If one has a novel idea that would not take much investment to prove, how would you recommend bringing it to fruition in the area of biotech? I have no idea how one goes about starting a small biotech company.
Biotech is not my area of expertise -- but I do know that a biotech that doesn't require a lot of investment to prove is a rare find!! Biggest issue with devices and biotech is often FDA clearance so you need to make sure you understand the regulatory environment. If this is something that doesn't need clearance, I'd start talking to customers and showing a working prototype. Like anything, you want to make sure this is something that solves a problem. You also want to look in to insurance reimbursements. I know a lot of bio startups stumble when they find out how hard it is to work with insurance companies, hospitals, etc.
Biotech is also not my specialty, but my recommendation is to find a mentor that has subject matter expertise in that space. Perhaps someone that has run a successful biotech company before. I believe UVA would be a great place to start the hunt for such a person.
If I have a business idea, what's the first thing I need to do to get started? A business plan? Money? Both?
The first thing I would recommend doing is to try and match the idea to a market need. We aren't in the age anymore where investors will invest in just an idea. You have to validate your assumptions. Better than a business plan, I would recommend connecting with potential customers and working on either a proof of concept or at least getting feedback about the merrit of your idea.
I echo Rami's comments. Too many startups wait too long to understand product/market fit. Great ideas are not enough - investors are looking for strong entrepreneurs who have done their homework, understand their market and have developed/tested a go to market strategy. Business plans are collecting dust ,but we do recommend that companies spend time with the Business Model Canvas. Incredibly valuable tool for mapping out your value proposition and assumptions.
How did get your first paying customer?
Our first paying customers were also our first unpaid beta customers. One of the most important things we did early on was talk to potential customers, pitch them on the idea and get buy-in on our concept. As we developed the product, we continued to engage with those potential customers to make sure we are building something they would buy. What that led to is a natural progression from market research -> advisor -> unpaid trial -> paying customer.
Rami-what is the hardest thing about owning a business?
The thing that keeps me up at night is making sure I don’t let anyone down. Ultimately, as the CEO, my decisions shape the future of the company and I worry about making a mistake. There are people that are counting on me to lead the company to profitability as part of their investment portfolio and another dozen that rely on me for their livelihood. Several of my employees are also close friends. I don’t want to let anyone down.
What are the latest trends in types of businesses being opened? Anything in particular?
I'd say eds, meds, security and big data are the big four right now. If you look at areas with the biggest pain points -- like soaring cost in education/health care, network/data security -- you will see a lot of startup activity. We are still seeing a lot in consumer Internet and mobile apps, but many of those companies are still struggling with monetization models.
I agree with Elana on a couple of the trends I am seeing, namely security and big data. The unifying theme that I see across the venture world is a move towards enterprise companies, ones that have a much clearer revenue model. While Elana is right that people are still creating consumer companies, I think as a trend they are on the decline. Not many investors are willing to invest in consumer internet anymore.
In my opinion, Web sites and social media are the two most important ways a business can communicate with customers. Yet, when I visit business Web sites, I am shocked to see how poorly they communicate. Some have Web sites that are years out of date (still advertising a sale from 2011). I have been on the Internet since 1992 and think I can help companies improve their Web sites and use of social media, but when I talk to business owners, they don't seem to understand the problem or feel like they have the money needed to update and maintain their Web site. They think that once a Web site is built, they are done with that aspect of their business. How can I convince business owners to take a look at what they may be missing out on by not keeping things current?
Sounds like you are looking at this as a business opportunity -- so like anything you need to help those business understand they have a problem. Sometimes people just get so busy that they forget about their Web sites -- shocking, I know -- but happens to the best of us :) Most small companies don't have the resources to stay current on their sites -- and some even think that by using social media they don't have to update their Web sites. Show a plan that isn't that overwhelming -- making small updates once a month or whenever you have news. There's also a perceived technical barrier --I think most people don't realize how many tools are out there to help manage sites.
I have an idea for a business. Haven't been able to find anyone else doing this in this field - some similar groups in other fields. With whom might I consult to determine if this is a reasonable idea with a possible future?
Anyone you can! Obviously within reason -- but the more feedback you get on your idea from trusted sources the better. Think about who would be crucial to your success -- customers, suppliers, channel partners -- and go out and talk to them. Understand options for financing the business and the costs to both developing the product and acquiring customers. The DC area has a lot of events for entrepreneurs so there are a lot of opportunities to talk to others.
I would recommend you try and connect with investors and entrepreneurs. If you can find any that have experience in the field of your idea, then even better. Attend local entrepreneurial meetups and you will find both readily available. Some events include Nightowls, Fosterly, CoFounders Wanted, etc. One note – when you talk to an investor, don’t talk to them about the financials, simply ask them about the idea. Investors are being pitched 24x7, instead of being one of the many, asking them for mentorship changes the conversation.
Why is it that the big companies do not develop a service like yours... they have resources and an installed base of customers?
Some big companies might eventually work on what we are doing too, but big companies move slowly. Often having a lot of resources and customers can be just as much of a hindrance as it can be a benefit. The big guys cant take the risks a startup can and often cannot change direction as quickly. This gives us a unique advantage to build and iterate faster than they can and establish ourselves as the market leaders in the space.
Security is also an area where larger players have historically acquired technology rather than develop on their own, for many of the reasons Rami mentioned above. Some of the biggest players like Symantec have grown by acquiring a lot of companies (good news for Distil!). Shareholders might be happier to see acquisitions than high R&D costs.
please say more about "connecting with potential customers and working on either a proof of concept or at least getting feedback about the merrit of your idea." How do you connect with potential customers or prove concept without either starting the biz or giving away your ideas (presuming it's a service, not a product)? What constitutes "proof" ?
Sure -- that is always tricky and a lot of entrepreneurs do worry about others stealing ideas, although it doesn't happen as much as you think. Typically people have ideas in markets where they have some experience and existing connections. If you can't immediately come up with a list of 10 potential customers that you could eventually sell to, then you are going to have a hard time when you actually have a product ready. For a service, proof is actually delivering on what you offer. If you have a new methodology for dog walking, offer to walk someone's dog for free to test it out and get feedback on what worked and what didn't.
First of all, the concept of “giving your idea away” needs to go away. If your idea can easily be implemented or copied, then chances are this idea is more of a feature and less of a standalone solution. Since you mention this as a service, have you identified who would buy this service? What types of companies are those? Who in those companies would buy it? Answer those questions and then go find local companies and people that fit those descriptions. Connect on LinkedIn or call them and simply ask for their advice. You’ll be amazed how many people are willing to talk to someone that is asking for help if they aren’t trying to sell them something.
started a hobby/biz a few years ago due to health issues. It does not make enough money to survive and I'm convinced, now, that it never will. Two questions: 1. I'm not sure if I can shift it into something that CAN make money. Who could I consult to make that determination? 2. How does one simply shut down? I have a healthy e-mail list and a following....there is just too much free information and my area of expertise is not something people are willing to pay for. Thanks.
Unfortunately, I have seen a lot of friends and fellow entrepreneurs shut their doors. Starting a business is a high risk decision and things don’t always pan out. The best way I have seen people shut down is to reach out to those that support them--their investors, followers, customers--and e-mail them explaining the situation as candidly as possible. Why are you shutting down? What is going to happen to the service moving forward? And then end with a huge thanks for everyone’s support.
Funny enough, this outreach may surprise you. I have seen several instances where the supporters came together to breath a second life into the company by either paying for the service or by making enough noise that someone notices and acquires the company and rolls it into a larger portfolio.
You are ahead of the game by recognizing it might be time to wind things down. Your supporters will understand and might either try to breathe life or help you with you next gig. The availability of free content has disrupted a lot of business models. As you move forward, you can also think about the value of your expertise in a different delivery model. This chat we are on right now is an example of a pivot in delivering content. You are not alone in trying to figure out how to break through the noise to deliver high quality expertise.
What are your opinions of accelerators (TechStars, 500, YC, Fortify)? Do they help, hurt, or do little to nothing?
I'm interested to hear Rami's thoughts on this. I'm going to say they can actually do all three - and it really depends on the accelerator and more importantly the entrepreneur. Accelerators do take equity in companies early on which can hurt companies later as they raise more money, leaving founders getting squeezed early. For first-time entrepreneurs, they provide extremely valuable advice and extensive networks. Enterpreneurs just need to be clear what they want out of an accelerator and spend their time wisely.
I cant speak highly enough of our experience being a part of the Techstars accelerator program. The mentorship they provided helped us compress a year’s worth of business and product development down to a few months. The program was an amazing jumpstart to our company. To this day we still leverage the Techstars network for introductions, connections, and advice.
That said, I cannot blindly endorse all accelerators unanimously. A friend, Aziz Gilani, along with the Kauffman Fellows did a study on 200 accelerator programs and they found that only a few actually add value to the companies they were supporting. (http://www.slideshare.net/dgiluz/accellerators-in-us-and-europe)
Beyond the nationally recognized few, you really have to take each accelerator on a case-by-case basis.
Rami, what are the most crucial things you've done to grow your business?
The most crucial thing I've done was to learn how to rely on other people. As a founder, I treat the company as my baby and try to influence every aspect of the business. You quickly realize instead of helping, you end up hurting the company by becoming the linchpin that slows everything down. Learning to let go, trusting that your team will deliver just as high-quality work - often better work- is the best thing you can do to scale the company.
this question is more personal, but given that Rami's bio includes "making a successful exit" - how do I present the idea of possibly shutting down without feeling like I'm announcing failure? It's not like I'm shutting down because I am moving to something better.
Failure is OK. No entrepreneur starts a business with failure in mind. That being said, most successfull entrepreneurs have failed at some point. I think that sometimes we do a disservice by not highlighting failure enough. A lot of investors like to see failure -- they know the entrepreneur has learned something on someone else's dime! No one likes to fail, but it happens, and as a community we need to make sure to understand the failure is just as much part of the entrepreneurial process as success.