Monday, February 27, 2012

Could you write Minecraft or Angry Birds in Southern Illinois?

Clearly, it is possible.  You would need a couple of strong developers and a great designer to get things rolling.  Game play design is key in the case of Minecraft and GUI in the case of Angry Birds.   If you want to really do well, that is going to be hard.  I like this article about the Physics of Angry Birds.  These games work well, and the subtle details make them really shine.

There was an interesting article in Business Week about iPhone Apps a while back.  A maker of a shotgun noise app claims to have made $1M in ad sales.  Wow.

Maybe it would be better to work on games, instead of a national website and service company?  Higher margins, some possibility of success?

Anyone ready to jump in the pool and write a game?

Sunday, February 26, 2012

What companies might be successful in Carbondale?

I have claimed, there isn't enough talent in Carbondale or in Southern Illinois to run a nationwide software company. So, what can you do and be successful?

iPhone/Android Apps
Computer Apps, without the nationwide aspect.
Kind of late for the passive e-commerce webpage, but maybe.

Liquor - boutique distillery, micro brew beer or wine.

Door knobs
Kitchen knobs
Christmas decorations

In general, manufacturing something that has enough value and profit margin to allow it to be sent UPS should work. Notice, none of these things are the standard, Southern Illinois style, cheapest thing in the price category. Higher value items, with less numbers of sales and more profit per item hold more promise.

What kinds of businesses could be successful in Southern Illinois?

The Aniston Axiom

I was reading along through this month's Wired magazine and came across this little story, inside of an article. The article quotes this -

“Let’s say you’re a unionized worker on the line,” Lefsetz says. “You’re working some overtime, you’re making some pay. You have a house, and you have a boat, and you’re sitting there having sexual fantasies about somebody on Friends. You say, ‘If I moved to Hollywood, I could fuck Jennifer Aniston.’ And you truly believe it. To get from there to actually fucking Jennifer Aniston is not impossible, but it’s an unbelievably long journey.”
I have written here about luck vs. skill many times. I can see many kids put their heads down and work really hard master "Mario Racetrack" video game, or the like. I have seen many people work hard enough to master many things, most of them fun and not productive.

Sometimes, I wonder if people understand what a long journey life is and also, what the alternative is to not walking that road? Not going on the journey and aways wondering what they missed. It is easier to move home again, after you tried, then you think. You can even move home twice, if you want to.

I'm about to over reach my boundaries again. Let the journey down one of my long roads begin.

Wednesday, February 22, 2012

Due Diligence 101 or Go Learn, Darn it.

I have been approached by several companies looking for investment, over the last couple of months. It is always surprising to me when I realize that the leaders, owners, partners of a company haven't read anything about all those little details that might allow them to succeed. I was browsing the "Small Business" section of the Huffington Post and found this article about investor due diligence. Here is another article from the same page about employee turnover.

After running a Google search for "attracting angel investors." Here are the first two links, 1 and 2. Seems like reasonable ideas to me. If I was trying to get an Angel deal, I would read the first 20 articles and see how they compare.

I spent years reading Business Week, Inc Magazine, Wired, the local paper and everything else I could think of. My standard metric was to spend 1 hour each day studying about business. There were so many times that I dipped into my pool of accumulated knowledge, those long hours of study drove my success. Imagine, reading up on what you don't know, but have to know to succeed? Crazy.

In answer to the little companies looking for my money, you should realize, I'm going to ask all the questions in those due diligence articles, sooner or later. Go read up, what you need to do is in those links. Hopefully, the easy part is spelled out in free text, the hard part is doing it. To everyone else, if you read about your work, you will do better.

Of course, your comments are welcome.

Thursday, February 16, 2012

Why Everyone is Starting a Software Company -

and why choosing the right company focus is so hard.

I have written here, that the entrepreneurial talent in Southern Illinois is opting to try their hands at Internet/Software Companies. First, the good news, it is possible to start a software company for cheap. For $25k to $100k, you can have a good run at making a product and launching. When you think about most any other kind of company, it is going to cost a whole lot more to launch.

More good news, because our entrepreneurs are mostly young, college undergrads, they can raise the money to start a company from many places. The traditional statement about funding sources is friends, families and fools. After all $25k, just isn't that much money. You can also depend on volunteer labor, unpaid interns and founding partners to work cheap, instead of that coming up with all of the $25k yourself.

There is a feeling that somehow the startup business is being dominated by the young. A more valid thought is that if enough monkeys type randomly on typewriters... or if enough people start internet companies, surely some small number will succeed. It will be so much easier at 30, assuming they work hard until then, than it is at 22. Historically, the sweet spot for starting a company and being successful is between the ages of 30 and 50 years old. Those are the years where you are energetic enough and experienced enough to solve many of your problems. Hopefully, you have management experience, some money in the banks, polished technical skills. Where there are many examples of people founding companies much younger, they are the exception and not the rule (yes, I know about Microsoft, Facebook and Quatro's).

I respect the desire to start a company and can see why software is so desirable, but let me suggest that there are several problems that are common to Southern Illinois software startups.

First - there is no management team. How can you attract investors or run a company, when you are a one man company? You can't. If you can't find a few friends/fools to start a company with you and you can't manage to keep that core together, how can you possibly manage a company?

Second - there are no management skills. Not only do most of our startups not have any management skills, ideas or experience, they often have never had a job working for anyone. I started launching startups with a complete management philosophy, that I learned through reading, working, managing and watching the startups I worked for fail. I'll write about my management philosophy was at 30 and why I lost it in my last tour through Carbondale soon.

Third - there is a real lack of the talent to do the work. Even if you are a great new college grad, you just aren't a senior engineer. The saddest thing that could happen to anybody is to be as good at 20, as you will be at 30 (or 50). You just can't get there, from here, without walking that road. It shouldn't amaze you that when startup companies talk to me about software, they will almost always change some important strategy. I once was a senior software engineer and might have a few other skills too. You can overcome these problems by knitting together a team with diverse talents, but that implies you have a team.

Fourth - the scope of the project is very large. So large that the company will not have the resources to have a real chance. I'm sorry, your Carbondale based company is not going to get big enough to provide software service solutions to every car dealer in the USA or the like.

Fifth - the business plan makes no sense. I can write a reasonable and fundable business plan in a day. Of course, I would have to invest my heart and soul in that area for months to understand what is possible first. If you can't provide a business plan that explains the vision, the team, the market place, the competition and the money - you are not getting funded. You can start with four pages, it isn't long. The problem is, you have to understand business and your business space, to begin writing and there are very few people who do.

Sixth - the Silicon Valley culture is to have an "Advisory Board." Unpaid, and general stock compensated, to help provide an infrastructure of support to startups. In Southern Illinois, we have inserted the Dunn-Richman incubator folks into those rolls. They are there to help, but that isn't their job.

Seventh - you need to give people stock in your company. It just doesn't work to get people to help you for free. They want to play. There are no high growth companies where the founders have all the stock. Your chances go up, if you buy people's support with stock. Yes, that is employees, advisors, and the pizza delivery person. Everyone wants a small piece.

Finally - the product choice was made too quickly. If someone told you they were starting a company, attacking a space with two venture capital backed companies, each with a multi-year head start, would you invest your life savings? No, me either. What about, if they told you there was a multi-billion dollar market, but if they worked really hard, they could make several million? Nope, not me.

The good news - it is cheap and easy to start a software company. Several people are trying. There is lots of good literature about starting and running companies.

The bad news - it is still very hard and success is difficult to achieve. People don't read the literature. People don't get the right kind of help. People don't share the wealth to bind people to their cause.

More to come.

Saturday, February 11, 2012

The hiring funnel - how many do you have to interview?

So, I put up a link to the NYT piece on manufacturing the iPhone in China. Let me expand on how this idea effects business development in Southern Illinois.

At my little company, bSquare Corp of Bellevue, WA (NASDAQ - BSQR), we experienced rapid growth. We were founded in 1994, at the end of that year, we had 3 founders and 2 employees. At the end of 1995, we had 11 total people. At the end of 1996, we had 40. At the end of 1997, we had 160 (or so). When I sold out in 1999/2000, we had about 550 employees. I ran hiring from founding, until into 1998. I put ads in the paper, got faxed resumes, phone screened, and interviewed a whole lot of people.

Here are the stats, as I remember them. In 1997, I phone screened around 1000 people, interviewed 250 in person and hired over 100. Now remember, we are taking about computer people, college educated, and looking to work in a startup (or at least to get a job in the computer industry). I think this was fairly typical, 10 phone screens to 1 hire. Notice, that isn't 10 resumes to 1 hire, I screened over 50% of the resumes too.

If you are starting a company in Southern Illinois, that you intend to make a national brand. Can you do it in software? I would have to say no. Sooner or later, you are going to need a team of programmers. Can you find 100 people, who have resumes worth looking hard at, in order to hire 10? I don't think so.

Let me suggest a different business model, that you build something that will allow you to succeed. For example, iPhone/Android apps for the software focused. You only need 1 or 3 programmers. The complexity is easier, so your need for experienced people is smaller. Once you get rolling, it would be easier to ramp it up.

If you read "The Millionaire Mind/Next Door," they seem to claim there are very few high tech millionaires (on a percentage basis). Financial success can easily come from almost any area. The laser focus of Southern Illinois entrepreneurs on high tech is likely self defeating. Historically, rural areas have been in the high value, specialty manufacturing business. You need a few smart people to develop the company and a lot of motivated people to turn the gears. I suspect, this model is still the right one for Southern Illinois.

In the end, we have yet to see anyone build a team of 10 programmers in Carbondale area. Doesn't mean it can't be done, but if you need to have that many programmers to have a chance, wouldn't you be better off in Silicon Valley?

More about my startup ideas and failings to come.

Of course, your comments are welcome.