Watch Over Your Angels!

Sure, as much as you'd like your heavenly angels to shower you with divinity, as an entrepreneur you may be blessed to be seed funded by angels - who are your fans, believe in you, and cheer you by motivating you to strive for the best. A good angel will get you off the ground, be there for you when you need them the most, and continue to be there for you till the very end.

If your company needs big money to grow and scale (remember that a company can be a healthy angel funded company never requiring VC money) then VC money is what you need next. The angel to VC transition follows the line of money; it is a business like banking and the stock market. Pampered as you may be by your angels, consider the honeymoon to be over when you seek institutional investment in your startup - you will need to get more serious in all aspects of business and execution.

Raising VC money will require more rigour. You will need to create a business model and slide decks that may need to show hundreds of millions of dollars in value that you can create. Look closely at your VC term sheets and seek help in trying to understand the terms. There can be a lot of subtle stuff in there. This is the time to watch over your angels. You angels will love you no matter what, but in the no-matter-what case if they are "wiped out," the angels (the ones with gossamer wings) shall weep.

Time To Market

The importance of getting the product to market on time cannot be understated. There are very few technologies that can stand the test of time in this fast moving market. Assume that there are others out there who are after the same business opportunity using similar technology (even a 1/2 star entrepreneurship book on amazon.com will say that). The difference between the first mover and the laggard (missing the first mover advantage when that was the original goal may politely be referred to as business validation if that helps ease the pain) can cost the business opportunity itself. Validation, however, has its advantages and may, in fact, be good for a new business model that needs to be proven. If the market is large, there may be room for other players after the first mover has demonstrated that the model is for real. A large market dominated by a few players (ever play Monopoly?) is not the same as a large market with hundreds of customers. This is a key factor that needs to be incorporated into the risk equation (OK, if you are looking for the answer, it is 1.0) stated below.

The challenge with a new business model is getting investors to believe that this is even possible. Those words are like music to the ears of a VC. Not. Haha. Add to this the difficulty of proving that the technology works...something that starts to become extremely critical when the technology itself is non-trivial. Waiting longer for the technical milestones can greatly reduce investment risk. But when the level of difficulty in building the technology is high (read as - money is needed to fund development and prove or disprove that the technology works), a slowdown in technical execution that is under-fueled financially can have serious business consequences.

So, what mathematically appears to be a zero sum game - the sum of technology and business risk is 1.0 using the Real Number notation, the savvy business mathematician knows where to draw the line (or place the fulcrum). For example, a technical winning team of a dozen years is likely to continue to be a winning team - a Warren Buffet Wall Street stock market investment principle (or so I'd like to believe), or analogous to Newton's First Law if you wish to be scientific...don't mess with it and it will stay its course!. More investment fuel for developing/validating technology may prove or disprove faster that the technology works or not, at the same time, giving the upside of being a first he last drop out of itmover that may be essential to the success of the company.

So, go ahead, milch that udder, and get the last drop of albino martini out of your business execution.

On the Business of Technology

Aside from my innate love for technology, the main reason for being a programmer has been to have the ability to say - Let's send man to Pluto, and then go write the code. Exciting as this technology trip has been, the last couple of years as a CEO have been an awakening of sorts.

I have now augmented the dream-and-build axiom with a corollary - What is the business of sending man to Pluto? Cool as the rocket science may seem there is no money in this space (never mind the pun). The algorithm as an entrepreneur is about creating value for the customer, building a team of highly motivated people, and giving a return on the money to the investors (without the investment we would not have the opportunity to build). The business of technology appears to be a lot harder than technology itself.

The truth of the matter is that both technology and the business of technology go hand in hand. Operating in a vacuum is probably the worst mistake an entrepreneur can make. After having built "beautiful," in a vacuum (that has a Silicon Valley shelf-life), the second application of our technology is being built to specifications from a major broadcast customer. How cool is that! Now add to it the deep science and challenging engineering. "Cool" is a natural magnet for the brightest minds in academia and industry. High quality work motivates the best. Channeling my team's energy and effort into something with significant business value is my challenge, and I'm beginning to love it.

Finding a real world application for cool is the single most important step in the direction of success for an entrepreneur. Let's call this my secret to creating a healthy company of happy people. It has been good learning.