Our featured attendee for Tue-Aug-16-2016 in Sunnyvale was David Saxby of SaxbyIoT, he offered a practical briefing on “8 things you should think about (a lot) before you start a company: lessons learned from founding six startups.” Dave shared lessons learned from Altera, Parallan, Scotts Valley Instruments, Storymail, Ultimate HD and starting up the PC Server Division at IBM as its first General Manager.
David Saxby: 8 Things You Should Think About (A Lot) Before You Start a Company
- Why start a company? What unique problem or need do you want to tackle? Dave observed that successful entrepreneurs tend to be motivated by solving a particular problem they are deeply familiar with. They see a better way to get the job done.
- Why you? What makes you the best person/team to make this happen? What relevant expertise and experience are you starting with? What makes the founding team uniquely equipped to solve this problem? What is preventing others from solving this problem? Sometimes it’s just a willingness to try and a familiarity with all that has failed to work.
- Why now? Why hasn’t this opportunity already been tackled by others? What’s changed? Is this the right time, you want to be 15 minutes ahead, not a decade or two. Dave started a voice recognition startup in the early 80’s that was at least a decade ahead of its time. Dave cited an analysis by Bill Gross at IdeaLab that timing has a significant impact on likelihood of success. It’s also be pulled toward an opportunity than to be primarily motivated to get away from a current situation.
- Who are your customers? Can you identify early adopters that desperately need what you have? Are these people you want to be working with and serving? Customers are where things get real, you have to leave your view of how things will proceed and get in front of real prospects. Customer conversations should take place in parallel with product development. It’s less about selling and more about getting a reaction and customer perspectives.
- How will you let all of your potential customers know how great you are? One key is a narrow focus in the beginning so that you have the time to get to know their issues and can tailor your message to their particular needs. The other trick is to share preliminary results and prototypes to get early feedback: this is not showing crap but it is soliciting feedback on early versions. All product development is a sequence of compromises, it’s better to get potential customers involved in helping you make the trade-offs. Risk for technical founders is that they don’t invest enough time and effort in getting the word out. Technical founders can also hold off because they want the product to be perfect before they show it. “Build it and they will come” happens just often enough to be a persistent but poor approach. Dave also recommended Geoffrey Moore’s “Crossing the Chasm” for B2B products.
- How big and profitable can this company get? In the early days this is more of a test to ensure you are not wasting your time on a small problem and to ensure you have an alignment on the vision for the company among the founders.
- What other people will you need on your team and how will you attract them? Any company beyond the size of a sole proprietorship will require that the entrepreneur at least orchestrate the work of others if not manage them.
- What financial resources will you need and how will you get them? There are no easy answers on when to stop bootstrapping and seek funding: it’s possible to lose time seeking funds before you have traction or to wait too long and allow other competitors to point to your success as proof of the market and use investment to increase their strength.
- Competition – A bonus item based on a question. What are the alternatives available to your prospects and how are they likely to respond to your entering the market?
Dave offered a candid perspective informed by the breadth of his experience. He opened with, “I really like working with entrepreneurs” and took questions from the audience as he went down the list.
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So what I would say, in summary, is execution definitely matters a lot. The idea matters a lot. But timing might matter even more. And the best way to really assess timing is to really look at whether consumers are really ready for what you have to offer them. And to be really, really honest about it, not be in denial about any results that you see, because if you have something you love, you want to push it forward, but you have to be very, very honest about that factor on timing.
For another take on Bill Gross’ analysis see David Siegle’s “A response to Bill Gross on Why Startups Succeed”
My premise is that you should replace the word “timing” with the word “luck,” and mean it. If you tell people that luck accounts for about 40% of start-up success, that’s a pretty good first-order approximation. This isn’t an easy request.