Nivi · January 25th, 2010
We’re determined to have the best comment section of any blog the universe. Comments that are really worth reading.
One of the tactics we use to improve comments is tweeting about the good ones. Another tactic is highlighting good comments on this blog. Here are three comments from last week that really rocked (among many other excellent ones).
My biggest recommendation for startups: Make sure you negotiate a fixed-fee arrangement with your lawyers on fund-raising events.
– Most people will tell you this can’t be done. We’ve done it every time.
– Simply tell your lawyer that this is a “vanilla” standard funding with no big, non-standard items.
– Make sure to also talk with 2-3 lawyers and let them know politely that it’s competitive.
– Also make it clear that whomever you choose for the funding will likely get your work in the future as your company progresses.
– Finally, tell your lawyer that if any “non standard” items pop up in the fund raising then you’ll accept these are change items that they can carve out of the standard arrangement.
– This way you get a mostly “fixed fee” agreement. Most importantly it sets everybody’s expectations up front how much the transaction will cost. By doing this lawyers will be less tempted to allow “billing creep” in your arrangement.
This works like a charm.
“The pertinence of forward looking sales projections depends on the stage of the business. If you raise capital from investors who pretend not to understand this, you will be setup for financial incongruity.
“Consider 5 distinct business stages:
2. Build Product
3. Early-Adopter Success
4. Repeatable Sales
5. Scale the business
“In (1,2) sales projections are useless, the time to prepare them is wasted effort. In (3) sales projections are presumptuous; you have yet to comprehend WHY and HOW the buyer will commit. In (4) sales projections become essential to internal planning.
“Raising capital between stages 3,4, a 1-year plan is valuable, surfacing the right questions/equations within the business, and with potential investors. A 3-5 year plan is chimerical until stage 5 and the shift preceding it.”
“It’s been exactly one month since I implemented Sean’s suggestions regarding assessing our before ‘product market fit’ strategy using survey.io. I can say that we’ve now clearly identified what the core value of our site is and have done a complete redesign focusing on what people love and ended up discarding all of the distractions. Our traffic has actually been growing (presumably due to word of mouth) and we are now on a clear path to monetization. We are hovering at the 30-40% “very disappointed” and continue to refine the functionality addressing our core mission.
“In summary, I am a believer in Sean’s suggestions and even reread Steven Blank’s “4 steps to epiphany” to focus all of our company’s efforts on customer development and minimize mission drift.
“Thanks again guys!”
Please keep the awesome comments coming. We read every single one.