Jan 1, 2010

5 Essential Lessons for tech entrepreneurs - Digital Music Startup

In late 2006 I started experimenting with delivering live recordings at concerts on USB sticks. By January 1 of 2007 I had done a bit of tech development prep, written the business plan and launched the company. Since then we have had many victories and our fair share of hardships as well. Here are 5 things I have learned so far about launching a tech startup:

  1. Recruiting - If the candidate demands a lot of money, they are not worth a penny.

    You are a start up. Your most important asset are the true believers you want working side by side with you. If a person TRULY believes in you and your business they will accept meager pay with the potential of reward later.
    Anyone who wants a bunch of cash upfront is betting against you. They have no confidence that you will be around for the long run.

  2. F&F - Be Focused and Flexible

    It is a weird tightrope walk: You need to be doggedly persistent to bring your vision to life but at the same time you need to be able to adapt that vision to the actual conditions you encounter. I'm not one for throwing around a bunch of martial bluster but
    the U.S Marine Corp. has an unofficial mantra that sounds like it came straight from Miles Davis' band stand: "Improvise, Adapt, Overcome."
    Recognize when you need to change strategy or tactics but then bite down hard and chase the new vision just as persistently as when you first started. My first vision for Aderra was to build hardware and sell it to touring performers. In the first handful of sales meeting I had I listened and learned that what they really wanted was a service to provide everything I was describing turn-key (Thanks to John Ferrante for helping to realize this.) . This was a total 180 from what was in the business plan but it quickly lead to us landing our first major concert at the Red Rocks Amphitheater on June 2, 2007, a mere six months after starting the company.

  3. Make Sure your spouse, partner, or whoever is 1000% onboard.

    If they don't understand why you are killing yourself working so hard for so little return at first, they will withdraw their support and make your life difficult. After a punishing day in the trenches the last thing you need is grief on the home front. There is an entire universe of stress that goes along with running a start up, especially if you are bootstrapping. If your domestic situation is precarious to begin with, it will not survive the tumult. I watched a good friend's marriage crash and burn along with her new business.

  4. Lawyers are the only Winners in a lawsuit
    It is a hoary, old cliche but it is true. It does not matter how much evidence you have to support your case, it does not matter how "right" you are or how many lies the other side has told. The ONLY thing that matters is who has more money. The party with the fattest warchest will win a lawsuit every time. If you find yourself faced with an opponent that can easily out spend you on the suit, think carefully before entrenching yourself in the courts. And as a small startup, don't dream that you will find some fantasy attorney that will take your case on contingency. They won't. They know you or your opponent will most likely go bankrupt as a result of the lawsuit in which case they will never get paid. One strategy you may want to consider early on is to
    invite an attorney at a practice that can handle both transactions and litigation to join your Board in exchange for a percentage of equity.
    Your legal fees won't completely disappear but they may be significantly lower than if you simply hired a counselor.

  5. Never Give Up.

    You can credit my Dad with teaching me this one. There may be dark times in the early days. Funding is hard to come by, competition is fierce, there are a lot of people out there who just don't get what you do, sales are hard to come by. When you read business books or biographies of entrepreneurs they often gloss over this or mention it in passing "His first ten companies went bust before he hit on the trillion dollar idea..." but seldom do they ever describe in detail the gut wrenching feeling of not being sure how you will pay your employees (or your lawyers...). There is only one thing to do when things look gloomy, find the unnoticed opportunity that is presenting itself and chase it hard. (Thanks to Gus Ruelas for that bit of wisdom.)


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