New venture outsourcing blog

We help startups outsource in order to get to market faster, reduce their costs, and scale up.  You might find it surprising that we don’t tell every startup that they should be working with us.  Like all companies, we spend a certain amount of time stepping back and asking ourselves who our best customers are - and why.

• Why do certain clients seem to get more out of the relationship with us than others?
• What kinds of clients seem to benefit the most from outsourcing?
• How can we help all of our clients get more out of working with us?

The companies that get the least out of outsourcing, and consequentially the least out of working with us, are the ones with a more scattered vision of the future.

Outsourcing is so powerful for startups that need to accelerate.  In much the same way that raising VC money can provide the jet fuel needed to catapult a company to the next level, deciding to outsource can really propel your company to accomplish more in much less time.  It compresses the time to market.

Like any accelerator though, this can backfire if your aim is bad!

If your business hasn’t figured out what you need, what your customers require, or what form it needs to take - you can spend a lot of money building the wrong thing.  When we find customers who are less sure about what they want or how it should look or behave, we give them the following advice:

• Take stock in what your value proposition is to your easiest to reach customers
• Validate, with each other or customers, which features are required
• Focus on getting that accomplished, shelve the other ideas

Getting customers to pay for things is how you ultimately validate your products and your business.  Once you’re sure that customers will need and pay for whatever you need built - then it’s time to hit the gas pedal - outsource as much as you can as fast as you can!

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This fits in the bin of “so I have this (great) idea, is it worth pursuing?”

The entrepreneurs and inventors we work with are often trying decide how much time and energy to invest in their venture or whether it is worth investing any at all. Here are some quick tips we’ve found to be particularly applicable to web 2.0 and other online startups, but also apply to any good old fashioned brick-n-mortar:

1) Customer Feedback is Vital - It is one thing to predict how your customers might behave, it is another to know how they will behave based on experience, sales data, surveys or other interactions. The side benefit is that you will learn a tremendous amount and be able to strengthen your offering by engage your (potential) customers early.

2) Get a letter from a potential customer - especially if you are talking to partners or investors. There is little more impressive than a well prepared entrepreneur who has considered the posibilities, decided on a strong product/service offering, talked to customers, and has documented their feedback. Nobody is asking for a signed purchase order, but how about a non-committal letter stating that they would be interested in potentially, maybe, purchasing ____ from you.

3) Write a Business Plan - this is not optional. The greatest value of a business plan is to you! It is absolutely a vital tool to formalize your idea, figure out what it takes to get it done, an set out a plan to get there. This doesn’t have to be formal, doesn’t have to be 50 pages nor written by a Harvard-MBA. There are many great resources to help you get started if you, like many, feel overwhelmed by this…
4) Build a Strong Team - advisors, mentors, management team members, board members, consultants, vendors, and other are important to your success. Recruit the best you can, and get started at the lowest cost possible. A key determinant in the success of new ventures is the team (strong teams can overcome many challenges)
5) Get Started - the most important piece of advice we dole out on a daily basis is: ‘get started’. Edison talked about his mix of inspiration and perspiration, but more commonly, how many times have you heard “I thought of that X years ago”. What separates success from not is, sometimes surprisingly, getting good work done. This includes research, building your product or service, selling it, expanding your customer base, and generally making headway!

more to come…what do you think?

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We’re proud to be a part of Josh Hyatt’s excellent article on Entrepreneurship found in

The July 2007 issue of Money magazine, page 78 at your local newstand or online.

It is thanks to our many entrepreneur friends and clients that we are able to help even more new ventures “cut costs [and] do what the big boys do: Go offshore.”

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We often find ourselves at the nexus of invention - our clients are often inventors and entrepreneurs, our service and product offerings are typically innovative software, and we have had the pleasure of sharing a number of inventor success stories.

An article in the Marketplace section of todays Wall Street Journal offers a step back in time.  Cynthia Crossen profiles Raymond Yates - an inventor and author of numerous books.  Amazon has a few, but the one mentioned, 2100 Needed Inveitons, may be a bit harder to find.

Mr. Yates’ idenitification of real needs, 65+ years later are coming to life.  At the time, far-flung ideas such as the “a personal television receiver that would fit into a vest pocket” are being realized.

The most encouraging aspect of this article isn’t Mr. Yates’ incredible vision in identifying very real societal needs — no, it is his insistance that execution is a vital part of the invention process.  Afterall, many of us have good ideas, what sepereates the successful ones from those who complain is, in his words, what makes successful ventures:

“Why I could have thought of that years ago and made a lot of money with it!

Certainly you could have — but you didn’t.”

So, as Yates said: “Get your thinking cap on!”

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well, maybe something that would be helpful to the entrepreneurs we’re working with and that read our blog.

The April 30th Wall Street Journal has an excellent speical section entitled “Small Business: The Journal Report”.

Highlights include:

“In Search of Traffic (about SEO)”

“Here, There and Everywhere (about virtual office space)”

“Early Options (on Seed stage funding - mentions the Tech Coast Angels here in Southern California”

“It Seemed like a good Idea (on the downsides of Guerrilla Marketing)”

“Calling All Customers (on cell phone marketing)”

and some others…

 

I hope you find this reading enjoyable 
and informative…

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We field a lot of inquiries about e-commerce specifically in seting-up a solution and optimizing an existing system.

Two recent (3/24/07) articles in the Business Technology section of the Wall Street Journal shed some light on this.

Elizabeth Holmes questions the need for a website. Of 500 small businesses surveyed, 57% in the services sector don’t have a website, 39% in retail, and 67% in Construction. The primary reasons given for not being online include costs of time and money. The question to be asked isn’t “can i afford to be online” but rather “can I afford not to be online” especially if your customers, competitors, partners, and investors are. Getting a website online, or setting up an e-commerce solution to start seling doesn’t have to be a large project requiring extensive capital investements. This can be done very economically with extremely good results. Even the bakery owner on the main street can benefit from a well thought out internet presence - 20 years ago what business would have said “I don’t need to be in the phone book, an unlsted number will be just fine”

Kelly Spors, on the same page of the same issue, under the Small Talk column, answers a question we often receive: “How can I set up a low-cost e-commerce solution (i.e. I want to start selling online)”. The best option is hiring a professional that specializes in small or new businesses and has the flexibility to grow as your venture does. The right partner will be able to increase your sales while increasing the conversion of site visitors to customers and increasing overall site traffic. If an entrepreneur is really set on bootstrapping and eager to do it herself, here are few suggestions:

Yahoo Merchant Solutions - for your domain name, some basic templates, a customer shopping cart, and many other features.

Go Daddy Group -again, for a domain name, hosting service, site-building, and a basic shopping cart

Both services are similar and are competitors. There are many others worth exploring including offerings by Siteground, Google, and others.

I think Ms. Spors and I agree that these are good starting points, not long term solutions as these generally lack originality, integration, or customizability your venture may require.

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We meet with entrepreneurs at all stages of venture creation, one of the first questions I often ask is about competition. In light of this I thought it would be useful to put up some thoughts on the dreaded “C” word:

Competition isn’t a bad thing.

Educating customers is a difficult prospect, especially for a product or service that is disruptive. If your competitors are going to help you do this you should thank them. In the face of competition we are forced to articulate the meaningful, differentiated value we are providing.

The amount of competition is likely to be inversely proportional to what we initially think.

Our gut reaction tends to be ‘feast’ or ‘famine’ – either “I have no competitors” or “Every venture on the planet is trying to do what I do”. Each of these scenarios merits more work into understanding your competitive landscape; what do people buy and why do they buy it? A corollary of this is the classic sell one each person in China business plan.

Competition isn’t just direct competitors.

It is goods or services that are alternatives to yours – including, but not only, those that are similar to yours. If you are an event planner your competition isn’t only other event planners but also the resources available for those planning their own events.

Competition isn’t static.

The most successful ventures will foster the growth of competitors – the secret is knowing that this will happen and planning for it.

Even the most revolutionary ventures have competitors.

That is to say the customer always has a next best alternative. Even a insulin for diabetic (a classic example of a necessary purchase at almost any price) has an alternative – no insulin at all.

We’ll add to the list as the not-so-dreaded ‘C’ words come up in conversations, business plans, and presentations.

Does competition have too negative a connotation? What do you think?

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Three ‘L’s have defined common wisdom on real estate…’Location, location, location’ is the mantra which almost defines valuation of property (although anecdotal, it is time-tested and widely practiced). If I had my way, everyone would know the three ‘E’s of business: Execution, execution, execution. The accomplishment of tasks (with or without a business plan - see this entry ) is by far the most important aspect of building a successful business. I’ve seen entrepreneurs fall into the trap of over-planning and under-executing – something that doesn’t add much value to a new company or a new venture. To stack the odds of success in your favor, start strong. Have the best team on board early (you can reduce costs by bringing onboard a flexible outsourcing service) to get work done – after all it is refining your businesses processes to create meaningful, valuable output that define successful, growing businesses.

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If you’re an entrepreneur or even just a closet entrepreneur - you need to check out Business 2.0’s $100 Givaway. Business 2.0 asked a few venture capitalists for a list of ideas they’d like to see - and would be willing to fund.The ideas on here show an interesting array of breadth in fields from new batteries to social networking to creating another database vendor!Especially if you’ve ever had an idea rejected by a VC - you owe it to yourself to go read the list. Go find one idea that you can easily point at and laugh out loud about! It’ll be theraputic.I’ve spent a total of about 30 minutes reviewing the ideas - and they certainly were underwhelming to me. It’s amazing how often I hear new business ideas and say to myself, “That’s ridiculous.” It’s also amazing how often this ends up being the wrong call.I have, in the past, convinced myself that many, now very successful, technologies or businesses such as text messaging, Amazon, or even search advertising (at least I’ll admit it) were not great businesses. This humbling experience of remembering which ideas you liked and didn’t like, and evaluating the results, is something any VC has to go through. No one likes it, but it’s a fact of life for a VC and comes with the territory.The same is true for entrepreneurs. If you do this long enough you will get kicked out of at least one meeting at some point because person X thinks your idea Y is stupid.These guys are pros, and it’s nice to see that they’re no different.

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Check out Ron Steen selling 2% of his future earnings for a debt-free college experience! The man started the bidding at $100,000, which implies that he believes his future income stream is worth at least $5MM over his 40 working years!

So is this a good idea?In the 2005-2006 school year, the College Board’s 2005 tuition report found that at four-year private nonprofit institutions, college cost students $29,026. Four year public institutions cost just 42% of that, coming in at: $12,127. They also found that the rates of increase were slowing to about 6% annual increases. They also found that the trends in student aid favored higher income people.With the amount of student aid ballooning in 2005-2006 to $129BB - I find it hard to believe that he couldn’t have financed part of his education through debt.

Therefore, I think the best idea would be to agree to his equity terms, and then “refinance” the equity by having Ryan take on a student loan - but then agree to guarantee the loan for him. This would get the equity holder most of his money back, at an interest rate totally out of reach for him, and Ryan would get to go to college debt free!

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