Nine Tips for Organic Technology Start Ups


By Art Reisman

Art is CTO and Co-Founder of APconnections – makers of the NetEqualizer. NetEqualizer is used by thousands of ISPs worldwide to arbitrate bandwidth. He is also the principal engineer and inventor of the Kent Moore EVA, a product used to trouble shoot millions of vehicle vibration issues since 1992.

1) Find somebody who has built at least two businesses on their own, and better yet, somebody that has done it more than once from scratch.

For example, a Harvard MBA that went to work for Goldman-Sachs right out of school has no idea what you are up against. They may be brilliant, but without experience specifically in the field of growing a start up, their education and experience is not as good as somebody who had done it on their own.

2) Be leery of late 1990’s dot com moguls.

Many good people got lucky during those years. It was a rare time that will likely never happen again. Yes, there are as some true stars from that era, but most were just people who were in the right place at the right time. Their experiences generally don’t translate to a market place where money is tight and you must bite and scratch for every inch of success.

3) Be careful not to give too much credence to the advice of current and former executives at large companies.

They are great if you are looking for connections and introductions within those companies, but rarely do they understand bootstrapping a start up. These executives most likely operated in a company with large resources and rampant bueracracy that required a completely different set of skills than a start up.

4) Amazingly, I have found Real Estate Broker(s) are a great source for marketing ideas.

Not the agents, but the founders of the companies that built real estate companies up from scratch. I can assure you they have some creative ideas that will translate to your tech business.

5) Product companies must avoid the consulting trap.

If you produce a software product and (or any product for that matter), you will always be inundated for specialty, one-off, requests from customers. These requests are well intentioned, but you can’t let your time and direction of a single customer drive your feature set. The exception to this rule is obviously if you are getting similar requests from multiple customers. If you start building special features for single customers, ultimately you will barely break even, and may go broke trying to please them. At some point (now), you have to say this is our product, and this is our price, and these are the features, and if a customer needs specialty features, you will need to politely decline. If your competition takes up your account on promises of customization, you can be sure they are spreading their resources thin.

6) Validate your product see if you can sell to strangers.

Early on, you need to sell what you have to somebody that is not a friend. Friends are great for testing a product, or making you feel good, or talking up your company, but for real honest feedback on whether your product will be a commercial success you need to find somebody that buys your product. I don’t really care if it is a $10 sale or a $10,000 sale, it is important to establish that somebody is willing to purchase your product. From there, you can work on pricing models. Perfection is great but don’t stay in development for years making things better and perfecting your support channel, or whatever. The reality is you have to sell something to build momentum and delay to market is your enemy. If you do not find customers willing to commit their hard earned money for your product at some early stage you do not have a product.

You should be able to take early deposits on the concept if nothing else.

7) Don’t spend precious cash on patents and lawyers to defend non existing value.

As an organic or unfunded start up, the last thing you need to worry about is somebody stealing your idea, and yet this is the first piece of advice you are going to get from everybody you know. The fact is, there are millions of patents out there for failed products protecting nothing. I suppose it could happen, somebody steals your idea and profits before you get off the ground, but it is much more likely you will waste 6 months mortgage on a patent that you’ll never get a chance to defend. Even if you have a patent, you won’t be able to defend yourself with a large pocketed rival. The good news is if you have a good growing idea, investors will take care of the protection of your idea when they buy you.

8) Become an expert in your field. Maybe you are already? Sounds obvious, but make sure you know every detail of your technology and how it can help your customers.

9) Test the market like Billy Mays (may he rest in peace).

Before he passed away, Billy and his partner had a show where they took you through the test market phase of the products they introduced. The plan was simple, build a cheesy commercial to demo the cheesy product. Then run your advertisements in a small market metro area on late night TV. Although your audience may be insomniacs watching re-runs of old movies late at night, you need to find a way to test market your idea and get honest feedback (people calling trying to buy your product is a good indicator). You might even want to run some teasers to your market before you launch, but do so with limited resources. If you get a representative sample, you can then decide to ramp up from there with some confidence.

10) Need verses buy. The only measure of success is from somebody buying your product. Just because people “need” your product is not an indicator of if they are willing to pay for it. People “need” lots of things and only actually buy a small percentage. I need a bigger house , a nice car, a vacation to Hawaii. I also need a sprinkler system, faster computer, but I bought none of these things this past year.

In the last four years from 2008 and to 2012 hot selling items have been very basic services, such as telephone systems, heat, advertising.  Very few businesses are buying anything beyond the essentials in any quantity. This could change if the economy goes back into a growth phase, but the point here is to build something that is a necessity with clear value and you must test that value by selling product, an open wallet is the only to validate need verses buy Marketing surveys of intentions will not tell the truth. Don’t get me wrong there is always opportunity out there, but you constantly need to validate your threshold of value by selling something.

 

 

Related Business Advice Articles.

Tips to make your WISP more profitable

Terry Gold’s blog has a good bit of Advice Sprinkled throughout

How I got my start the story of NetEqualizer

Building a software company from Scratch

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