The excellent book “Venture Deals” by Brad Feld, Jason Mendelson gives a ton of great advice, one nugget you should know is smart Entrepreneurs, even experienced ones like me, get a stable of experienced mentors.
Here’s their specific advice:
These mentors can be hugely useful in any financing, especially if they know the VCs involved.
We like to refer to these folks as mentors instead of advisers since the word adviser often implies that there is some sort of fee agreement with the company. It’s unusual for a company, especially an early stage one, to have a fee arrangement with an adviser around a financing.
Nonetheless, there are advisers who prey on entrepreneurs by showing up, offering to help raise money, and then asking for compensation by taking a cut of the deal. There are even some bold advisers who ask for a retainer relationship to help out. We encourage early stage entrepreneurs to stay away from these advisers.
In contrast, mentors help the entrepreneurs, especially early stage ones, because someone once helped them. Many mentors end up being early angel investors in companies or get a small equity grant for serving on the board of directors or board of advisers, but they rarely ask for anything up front.
While having mentors is never required, we strongly encourage entrepreneurs to find them, work with them, and build long-term relationships with them.
The benefits are enormous and often surprising. Most great mentors we know do it because they enjoy it. When this is the motivation, you often see some great relationships develop. The Entrepreneur’s Perspective Mentors are great.
There’s no reason not to give someone a small success fee if they truly help you raise money (random email introductions to a VC they met once at a cocktail party don’t count). Sometimes it will make sense to compensate mentors with options as long as you have some control over the vesting of the options based on your satisfaction with the mentor’s performance as an ongoing adviser.
Well most people would start the painful process of writing a business plan right away as they have their first idea for their startup, often taking months, just getting ready because that’s what they are trained to do – polish up word and PowerPoint and hone the idea in their minds and those of their friends.
NOT ME! Not any more…
In my view before you do anything you need to do lots and lots and lots of market research with target customers (customer development) – no business plan, excel or slides – just get a sample of whatever your idea is in as visual a form as possible ( a picture, mock-up, diagram…something potential customers can see, feel, smell, play with…even if it’s a service).
Spend a little time and money on the basic idea and then hit the streets – in my case I am prepared to go anywhere to get market data, for my last idea I travelled to 10 cities across the UK and the USA meeting competitors, potential customers, suppliers, consultants and anyone who could give me useful market data that was ‘visceral’ and ‘meaningful’.
On collation of all of this data, over 3 months, I started a business plan – after I had got many of my assumptions either thrown out, modified or proven – only then did I feel ‘comfortable’ to write something that was realistic.
I got an email from the great Silicon Valley StartupDigest newsletter and its giving subscribers free access to some really useful training for startups, check it out.
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A colleague at Stanford, serial entrepreneur and friend Joe Beninato has a really great new blog based around his adventures on his 7th startup Tello.
His is an example of the many granular things that just need to get done when you startup and some of his advice that could short circuit some of your efforts if you are valley based:
In no particular order, here are some things to be aware of as you get your new company going:
1. A good lawyer. Lots of people think lawyers are evil, expensive, etc. The best startup lawyers are certainly expensive, but I think of them as great startup advisors who happen to have J.D. degrees. The advantage of startup lawyers is they’ve seen hundreds of times more term sheets than you, they’ve negotiated hundreds of times more business deals than you, and because of this volume, they know what’s “market” and what is not. This is true for convertible notes, equity financings, leases, etc. The best firms will defer some amount of their fees until you get funded if you convince them you are credible and/or working on a good idea, so in a sense, they are willing to take a risk on you. I suggest getting someone on board right away to get you incorporated, get your founder agreements setup, etc. I’m a big fan of Scott Dettmer and Mike Irvine at Gunderson Dettmer, Mitch Zuklie at Orrick, and Mike Sullivan at Pillsbury.
2. Incorporation. I recommend incorporating as a Delaware “C” corporation. Delaware is much more startup-friendly than California from a logistics perspective, believe it or not. For example, if you need to modify corporate documents, the turnaround time for California can be days or weeks, whereas with Delaware, it’s typically hours. And if you’re ever going to raise venture capital, LLCs and “S” corporations are most typically converted into “C” corporations at that point. Once you get going, you’ll need a Federal EIN (employer identification number) for most things like lease applications, payroll, etc. and all of this can be taken care of by your lawyers.
3. Founder agreements. One of the biggest mistakes made by founders is to fail to have the hard conversations about how to split the equity and what happens if things don’t work out. This most likely happens because a) the founders are friends and don’t expect hard times to test their relationship, and b) these conversations are awkward and difficult. I can tell you that even experienced entrepreneurs don’t like to have these conversations, and it can lead to ugly situations. Bite the bullet, be an adult, and have these hard conversations. I call it the “Founder Pre-Nup.” You both (or all) owe it to yourselves to think through how you’re going to split the equity up front vs. down the road. Sometimes it’s an equal split, but I would say that more often than not, it is not an equal split because of someone’s experience level, IP contribution, reputation contribution, cash contribution, etc. There are no hard and fast rules of thumb here. You should also think about vesting schedules, vesting cliffs, what happens if one of the founders leaves, etc. It might be tough, but you’ll be surprised how relieved you are when it’s over and everything is understood between founders.
4. Salaries and benefits. This varies by situation, but I’d suggest making some progress on the product or fundraising before putting this into place. If founders aren’t willing to bootstrap and invest a month or two of time in getting something off the ground, imagine what happens down the road when times get tough. Some people who have a paying job will need to keep it while getting the new company going nights and weekends. Most people can continue to keep their COBRA coverage from a previous job, and once you get funded, it may even make sense to just reimburse people for their COBRA vs. the time/expense of setting up benefits right away. Of course, by the time you get to 5-10 people, you’ll need to set this up, but defer it as long as you can.
5. Banking. I recommend getting setup with Silicon Valley Bank right after incorporating. While you can choose to work with any bank, SVB is setup to work with startups, and knows the issues that come up all of the time.
6. Office space. Some people think that getting an office is a waste of time, that everyone can work virtually from home and be as productive as they would be sitting in a room together. While that approach might work for some, I am not a fan. I am all for being lean and frugal, but I think there is something special that happens when a team is getting together daily in their own “place” to solve tough problems together. It’s a bonding experience that forges them together. They’re working together in groups and individually, and eating lunch together. I’m not saying that this can’t happen if you meet over Skype or in a Starbucks every day, but I think it’s more difficult. For me, some of my fondest memories of the startups I’ve been involved in are the earliest days of the company with just the founders in the first office. I think back to S3 and Bunker Hill Lane in Santa Clara. When.com and Broadway Street in Redwood City. Presto and Sand Hill Road. Those of you who were there with me know what I’m talking about. I think it’s worth the $1000/month to get a small office and get people together almost daily.
More here: http://startupseven.com/
One of the sales people that works for me was having a few troubles getting “psyched up” to make cold calls to prospects and we sat down to discuss how he was feeling. After a short while I decided he simply needed to do two things – to be clear on his personal and business goals and to have something to motivate him daily.
The daily motivation can be very important not just for sales staff but also small startup teams who often work alone or in small silo’s and after the honeymoon period has worn off settle down to many years of very hard work!
A Dream Wall (for those of us that are visually orientated) is great way of motivating yourself daily to what your deepest dreams and desires.
What is a Dream Wall
A Dream Wall can be whatever you want but generally it is made up of images of the achievements or goals you wish to experience in reality. These can be short or long term goals but they want to be orientated around “visceral” things or experiences that you can get into pictorial form.
For example in the image above we have places, things, experiences, homes, books etc that signify various goals. This can also be poetry, quotes, affirmations, spiritual sayings, pictures of loved ones, people you admire or a person you would like to have in your life or whatever makes you motivated and excited about your future!
The images are designed to really make the viewer excited and remind them of the “why” in their day. Why do you get out of bed every day? well this “wall” should remind you why!
So why bother to do this?
Well the process of creating the wall can be very valuable in itself, it makes you go through a goal setting process and to consider your needs, wants and desires. It helps you choose the really important ones and it reminds you about the “why”. Then it stands as a reminder from then on when you are lacking motivation or are having a hard time why you do what you do.
You will probably know that if you engage several of your senses into recalling something i.e. looking at a picture, writing down the experience associated with it, thinking deeply about it that your memory will be far stronger around that goal than simply putting it on paper. Then if you regularly review the images and words associated with your goal you are reinforcing that memory more and more.
So this is essentially a process of focusing you and then reinforcing yourself later.
Creating your own Dream Wall
To practically go through this process you can have a virtual or physical board (like a pin board). In my case I have it on my PC as an image that I can add and change the pictures I have found from my own photo album, or on the internet or in magazines. Once you have located these pictures, cut them out or print them out for the pin board or make a collage like above.
Then place them in a place where you can easily view them in all of their glory each day. This is now your own Dream Wall. The place where you come to look at your dreams.
“Seeing is believing” as the saying goes. The world is full of distractions, and it’s really hard to stay focused on your dreams. That’s why it’s so important to have reminders all around you of why you are doing what you are doing.
If you have limited space or are in an inflexible “cube” at work then why not type out some goals and stick them on your computer. Or make a photo collage of your family, goals and dreams and put it in a little frame on your desk.
How to use your Dream Wall
Don’t go to the effort of making this “wall” and then hide it away – it’s very purpose is to in your view all of the time, on the wall, on a desk, on your PC desktop or in view. It will not just remind you when you specifically look at it but also it will allow your subconscious mind to assist you while its in your peripheral vision!
Visit this wall at least twice a day, spending around 5-minutes per visit visualizing what you want in the future. Try and review each part of the wall, say a sunny beach home, and then shut your eyes and try and use each of your senses to feel, see, touch, smell and hear what it would be like sitting on your front porch in this beautiful new home you have just purchased. See the image in your mind in full color and see yourself in the image with the goal or desire. Breathe deeply and really get absorbed into the dream – believe it.
Each time you visit your Dream Wall you are imprinting upon your brain a positive and clear message of what you want from life. Through repetition this positive habit actually programs the brain with a positive expectation and a clear vision of what you expect from yourself. The brain then goes to work on seeking out and providing you with solutions and strategy’s for achieving what you want. The more you want it, the quicker your brain will find a solution for attainment.
Practice this daily and you’ll amaze yourself at how quickly and easily you can actually achieve your dreams in the real world.
The quickest and most direct route to achieving success is to know what you want out of life and just as importantly when you want it? The Dream Wall emphasizes this and helps keep you focused, true and determined to achieve your deepest desires in life.
Of course this is not a “miracle working” device – you need to do the work, the planning and goal setting to be clear on the “road” to these wonderful goals and to do what you must to achieve them! Below is my post on setting your goals and this should preferably be completed before your Dream Wall.