Archive for February, 2007
Throughout the building of Emerging Demographics, my advisory board has played an instrumental role in helping me mitigate my inexperience. An advisory board, if constructed properly, can be the main difference between a successful company and a “learning experience.” This is especially true for young entrepreneurs who need to rely on others for a knowledgebase of experience.
The 5 steps to building a strong advisory board:
- Asses your strengths and weaknesses:
A board of advisor’s primary responsibility will be to advice you, the CEO, on key decisions. Therefore, understanding your strengths and weakness is paramount to constructing an advisory group that will help guide you in areas that you need help with. Knowing that you are not a great marketer is not enough, you need to dig deeper and think about all issues relating to managing a business. Do you have the financial acumen, do you have the operational experience, can you manage diverse personalities, do you have the technological prowess, do you know enough people (i.e. connections), and just about all other aspects of business.
2. Understand your business
Not all businesses are the same, and therefore the experiences needed vary widely. While a financial guru is always a big help in establishing a business, a manufacturing guru probably won’t help an emerging blog network. The point is, try to find advisors in similar industries to your business or with an understanding of the market you operate in.
3. Identify advisors
At this point you already have a clear guideline of the needs that must be met by your board of advisors. So the next step is to find people who can help fill those needs. There are a couple of things to consider for each candidate, firstly do you work well with them. Second, do you respect their opinions? Will they be able to provide you with enough time? And finally, are they just a big name or will they add insights, advice or direction? Being a big name might be something you need, but again, at this point you understand what you are looking for and are just trying to fill the needs in the best possible way.
4. Balance the group
Hopefully at this point you have a few candidates who are willing to join the board, and now your job is to create a good mix. No point in having two great marketing advisors when you don’t have someone who can help you with accounting. Try to maintain a good balance and don’t be afraid to leave a hole or two, as you will undoubtedly encounter potential advisors over the next few months that can join the board then. Filling a position for the sake of filling it, is much worse than not filling it at all.
5. Bring ’em on
All that is left now is to officially invite the chosen advisors to formally join the advisory board. Before you do so, make sure you have a very clear understanding of exactly the roles they will play and communicate very clearly what the responsibilities and parameters are. I am no expert on what kind of stock and warrant grants are appropriate to give, but you can read more about it on Brad Feld’s excellent blog.
Every start-up idea that I have listened to, at some point touts patenting the technology as a defensible measure against competition. At the same time, every investor who has any experience in the world of web technologies says that patents are basically useless and businesses should have other competitive advantages.
From my experiences in this arena, and from fighting from deep within the trenches, I can tell you that most business method patents won’t help you fight off competitors. As it is, companies competing for the same space usually take very different approaches. Secondly, as I have written about before, ideas are really just 5% of the difference between success and failure. It mostly comes down to execution, distribution and market trends, not patents on an idea.
So then why patent your revolutionary new technology? It comes down to scalability, fund raising, and ego.
If you do come up with the next big idea, and you are able to execute and build a huge business, then you will look back at the 20k you saved by not patenting your technologies and most likely cry. Patents might not help you get to superstar status, but they can help you stay there by threatening potential competitors with the threat of a lawsuit (something you can’t do as a start-up with a limited budget).
Even though VC’s say they don’t care about patents, they most certainly do. Approach any of them with a pitch and if you don’t have at least a provisional patent they will want to know why. It seems like a lot of times, investors feel more secure in their investments if there are tangible assets that they can turn to for protection.
Who doesn’t like to think of themselves as a creative genius who has a patent under his or her name? Though I am pretty sure it feels a lot better to have built a viable and successful company than it does to have your name on a useless patent.
A patent doesn’t make a lot of sense in the near term when resources are tight for a startup and it won’t get you to the big-time. But not filing for a patent can turn out to be a huge short sighted mistake that investors will hate.
So go ahead and file for a patent, but understand that it is a long term move that won’t help you fight off those competitors until after Google buys you out…
I am a huge fan of the work Michael Arrington is doing at TechCrunch.com. He is documenting the rapid evolution of the technology and start-up space, and doing it well. I have no problem with the process he uses to determine which companies to cover, and I do appreciate his talents as a filter. I know I wouldn’t want to read a watered down site that mentioned the 20 or 30 new companies that launch every day, because if I did I would just read a press release aggregator.
My Problem with TechCrunch is that it often feels like Michael and his writers are only spending 10-20min reviewing a website and spouting uninformed opinions. If the point of filtering content is to deliver only quality postings, then he should do his homework and understand the companies he covers before writing praise or criticism.
Today Michael wrote about Tinbag and completely trashed it, saying “This is a model that flat out failed at Google” and “Normally we’d pass on writing about a startup like Tinbag, but I want to point out that if Google failed at a business model after 4 years of trying, there’s a good chance you’ll fail with a look alike service, too.”
I checked out Tinbag’s site and discovered a very different business than Google’s failed model. Google and Yahoo approached the Q&A market like they do the web, as a central depository of information. They see it as one big forum of answers. The Tinbag model however, allows “experts” to create mini e-commerce sites and charge for support. The site isn’t trying to help you find answers to single questions (heck from what I can see it doesn’t even let you pay by the answer – instead you have to buy a monthly pass), rather it’s trying to help consultants and experts formalize a way to charge for support they already give and monetize their time.
I am not saying I love what Tinbag is doing, but I do think it’s different enough from the other stuff that’s been tried to at least warrant that the Techcrunch team read and visit the website before writing such a scathing review.