business strategy

[pchang]

what terms are the VCs asking for? The most important term is probably their preference number. Organic growth can be pretty slow, especially if you think prod dev will eat up all your revenues. Do you have any lines of credit? You need access to capital to grow fast. Traditional lenders will just ask for interest (a percentage of future revenues) instead of a percentage of your company. Look for non-traditional lenders (perhaps a peer to peer lender).

[Pekka]

Why I should not be the CEO? I don't know, I have no experience. The others in the management are all more experienced, yet they would prefer if I was the CEO. I guess I'm looking for an exit as to hide my inexperience, even though I've said it point blank. Oh well.

There is stuff like SCORE in here, I've talked to them early on, but to me it seems like they aren't very efficient. They tell me the obvious stuff, but don't go beyond that. As in they explain the very basics... for example, I sent them my second version of the business plan and they didn't have anything to add to it. Now, this isn't a good thing. To me, it just says that they aren't very good or not interested enough to make this a success.

As for lenders, all of us have good personal credit, meaning that we can all get a loan if needed. Everyone of us, except me, have money hiding so they can invest their part easily. I'm the only broke person (but with good credit)

I would personally prefer to be paying interest from the future profits rather than giving up ownership. But I don't know if we have any other ways here for that except basically banks. So far, investors have been interested, even excited, but they want to take over as well, so I've turned offers down that propose a scheme like that.

[Pekka]

So, good news. We're closing deals, quite big deals. We've got clients who want to sell our stuff. Let's say that the magnitude is that they have thousands of corporate customers. So we're excited, and hope that the deal goes through, as we're only in our early stages of making it happen.

So, it might soon be that how to sell is not the problem, but how to accomodate to all the clients to what they bought.

[Dinner]

You should just beat them all with your penis until they comply with your demands.

Winner.

[DaShi]

So, good news. We're closing deals, quite big deals. We've got clients who want to sell our stuff. Let's say that the magnitude is that they have thousands of corporate customers. So we're excited, and hope that the deal goes through, as we're only in our early stages of making it happen.

So, it might soon be that how to sell is not the problem, but how to accomodate to all the clients to what they bought.

Let me know when you go public.

[Pekka]

I will. We're still negotiating, but seems like our first key client might be secured. Looks promising.

[DanS]

How do the management issues stand?

[KrazyHorse]

Let me know when you go public.

Bad news: the SEC has permanently disallowed naked shorting.

[DaShi]

Damn it!

[Pekka]

DanS, well, at the moment, I'm the acting CEO. I'm being advised by one of the key people in this management who is much more qualified but also is more of a "behind the scenes" type of a guy. I think he just likes to be an adviser and it fits his personality.

At the moment, we've preparing our sales kit more professionally (for our product, to the organization, end user etc.), all kinds of material that is needed to make the product real and tangible and so we can do some real marketing to businesses. We are still negotiating with our first key client. We're doing more pricing models, stuff like that. THis is where I can still feel comfortable in CEO position, as knowledge about the product and service itself is a lot to go with.

So I just came back from India, thus it slowed down (on purpose) for few weeks, but next month we're going public if everything is on schedule, and also we want to secure the key client by that time. We will also have done our material, and continue test marketing with what we feel are best possible clients for us according to our lead qualifications. Then we have to do many things simultaneously (that is more than now) and we will be very very busy.

In short, we are digging few holes on the ground at the moment so we can have a good running start, so we can be at our best with test marketing to bigger potential clients. IN other words we're trying to attract strategically important companies and make bigger deals first, see where our price should be at, then just go with it. Sell, recruit some more people, the usual stuff.

Obviously the management issue is something we have to return to at some point not too late. Soon we will be going over the owner strategy, so a lot of things could be settled there. I'm just learning a lot daily, this is new stuff to me, but it seems rational so far.

[pchang]

Going public

DanS, well, at the moment, I'm the acting CEO. I'm being advised by one of the key people in this management who is much more qualified but also is more of a "behind the scenes" type of a guy. I think he just likes to be an adviser and it fits his personality.

At the moment, we've preparing our sales kit more professionally (for our product, to the organization, end user etc.), all kinds of material that is needed to make the product real and tangible and so we can do some real marketing to businesses. We are still negotiating with our first key client. We're doing more pricing models, stuff like that. THis is where I can still feel comfortable in CEO position, as knowledge about the product and service itself is a lot to go with.

So I just came back from India, thus it slowed down (on purpose) for few weeks, but next month we're going public if everything is on schedule, and also we want to secure the key client by that time. We will also have done our material, and continue test marketing with what we feel are best possible clients for us according to our lead qualifications. Then we have to do many things simultaneously (that is more than now) and we will be very very busy.

In short, we are digging few holes on the ground at the moment so we can have a good running start, so we can be at our best with test marketing to bigger potential clients. IN other words we're trying to attract strategically important companies and make bigger deals first, see where our price should be at, then just go with it. Sell, recruit some more people, the usual stuff.

Obviously the management issue is something we have to return to at some point not too late. Soon we will be going over the owner strategy, so a lot of things could be settled there. I'm just learning a lot daily, this is new stuff to me, but it seems rational so far.

Does not mean what you think it means. Going public means listing on a stock exchange.

[Japher]

He means "opening his doors for business"

[Pekka]

Yeah, I meant opening doors for business.

Here's my latest update, which might be interesting to some of you guys.

First off, I'm a bit tired. It seems like I'm mixing between my research (it is on this same topic though, my core business so I don't treat it differently), and TWO businesses. It's hard. Sometimes I wish I had a business where I didn't have to be the person who then goes and also provides the service itself.

Good news though, we found some obvious ways to implement our technology, that is it has tons of scalability. We're in a process of doing a big pilot for a big company, which they will pay for. This means we just got someone else to pay for the majority of costs related to our product. This means that it took a bit longer than we wanted (still under work), but the positive side of the trade off was of course a lesser risk for us. This means we've had to hold back our guns, we haven't gone out so much as we hoped to go and market, as we need to complete the pilot first and since we're not doing it on a schedule that is actually very solid, we lost some predictability and thus halted some other routes for a while. In the meanwhile, we found a whole new domain for our technology, which might actually prove to be better for money making. It certainly does not take much of our resources and we're already connected with it. So we have this backbone technology that we're spinning in different directions at the moment, and we're about to file a patent application as well, because we want to secure the backbone. I do realize patenting means crap these days, and it's mostly to flex a muscle, but when push comes to shove, it's not that much of a deal, especially against big entities. So mostly it's a show for investors, that we do take care of our stuff and for the future if we become big.

Anyway, this product-based company is still promising and going good. In the meanwhile I've acquired a sales person to sell my consulting. It's pretty good, we just won our first bidding competition. I was happy to get the first one going on with the price we wanted, which is close to $1800 a day on site. Naturally the real amount of days is about double to on site days, but still it's in the high end of what companies in here pay for simple stuff. We could do a lot of gigs with lower salary, but it's too much work because I always have to travel, share the profit and pay taxes and ultimately it's time away from research and this product-based company. So we're trying to hit only few big companies with it to make it worth our time. Plus the money coming in pretty much goes into building the company anyway. I actually raise only few hundred bucks from a gig to myself to pay the bills.

I've learned a lot of how to do business in the last 6 months. We pretty much get inside companies to negotiate quite easily. We just don't call them, or send them spam. We network first, use our connections to mention about the thing we do, get some interest, ask for a date where we can sit down and talk about it and pitch for 10 minutes and ask if they want to continue to talk about it. If not, then we're out, if yes, we're usually pretty much in. Then we make them pay for us telling them what we can do for them, we just call it "mapping their situation", so we won't work too much and not being paid for it. This alone usually makes it profitable for us, and if they're interested in furthering our relationship, we're happy.

Otherwise we'll do some test marketing, make companies pay for it as well, and sell stuff. Get our foot in, and then sneak in fully. We have decent selling arguments and if we're credible enough, we're usually successful.

The only problem is, I'm getting tired. Not like tired physically, but mentally. It has become quite boring. Say we get a new person who is in charge of the money in a company (we don't talk to other people usually). OK, so we set up a meeting. To me, that means, with the traveling, at least a 16 hour day alone. It's just very tiring and for the most of the time, boring. Plus, financial people are usually sharp, so there's no bull****ting around, if you get hit once, there's no chance of success later on with them. That, and sometimes these people are total sociopaths. It's ****ing retarded. You'll give them a price, and they want to slice off few hundred euros from it. Just to be able to lower the price, even though it makes no difference. But what I've learned from business is that you don't lower your price and become a *****. So then a new round of negotiations start and you have to prepare a new offer, in which you either lower the service hours on site, or take some service away completely. Or you request a written testimonial. You have to get something in return or take something out, it's not a fire sale. So suddenly it becomes a battle of egos, and at least a day's work. This is tiring as well.

Then you've got to realize that some of these people are super busy, and you might have to chase them for weeks, just to set up a new date for something that was already settled. The worst thing you can do is do something for free or too cheap. Then they want everything, nothing is good enough and soon you'll be their slave and they're unhappy anyway. Make them pay for it, and suddenly they're your friends. In short, make them pay for everything or become a lifestyle company.

Then there's all the inside crap as well. Who owns how much of the company, what is their contribution, how are we doing this and that... there's tons of stuff to do, especially when you're doing TWO companies and a day job on top of that. So soon I'll have to quite my day job, that's pretty obvious.

But anyway, I could go on forever. Doing things for yourself I would recommend to everyone. It is rewarding, if you become successful. There are downsides to it, for example, people become jealous. They think you're getting lots of money by saying few words to other people. This is not true and is quite insulting. First of all, you're doing a whole lot of work, and taking risks, and most of the money never comes into your own pocket. Then, if you get something, people become jealous and talk **** about you. It's enough that you have to deal with these sociopaths in the business, but then in your private life it's like wtf... it is as if I have to be sorry for doing things for myself and succeeding in few things. All the while they were not doing anything for themselves, I mean you do things and that pretty much determines what you get, so if you want something, then you have to do these things. The most ridiculous part is that my actual income is still low, I'm making less than most of my friends who are doing entry-level jobs, and way less than the average in this country. But somehow people are already getting jealous. It is as if I should fail that would make them feel alright about themselves. It's bull****, and **** them. I'm seriously again considering moving to another country, just to be able to get away from this crap.

[Pekka]

There are also difficulties in - because I'm not good at this and it does trouble me - when people close to you tell them what you should do, how you should do your business. It's cool when some of them are knowledgeable. But most just don't know much, and none of them know about the domain. So they're all excited about this idea they've had and have been waiting for few days to tell you about it and unfortunately in 99% of times, the ideas suck business-wise. Then you'll be smiling and saying that's pretty cool, let me think about it, just to get away from the situation and not hurt their feelings. It's a bit disturbing, as usually it's like people want to throw some ideas at you, so if you think it's good, then THEY suddenly become millionaires and you owe them. And it seems that you owe them even though their idea wasn't good and definitely was discarded the second they opened their mouth.

So suddenly people want to be your friends. And "they've been thinking about...". Yeah I'm sure they've been thinking. But it's a fact that most of it is just bunch of bad ideas. People always want to jump into something, they never, at least in here, want to build it themselves. Too much work, there's risks involved, etc. It's not like I actually respect that attitude and when I clearly see that this is the case, it's a turn-off for me. It sucks because they think it's a good thing and it's just not, and they're excited and you're in a situation where you can be polite or hurt their feelings, and either way, it's on you. This is, I guess, the price of setting up your own business and trying to become as successful as possible with it.

[Pekka]

One more thing. It's quite amazing how the state works. First, they will not give you any monetary support. In here, when you have a start-up, you can get support IF you don't have any other income that exceeds somewhere around 1000 euros per month. When I was trying to apply for that mere 700 euros per month for 6 months (this isn't even a lot of money to set up a business!), it was well, you can quit your job so you don't have income and become de facto unemployed, THEN you'll get this support.

OK, so no support what so ever? No. OK, so this means, in terms of business, that I'll be taking all the risks. If I turn in profit, the state takes half in taxes. So when you do succeed, they will eat the cake. But there's no sharing of the risk in the beginning. That's a racket I'd like to be involved in. No risk, just profit. Not to mention when you go down, they'll be sure to rape your nest. As in, OK I tried but this failed due to whatever, bad economic times. Do I get help now? No. You'll get raped.

I would accept this all if they actually did support start-ups. What they will do is support big entities, because when a big company has bad times, it's a matter of the economy then. So we tax payers give them money, so they can fire people and show savings and better profit margin, and then give presents to these geniuses who did the firing and raising their own salaries. Nice bonuses and a golden handshake, is a total what the ****. Hey, what if I'm suffering in my business, where's my golden handshake and "relief package"?

Or when a bank grants loans and credit when they shouldn't be, to poor people with no income and no chance to pay back... this IS an investment banks make. So when they do these small investments in bunches and it turns out they did bad business, again, tax payers have to pay for it. Let's give them hundreds of millions. I say let's null these loans, since now I'm paying a bank in order for them to be able to make sure that I'll pay them my loan as well and the interest rate. Now this is a racket I'd like to be in as well. Where people pay me so I can charge them, and at the same time this happens due to my own investments.

To me it sounds like communism anyway. We're ready to have the state come in and take over business, but only if it's big corporations or banks. In the meanwhile, the small man and the lone business person gets raped.

My whole point is that there's lots of obstacles in your way when you do these things. You REALLY have to make a lot of cash flow just to keep running. I could have my own small business, employ only myself. This way most of the income is in my pocket. I can make $1800 a day on site gigs, and at least $1200 is right in my pocket. But when I want to make it a real business, suddenly, I have to employee few more people, pay all the taxes and social expenses, and since they don't work for provision, you'll give them 2500-3000 euro salary and that means when it's all said and done, you have to make 7-8000 euros in JUST to pay one salary and all the side costs related, per month. Of course double for a second person, triple for third and so forth. And now you aren't even paying yourself, or all the expenses businesses have, running costs, travel costs, all that stuff. Nor are you still accounting all the taxes the business has, or the freaking insurances and whatevers. Soon, you'll realize, that you have to come up with tens of thousands per month, say, if you employee 10 people, you'll have to have at least an income of half a million per year, just to run the operation. And still everyone is *****ing and moaning, and now you're sleeping horribly as if this and this deal doesn't come through, you'll have to fire someone, or not, because you can't sleep then so you'll just sell what ever is yours and ask for another loan just to keep that one person there for the next month. This is something people do not realize. When they hear that a company pays hundreds of euros per hour when you show up, it's just not that simple. Of course there's a positive side, as in you own the thing and it's the only way of truly becoming successful. Risk is the price you pay for success. But at this point, instead of people being jealous, I would appreciate for "Hey it's a good thing that someone is creating jobs in these bad times, instead of *****ing and moaning."