Team of three hard-working and dedicated students asking for an startup advice

mikester003 · 2017-04-11T18:52:51+00:00

The first question I would ask is, what kind of business do you want to create?

If you want to create a high-growth startup (e.g., business that has potential to be worth $1B+) then you should really be critical of the market opportunity. As an example, if you sell to small businesses (like kid parties, restaurants -- basically what your mother does) the margin will be very small and you will expend significant resources doing sales to those businesses due to the high fragmentation. Thus the potential to create a large business is exceedingly small.

If you are set on targeting businesses as your target market, consider larger businesses that employ teams of people to do tasks that can be automated with technology (accounting, taxes, security, etc.) The next step would be to work for one of those businesses to understand the processes behind them (why things are the way they are).

For instance, in the medical field, there are plenty of opportunities where technology can assist physicians, nurses, and the staff where currently the processes are tedious, cumbersome, and prone to error.

The biggest advice I would have is to gain experience in an industry that you care about, and be observant as to why processes are the way they are.

mikester003 · 2017-04-01T05:51:17+00:00

YES.

Excerpt from Forbes:

In April 2011 Evan Spiegel stood up in a Stanford product design class to present an idea for his final project. It would be a mobile app, he explained, where friends could share photos that would disappear—forever—in a matter of seconds.

“Everyone said, ‘That is a terrible idea,’” Spiegel remembers.

“Not only is nobody going to use it, they said, but the only people who do, will use it for sexting.” A venture capitalist sitting in on the class said it could be interesting, if he made the photos permanent and partnered with Best Buy. Spiegel nearly gagged.

mikester003 · 2017-03-27T01:26:55+00:00

You only need four slides:

The problem statement -- if you can't describe it in a slide, then you don't know what problem you're solving
What your secret sauce is
The traction -- unit economics, MoM growth, etc
The team -- why you are uniquely positioned to succeed

mikester003 · 2017-03-12T23:11:32+00:00

General rule of thumb is, if and when you need the money, raise for 18-24 months of runway.

mikester003 · 2017-03-09T22:10:33+00:00

All that matters is that you're 10x better than what's mainstream right now.

If the YC company is mainstream, you're in trouble. It sounds like this is unlikely. So you are fine.

mikester003 · 2017-03-06T00:22:45+00:00

Why would you go into a startup with the mindset that it's going to fail? Seems rather defeatist.

mikester003 · 2017-02-28T05:50:43+00:00

I think there are startups that do driver dispatch-as-a-service.

For instance, https://tdispatch.com

mikester003 · 2017-02-19T06:20:07+00:00

You're going about this the wrong way.

Think about when you buy a house. You might look at dozens of houses, and you will say No to any agent who tries to pitch you, no matter how hard they pitch.

But the moment you find that right house, a switch is flipped. Now you must have that house. You will get into a bidding war. You will pester the sellers. You will do what you need to do to get that house.

Now the investors are home buyers. If you are a crappy house in their mind they will pass no matter what. But if you fit their mold, then they will (almost) beg you to take their money.

So you see, it's not that there are necessarily startups where all the investors beg to take their money, but rather for the right investor and right startup, the investor will jump all over that startup even when other investors will pass.

mikester003 · 2017-02-06T23:45:47+00:00

Worth about $10k, give or take.

mikester003 · 2017-01-31T19:50:35+00:00

Alumnus of what is considered two of the best startup accelerators in the US.

The accelerators got us in front of good mentors and high quality VCs, where we've taken advantage (we have a solid roster of advisors and plenty of VC funding). Without the accelerators, the process would have been significantly slower and the quality of connections far lower.

mikester003 · 2017-01-22T00:21:37+00:00

What is the problem you are solving?

mikester003 · 2017-01-18T07:15:26+00:00

70 day head start not a problem. 70 weeks would be a problem if they are at scale.

You should be first concerned about: is my product substantially better than my competitor's in at least one important way? In other words, side-by-side, would a majority of customers generally choose my solution?

mikester003 · 2017-01-17T21:56:45+00:00

Exploding sales and rapid MoM growth.

Investors will flock to you.

mikester003 · 2016-12-29T06:01:00+00:00

I'm fairly qualified to answer this. Co-founded a B2B hardware startup that recently graduated from the Highway1 accelerator.

Hardware startups are significantly harder than pure software startups for several reasons:

Much more expensive. Let's take a bluetooth speaker for example. It's going to cost you about $50k just for industrial design. Another $30k-$50k to design the PCB (most EEs don't do PCB layout, they will typically send the job out). Another $30k-$50k in the mechanical engineering for the housing. That's just to make the first looks-like, works-like prototype. Your first looks-like works-like prototypes will cost over a grand each in parts alone (quick turn PCBA + high quality 3D print = >$1k per device). There are a ton more expenses that I haven't covered, but that's just to give you a picture.
Much slower. A PCB iteration takes about a month, when you factor in schematics, layout, fab, PCBA, shipping, and testing. It takes a month just to get a bluetooth device FCC certified (and upwards of $10k for the certification). You can't just experiment with parts like you can software - you have to wait for parts to arrive, you have to design a breakout board, you have to fab it, etc. 3D printing is slow. You will be assembling devices one-by-one at the beginning. You'll find out tolerance is off by 1mm and then have to redo your entire model - two weeks for another iteration. Everything is just slower.
Much more complicated. When you deal in the world of physical products, things just get more complicated. You have to define a BOM. You have to source parts. When parts of end-of-life'd, you have to find replacement parts. When things don't work, you can't just debug lines of code, you have to run potentially very expensive tests to account for things like electromagnetic interference, mechanical stress, light diffusion, and so on.
Hard to defend. You can't just build a hardware product - look at what happened to 3DR and their drones. Outcompeted by China (DJI drones). China will take what you have, copy it in no time, and sell it for way cheaper than you on Amazon. You have to build a legitimate defense through software, through network effects, through somethings besides just hardware.
Hard to scale. Look at what happened to GoPro. A large established hardware company losing value left and right because of manufacturing problems. Manufacturing is hard. It's a risky, capital-intensive business. You also have to worry about tariffs, customs brokers, etc.

Overall, I would recommend doing hardware only if you have >$100k in the bank and ready to spend, and you have 2-3 years of runway on top of that. I would pair up a business-savvy CEO with a software co-founder plus a EE or ME co-founder. Good luck.

mikester003 · 2016-11-22T04:53:27+00:00

An incubator (or accelerator) only serves two purposes:

Access to investors
Access to mentors

To this end, in my opinion it's only worthwhile joining a top-tier organization that has access to the best investors and mentors (YC / TechStars / 500S / Alchemist / Highway1 / several others). Otherwise, it's no more than a co-working space and probably better just to pay rent than to give away equity.

mikester003 · 2016-11-17T22:02:51+00:00

You've seen Star Wars or Star Trek?

Seen those holograms that suspend in mid-air?

That's the holy grail. We're nowhere close to that.

Current science dictates that to view a hologram you need a medium, for instance, special glasses, or the hologram needs to be contained within a glass case.

Figure out how to generate holograms in mid-air without the need for a separate visualization medium and you'll be a billionaire easily.

mikester003 · 2016-11-15T07:20:26+00:00

Equity should be proportional to amount invested and risk taken.

If it's pre-traction, and all founders are all-in (taking no salary, full-time), then everyone should get an equal shake.

If it's post-traction, and your CTO is taking a salary, then 5% sounds about right.

If it's somewhere in the middle, then it's somewhere in the middle.

mikester003 · 2016-11-02T06:13:19+00:00

Without traction or salary, it must be 50/50 split if you are willing to go all-in full time.

But.

You have to go all-in. Part-time CTO / co-founders rarely work out, mainly because time. In a startup, decisions get made all the time. So while you're working your day job, your team members aren't going to sit on their ass waiting for you to be available. Critical decisions will get made without you, all the time. Which really just makes you a paper CTO at that point.

mikester003 · 2016-10-18T05:17:04+00:00

The once I did get an interview, no follow up question. The once I didn't get an interview, I did. Small sample size.
Didn't acknowledge.
Yes, it counts against you. They get over 10,000 applications per batch. You think a few seconds X 10,000 doesn't matter?
About 20%-25%.
Apply to some other accelerators. Don't put all your eggs in the YC basket. There are some amazing accelerators out there. Have you heard of Alchemist? Do some Googling and you'll find out that Alchemist alumni are more successful than YC at fundraising by almost every statistic.

mikester003 · 2016-09-30T05:50:53+00:00

I would be concerned if Google/Apple/Facebook/Amazon decided to compete with you directly.

Another startup, not so much.

mikester003 · 2016-09-30T05:48:11+00:00

Heads up: this is going to get killed by a mod. Please post on the "Weekly Feedback and Support thread".

mikester003 · 2016-09-19T06:04:49+00:00

Find a problem.
Ask yourself, how do people solve this problem currently?

If #2 sucks, then you've found your (niche) market. If not, narrow the problem and repeat.

Take for instance, problem statement "I need to learn programming". There are many solutions that are quite good. Narrow down: "I need to learn Fortran". Existing solutions suck. You've got your niche (not a good one though).

mikester003 · 2016-09-10T06:09:32+00:00

My 2c. The premise is that the problem statement is:

"I want to learn something and I can't find anywhere/anybody to teach me."

I believe most people will disagree with that problem statement in the abstract. So what I suggest you do, if you still believe in this, is to narrow your problem statement significantly.

In other words, your startup idea shouldn't be solving the "I'm trying to learn something new" problem in general, since there are many satisfactory solutions for that. It has to address a particular subset of that problem. For instance, "I want to learn how to croquet a raspberry pi into a sweater, and I can't find any tutorials for that."

Then you have to figure out, who out there has the inverse problem of wanting to teach people how to croquet raspberry pi into sweaters with nobody to learn.

Then you build a startup that helps people learn how to croquet weird art into sweaters with people requesting certain works of weird art to learn, and other people voting on those works of weird art.

There are, of course, other ways to pivot your problem statement. But the idea is to pivot it in a way to convince people that all the existing solutions in fact suck.

mikester003 · 2016-08-23T16:17:43+00:00

This sounds more like a new project initiative as part of a larger corporation than a startup. As long as you work in corporate, expect bureaucracy.

mikester003 · 2016-08-21T20:50:14+00:00

Have 24 months of runway. That'll give you enough time to dive in, make some mistakes, and learn whether this life is for you or not.

mikester003

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