Showing posts with label tech-startup. Show all posts

Until you test the hypothesizes on which your business plan is based, you don’t know how crazy these hypothesizes really are.

This week, I managed to finally get some interviews with consumers completed. These were the interviews that I had set up during last week’s emails and phone calls. Speaking to both researchers in industry and in academia, it was a whirlwind week. I laid out my hypothesizes for these consumers, the ultimate judges of my proposition. How did they respond?

This was not the first time I was speaking to consumers. I had previously spoken to some end consumers in March. A Marketing Research Methods class had also done further interviews during the Spring Quarter. Both of these sets of interviews were more exploratory in nature. In this third iteration of interviews, my main goal was to present some fleshed out ideas and also, where appropriate, demo the prototype that a software engineering class from the Spring Quarter had completed.

I spoke to researchers in industry both in person and over the phone. One these researchers had recently become a victim of the downsizing that many R&D labs have been undergoing due to the recession. Meanwhile, another firm boasted that they were spending more on R&D than ever before. A particular woman I spoke to on the phone exclaimed that she had an awful employer – her only reason for speaking to me must have been to warn me away from ever working there. Perhaps most extraordinary was meeting someone who had attended the same middle school as me in the UK. The varieties of circumstances were fantastical. Driving on the "wrong side of the road", the travel was exhausting too.

Perhaps because all the academics I spoke to were based at Northwestern, there was less variation in the circumstances of the academics. It was clear that some professors were superstars and had carte-blanche autonomy to do as they pleased. The administrative staff seemed at times to struggle with this. It transpires that consulting is something that is discouraged, though in some areas parts of the university it is rampant. Academia also has interesting and divergent priorities to industry, particularly with respect to publishing intellectual property.

I’m still digesting what I’ve learned from all these interviews, but one thing is clear: the hypothesizes that my business idea is based on do completely hold. The incentives are not completely aligned. For some people the conflicting priorities of what academia and industry prefer stifles the creation of value that I propose for both parties. However, I am not completely dismayed. I believe this is part of the process. After a previous iteration of talking to consumers, I refined my target customers from anyone in industry to researchers in industry. Following this set of interviews, and the latest feedback, I now need to refine another part of the business plan. My only worry is whether I'll run of time and money before I have a business that holds up when the hypothesizes it is based on are tested.

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"At least we don't have to do the cleaning," says one of the interns.

While doing various jobs in the eight year period before business school, I would sometimes come across other people doing other jobs - jobs I would deem "worse" than my own. I would be grateful that I was not one of those people doing those jobs. Yet, this week I have been doing those very same "worse" jobs - and learning a lot.

My first job out of undergrad was as a software developer. In that role, I would often work with software testers - people who would go through and test all the functionality of the software that we developed, making sure it all worked perfectly. During the early part of this week, this was exactly what I was doing. As we polished up the first iteration of a prototype developed by a software engineering class during the Spring quarter, I've been getting my hands dirty making sure it all works perfectly for when it comes to demo.

Later on in my career, as I moved into managing software development teams, I would sometimes peer over the wall towards the sales team and watch them trying to develop new sales leads - so the software development teams would have something to develop. Developing customers is how I spent the latter part of the week, sending out numerous emails and making calls. This was all with the purpose of setting up meetings with the types of people who may be our customers. We want to test our assumptions against these end consumers to ensure it has value for them.

The end consumers we are targeting are of two varieties: researchers in academia and researchers in industry. The academics have been relatively easy to meet with - the professors at Northwestern have been pretty open to meeting. The researchers in industry have not been as open. I've been using the Northwestern Alumni directory to reach out to these folk, but often the contact details are wrong. Secondly, when I do get through to the alums, they will often not be inclined to help. This is a learning process though, and I'm getting a better sense of the approach I should take.

Through all this, I've developed a minor health problem, which has been affecting my level of positivity. A less than positive mental attitude signals all the wrong things to the rest of the team (the interns), as well as the people I meet. Part of this game has to be projecting confidence and believing success will come - creating the virtuous circle where confidence and success reinforce each other. So I've turned to music to keep my spirits up; it has been surprisingly effective. We might be doing the "worst" jobs, but at least we can do them the way we want to, playing music in the office that we want to. This week, it's a lot of AC/DC.

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My startup is incubated on the top (attic) floor of Fisk Hall, the home of Northwestern's Medill School of Journalism.

"I never thought any of this equipment would see use again," says one of the staff members at Northwestern's Media Management Center. Pulling out computers from the basement of Fisk Hall, we are literally dusting off old equipment and piecing together what we can to get ourselves set up for the thirteen weeks we have of the Summer. Thirteen weeks is all we have to develop and prove a business model that will generate revenue. Thankfully, we are building on work already completed during my first year at Kellogg.

My focus this past first week has been on getting things set up, as well as team-building. I've hired two software engineering students from Northwestern's McCormick School of Engineering as interns for the summer. Out of my keenness to get them on board with the mission, I had us all review the team-related slides from the MORS430 (Organisational Behavior) course. A highly rated course at Kellogg, I genuinely believe in the importance of this stuff.

The MORS430 course explains the differences between high-performing and low-performing teams. For example, in high-performing teams there are clear divisions of responsibility in the team. There is also greater emphasis on co-ordination of activities than any one person leading. Also, as we learned in a Lego game during the course, the better the team does in initial planning, the quicker and easier the team finds it in ultimately executing the necessary activities. Thankfully, the interns thought the material to be as interesting as I do.

As much as this is the first week of a summer adventure, this is just the current phase of my ongoing project. This is the project I undertook, when I started business school, to start a new media venture. During the Spring Quarter I was fortunate enough to have a number of student teams take on my startup as part of their class projects:

• A software engineering class at the McCormick engineering school developed some mock-ups and a basic outline of the web-based service that we are building.
• A marketing research class at Kellogg (MKT450) completed market research on some of the end users that would use the service, developing some findings on their preferences and motivations.
• An entrepreneurial selling class at Kellogg (ENTR903A) developed a slide-deck and sales presentation for presenting the business to channel partners.

During the Winter quarter I was even more fortunate to have won funding, via Northwestern's Media Management Center, from the McCormick Journalism Foundation. This funding is what provides the financial support for the summer activities that I am now undertaking.

With all these past efforts from the Winter and Spring quarters, another part of "setting up" this first week has been getting together and shaping up what we already have, so that it is ready for use in the upcoming weeks.

At this stage it is difficult to say how these thirteen weeks will unfold, but it will perhaps be a more interesting ride than the MBA admissions process or even the first year of business school.

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Spring quarter has started at business school, which means it is business plan season.

Business plan competitions with strange acronyms are flocking from every corner, from RBPC to NUVC. For someone like me, who is starting a business from business school, these competitions are great motivators and milestones for writing and rewriting my business plan.

The competitions rarely ask for a full business plan, as least in the early stages. Instead, an executive summary or abstract is asked for. Someone recently said to me that, in selling my business, I need a 1 minute pitch, 10 minute pitch and 45 minute pitch. These summary documents are analogous to the 10 minute pitches.

So I've been writing these "10 minute" summary versions of my business plan. As I write these documents, I realize that for every line in a one page document, there is probably tens of hours of work of work behind it. Yet this will not be apparent at all in reading the document. Take, for example, a line that says "a team from an undergraduate class will build a prototype". This line does not describe the other alternatives I had investigated and thrown away, such as looking to contract software engineers or developing relationships with researchers who might help build it. It will not even describe the pain experienced in some of these not working out.

At first, it is tearful to not unravel the full story behind the window dressing that is the business plan. But it is important to realize that the business plan is largely window dressing. I'm learning more and more that a business plan is not a document with intricate details that you design and create to carefully help you navigate yourself to your dream. It is not even an aid to help people understand how you will set up your business. A business plan is a marketing document. Its sole purpose is to convince people - to excite people into giving you whatever it is you need.

Though I have only entered two competitions thus far, I already feel that each competition helps iterate and refine my ideas - solidifying them, creating more punchy descriptions and ultimately improving what I'm working on. I'm looking forward to what my business plan will look like at the end of Spring quarter, at the end of the business plan competition season.

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I've managed to assemble a few good mentors to help me develop my business.

Several people have asked me how it came to be that I'm now working with these mentors. The answer to this question comes from MORS430 - a course that all Kellogg students complete during pre-term. We are taught that we should "seek advice" from people who can help us. When seeking this advice, we must demonstrate likability and competence.

Before even starting at Kellogg, during the admit weekend (DAK), I took the opportunity to meet professors and others who might talk to me. During these conversations, I often managed to demonstrate my enthusiasm and interest, if not take their thinking in different directions. For the people that did not meet me, when school started, I was soon at coffee chats that they frequented. I was soon able to demonstrate my commitment, if nothing else.

As my ideas developed, becoming more realistic and tangible, then the moment of magic occurred - one of these people said, "that's a really great idea - I'd love to work with you on it". Pretty soon, the next person was saying, "wow - how'd you manage to get that person on board?". My credibility was increasing.

Through this continual process of seeking advice and demonstrating likability and credibility, I've now gained access to two valuable resources - a team that will help me prototype my idea (some undergrads) and some money. I hope to find the limits of this seeking advice/likability/credibility strategy.

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Facebook founder Mark Zuckerberg created competitive advantage over other social networks by first creating a closed environment for just the students at Harvard.

Competitive advantage comes from a firm's resources. Often this advantage is rooted in the very origins of the firm. At Kellogg, this is one of the first lessons we learnt in our Strategy course during the Fall quarter. For me, working on creating a startup while at business school, this lesson has taken on a whole new meaning.

Southwest started life with the ambition to be the cheapest airline available. As a consequence, it developed resources (e.g. culture and processes) that meant costs were always kept low, comparative to other airlines. From the beginning, McKinsey prided itself on having consultants who were generalists - and the firm continues to have a generalist bias even as other firms use specialists to give them an edge.

Before there was Facebook, many social networking sites existed. However, Facebook was the first such site where users did not feel the need to be anonymous. As a consequence, it became far easier to find your friends and keep up with what they are doing. Facebook was able to achieve this because it first started as a closed system for use within universities. Within such a closed environment, it felt safe for the s initial users to reveal their identities. By the time Facebook became public, there was a critical mass of people who felt comfortable with exposing their identities online. Facebook was able to get its user base to reveal their identities - and thus create a key differentiator - because it spawned out of closed university environments where people felt it was safe to do so. Faceboook's competitive advantage was due to the unique resources (the university environment) that it had comparative to other social networks.

So, in starting up my own business, I'm utilising the resources that I have available to me at business school. I've spent a long thinking - what do I have available here that lets me build something that others can't? What is available here that let's me build something in a different way to which others have - enabling me to create some kind of competitive advantage? Perhaps it's the alumni network? Perhaps faculty? Perhaps students? Perhaps the buildings and facilities? Perhaps the student culture? As Facebook has shown, I believe the vastly different dynamics of a university to the outside world are sure to provide opportunities for new kinds of firms to flourish.

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Following the VC trek, a number of Kellogg students (including myself) visited startups in the Bay Area. The companies visited were Fusion One, Cubetree, Minekey, Terrapass, Hollrr, Widgetbox and Engine Yard. We then joined Kellogg's official Entrepreneurship Trek, visting Chegg, the Plug and Play Incubator, SnapLogic, Founder Institute, Sinexus, Yammer, EventBrite, Bump, and Meebo. What follows are some "lessons learned" that the entrepreneurs shared with us.

It is better to build a business that exits for $25M - $50M than one that exits for $1B. Building a $1B business is very difficult and requires extraordinary luck and/or skill. It usually also requires a lot of investment and dilution of your shares. The venture capital firms are looking to build $1B businesses, yet very few businesses ever become $1B businesses. In the meanwhile, there are many $25M - $50M exits where the founders have walked away with as much returns as those who have in a $1B exit. These exits are easier to execute. VC firms will not invest in a business that wants to exit at $25M - $50M, but it is a more realistic goal to create such a business.

Many successful firms start out doing one thing, with little success, but then discover they have acquired all the resources needed to do something else really profitably. As an example, Chegg started out as a Craigslist type classifieds service for students. There were many competitors doing similar things, but the growth of the business was small. They then experimented with renting text books and found this was proving to be a popular service. They suddenly found that the resources they had from the classifieds business, such as students lists and on-campus champions, put them in the perfect position to execute on this business. There were similar stories of experimenting, building resources and finding eureka monetization moments at other companies also.

Milestones are important. When building your business, you need to set milestones for when you are going to accomplish certain things, e.g. get FDA approval for a drug, release feature X or acquire 1M customers. If you don’t reach a milestone, you have to ask yourself why this is not the case – is it because of motivation? Because of resources or skills? If you are not able to address the shortcomings to reaching your milestones, you need to revisit what your business can accomplish. Milestones are paramount when it comes to fundraising; to obtain the next round of funding, you need to accomplish the milestones that give confidence to the next round of investors.

Networking is key. Several firms had obtained substantial expertise from others, people that the founders had worked with before. One particular firm had for its first two corporate customers two of the founders’ best friends from earlier in life. An executive from at another firm had previously roomed with an executive from yet another. The Bay Area seems to be full of incestuous relationships such as these – particular circles of people that control money and other resources, which ultimately enable the startups to succeed or fail. The difference was clear between those startups where the founders are "plugged in" to particular networks, and those where the founders seemed to continue to struggle with little success.

Viral growth. A lot of startups in the consumer internet space focused on building products that could create viral growth – this was the predominant growth strategy. If the product is good enough, the product will create huge engagement, as well as customer acquisition, purely from the way it works. Bump, the iPhone application, is an example of a product with huge viral customer acquisition.

Start with a core team. A startup needs a core team of 2 or 3 people who are extremely capable, work well together and can deliver and iterate the product quickly. This creates momentum and pushes the startup forward to funding and traction.

Don't spend time convincing people they have a problem. Instead, focus on finding the people who are already convinced that they have a problem. In sales, in hiring or anything else, targeting these people is the most effective use of your time. Convincing people from scratch that the problem exists consumes a large amount of time and effort.

Corporate IT departments are gatekeepers preventing SaaS from becoming a multi-billion dollar business. IT departments, threatened by the flocking of technology to the cloud (and consequent redundancy of their jobs), are proving to be resistant to SaaS adoption. Ultimately, in the long run, SaaS will win through, but their resistance is slowing the pace of adoption.

Laser focus on customers means competitors are not as important. If you focus on a particular segment and satisfy their needs really well, you don’t need to worry as much about competitors. Your product will simply be the best thing for the customers you are targeting.

The most important thing is getting traction. If your product is getting traction, everything else will be easy – getting investors, hiring, mentors etc. If users are flocking to your product, all these other resources and people will come and find you.

Doing a startup is an emotional rollercoaster. Experienced entrepreneurs become numb to the ups and downs. You just have to accept it and learn to manage it.

Realise the phases of a startup and do what you are naturally good at. E.g. the early phase of bringing an idea together versus the phase of building a business – know in which phase your capabilities lie and focus on that, handing over to other people for other phases.

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I spent two days on Kellogg's Venture Capital (VC) trek to the Bay Area. We visited a broad range of firms, from life science centric Alta in San Francisco to typical residents of Sand Hill Road, such as Battery. I've summarized my main take-aways from the trek into the broad areas of (1) startups and investing (2) hot areas of (high tech) investment (3) getting a VC job and (4) some other points. Many thanks to Windsor and Thupil for organizing.

Startups and investing.

If the area that you are looking at is trendy now, it is too late – the opportunity has already passed. You need to be ahead of the curve. The VC looks for people who have powerful market insights – people who know something more in the area than the average top tier person. The VC invests in people who they think can solve the problem in the area, not in a specific business plan.

Most sectors are cyclical. The question is how long is the cycle? For clean tech this could be 20 years, which is too long for a VC backed fund. When the VC invests, they have to believe the company can become a billion dollar company. They play for big hits, knowing only a small portion will become big hits.

Success happens to you. Only when you fail do you learn something. Doing something (e.g. a startup) and failing teaches you things that are invaluable about how startups work.

Hot areas of (high tech) investment.

Two areas of high tech investment stood out in particular across the firms.

Mobile: All the things that we needed on the Internet in 2000, we'll need on mobile in the not too distant future, e.g. payments, advertising, commerce. The opportunity is in figuring out how these things might work on mobile.

Enterprise: virtualization and cloud computing are hot in this area. In the past, to win money from enterprises, it was necessary to approach IT departments and win over large amounts of money for large contracts, e.g. a SAP implementation. What we are now seeing is individual business units buying SaaS software for small amounts of money, e.g. entry level SalesForce. Because the level of enterprise sign-off required for small amounts of money is low, it is easier to get these transactions done.

Getting a VC job.

Jobs at VCs usually open up as a need arises for particular skills or expertise. When that hole opens up at a VC firm, you have to be the right peg to fit that hole. Sometimes that openings won’t match your skillset. In the meantime, you have to keep developing yourself until the opportunity arises. You have to keep yourself at the top of VC’s minds, perhaps dropping them an email every quarter.

While you’re not yet working at a VC firm, you have to become an expert, perhaps in a particular domain or in human-issues of startups. You have to place a bet on what kind of skills will be useful in 2 or 3 years out, and start developing the skills for that area. Sales and operating experience are two generally very useful experiences for rounding out your skill-set.

Other points.

While fund sizes get bigger, the number of quality opportunities does not. In the future, the number of VC firms and the amount of money in VC will need to reduce if the industry is to return to reasonable returns.

In the meanwhile, VC firms are other ways to deploy this extra capital efficiently. For example, VC firms are building to Entrepreneur-In-Residence programs and using those to start businesses in which they own a much larger share than they might otherwise.

VCs come in all shapes and sizes, from very slick to the nerdy. The backgrounds of VC are very varied, and the stories of how they got into VC is just as varied.

For LPs, the most important thing to them is a VC being able to show them exits.

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What need does any particular media publication fulfil? In the face of increasing difficulty that media publications have for charging for content, one of the recent dicussions in the Media & Entertainment Club at Kellogg has centered on thinking about media as we would any other business: what problem is the media publication fixing that the consumer would pay money for?

Too often, editors that run publications do not care about the readers - often printing what they think is best. In contrast, publications that are successful satisfy specific needs of their customers. Two examples that have arisen are:

• The Economist: For executives, this solves the problem of getting a weekly dose of all the important news, within a one hour period. Ultimately, The Economist helps executives with small talk when meeting people. The Economist's attitude and approach to writing also has a particular appeal.
• The Wall Street Journal: On the surface, this publication appears similar to the New York Times. However, investment banking professionals read the Wall Street Journal specifically. This is because they know that everyone else in the profession reads it - so to have the same information that they do, these bankers also need to read it. Secondly, for investment bankers, having a copy of the Wall Street Journal on your desk is almost a status symbol - an artefact showing that you are a member of the profession.

In the case of both of these publications, they are able to charge for their content because they satisfy a clear need. B2B media takes this to the extreme. While not as sexy as B2C media, B2B media satisfies essential business needs. Subscription based businesses, such as Lexus Nexus and Bloomberg, add value to the workflow of workers in the world of business.

In a time of desperation for many media publications, the old "what problem does it solve?" insight is perhaps a more obvious cure than most publications realise.

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I've applied for a grant with the Knight Foundation. The Knight News Challenge is a contest that awards up to $5 million each year for innovate digital projects that have a geographical or local element. The business idea that I am pursuing fits the bill and, I've estimated, needs less than $200k to get going.

Although the application is very simple - less than 800 words in total - I've spent an inordinate amount of time on it over the last two months. Writing and redrafting, the process was similar to applying to business school. I believe tens of thousands of applications are made each year, from which a dozen to two dozen projects are eventually funded. The odds are not good, but I figure that it's worth a punt.

I debated whether to make my application under the "open" category, so people could view it and make comments on the Knight News Challenge website; ultimately I opted to apply under the "closed" category. Although seeding copy-cat competition is an issue, the main reason I've applied under the closed category is so I can manage my time. If I applied under the "open" category, I would need to undertake a large marketing effort to get it viewed by lots of people, rated highly and get good comments on it. I'm sure the Foundation will disagree, but social proof (or the lack of) is hard to not pay attention to. I feel my time is better invested actually looking for funding - this is after all why I am applying.

If I am successful in winning the funding that I am seeking, my project will be able to follow a utilitarian path - I will be able to concentrate on producing the best product possible, and it might just help improve the distribution of news in local areas. If I am unsuccessful, I will be relying on purely commercial funding and the focus of the product will likely have to focus on the distribution of news and marketing relating to commercial products.

Although it is a very small step, and potentially will not yield anything, I feel like I've taken my first step to starting a business out of business school. I can now concentrate on the next step.

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The romanticized view of entrepreneurship is of creating something world beating. This is still the view of many VC firms, I'm sure. Yet - in the the VC firm where I've been working - this is not necessarily true. This may be because this particular VC firm is moving later stage with its investments, which may be true of many European VCs comparative to Americans. In any case, the experience of intern'ing at a London based VC firm has coloured some of my thinking on start-ups. Here are some of my take-aways.

You doesn't necessarily have to have something market leading. You just need something that gains market traction and generates revenue. If it makes enough of an impression on the market, it'll be acquired and generate a payout for the entrepreneur and the investors involved. It is not necessary to build a new way to brush teeth; a better way to brush teeth is fine.

There are lots and lots of startups everywhere. It is amazing how many there are. They are flies circling VC firms. The VC will say that only thing that ultimately differentiates one against another is revenue, profitability and the opportunity for growth.

It's not necessarily about creating a good business as much as creating a good exit. Having mentioned how important revenues are... on the flipside, if you can sell the hype that a service with millions of people using it, yet no revenue, will in some future generate large revenue returns - so be it! The classic example of this is Google's purchase of YouTube.

Entreprenuers fumble about a lot before hitting the jackpot. There are a number of examples of companies that are successful now, but which weren't originally as successful. As they started investigating a problem, they stumbled on something which was the real money making opportunity. A recent British example of this is Skimbits, which eventually found a neat way to monetize links and created Skimlinks.

Some entrepreneurs are more impressive than others. Some of the most impressive entrepreneurs have a long track record in the field they operate in, with deep industry knowledge, know-how of the market and what users want from the product. They also have lots of connections within the industry and experience of the technology or innovation involved. One entrepreneur I've come across has such a reputation in his industry, a firm he was interested in acquiring dropped their asking price from £1M+ to ~£150k for a 50% stake in their business: they believed he could dramatically increase their revenue.

Presentation and clear articulation are important. Many companies will approach a VC firm in many different ways. Some companies can be overlooked quickly merely because the concept is not clear. This is particularly true if the financials are not particularly impressive. The clarity of the message is important. How well the entrepreneur communicates this can reflect on him/her positively or negatively. Realism with a slick, carefully thought out presentation can go a long way. The first presentation everyone (including a VC) will look at is the company's website.

There are signals for good and bad. A company seeking investment for international expansion is attractive. A company seeking investment to expand by going into a new market (which it may not have direct experience), is much more risky. If the company has a foot in the door (e.g. a pilot) for the next growth opportunity that they promise, this is a good sign. If the company needs lots of physical assets to operate, it can be difficult to scale it.

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August is here. For many of us starting our MBAs, there are at least two turning points fast approaching us. The first is the thought of having yourself plucked out of everyday reality and crammed in with hundreds of other people from all parts of the world and all walks of life - restarting student life in quite a different place to where-ever we are now. Whatever gradual path we've been taking thus far will soon be batted into the stratosphere. The second turning point will come approximately 22 months later. At that point, our paths will again be smacked out to other parts of the stratosphere - in different directions. With the career goals essays that the schools mandate, I feel like I've been thinking about these turning points and my future life path for several years. Recently, with the first of these turning points fast approaching, I've been inspired to think about them in three specific ways.

Be the best at three things, not one. Scott Adams, the creator of Dilbert, suggests that to become to the very best at one thing, such as a NBA basketball player, is very difficult. Instead, he recommends picking three things that work in synergy to define your own niche. For me, I think this is media, entrepreneurship and technology. I've always been interested in media - from starting a school newspaper when I was 14 (a newspaper that never saw past issue 1, such is youth) to launching a online student new site (which I can't take full credit for, I admit). Entrepreneurship has come relatively easy in spits and spats - building torture devices (starting a public speaking club) and once running a hobby company organising embarrassing events (yes, speed dating). Technology was my undergrad education and has been the major part of my career to date. Maybe, just maybe, the MBA will give me the opportunity to properly fuse these together.

If you want to shine, put in 10,000 hours. Malcom Gladwell has written a book on this thought, and the gist of it can be found in many places. It makes a lot of sense that overnight success actually took several years of hidden effort. It also makes sense that perhaps the reason people never realise their true potential is because they give up before they reach those 10,000 hours. If media, entrepreneurship and technology are to be "my thing", I wonder - how many hours have I put in to date? Perhaps it is 10,000 hours that are required to start a business?... in which case, I'd still have lots more hours left to put in. The difference between success and failure is perhaps persistance. Do I have what it takes to put those 10,000 hours in? Because I spent a long time deriving my "three things", I think I do. Time will unravel if I will be right.

Personal Branding in the age of Google. Seth Godin points out that it's difficult to not have some kind of personal branding out there, on the Internet. He himself has built an unshakeable brand on the Internet. His three things are probably "hip marketing, author/blogger, thought leader/professional speaker". He has certainly put in at least 10,000 hours into this over at least the last 10 years - probably more. The culmination has been a personal brand that attracts for him the resources and opportunities he needs to be even more successful. Thus far, I've not proactively managed my personal brand on the Internet; a search for my name produces random things. There is barely any association to my three things - "media, entrepreneurship and technology" in what comes up. I'm now thinking about the kind of brand that I might be able to build for myself over the next two years, either side of the turning points, as well as beyond.

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In the few weeks that I've been interning at a London based venture capital firm, already one thing is clear: a venture capitalist needs to be a jack of all trades, i.e. competent in many skills. Further, to be a really good VC - it is necessary to be master of a lot of these skills. Whereas a career in consulting might be a full time mostly soft-skills based career, or career in banking might be a full-time mostly quantitative-skills based career, a career in venture capital is a mixture of many things.

To illustrate, here are a few of the skills called upon:

• People management: For each portfolio company that a venture capitalist manages, there is a relationship with the entreprenuers of the company that needs to be nurtured and tended to. The entreprenuers might want to build the best product in the world, whereas the venture capitalist will want to just generate 5x returns of his/her investment within 3 years. These expectations need to be managed and a relationship of trust built so that everyone is pulling in the same direction. If things don't work out, the VC will need to be prepared to change the CEO and/or other members of the management team.
• Business acumen: A VC's main management control of a company is via their seat on the company board. To this meeting will be escalated any issues the company might be having. The age old classic with internet startups is the problem of monetization, but it could be issues related to market traction or even the startup's team composition. The VC will need to be quickly add value to these discussions based on the shallow knowledge he/she has of the company and industry.
• Quantitative: Some of the deal terms that are discussed in the process of funding a startup can get very complicated. In fact, some people say these complications have only become possible as Excel, over the last 20 years or so, has become capable of modelling them. To illustrate, there may be several investors investing in a company. One investor may have liquidation preference. This means that in a future sale, that investor can specify to have returned a multiple of the shares of other shareholders. This multiple can be dependent on the sale value, e.g. "2x shares if sale value is $50M+, 1.5x if $75M+ and 1x if $100M". In addition to this, the investor can also stipulate anti-dilution, which means that if the future value of the company is lower than when investment was made, that investor gets their returns at said multiple while all other shareholders are squeezed. This is all for just one round of funding. Over several rounds, with several more variations of stipulations added by several different VCs, it quickly becomes possible for the model to run wild.
  
• Networking, Sales and Negotiation: Building a reputation in the industry and "attracting deal flow" is a virtuous circle. For the industry that a VC is investing in, the VC will need to build contacts - with the big conglemerates as well as budding entrepreneurs. The conglemerates may become future customers of a portfolio company. The entrepreneur could be a future star the VC they'll want to invest in later. The VC will also need to build relationships with Limited Partners ("LPs"): insurance firms, pension funds and others providing the funding for a VC's investments. The sales element of all this comes in when convincing an LP to provide funding or a startup to take your investment. An attractive startup may get the attention of several VCs, in which case it becomes important to negotiate well and project a strong impression in the competitive process between VCs. At other times, it will be necessary for a VC to bring in another VC to spread the risk and the investment. It's a murky soft skills world.
  
• Entrepreneurial Skills: There are not many people within any VC firm, and little or no direction is provided. It will be down to the VC to "make things happen": bring in investment, attract deals and manage companies. In much the same way that entreprenuers do, to make all this happen, a VC will need to attract and gain access to resources that are beyond their immediate control. They might do this through networking, running mini programs with incubators or other means. The VC will have to take the initiative; it is pretty much like running a little firm - except done in a partnership.
  
• And there is more... VCs need to quantify the value of companies not listed on any stock markets, which is a skill in itself, and conduct due-diligence on companies targeted for investment. VCs need to keep abreast of deals that are being made in the market and new technical developments of major companies. They also need to have strategic foresight to guide their thinking of the types of firms they think will be successful.

It is difficult to break into venture capital, because a VC has to be a jack-of-all-trades. There is also no one single profile of a typical VC. This is because a VC will have to be a master of many of these trades; the variation is likely due to what they've mastered.

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BusinessWeek is up for sale. The loss-making business has become "a continuing distraction" for publisher McGraw-Hill. I don't think the current operating model for online newspapers and magazines, such as BusinessWeek, will survive much deeper into the 21st century. For my business startup, I'm exploring what kind of new operating models might work better for online publications.

Many people have many ideas as to what shape publications will take in the future. I've speculated on this myself. Even BusinessWeek has speculated on possible new models for its own future. Yet, as soon as you start executing the idea - the dreams and aspirations meet the dirt and grind of the floor.

I spent quite a bit of time and effort over the last few months trying to find software developers to help me build a prototype for my startup. I've been thoroughly unsuccessful. Lots of people seem to get excited and want a piece of the action. Yet when it comes to actually doing something (in return for equity), there is nothing. "I just don't have the time", one of them moaned - and he was the one who'd been made redundant following the financial crisis. Another is too distracted by women. Yet another does not think I'm committed enough(!)

So two weeks ago, with time running out, I started going about building the prototype myself. I started my career as a software developer, after all, and my undergrad was in Computing. However, having not done any software development in almost four years, I thought I would struggle - particularly since the programming language is new to me - Python. Yet, it has been less of a struggle than I anticipated. What is a challenge, however, is pulling together something that will be sizeable for anything other than demo purposes. Yet this might be enough. My plan is to spend the Fall quarter at Kellogg pursuing potential customers who may give me enough money to develop a fuller software solution over the summer internship period.

The dirt and the grind may not be too pretty, but hopefully there will be enough before school starts to get others to buy into the vision and dream. The prototype just needs to be suggestive enough to let the minds of potential customers go wild. If it can capture the hearts of Northwestern's software developer type students, who might then help develop it further, that'll be even better. As to what to call this prototype / business / idea... I wonder if I could get a student loan package to cover the debt associated with BusinessWeek brand? Probably not.

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I plan to start a business while at business school. I'm writing a business plan. I've previously published an outline. At the moment, I'm on version 11 of the document. Each version has required hours and days of sweat and toil. Yet, it's still very far from any way near something that is presentable. The narrative is jolted and does not quite flow from problem to solution to route to market. Adding realism to financials requires revisiting all the assumptions that make up the rest of the plan. Taking consideration of potential competitive threats makes me wonder if the problem and solution are thought out enough. Writing the business plan is like putting together a 100,000 piece jigsaw puzzle where fitting in a new piece disrupts the other pieces that have fitted before it.

The first version started with a fantastic aspiration. The idea was simple. There were some monetization possibilities. No figures. No project plan. Just the germ of an idea. Then I started to flesh it out. I sought evidence for my problem hypothesis. Sites such as the Pew Internet & American Life organisation and even Northwestern's own Media Management Center are full of data and information that are absolutely fascinating. There is only one problem – none of it quite says what I want to say. The focus is always slightly off from what I'm looking at. This means the solution does not quite follow from the problem. Maybe I need to do my own market research? If that's the case, I might be better off waiting to do that in the relevant Marketing Research class at business school.

The solution is a software platform. There is so much open source software out there, yet none of it does precisely what I want it to. In fact, none of it does even 5% of what I need it to. So it'll be built in three stages, reworking existing open source solutions where they exist. The first stage is to build a prototype. I'll try and get this done before business school starts. The second is something that will be developed over the summer internship period between first and second year. The third is for after business school. The prototype can be built in a few days, I'm sure of it. The problem is getting motivated people to help me build the thing in return for promises of receiving something great at some unspecified future date. I'm still working on this.

I initially thought I was working on a consumer facing solution. I'd get it out there and try and grow it organically. The problem with consumer facing solutions is that any monetary transaction from a consumer will be relatively small. You need to amass a large number of small transactions to generate revenue. Would I really be able to get the business growing quickly and fast enough to fund several members of staff and overheads? I figure that I need $60,000 to fund software developers (and me) over the summer period between first and second year of the MBA – the period when stage two of the software platform will be developed. I think this is too challenging to raise from small monetary transactions against a prototype. I'm now thinking of generating three large sales of $20,000 each from three companies. For this money, these companies would get a white label solution they can brand for their own purposes.

Competition is a problem. As a consumer facing service, the threat is Google, Yahoo and a myriad of other companies. A professor from my undergrad would often say, "if Canon enters your market – then it's time to leave". I'm not trying to build something in an established market, but it is adjacent to so many other markets that it would be easy for others to shift their emphasis and copy what I'm trying to do. Yet competition has also made me focus. Digg is doing X, which is different to what I'm doing because of Y. Google Wave is amazing – it does piece N of what I was thinking of doing, but in a much better than what I was already thinking. Every product announcement by every corporation, usually covered in detail by TechCrunch, makes me rethink and revisit that 100,000 piece jigsaw puzzle. What does it mean for what I want to do? Do I need to do anything differently?

I've heard that some MBA entrepreneurs write a new business plan each week, just for kicks. I wonder what exactly they were doing. I've written business cases for my employer before, but I'm finding this to be an entirely different game. Perhaps it's because I've more "skin" in this game. The shear information overload from how much detail that I could write for each section of the business plan overwhelms me. At first I thought I needed to capture it all in the business plan. Then I started moving it all to appendices. I soon realised that keeping the appendices up to date (and even finishing each one) was a mammoth task. I'm soon starting version 12 of the business plan. This time I'm simplifying everything – the appendix is now just a spreadsheet with a different sheet for each piece of information. The business plan is just highlights. Perhaps I'll be able to finish writing this version.

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For some time now, people have been talking about Google Docs and other similar efforts to port an MS Office style environment to the online world - into "the cloud" - as being disruptive. Disruptive technologies are those that have displaced existing technologies, in the process almost magically displacing the dominant incumbent companies that champion the existing technology. In the 1980s, HP's inkjet printers offered a cheaper, but "good enough", alternative to large and expensive heavyweight alternatives from the likes of Xerox. The inkjet stole market share, forced Xerox to move to more upmarket customers, and ultimately sealed HP's name in the printing business. Other examples include digital downloads displacing CDs and DVDs, as well as email displacing postal mail.

Disruptive technologies of the past have not altogether been obvious at the outset that they are disruptive. Had they been so, the companies they threatened would have noticed them and taken action to ensure they were not displaced. So it is that Microsoft, eyeing the potential disruption that is Google Docs, has created its own rival offering. In this particular case, it would appear that the existing incumbent technology could well survive the threat of the disruptive Google Docs. However, I don't believe that Google Docs was ever disruptive to begin with.

Google Docs continues to work with the existing paradigm of documents and files. If you were to take out the rich formatting in the document you send in an email, what is the difference between the document and the email text itself? Why could the document not have been written in an email client itself? Why do we need to open a separate application to edit a document, which we then save and send out in another email? Google Docs continues to perpetuate this behavior by simply taking the offline Office experience and putting it into a browser. Surely the browser affords a new way to work with information? In disruptive technology lingo, it could be said that Google Docs is "cramming" the existing Office concept into a new technology. As a result, everyone can see it coming. So I would suggest that Google Docs and online office suites are probably not disruptive.

So what is disruptive in the office suite space? If we take the behavior of sending each other emails with documents attached, then perhaps Google's Wave product is the truly disruptive technology. The email is the document. Collaborators change different elements of the document inline. There is no need to open a separate application to work on the document. Many think that Google Wave is disruptive of email; even the Google Wave team position Wave as what email would be if it were invented now and not 40 years ago. However, a large portion of my emails is between myself and one other person. Most of my emails also do not require the playback/forward sophistication of Wave. I think email is still the simplest solution for most private text based communication. Wave's strengths in collaborative working – in collaboratively creating documents.

It is probably not obvious that Google Wave could disrupt the office suites, rather than email. That's why it might just do that.

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Bedroom entrepreneurs may be better off doing their thing at business school. A good B-School can provide all kinds of amenities to help your venture that your bedroom can't. Here are five of them.

(1) As a student, you can make all kinds of requests to companies that might otherwise get rejected. When Akamai started out of MIT, they called up Internet Service Providers and companies such as Yahoo. Because they were MIT, people were willing to talk to them. Because they were students, these companies didn't think these kids were trying to sell them anything. Tom Leighton's talk has the full story on Akamai; the company formation stuff gets interesting from 26mins.

(2) With an MBA from a top B-School, you get the credibility to do all kinds of stuff that might be more difficult to do otherwise. For your startup to get the attention of investors, such as VCs, some people moan that you need an MBA from some elite school with 20 board members who know Jack Welch personally, with an extremely complicated idea that has never been built. Alternatively, you might want to buy a company. Yes, really.

(3) You get something to show for those 2 years in the bedroom. I have several friends working on building businesses. The most successful among them have got a customer or two and can make a living. Others are still prospecting for their first customer, two years after they started (yep, not good). Those guys might have been a little bit better off doing an MBA in the meantime.

(4) You can structure your effort. Starting a business can be an unstructured effort that can seem to go nowhere and everywhere at the same time. Discipline can be difficult, with self-imposed deadlines swooshing by as time drags on. Some business schools provide a structured process for starting a business, providing stage gates and support for building a business. This brings some certainty and enforced momentum to the process. Wharton's VIP is one such process. Northwestern (Kellogg's parent institution) has the interdisciplinary Nuvention program.

(5) You'll meet all sorts of people who could help. Activities such as finding initial customers and getting funding could be made a little bit easier through a referral from an appropriate school professor, a class-mate who has worked at a company you are targeting or any number of other people. Some of these "people who can help" are prolific; just take the example of Stanford computer-science professor David R. Cheriton.

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An MBA opens doors. This week I stumbled upon a door that few take, yet is typically difficult to break open without an MBA from a top business school. Described as a high-probability way of making good returns on investment and entrepreneurial effort, search funds are funds that are typically only raised by alums of top business schools. Essentially, search funds are a way for entrepreneurs to raise money to acquire a company. Once a company is acquired, the entrepreneur works to improve the profitability of the company over a period of 5 years or so, before selling it on for a profit - taking a 30% share of that profit. Usually that 30% share will be worth several million US dollars.

I stumbled upon the idea at an MIT Enterprise forum event earlier this week; I had been to their events before. On this occasion, Jim Southern explained the mechanics of search funds and went through a case study of how search funds work. One of the ideas that struck me about Jim's talk was his point that in the normal entrepreneurial path of building a company, only 1 in 10,000 or 1 in 100,000 people are successful in generating a multi-million dollar earn out. Yet, through the search fund process, the probability is more than 25%.

As Jim Southern's talk progressed, I got more and more excited about the search fund vehicle. The disheartening part for me was that the search fund process prefers acquisitions of companies with simple operational processes, e.g. a freight forwarding company or events company. This is because it makes it simpler for the entrepreneur to understand the process of the company and improve the profitability. Under this restriction, I would have to give up my preference for new media, which I have built my career on. Software development, which is at the heart of new media, can be complex - at times it can seem like a process that does not have a process. This makes it less than ideal for a search fund. However, I find new media exciting and engaging.

Consequently, at this stage - while I am enticed by the idea of search funds - I am reluctant to give up on my new media entrepreneurial plans. Setting up search fund might be a good "Plan B" for me though, if by my second year at Kellogg all else has failed.

The New York Times has a recent article on search funds. Stanford GSB has the most research and information on these funds.

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I'm planning to set up a business while I am at business school. Before I applied to business school, my plans for this ambition started as a distant and vague notion. Following admission to Kellogg, they developed into a plan. This post represents my latest thinking on this plan; my latests thinking on how I might go about achieving my ambition.

I'm building a web start up. Why? Because my career has been centered around the web and it is what I know best. The barriers to entry are low - these days just about anyone can build a website. The differentiation comes in the user experience of the website and job that it satisfies. As I previously mentioned, I believe there are big opportunities around content and the Internet - everyone seems to be struggling with a model for making money from content on the Internet.

Fit with B-School. I realized early on that some ideas fit the environment of setting something up while at business school better than others. If the product or service of my business has similarities / links to services provided by clubs or other entities at business school, then I can leverage those entities. If it is a luncheon product, perhaps it could be initially distributed by the shops at the school? If it is a new type of publication, perhaps existing publications at the school can be persuaded to fund a issue? My plan is to create a web based service to entice the community at Kellogg. Who knows if it will succeed, but I'm sure going to give it a shot. If it is successful there, it can be expanded beyond these boundaries.

Recruitment. Rather than pursue the rounds of recuitment that the rest of the student body participates in, I anticipate spending the first year seeking seed funding to build a prototype system over the summer. I am then looking at the second year as time spent seeking venture capital investment to build the business properly.

Sketch of the current plan.

Before Kellogg:

• Complete a business plan for starting and developing the business; develop an elevator pitch.
• Piece together a mock-up dummy system.

First year at Kellogg:

• Test the concept out using whatever low budget / free tools there are (the mock-up system).
• Get fellow students to use the service; get feedback for improvement.
• Find mentors who can help reduce the number of mistakes I make.
• Seek investment to do work over the summer to establish a real service that can work.
• On securing funding, hire a team to work on the business over the summer.

Summer internship

• Build the service as a prototype.
• Seek out potential B2B customers of the service, i.e. companies that may want their own branded version of the site.

Second year at Kellogg:

• Continue marketing the prototype service and building the user base.
• Seek venture capital investment to build the service from prototype to full service on graduation from MBA.

After graduation:

• Build full service. Grow the business.

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