Wednesday, December 27, 2006

Christmas break

So I've been offlien for the past couple of weeks doing exams as well as finishing some of the other projects I was doing.

Tired like hell after a crazy :-) christmas break,looking forward to the new year 2007....See you then..

P.S. Kwangoo.com is not dead :-)

Monday, November 27, 2006

Journey of an Afro-preneur: Making my way back..

It's such a refreshing feeling to be able to blog again after such a long time, I think its been almost 3 weeks since my last post and the few people who actually read it have been asking me "what's going on?.."Well to answer my "fans" :-) a lot has been happening :-) and that's all I'll say...I'm just kidding, well in the few weeks I've been off the blog I've been designing the Kwangoo.com database (alone) and its been really interesting, I basically have to think of every possible feature to have in Kwangoo and then come up with a suitable and optimised structure, sounds boring, well it can be but its not like I have a team behind me.

Last friday, 24th Nov, was interesting, I called up my friend TK and she informed me that the people on the TV show she's shooting were interested in featuring kwangoo.com, that was exciting news for me but also scary since so far kwangoo.com is just a splash page, this put me into overdrive and I holad at Bluefi5h to setup a meeting for the weekend which unfortunately didn't materialise, but we meeting today and hopefully will cover a lot of ground.

Working on kwangoo as well as other projects hasn't been easy, sometimes I just want to quit it all (work, school and God forbid kwangoo) but I can't, I need the day-job to pay my bills, I'm not sure I need school (You tell me...) but I figure I can go on another day and even though it's breaking me physically I'll push on.

On saturday, while on my way to a wedding party (which by the rocked like krazy), I met a friend of mine blacksheep (the guy is one dark-skinned brother :-) ....) and we had a rather lengthy discussion about kwangoo.com. I told him what my vision was and the way I was going about it, I was surprised at his level of excitement which seemed to supersede mine, and I like that koz it gives me psyke or drive to go on.

I wish I had a team of developers to work with on Kwangoo.com but I don't so I work with what I have which in this case is an overburdened mind and body that could do with a major makeover.

Yesterday I tried to take a few pics of the kwangoo.com splash on my very wonderful Dell Inspiron E1505 (runs like a ferrari but has the most stupid OS on it...) but the pics were so unclear I decided to let it go. In time I'll setup a blog for kwangoo.com and I'll post all the pics :-)

Anyway, gotta go meet bluefi5h ....

Cheers

Tuesday, November 14, 2006

Journey of an Afro-preneur: Building the Kwangoo Brand

I mentioned last week that our vision was to build the most prolific online social brand in the region and slowly by slowly we heading there. I need to mention that our budget for this whole project is currently standing at....let me look at my accounting books...zero 0Ksh 0$..sad but true..I think the lack of money makes as even work harder towards achieving the goal, it forces us to network even more, to pull resources together, basically it makes us put in the extra mile to ensure that we achieve it..

Last friday I decided to conduct a small "focus group" (The Apprentice got me on this line of thinking) to get users view on what they would like to see in a site of this kind, No I didn't go to the streets and ask people questions or hand them some questionnaires, I used the power of the internet and decided to IM them :-) cost cutting and efficiency of time is critical at this point dude to limited resources. The views I got were rather interesting and most weren't knew but I was glad to hear them from potential users and they will definitely be factored in.

Bluefi5h sent me the t-shirt concepts yesterday, although I wasn't in the office where I have internet access (I seriously need to hook up some internet at home) I still managed to access my mail on my phone (this wouldn't have been possible a few years ago when no one had a fixed line or even a mobile) and look at them on the small phone screen and I was impressed with what he had done. So today I rushed to the office and had a proper look on my mammoth 17 inch monitor (not flat ..aint that so sad..) and you can just imagine my excitement at looking at them properly. I did what I consider is always important, get user views on the look of the t-shirts, I got good feedback which I communicated to Bluefi5h immediately.

The plan is to use as much human resource and network associations to build the brand, let people be part of the online social move and move it from just a word of mouth brand to the brand that everybody wants to be associated with.

Thursday, November 09, 2006

Journey of an Afro-preneur: Baby Steps


This week has been quite exciting, I met up with Bluefi5h (those Kahawa hookups :-) God Blesss Capuccino) and had a talk with him about Kwangoo.com it really is amazing how much we have in common when it comes to creating an online brand but Bluefi5h took it to the next level when he explained to me what he would like this brand to be, the ultimate goal is to buold the number one online brand in the region. We know where we want to be in the next 5 years and we taking the "Baby steps" to achieve that vision one day at a time.

One of the most fruitful things to come out of our conversation was the development of a release schedule, we both pretty busy people so it's hard to come up with tight schedules and stick to them but I was glad that we both so the need to come up with a timetable. Bluefi5h is primarily going to focus on developing the brand and growing it, he has many contacts in the design field and they will come in handy when we need to really grow the brand. A clothing line was mentioned and it rallied a few ideas from the two of us. Such brainstorms make the whole idea exciting and worth the effort even with the challenges we face.

Since the "launch" of the splash page, a few of my friends have signed up and even though the numbers havent been record breaking the feedback and queries I've received have gone a long way in encouraging me to pursue this vision. In the last few months I've been working on a code snippet that could really enhance the registration process of new users as well as spread the word just when I thought it was hopeless the code has come together and is working woohoo!!am so excited and bearing in mind that Bluefi5h will come up with an exciting interface am rearing to go.

One of our core objectives is to set a trend that others will be daring enough to follow, they say "Imititation is the highest form of flattery" and I wouldn't be surprised if others followed :-) It's only fair that I mention that there have been other social networking sites developed and they definitely did blaze the way but its also important to note that what we are trying to do is indigenous and will encompass the latest trends on Web 2.0 (Javascript wil really work its magic..damn browser compatibility grrrr!!...)...

Everyday I learn something new, I follow the trends in social networking and pick as much as I can from every site that pops up or dies, all these lessons are applied in kwangoo.com

Monday, November 06, 2006

Journey of an Afro-preneur: Kwangoo.com so many questions??

So the splash page for kwangoo.com has been up for about 5 days now, I've received some awesome reviews on the logo, people really associate with it and it gives them a desire to know more about the site and its features.

Duke looked at the splash page and said "i see a kenyan trying his luck with a myspace-ish idea" :-) well I have to admit myspace.com is a major source of inspiration but am not trying to be one.

I've received many questions from people asking me when will it be launched? and as much as I'd like to launch it yesterday I can't, kwangoo.com is still in the development phase and once I have something that can hold people in as I release updates I will, so for now I would urge my supporters to be patient :-) it will come...

I'm basically an Army Of One so you can imagine the load on my shoulders, but am enjoying it at the same time dreading it. On one hand I have a dream coming up and that is major adrenaline rush!! on the other hand I have the demands of life pulling me down and yet I have to deal with kwangoo.com as an online brand. But its an experience I wouldn't trade in for anything.

I want to thank a few guys for their support even with such a small step like a splash page, Major props goes to Bluefi5h, Gigi, Duke,Benoit, Gisty jeng and the rest whom I havent mentioned. Good things are on the way...

Thursday, November 02, 2006

Journey of an Afro-preneur: Kwangoo.com Online

Finally the child is being birthed, I finally managed to upload the site on Thursday 9am, am not a very good designer but I came up with a simple page which I'll redo in the next few days in the meantime go to www.kwangoo.com and marvel at the baby we are about to unleash to the world.

Wednesday, November 01, 2006

Journey of an Afro-preneur: A demanding week

It's been a demanding week for me and despite me hoping for the best from every situation the "Murphyesque cavalcade" (I got that line from another blog which was talking about the string of problems they have been facing) of stumbling blocks seems to be getting to me. I have the rigours of full time employment to deal with, a string of projects I need to deliver, meetings with my contractors (basically people who have paid me to do for them work),family issues on my back and the occasional desire to just pick up a blunt object and go mass genocide on every living soul within 200 miles.

So the domain is ready and is aptly named Kwangoo (which is like a twisted version of the swahili word "Kwangu" which means "my place..") I like the name cause its catchy and easy on the tongue even for the non-bantu out there, I'm informed that non-bantus and caucasians would have a problem with the word "kwangu" and would pronounce it as "kwangyou" which would be so wrong in my view, so I twisted it at the end and added to letter O's.

So now am trying to get the logo up and running which seems to be the place where my patience will be tried to the core. Bluefi5h seems to be operating on another level of existence where the word "today" seems to mean something else, so am left hanging as he says his sending me the logo and when I check my mail I see nothing, now you know why I have visions if inflicting bodily harm to my lovely neighbours (bluefi5h lives about a km from where I live :-0...).

Jisty Jeng also seems to be on another parallel universe, he did the wrong concept despite me insisting on Kwangoo. Uganda is far if you look at it from a walking distance perspective but am sure I can organise for his arse to get a thorough beating.

I even considered having a company. Logoworks, do for me the logo but having looked at the cost about USD300 I had to shelve that idea after all I have no budget.

On a lighter note, I decided to pay the organisers of my "randaranda" a visit on Monday where I finally met the 6 beautiful ladies behind this exciting concept. I spent the better part of the vening talking and listening to them and they spent the better part of the time just being themselves and drowning me in so much humour I almost cracked up.

So now its thursday am a logo short, and am wondering is this the way it was all meant to be when this vision came about or does it get better with time?

Friday, October 27, 2006

Journey of an Afro-preneur: Just bought the domain name finally!!

So after my bad experience with godaddy.com which even upto this day seems to be rejecting my Credit Card (yes I finally accquired one) I have finally bought the domain for my social web app. This signifies the most serious and committed step I've ever taken towards achieving this vision of mine.

In the next few days I'll put up the home page with an invites only form to build the buzz..come up with tag line and flood the blogosphere with speculative info :-) use the power of the internet to create a viral marketing campaign.

I've asked Jisty Jeng,who keeps posting comments on the blog using a different identity everytime, to also come up with a sharp,crispy looking Web 2.0 logo, I'll then choose between his and the one that Bluefi5h will have come up with.

Sad news was that another domain I wanted to purchase seems to have been bought by some Indian Sage or swarmi :-) but those are issues that will be dealt with in the future. The important thing is the first seeds have been planted.

Bluefi5h has offered me free hosting services on his megaspaced and ultra-bandwidth server, now how can I say no to that kind of offer? :-)

Thursday, October 26, 2006

Inside Facebook

A few excerpts from the newly published book "Inside Facebook" by Karel Baloun(his a dude by the way just incase the name conjures up images of a hot techie lady :- )). The book was available for 36 hours to online reading and I did my best to soak up all of its important message :

For every success, there are hundreds with the same or similar idea, who gave up, couldn’t find or keep the passion to succeed. Every one of them would have faced different challenges towards success, some being prepared in these ways, others having these strengths, others having help in these areas, but the passion which could have lead to success is a flower which withers in self-doubt, criticism and loneliness.

For even without those experiences of colossal, dramatic failure, for any good idea there are countless critics and numerous competitors. So we try to stay away from negative, critical people. But one of them is always with us - our inner voice can spew fear and self doubt, whenever we let it, if we don’t train it. Are my ideas worth anything? Maybe everyone whatever I’m thinking, other people know it. Maybe my best idea, some smarter guy at google is already finishing it.

Social networking needs to fulfill a purpose, or people will not go through the trouble..

If a service is useful, people will be loyal to it, and give up a lot for it, though less eagerly countable things like money.

The product needs to speak to the needs of its users and gain their trust


Even great famous people usually only did a few great things. So we need to choose carefully what that great Anything will be. Lack of focus means your power is divided. You will lose any race if you are trying to juggle at the same time. Your superior talent can only take you so far. If you are dividing your focus, it needs to be in hope that the synergy among your efforts will have greater power than either piece, otherwise you’d be better off finding a greater vision for either one of the two pieces, and just forgetting about the other piece. Not lowering the priority of that other piece, so it can continue to take up valuable space in your deeper mind, but actually cutting it away, as in “that would be great, but I’m not going to do it

"Anything great is overwhelming, so seeing it as small steps helps, if it is actually a staircase you are building and not a treadmill. And you can trust that help will come, exactly matching your passion; perhaps it will be someone like Sean walking by your house without a clear place to stay.

Keep focus and passion on a single, even if complex, vision. If it is a complex vision, you must find passion on a simple piece or two of it, and start running with that.

If you don’t have a vision yet, meditation, having a realistic idol/role model/mentor, time for deep, creative conversations, topical and inspirational reading, and other things can help, but maybe you are just not ready for your journey yet. Visions can take time63. So be patient, but remember that you won’t get far ahead without one."

"The internet has given us all incredible power. How will you use it? What’s your passionate vision? Can you leverage your online or offline social networks to launch you?"

"Your attitude determines your opportunities. The economy for you is what you personally think it is. Whether you believe you will succeed or fail, you’ll be right. As Abraham Lincoln said, “Most folks are about as happy as they set their mind to be.”

Monday, October 23, 2006

Journey of an Afro-preneur: Road Trips, Languages and Snakes

I'm back from one of the best road trips (aptly named randa randa, which if my swahili serves me well means "move from place to place") I've ever had and I can assure you it was worth it, down to the last cent but more on that will be in a wordpress powered web log I'l be setting up in the next few days where all the guys who were on the trip will be able to share their own experiences.

TheVillager asked me what ever happened to the social networking site I was working on and I was left wondering what I should tell him, the truth of the matter is that it still is in the pipeline, I've faced a few obstacles here and there but they've only given me more resolve to push forward and get things moving.

So while that is happening I've been trying to learn the "language of snakes" :-) am sure your thinking I've decided to become a snake charmer :-) I wish!!..hahaha..I actually decided to open up that ebook and learn python. Why learn a new language??..you may ask..well the desire to learn something new in an ever changing environment is my driving force, ICT is the only field where everything changes everyday, several years ago Classic ASP was the wen development language of choice now we have more then 20 languages coming up each with a different syntax and all of them offering a different way to do the same thing. I think learning a new language gives me that extra edge and also helps me adapt easily when faced with new environments.

How much of the language have I learnt?..not as much as I'd like to since am not in a hurry to start getting my hands dirty with common web development tasks like Add, Edit and Deleting of records :-) Infact I've spent more time trying to understand the core of the language, the nuts and bolts, rather then the engine, that way I can master how it works before running head first into a web development framework e.g. django, and Turbogears.

Is it an interesting language?..any new language is interesting even the hard ones like Perl :-) The syntax is radicaly different from PHP where we have curly braces to signify the start and end of functions, loops, and conditional statements, with Python indentation is what denotes the start and end of the code..hmm..a new way of thinking..personally prefer the curly braces :-)..So i guess my answer is yes.nad yes its relatively difficult but so is any new language..

What's my plan after I learn the language?..well my take has always been look for its application to your current field, in my case it would be web development. There are a few python based web development frameworks out there with Django being the most prolific (The similarity between Django and Symfony PHP5 framework is remarkable), so I will try to use the frameworks available on one or two apps.

PHP still remains a favorite for me currently due to its ease of use and powerful features but it never hurts to up the skill levels.

The 18 mistakes that kill startups

I stumbled upon this article by Paul Graham, which I thought would be an interesting read for my fellow afropreneurs:

If you would like the original web link go to http://paulgraham.com/startupmistakes.html
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In the Q & A period after a recent talk, someone asked what made startups fail. After standing there gaping for a few seconds I realized this was kind of a trick question. It's equivalent to asking how to make a startup succeed—if you avoid every cause of failure, you succeed—and that's too big a question to answer on the fly.

Afterwards I realized it could be helpful to look at the problem from this direction. If you have a list of all the things you shouldn't do, you can turn that into a recipe for succeeding just by negating. And this form of list may be more useful in practice. It's easier to catch yourself doing something you shouldn't than always to remember to do something you should. [1]

In a sense there's just one mistake that kills startups: not making something users want. If you make something users want, you'll probably be fine, whatever else you do or don't do. And if you don't make something users want, then you're dead, whatever else you do or don't do. So really this is a list of 18 things that cause startups not to make something users want. Nearly all failure funnels through that.

1. Single Founder

Have you ever noticed how few successful startups were founded by just one person? Even companies you think of as having one founder, like Oracle, usually turn out to have more. It seems unlikely this is a coincidence.

What's wrong with having one founder? To start with, it's a vote of no confidence. It probably means the founder couldn't talk any of his friends into starting the company with him. That's pretty alarming, because his friends are the ones who know him best.

But even if the founder's friends were all wrong and the company is a good bet, he's still at a disadvantage. Starting a startup is too hard for one person. Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.

The last one might be the most important. The low points in a startup are so low that few could bear them alone. When you have multiple founders, esprit de corps binds them together in a way that seems to violate conservation laws. Each thinks "I can't let my friends down." This is one of the most powerful forces in human nature, and it's missing when there's just one founder.

2. Bad Location

Startups prosper in some places and not others. Silicon Valley dominates, then Boston, then Seattle, Austin, Denver, and New York. After that there's not much. Even in New York the number of startups per capita is probably a 20th of what it is in Silicon Valley. In towns like Houston and Chicago and Detroit it's too small to measure.

Why is the falloff so sharp? Probably for the same reason it is in other industries. What's the sixth largest fashion center in the US? The sixth largest center for oil, or finance, or publishing? Whatever they are they're probably so far from the top that it would be misleading even to call them centers.

It's an interesting question why cities become startup hubs, but the reason startups prosper in them is probably the same as it is for any industry: that's where the experts are. Standards are higher; people are more sympathetic to what you're doing; the kind of people you want to hire want to live there; supporting industries are there; the people you run into in chance meetings are in the same business. Who knows exactly how these factors combine to boost startups in Silicon Valley and squish them in Detroit, but it's clear they do from the number of startups per capita in each.

3. Marginal Niche

Most of the groups that apply to Y Combinator suffer from a common problem: choosing a small, obscure niche in the hope of avoiding competition.

If you watch little kids playing sports, you notice that below a certain age they're afraid of the ball. When the ball comes near them their instinct is to avoid it. I didn't make a lot of catches as an eight year old outfielder, because whenever a fly ball came my way, I used to close my eyes and hold my glove up more for protection than in the hope of catching it.

Choosing a marginal project is the startup equivalent of my eight year old strategy for dealing with fly balls. If you make anything good, you're going to have competitors, so you may as well face that. You can only avoid competition by avoiding good ideas.

I think this shrinking from big problems is mostly unconscious. It's not that people think of grand ideas but decide to pursue smaller ones because they seem safer. Your unconscious won't even let you think of grand ideas. So the solution may be to think about ideas without involving yourself. What would be a great idea for someone else to do as a startup?

4. Derivative Idea

Many of the applications we get are imitations of some existing company. That's one source of ideas, but not the best. If you look at the origins of successful startups, few were started in imitation of some other startup. Where did they get their ideas? Usually from some specific, unsolved problem the founders identified.

Our startup made software for making online stores. When we started it, there wasn't any; the few sites you could order from were hand-made at great expense by web consultants. We knew that if online shopping ever took off, these sites would have to be generated by software, so we wrote some. Pretty straightforward.

It seems like the best problems to solve are ones that affect you personally. Apple happened because Steve Wozniak wanted a computer, Google because Larry and Sergey couldn't find stuff online, Hotmail because Sabeer Bhatia and Jack Smith couldn't exchange email at work.

So instead of copying the Facebook, with some variation that the Facebook rightly ignored, look for ideas from the other direction. Instead of starting from companies and working back to the problems they solved, look for problems and imagine the company that might solve them. [2] What do people complain about? What do you wish there was?

5. Obstinacy

In some fields the way to succeed is to have a vision of what you want to achieve, and to hold true to it no matter what setbacks you encounter. Starting startups is not one of them. The stick-to-your-vision approach works for something like winning an Olympic gold medal, where the problem is well-defined. Startups are more like science, where you need to follow the trail wherever it leads.

So don't get too attached to your original plan, because it's probably wrong. Most successful startups end up doing something different than they originally intended—often so different that it doesn't even seem like the same company. You have to be prepared to see the better idea when it arrives. And the hardest part of that is often discarding your old idea.

But openness to new ideas has to be tuned just right. Switching to a new idea every week will be equally fatal. Is there some kind of external test you can use? One is to ask whether the ideas represent some kind of progression. If in each new idea you're able to re-use most of what you built for the previous ones, then you're probably in a process that converges. Whereas if you keep restarting from scratch, that's a bad sign.

Fortunately there's someone you can ask for advice: your users. If you're thinking about turning in some new direction and your users seem excited about it, it's probably a good bet.

6. Hiring Bad Programmers

I forgot to include this in the early versions of the list, because nearly all the founders I know are programmers. This is not a serious problem for them. They might accidentally hire someone bad, but it's not going to kill the company. In a pinch they can do whatever's required themselves.

But when I think about what killed most of the startups in the e-commerce business back in the 90s, it was bad programmers. A lot of those companies were started by business guys who thought the way startups worked was that you had some clever idea and then hired programmers to implement it. That's actually much harder than it sounds—almost impossibly hard in fact—because business guys can't tell which are the good programmers. They don't even get a shot at the best ones, because no one really good wants a job implementing the vision of a business guy.

In practice what happens is that the business guys choose people they think are good programmers (it says here on his resume that he's a Microsoft Certified Developer) but who aren't. Then they're mystified to find that their startup lumbers along like a World War II bomber while their competitors scream past like jet fighters. This kind of startup is in the same position as a big company, but without the advantages.

So how do you pick good programmers if you're not a programmer? I don't think there's an answer. I was about to say you'd have to find a good programmer to help you hire people. But if you can't recognize good programmers, how would you even do that?

7. Choosing the Wrong Platform

A related problem (since it tends to be done by bad programmers) is choosing the wrong platform. For example, I think a lot of startups during the Bubble killed themselves by deciding to build server-based applications on Windows. Hotmail was still running on FreeBSD for years after Microsoft bought it, presumably because Windows couldn't handle the load. If Hotmail's founders had chosen to use Windows, they would have been swamped.

PayPal only just dodged this bullet. After they merged with X.com, the new CEO wanted to switch to Windows—even after PayPal cofounder Max Levchin showed that their software scaled only 1% as well on Windows as Unix. Fortunately for PayPal they switched CEOs instead.

Platform is a vague word. It could mean an operating system, or a programming language, or a "framework" built on top of a programming language. It implies something that both supports and limits, like the foundation of a house.

The scary thing about platforms is that there are always some that seem to outsiders to be fine, responsible choices and yet, like Windows in the 90s, will destroy you if you choose them. Java applets were probably the most spectacular example. This was supposed to be the new way of delivering applications. Presumably it killed just about 100% of the startups who believed that.

How do you pick the right platforms? The usual way is to hire good programmers and let them choose. But there is a trick you could use if you're not a programmer: visit a top computer science department and see what they use in research projects.

8. Slowness in Launching

Companies of all sizes have a hard time getting software done. It's intrinsic to the medium; software is always 85% done. It takes an effort of will to push through this and get something released to users. [3]

Startups make all kinds of excuses for delaying their launch. Most are equivalent to the ones people use for procrastinating in everyday life. There's something that needs to happen first. Maybe. But if the software were 100% finished and ready to launch at the push of a button, would they still be waiting?

One reason to launch quickly is that it forces you to actually finish some quantum of work. Nothing is truly finished till it's released; you can see that from the rush of work that's always involved in releasing anything, no matter how finished you thought it was. The other reason you need to launch is that it's only by bouncing your idea off users that you fully understand it.

Several distinct problems manifest themselves as delays in launching: working too slowly; not truly understanding the problem; fear of having to deal with users; fear of being judged; working on too many different things; excessive perfectionism. Fortunately you can combat all of them by the simple expedient of forcing yourself to launch something fairly quickly.

9. Launching Too Early

Launching too slowly has probably killed a hundred times more startups than launching too fast, but it is possible to launch too fast. The danger here is that you ruin your reputation. You launch something, the early adopters try it out, and if it's no good they may never come back.

So what's the minimum you need to launch? We suggest startups think about what they plan to do, identify a core that's both (a) useful on its own and (b) something that can be incrementally expanded into the whole project, and then get that done as soon as possible.

This is the same approach I (and many other programmers) use for writing software. Think about the overall goal, then start by writing the smallest subset of it that does anything useful. If it's a subset, you'll have to write it anyway, so in the worst case you won't be wasting your time. But more likely you'll find that implementing a working subset is both good for morale and helps you see more clearly what the rest should do.

The early adopters you need to impress are fairly tolerant. They don't expect a newly launched product to do everything; it just has to do something.

10. Having No Specific User in Mind

You can't build things users like without understanding them. I mentioned earlier that the most successful startups seem to have begun by trying to solve a problem their founders had. Perhaps there's a rule here: perhaps you create wealth in proportion to how well you understand the problem you're solving, and the problems you understand best are your own. [4]

That's just a theory. What's not a theory is the converse: if you're trying to solve problems you don't understand, you're hosed.

And yet a surprising number of founders seem willing to assume that someone, they're not sure exactly who, will want what they're building. Do the founders want it? No, they're not the target market. Who is? Teenagers. People interested in local events (that one is a perennial tarpit). Or "business" users. What business users? Gas stations? Movie studios? Defense contractors?

You can of course build something for users other than yourself. We did. But you should realize you're stepping into dangerous territory. You're flying on instruments, in effect, so you should (a) consciously shift gears, instead of assuming you can rely on your intuitions as you ordinarily would, and (b) look at the instruments.

In this case the instruments are the users. When designing for other people you have to be empirical. You can no longer guess what will work; you have to find users and measure their responses. So if you're going to make something for teenagers or "business" users or some other group that doesn't include you, you have to be able to talk some specific ones into using what you're making. If you can't, you're on the wrong track.

11. Raising Too Little Money

Most successful startups take funding at some point. Like having more than one founder, it seems a good bet statistically. How much should you take, though?

Startup funding is measured in time. Every startup that isn't profitable (meaning nearly all of them, initially) has a certain amount of time left before the money runs out and they have to stop. This is sometimes referred to as runway, as in "How much runway do you have left?" It's a good metaphor because it reminds you that when the money runs out you're going to be airborne or dead.

Too little money means not enough to get airborne. What airborne means depends on the situation. Usually you have to advance to a visibly higher level: if all you have is an idea, a working prototype; if you have a prototype, launching; if you're launched, significant growth. It depends on investors, because until you're profitable that's who you have to convince.

So if you take money from investors, you have to take enough to get to the next step, whatever that is. [5] Fortunately you have some control over both how much you spend and what the next step is. We advise startups to set both low, initially: spend practically nothing, and make your initial goal simply to build a solid prototype. This gives you maximum flexibility.

12. Spending Too Much

It's hard to distinguish spending too much from raising too little. If you run out of money, you could say either was the cause. The only way to decide which to call it is by comparison with other startups. If you raised five million and ran out of money, you probably spent too much.

Burning through too much money is not as common as it used to be. Founders seem to have learned that lesson. Plus it keeps getting cheaper to start a startup. So as of this writing few startups spend too much. None of the ones we've funded have. (And not just because we make small investments; many have gone on to raise further rounds.)

The classic way to burn through cash is by hiring a lot of people. This bites you twice: in addition to increasing your costs, it slows you down—so money that's getting consumed faster has to last longer. Most hackers understand why that happens; Fred Brooks explained it in The Mythical Man-Month.

We have three general suggestions about hiring: (a) don't do it if you can avoid it, (b) pay people with equity rather than salary, not just to save money, but because you want the kind of people who are committed enough to prefer that, and (c) only hire people who are either going to write code or go out and get users, because those are the only things you need at first.

13. Raising Too Much Money

It's obvious how too little money could kill you, but is there such a thing as having too much?

Yes and no. The problem is not so much the money itself as what comes with it. As one VC who spoke at Y Combinator said, "Once you take several million dollars of my money, the clock is ticking." If VCs fund you, they're not going to let you just put the money in the bank and keep operating as two guys living on ramen. They want that money to go to work. [6] At the very least you'll move into proper office space and hire more people. That will change the atmosphere, and not entirely for the better. Now most of your people will be employees rather than founders. They won't be as committed; they'll need to be told what to do; they'll start to engage in office politics.

When you raise a lot of money, your company moves to the suburbs and has kids.

Perhaps more dangerously, once you take a lot of money it gets harder to change direction. Suppose your initial plan was to sell something to companies. After taking VC money you hire a sales force to do that. What happens now if you realize you should be making this for consumers instead of businesses? That's a completely different kind of selling. What happens, in practice, is that you don't realize that. The more people you have, the more you stay pointed in the same direction.

Another drawback of large investments is the time they take. The time required to raise money grows with the amount. [7] When the amount rises into the millions, investors get very cautious. VCs never quite say yes or no; they just engage you in an apparently endless conversation. Raising VC scale investments is thus a huge time sink—more work, probably, than the startup itself. And you don't want to be spending all your time talking to investors while your competitors are spending theirs building things.

We advise founders who go on to seek VC money to take the first reasonable deal they get. If you get an offer from a reputable firm at a reasonable valuation with no unusually onerous terms, just take it and get on with building the company. [8] Who cares if you could get a 30% better deal elsewhere? Economically, startups are an all-or-nothing game. Bargain-hunting among investors is a waste of time.

14. Poor Investor Management

As a founder, you have to manage your investors. You shouldn't ignore them, because they may have useful insights. But neither should you let them run the company. That's supposed to be your job. If investors had sufficient vision to run the companies they fund, why didn't they start them?

Pissing off investors by ignoring them is probably less dangerous than caving in to them. In our startup, we erred on the ignoring side. A lot of our energy got drained away in disputes with investors instead of going into the product. But this was less costly than giving in, which would probably have destroyed the company. If the founders know what they're doing, it's better to have half their attention focused on the product than the full attention of investors who don't.

How hard you have to work on managing investors usually depends on how much money you've taken. When you raise VC-scale money, the investors get a great deal of control. If they have a board majority, they're literally your bosses. In the more common case, where founders and investors are equally represented and the deciding vote is cast by neutral outside directors, all the investors have to do is convince the outside directors and they control the company.

If things go well, this shouldn't matter. So long as you seem to be advancing rapidly, most investors will leave you alone. But things don't always go smoothly in startups. Investors have made trouble even for the most successful companies. One of the most famous examples is Apple, whose board made a nearly fatal blunder in firing Steve Jobs. Apparently even Google got a lot of grief from their investors early on.

15. Sacrificing Users to (Supposed) Profit

When I said at the beginning that if you make something users want, you'll be fine, you may have noticed I didn't mention anything about having the right business model. That's not because making money is unimportant. I'm not suggesting that founders start companies with no chance of making money in the hope of unloading them before they tank. The reason we tell founders not to worry about the business model initially is that making something people want is so much harder.

I don't know why it's so hard to make something people want. It seems like it should be straightforward. But you can tell it must be hard by how few startups do it.

Because making something people want is so much harder than making money from it, you should leave business models for later, just as you'd leave some trivial but messy feature for version 2. In version 1, solve the core problem. And the core problem in a startup is how to create wealth (= how much people want something x the number who want it), not how to convert that wealth into money.

The companies that win are the ones that put users first. Google, for example. They made search work, then worried about how to make money from it. And yet some startup founders still think it's irresponsible not to focus on the business model from the beginning. They're often encouraged in this by investors whose experience comes from less malleable industries.

It is irresponsible not to think about business models. It's just ten times more irresponsible not to think about the product.

16. Not Wanting to Get Your Hands Dirty

Nearly all programmers would rather spend their time writing code and have someone else handle the messy business of extracting money from it. And not just the lazy ones. Larry and Sergey apparently felt this way too at first. After developing their new search algorithm, the first thing they tried was to get some other company to buy it.

Start a company? Yech. Most hackers would rather just have ideas. But as Larry and Sergey found, there's not much of a market for ideas. No one trusts an idea till you embody it in a product and use that to grow a user base. Then they'll pay big time.

Maybe this will change, but I doubt it will change much. There's nothing like users for convincing acquirers. It's not just that the risk is decreased. The acquirers are human, and they have a hard time paying a bunch of young guys millions of dollars just for being clever. When the idea is embodied in a company with a lot of users, they can tell themselves they're buying the users rather than the cleverness, and this is easier for them to swallow. [9]

If you're going to attract users, you'll probably have to get up from your computer and go find some. It's unpleasant work, but if you can make yourself do it you have a much greater chance of succeeding. In the first batch of startups we funded, in the summer of 2005, most of the founders spent all their time building their applications. But there was one who was away half the time talking to executives at cell phone companies, trying to arrange deals. Can you imagine anything more painful for a hacker? [10] But it paid off, because this startup seems the most successful of that group by an order of magnitude.

If you want to start a startup, you have to face the fact that you can't just hack. At least one hacker will have to spend some of the time doing business stuff.

17. Fights Between Founders

Fights between founders are surprisingly common. About 20% of the startups we've funded have had a founder leave. It happens so often that we've reversed our attitude to vesting. We still don't require it, but now we advise founders to vest so there will be an orderly way for people to quit.

A founder leaving doesn't necessarily kill a startup, though. Plenty of successful startups have had that happen. [11] Fortunately it's usually the least committed founder who leaves. If there are three founders and one who was lukewarm leaves, big deal. If you have two and one leaves, or a guy with critical technical skills leaves, that's more of a problem. But even that is survivable. Blogger got down to one person, and they bounced back.

Most of the disputes I've seen between founders could have been avoided if they'd been more careful about who they started a company with. Most disputes are not due to the situation but the people. Which means they're inevitable. And most founders who've been burned by such disputes probably had misgivings, which they suppressed, when they started the company. Don't suppress misgivings. It's much easier to fix problems before the company is started than after. So don't include your housemate in your startup because he'd feel left out otherwise. Don't start a company with someone you dislike because they have some skill you need and you worry you won't find anyone else. The people are the most important ingredient in a startup, so don't compromise there.

18. A Half-Hearted Effort

The failed startups you hear most about are the spectactular flameouts. Those are actually the elite of failures. The most common type is not the one that makes spectacular mistakes, but the one that doesn't do much of anything—the one we never even hear about, because it was some project a couple guys started on the side while working on their day jobs, but which never got anywhere and was gradually abandoned.

Statistically, if you want to avoid failure, it would seem like the most important thing is to quit your day job. Most founders of failed startups don't quit their day jobs, and most founders of successful ones do. If startup failure were a disease, the CDC would be issuing bulletins warning people to avoid day jobs.

Does that mean you should quit your day job? Not necessarily. I'm guessing here, but I'd guess that many of these would-be founders may not have the kind of determination it takes to start a company, and that in the back of their minds, they know it. The reason they don't invest more time in their startup is that they know it's a bad investment. [12]

I'd also guess there's some band of people who could have succeeded if they'd taken the leap and done it full-time, but didn't. I have no idea how wide this band is, but if the winner/borderline/hopeless progression has the sort of distribution you'd expect, the number of people who could have made it, if they'd quit their day job, is probably an order of magnitude larger than the number who do make it. [13]

If that's true, most startups that could succeed fail because the founders don't devote their whole efforts to them. That certainly accords with what I see out in the world. Most startups fail because they don't make something people want, and the reason most don't is that they don't try hard enough.

In other words, starting startups is just like everything else. The biggest mistake you can make is not to try hard enough. To the extent there's a secret to success, it's not to be in denial about that.



Notes

[1] This is not a complete list of the causes of failure, just those you can control. There are also several you can't, notably ineptitude and bad luck.

[2] Ironically, one variant of the Facebook that might work is a facebook exclusively for college students.

[3] Steve Jobs tried to motivate people by saying "Real artists ship." This is a fine sentence, but unfortunately not true. Many famous works of art are unfinished. It's true in fields that have hard deadlines, like architecture and filmmaking, but even there people tend to be tweaking stuff till it's yanked out of their hands.

[4] There's probably also a second factor: startup founders tend to be at the leading edge of technology, so problems they face are probably especially valuable.

[5] You should take more than you think you'll need, maybe 50% to 100% more, because software takes longer to write and deals longer to close than you expect.

[6] Since people sometimes call us VCs, I should add that we're not. VCs invest large amounts of other people's money. We invest small amounts of our own, like angel investors.

[7] Not linearly of course, or it would take forever to raise five million dollars. In practice it just feels like it takes forever.

Though if you include the cases where VCs don't invest, it would literally take forever in the median case. And maybe we should, because the danger of chasing large investments is not just that they take a long time. That's the best case. The real danger is that you'll expend a lot of time and get nothing.

[8] Some VCs will offer you an artificially low valuation to see if you have the balls to ask for more. It's lame that VCs play such games, but some do. If you're dealing with one of those you should push back on the valuation a bit.

[9] Suppose YouTube's founders had gone to Google in 2005 and told them "Google Video is badly designed. Give us $10 million and we'll tell you all the mistakes you made." They would have gotten the royal raspberry. Eighteen months later Google paid $1.6 billion for the same lesson, partly because they could then tell themselves that they were buying a phenomenon, or a community, or some vague thing like that.

I don't mean to be hard on Google. They did better than their competitors, who may have now missed the video boat entirely.

[10] Yes, actually: dealing with the government. But phone companies are up there.

[11] Many more than most people realize, because companies don't advertise this. Did you know Apple originally had three founders?

[12] I'm not dissing these people. I don't have the determination myself. I've twice come close to starting startups since Viaweb, and both times I bailed because I realized that without the spur of poverty I just wasn't willing to endure the stress of a startup.

[13] So how do you know whether you're in the category of people who should quit their day job, or the presumably larger one who shouldn't? I got to the point of saying that this was hard to judge for yourself and that you should seek outside advice, before realizing that that's what we do. We think of ourselves as investors, but viewed from the other direction Y Combinator is a service for advising people whether or not to quit their day job. We could be mistaken, and no doubt often are, but we do at least bet money on our conclusions.

Thanks to Sam Altman, Jessica Livingston, Greg McAdoo, and Robert Morris for reading drafts of this.
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Tuesday, October 17, 2006

Journey of an Afro-preneur: Worth the tinker..

It's been long since I posted on my journey as an afropreneur and just last weekend a special friend of mine pointed that out to me, so I felt it necessary to return back to chronicling this journey, although I am the view that some of my posts have been part of my journey I haven't titled them in the manner that would suggest that they are part of the journey. I think every experience worth remembering must be put down as an event that brings with it new lessons, successes and failures, triumphs and defeats, all must be given the proper attention.

As I seat here listening to one of Africas most distinguished musicians, Oliver Mtukudzi, whose music is amazing and a collectors item for any serious person, a million thoughts are going through my mind (honestly may be just one..When will I get more money?...:-) ..) am forced to focus on the current challenges am facing as web developer in a market where every "smart" university graduate and anybody who can write a program wants to undercut me on every project that pops up. I remember a time when one could survive on one project a month comfortably, the hourly rate for a project was strong enough to cater for my needs, a few years ago I used to get paid about Ksh45,000 (about 600$ USD at the current exchange rate) for about 5 days work (minimal effort required) without breaking a sweat now those were the good times. Now people approach me with figures which would make me run to hills like the freedom fighters (MauMau) of yesteryear.

I always thought that as you got better at what you do and honed your skills the more money you'd be able to command for work, just look at lawyers and almost any other profession, that belief has been crashed with the rise of "For 10grand I'do everything" breed of developers out there. Don't take me wrong, I understand that people need to eat and that we all can't charge high fees, but am also of the view that cheap is also bad for the industry because one day that ksh10,000 project will not be able to meet your current needs and you will want more but shock on you when you realise there's another coder standing behinding you telling your client "...I can do everything plus maintenance and even iron your clothes for Ksh5000..." and your left wondering "What have I done?.."

The Problem:

I'm afraid am part of the problem, having come from a culture of undercutting the competition on pricing we have spawned a breed that seems hell bent on giving more for less just to earn that shilling.

The Solution:

The solution, I don't think I have one, I could carry out mass genocide on "For 10grand I'do everything" breed of developers but that would only land me in court or worse death where I know I will never be able to renegotiate my way out of fiery gates of Hades (hell is real whether you believe in it or not) for now am thinking that an organisation or body of freelance developers could pool their resources and come up with a body that would ensure we maintain certain fee standards, guidelines that would ensure that we don't go cheap even in a flooded market.

The Exception:

There are projects out there that can only be done cheaply but careful consideration must be given before embarking on those projects.I have often found that "small" is usually big, because it tends to mean that the client hasn't properly thought out what they want and as such you end up doing more work for less. The exception must never become the rule.

The Rule:

Cheap is bad and it kills as all. I often say that "ignorance is good for business" :-) take web hosting and domain registration for example, charge a client 50$USD for a .com which could go for as little as 7$USD and 250-500$USD for hosting that can go for as little as 50$USD Why you may ask?greed..NO..the client is not only paying for the service his also paying for your time and the knowledge you have acquired over a period of time.

I am reminded of the story of the Ford motor plant, one time the assembly line had a problem that had resulted in the halting of production resulting in losses. Mr.ford attempted to solve the problem internally using all the manpower he had but to no avail, so he called in an engineer who came and looked at the machinery for about 10 minutes, keenly observing the workings, he opened up one section and twisted a knob and the machinery was up and running. The engineer then sends Mr.Ford an invoice of $10,000USD which was a tidy some in the 30's and 40's, Mr.Ford was shocked at this and proceeded to send him a note asking hwo he had come up with such a figure yet he had only "tinkered" with the machinery. The engineer then sent a rather smart response of a breakdown of his costs:

Tinkering 10$ USD
Knowing where to tinker 9,990$ USD
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10,000$ USD
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You are worth the tinker...act like it...

Friday, October 13, 2006

Is the grass truly greener?..

"Is the grass truly greener?.." I keep asking myself that question everyday when I wake up in the morning and when am constantly bombarded by such questions as "will I ever break from this cycle of financial drought?"..

I think I'll just smoke the grass and let the forces of nature take their own course..:-)

Wednesday, October 11, 2006

Interesting ideas and the upcoming tech boom

Africa is being touted as the next frontier and word on the ground is that by 2010 they'll be a tech boom in Kenya. All signs seem to point to this happening:
  1. Explosive growth of the mobile industry
  2. Internet penetration in most areas.
  3. Economic growth of at least 5.5% ( hasn't trickled down to the common man "mwananchi" but am told that this takes time..how long?!?!..).
  4. ICT sector becoming a major investment area for locals as well as foreign companies. Dimension Data, one of the largest It companies in Africa recently acquired a major stake in ICL a local IT company owned by the Sameer Group.
  5. The recent visit by some Google directors which highlighted Kenya as a significant partner within the region.

With this in mind I had a very interesting discussion with a colleague (i call him Hoolio) of mine yesterday and what he told me really wet my appetite. We met in Westlands, a leafy suburb in Nairobi, at around 4pm and proceeded to head to K1 (Klubhouse) since Sohos (apparently a classy joint) was closed for the National Holiday (Heroes day).

On the way there we ended up talking about the YouTube/Google acquisition which had escaped me since I hadn't had the chance to access the blogosphere. We then sat down, and over a few drinks, Hoolio proceeded to explain to me what his vision was and where I fit in the whole picture, basically we are supposed to form a team and grow a web based brand from a local name to an international brand complete with TV show and magazine, the exciting thing about the whole venture is that we Will be backed up by one of the largest and most successful companies in the region.

We didn't go into the legalities but our "financial and technical" backers would own 51% of the company brand since they did come up with it. We would be put on a basic salary (I had the figure and believe me you its a basic salary) by the VC firm as we get the business up and running and eventually grow it to the point of self-sustainability, this was a major selling point for me since at the end of the day we all have to pay bills and eat and having an income while working on a dream/vision really eases those worries.

The advantage of having a major company as a partner cannot be overstated, it gives us access to their technical and managerial know how, business contacts necessary to open doors and close deals and the "muscle" to actually get things done. The head of the company is a major IT visionary and has a wealth of experience in pioneering IT projects that have put the company in a league of its own.

The opportunity presented to me enables me to be part of something that grow into a well known brand, you rarely get chances like this presented to you. I would have the opportunity to build an application and in time head my own team, an exciting opportunity whichever way you look at it.

Hoolio is waiting for my feedback today and the next few days will be very crucial...check here for updates...

Tuesday, October 03, 2006

Top ten geek business myths

Myth #1: A brilliant idea will make you rich.

Reality: A brilliant idea is neither necessary nor sufficient for a successful business, although all else being equal it can't hurt. Microsoft is probably the canonical example of a successful business, and it has never had a single brilliant idea in its entire history. (To the contrary, Microsoft has achieved success largely by seeking out and destroying other people's brilliant ideas.) Google was based on a couple of brilliant ideas (Page rank, text-only ads, massive parallel implementation on cheap hardware) but none of those ideas were original with Larry or Sergey. This is not to say that Larry, Sergey and Bill are not bright guys -- all three of them are sharper than I can ever hope to be. But the idea that any of them woke up one day with an inspiration and coasted the rest of the way to riches is a myth.

Myth #2: If you build it they will come.

There is a grain of truth to this myth. There have been examples of businesses that just built a product, cast it upon the ether(net), and achieved success. (Google is the canonical example.) But for every Google there are ten examples of companies that had killer products that didn't sell for one reason or another. My favorite example of this is the first company I tried to start back in 1993. It was called FlowNet, and it was a new design for a high speed local area network. It ran at 500Mb/s in a time when 10 Mb/s ethernet was the norm. For more than five years, FlowNet had the best price/performance ratio of any available network. On top of that, FlowNet had built-in quality-of-service guarantees for streaming video. If FlowNet had taken over the world your streaming video would be working a lot better today than it does.

But despite the fact that on a technical level FlowNet blew everything else out of the water it was an abysmal failure as a business. We never sold a single unit. The full story of why FlowNet failed would take me far afield, but if I had to sum it up in a nutshell the reason it didn't sell was very simple: it wasn't Ethernet. And if we'd done our homework and market research we could have known that this would be, if not a show-stopper at least a significant obstacle. And we would have known it before we spent tens of thousands of dollars of our own money on patent attorneys and prototypes.

Myth #3: Someone will steal your idea if you don't protect it.

Reality: No one gives a damn about your idea until you actually succeed and by then it's too late. Even on the off chance that you do manage to stumble across someone who is as excited about your idea as you are, if they have any brains they will join you rather than try to beat you. (And if they don't have any brains then it doesn't matter what they do.)

Patent protection does serve one useful purpose: it can make investors feel warm and fuzzy, especially naive investors. But I strongly recommend that you do your own patent filings. It's not hard to do once you learn how (get the Nolo Press book "Patent it Yourself"). You'll do a better job than most patent attorneys and save yourself a lot of money.

Myth #4: What you think matters.

Reality: It matters not one whit that you and all your buddies think that your idea is the greatest thing since sliced pizza (unless, of course, your buddies are rich enough to be the customer base for your business). What matters is what your customers think. It is natural to assume that if you and your buddies think your idea is cool that millions of other people out there will think it's cool too, and sometimes it works out that way, but usually not. The reason is that if you are smart enough to have a brilliant idea then you (and most likely your buddies) are different from everyone else. I don't mean to sound condescending here, but the sad fact of the matter is that compared to you, most people are pretty dumb (look at how many people vote Republican ;-) and they care about dumb things. (I just heard about a new clothing store in Pasadena that has lines around the block. A clothing store!) If you cater only to people who care about the things that you care about then your customer base will be pretty small.

Myth #5: Financial models are bogus.

As with myth #2 there is a grain of truth here. As Carl Sagan was fond of saying, prophecy is a lost art. There is no way to know for sure how much money your business is going to make, or how much it will cost to get to market. The reason for doing financial models is to do a reality check and convince yourself that making a return on investment is even a plausible possibility. If you run the numbers and find out that in order to reach break-even you need a customer base that is ten times larger than the currently known market for your product then you should probably rethink things. As Dwight Eisenhower said: plans are useless, but planning is indispensible.

This myth is the basis for one of the most classic mistakes that geeks make when pitching their ideas. They will say things like "Even if we only capture 1% of the market we'll make big bucks." Statements like that are a dead giveaway that you haven't done your homework to find out what your customers actually want. You may as well say: there's a good chance that only 1 customer in 100 will buy our product (and frankly, we're not even sure about that). Doesn't exactly inspire confidence.

Myth #6: What you know matters more than who you know.

Reality: You've been in denial about this your whole life. You were either brought up to believe that being smart mattered, or you just didn't believe your mother when she told you that getting along with the other kids was more important than getting straight A's.

The truth is, who you know matters more than what you know. This is not to say that being smart and knowledgable is useless. Knowing "what" is often an effective means of getting introduced to the right "whos". But ultimately, the people you know and trust (and more importantly who trust you) matter more than the factual knowledge you may have at your immediate disposal. And there is a sound reason for this: business decisions are horrifically complicated. No one person can possibly amass all the knowledge and experience required to make a broad range of such decisions on their own, so effective business people delegate much of their decision-making to other people. And when they choose who to delegate to, their first pick is always people they know and trust.

Ironically, C programmers understand this much better than Lisp programmers. One of the ironies of the programming world is that using Lisp is vastly more productive than using pretty much any other programming language, but successful businesses based on Lisp are quite rare. The reason for this, I think, is that Lisp allows you to be so productive that a single person can get things done without having to work together with anyone else, and so Lisp programmers never develop the social skills needed to work effectively as a member of a team. A C programmer, by contrast, can't do anything useful except as a member of a team. So although programming in C hobbles you in some ways, it forces you to form groups whose net effectiveness is greater than the sum of their parts, and who collectively can stomp on all the individual Lisp programmers out there, even though one-on-one a Lisper can run rings around a C programmer.

Myth #7: A Ph.D. means something.

Reality: The only thing a Ph.D. means is that you're not a moron, and you're willing to put up with the bullshit it takes to slog your way through a Ph.D. program somewhere. Empirically, having a Ph.D. is negatively correlated with business success. This is because the reward structure in academia is almost the exact opposite of what it is in business. In academia, what your peers think matters. In business, it's what your customers think that matters, and your customers are (almost certainly) not your peers.

[UPDATE: this is not to say that getting a Ph.D. is useless. You can learn a lot of useful stuff by getting a Ph.D. But it's the knowledge and experience that you gain by going through the process that is potentially valuable (for business endeavors), not the degree itself.]

Myth #8: I need $5 million to start my business

Reality: Unless you're building hardware (in which case you should definitely rethink what you're doing) you most likely don't need any startup capital at all. Paul Graham has written extensively about this so I won't belabor it too much, except to say this: you don't need much startup capital, but what you do need is a willingness to work your buns off. You have to bring your brilliant idea to fruition yourself; no one else will do it for you, and no one will give you the money to hire someone to do it for you. The reason is very simple: if you don't believe in the commercial potential of your idea enough to give up your evenings and weekends to own a bigger chunk of it, why should anyone else believe in it enough to put their hard-earned money at risk?

Myth #9: The idea is the most important part of my business plan.

Reality: The idea is very nearly irrelevant. What matters is 1) who are your customers? 2) Why will they buy what you're selling? (Note that the reason for this could very well be something like, "Because I'm famous and I have a huge fan base and they will buy sacks of stale dog shit if it has my name on it." But in your case it will more likely be, "Because we have a great product that blows the competition out of the water.") 3) Who is on your team? and 4) What are the risks?

Myth #10: Having no competition is a good thing.

Reality: If you have no competition the most likely reason for that is that there's no money to be made. There are six billion people on this planet, and it's very unlikely that every last of them will have left a lucrative market niche completely unexploited.

The good news is that it is very likely that your competition sucks. The vast majority of businesses are not run very well. They make shoddy products. They treat their customers and their employees like shit. It's not hard to find market opportunities where you can go in and kick the competition's ass. You don't want no competition, what you want is bad competition. And there's plenty of that out there.

Special bonus myth (free with your paid subscription): After the IPO I'll be happy.

If you don't enjoy the process of starting a business then you will probably not succeed. It's just too much work, and it will suck you dry if you're not having fun doing it. Even if you get filthy stinking rich you will just have more time to look back across the years you wasted being miserable and nursing your acid reflux. The charm of expensive cars and whatnot wears off quickly. There's only one kind of happiness that money can buy, and that is the opportunity to be on the other side of the table when some bright kid comes along with a brilliant idea for a business.

All these myths can be neatly summarized in a pithy slogan: it's the customer, stupid. Success in business is not about having a brilliant idea. Bright ideas are a dime a dozen. Business is about taking a bright idea and assembling a team that can turn that idea into a product and bring that product to customers who want to buy it. It's that simple. And that complicated.

Good luck.

Friday, September 29, 2006

Indeed.com: Salary Comparison Search engine


Just stumbled upon Indeed.com. It does a salary search that gives you an estimate (key word) of what a salary might be for a particular job in a specific state or city.

So I tried a search for Web Developer, Nairobi and it told me Sorry no web developers work in Nairobi!!...hahahahaha!! ...:-) u try

Blue stuff,mobile companies,Vigilantes and my week

My week can only be summarised as crazy and exciting at the same time.

On the mobile front, Celtel, the 2nd mobile service provider has introduced something that is bound to put MJ (Michael Joseph) on the run, one tariff for the 3 east african countries with no roaming charges, I don't know about you but that kicks arse whichever you look at it. In a nutshell everytime I go to Dar es Salaam,Tanzania to visit my dear brother I don't have to remove my SIM card and put one for one a TZ mobile provider, I'll just use my my Celtel Kenya SIM card and pay the same rate.

Word on the ground is that Celtel is drowning in debt. The numbers do give you a clearer picture, there are 6.5 million mobile subscribers in Kenya, Safaricom has 4.6 million of them leaving Celtel with a paltry 1.9 million. I'm a safaricom subscriber but I have to admit Celtel has better network coverage and a wider range of services. I'm in the process of acquiring my 2nd phone just for Celtel usage.

It seems Blue isn't the color to be this week. Bluefi5h seems to have run out of RAM resulting in a major boot sector error which culminated in a hard disk crash, in laymans terms the dude is burned out. I just hope he recovers and gets back to his normal self.

It seems that mobile phones are really penetrating in Africa, at least according to a report on ZDNET here. We now have HSDPA (high-speed downlink packet access) with our South African brothers. Looks like things will get better overtime, Celtel also launched their mobile internet access at Ksh20 (0.26$ cents) per mb (megabit) of data sent and received.

I had a talk with "Duke" of stockskenya.com and he tells me based on this article he'll launch a proactive group to agitate for the rights of the investor. You really need to read this article and see the underhanded approach adopted by stock brokers in a very bullish market. Looks like the birth of a vigilante group hmmmm...:-)

It seems the call center business isn't as rosey as I thought, if the action the company is taking an indication then things don't look very sunny. After a recruitment drive that so our company hire more then 100 people for one of our major clients, I was shocked to find out that the client cancelled the accounts and now we stuck with empty computers and the company has to retrench the guys they'd hired. Most had only worked for about 3 weeks so the disappointment and anger is at some crazy levels. Let's see how that goes...watch this space I might be out of a full time job sooner then I think....

It's amazing how web companies are valued look at the numbers:
Facebook-1.5$ billion
MySpace-Currently 580$ million but estimated to have a value of 15$ billion in the next 10 years or so..purchased by News Corp
Youtube-1$ billion.. but Mark Cuban doesn't think so article here

And that was my week...

Saturday, September 23, 2006

The Top Ten or Eleven Lies of Entrepreneurs

It seems Guy Kawasaki also wanted to expose the entrepreneurs lies here they are:

  1. “Our projections are conservative.” An entrepreneur's projections are never conservative. If they were, they would be $0. I have never seen an entrepreneur achieve even her most conservative projections. Generally, an entrepreneur has no idea what sales will be, so she guesses: “Too little will make my deal uninteresting; too big, and I'll look hallucinogenic.” The result is that everyone's projections are $50 million in year four. As a rule of thumb, when I see a projection, I add one year to delivery time and multiply by .1.
  2. “(Big name research firm) says our market will be $50 billion in 2010.” Every entrepreneur has a few slides about how the market potential for his segment is tens of billions. It doesn't matter if the product is bar mitzah planning software or 802.11 chip sets. Venture capitalists don't believe this type of forecast because it's the fifth one of this magnitude that they've heard that day. Entrepreneurs would do themselves a favor by simply removing any reference to market size estimates from consulting firms.
  3. “(Big name company) is going to sign our purchase order next week.” This is the “I heard I have to show traction at a conference” lie of entrepreneurs. The funny thing is that next week, the purchase order still isn't signed. Nor the week after. The decision maker gets laid off, the CEO gets fired, there's a natural disaster, whatever. The only way to play this card if AFTER the purchase order is signed because no investor whose money you'd want will fall for this one.
  4. “Key employees are set to join us as soon as we get funded.” More often than not when a venture capitalist calls these key employees who are VPs are Microsoft, Oracle, and Sun, he gets the following response, “Who said that? I recall meeting him at a Churchill Club meeting, but I certainly didn't say I would leave my cush $250,000/year job at Adobe to join his startup.” If it's true that key employees are ready to rock and roll, have them call the venture capitalist after the meeting and testify to this effect.
  5. “No one is doing what we're doing.” This is a bummer of a lie because there are only two logical conclusions. First, no one else is doing this because there is no market for it. Second, the entrepreneur is so clueless that he can't even use Google to figure out he has competition. Suffice it to say that the lack of a market and cluelessness is not conducive to securing an investment. As a rule of thumb, if you have a good idea, five companies are going the same thing. If you have a great idea, fifteen companies are doing the same thing.
  6. “No one can do what we're doing.” If there's anything worse than the lack of a market and cluelessness, it's arrogance. No one else can do this until the first company does it, and ten others spring up in the next ninety days. Let's see, no one else ran a sub four-minute mile after Roger Bannister. (It took only a month before John Landy did). The world is a big place. There are lots of smart people in it. Entrepreneurs are kidding themselves if they think they have any kind of monopoly on knowledge. And, sure as I'm a Macintosh user, on the same day that an entrepreneur tells this lie, the venture capitalist will have met with another company that's doing the same thing.
  7. “Hurry because several other venture capital firms are interested.” The good news: There are maybe one hundred entrepreneurs in the world who can make this claim. The bad news: The fact that you are reading a blog about venture capital means you're not one of them. As my mother used to say, “Never play Russian roulette with an Uzi.” For the absolute cream of the crop, there is competition for a deal, and an entrepreneur can scare other investors to make a decision. For the rest of us, don't think one can create a sense of scarcity when it's not true. Re-read the previous blog about the lies of venture capitalists, to learn how entrepreneurs are hearing “maybe” when venture capitalists are saying “no.”
  8. “Oracle is too big/dumb/slow to be a threat.” Larry Ellison has his own jet. He can keep the San Jose Airport open for his late night landings. His boat is so big that it can barely get under the Golden Gate Bridge. Meanwhile, entrepreneurs are flying on Southwest out of Oakland and stealing the free peanuts. There's a reason why Larry is where he is, and entrepreneurs are where they are, and it's not that he's big, dumb, and slow. Competing with Oracle, Microsoft, and other large companies is a very difficult task. Entrepreneurs who utter this lie look at best naive. You think it's bravado, but venture capitalists think it's stupidity.
  9. “We have a proven management team.” Says who? Because the founder worked at Morgan Stanley for a summer? Or McKinsey for two years? Or he made sure that John Sculley's Macintosh could power on? Truly “proven” in a venture capitalist's eyes is founder of a company that returned billions to its investors. But if the entrepreneur were that proven, that he (a) probably wouldn't have to ask for money; (b) wouldn't be claiming that he's proven. (Do you think Wayne Gretzky went around saying, “I am a good hockey player”?) A better strategy is for the entrepreneur to state that (a) she has relevant industry experience; (b) she is going to do whatever it takes to succeed; (c) she is going to surround herself with directors and advisors who are proven; and (d) she'll step aside whenever it becomes necessary. This is good enough for a venture capitalist that believes in what the entrepreneur is doing.
  10. “Patents make our product defensible.” The optimal number of times to use the P word in a presentation is one. Just once, say, “We have filed patents for what we are doing.” Done. The second time you say it, venture capitalists begin to suspect that you are depending too much on patents for defensibility. The third time you say it, you are holding a sign above your head that says, “I am clueless.” Sure, you should patent what you're doing--if for no other reason than to say it once in your presentation. But at the end of the patents are mostly good for impressing your parents. You won't have the time or money to sue anyone with a pocket deep enough to be worth suing.
  11. “All we have to do is get 1% of the market.” (Here's a bonus since I still have battery power.) This lie is the flip side of “the market will be $50 billion.” There are two problems with this lie. First, no venture capitalist is interested in a company that is looking to get 1% or so of a market. Frankly, we want our companies to face the wrath of the anti-trust division of the Department of Justice. Second, it's also not that easy to get 1% of any market, so you look silly pretending that it is. Generally, it's much better for entrepreneurs to show a realistic appreciation of the difficulty of building a successful company.
Talk about insight...

Friday, September 22, 2006

Of Angel Investors,and Venture Capitalists..

Angel Investors (Private Investors),Venture Capitalists, Investors..call them whatever you want at the end of the day they bring in the much needed money to take that dream of yours and turn it into a reality, the question is at what cost?..A large percentage of startup companies In Silicon Valley have leveraged large amounts of "seed" money in order to achieve their main objectives, is this truly the way to go?..

I haven't had the opportunity to meet on a business level any potential venture capitalists in this region, but lately its been the buzz word on everybody's lips. I know of two people who made their money developing an application that in a nutshell gave you access to the laws of the land with a single click, needless to say it proved to be a hit with several big companies,right now they've decided to take on the "venture capitalist" tag, I think I need to have a serious talk with them and ask them how that's going.

Just this week the Villager informed me that he was in the process of acquiring funding from an investor over an idea him and I had, you have to give the guy marks for going out of his way to get things moving. My skepticism went into full throttle when he told me that this money would be a loan at a certain amount of interest yet to be decided, I kept getting visions of an overseer standing over my shoulder witha whip screamin and shouting Profits!!Profits!! makes me think of Amistad (excellent movie starring Djimon Honsou)..I doubt if that's dramatic but when it comes tomoney you can't really be sure the extremes people will go to ensure that they get back their investment and a profit on top of it.

I'm meeting the Villager this weekend on "Kahawa (coffee) Sunday" :-) seems we've coined a name for those brainstorming sessions we have on sunday's..let me see what he'll tell me about our venture capitalist and whether wil have to sign away our souls.

Let me close this post with the top 9 lies of venture capitalists :-) as told by Guy Kawasaki, am sure there is number ten out there, be good and post it as a comment :-)..

  1. “I liked your company, but my partners didn't.” In other words, “no.” What the sponsor is trying to get the entrepreneur to believe is that he's the good guy, the smart guy, the guy who gets it; the “others” didn't, so don't blame him. This is a cop out; it's not the other partners didn't like the deal as much as the sponsor wasn't a true believer. A true believer would get it done.
  2. “If you get a lead, we will follow.” In other words, “no.” As the old Japanese say, “If your aunt had balls, she'd be your uncle.” Well, she doesn't have balls, so it doesn't matter. The venture capitalist is saying, “ We don't really believe, but if you can get Sequoia to lead, we'll jump on the pile.” In other words, once the entrepreneur doesn't need the money, the venture capitalist would be happy to give him some more--this is like saying, “Once you've stopped Larry Csonka cold, we'll help you tackle him.” What entrepreneurs want to hear is, “If you can't get a lead, we will.” That's a believer.
  3. “Show us some traction, and we'll invest.” In other words, “no.” This lie translates to “I don't believe your story, but if you can prove it by achieving significant revenue, then you might convince me. However, I don't want to tell you 'no' because I might be wrong and by golly you may sign up a Fortune 500 customer and then I'd look like a total orifice.”
  4. “We love to co-invest with other venture capitalists.” Like the sun rising and Canadians playing hockey, you can depend on the greed of venture capitalists. Greed in this business translates to “If this is a good deal, I want it all.” What entrepreneurs want to hear is, “We want the whole round. We don't want any other investors.” Then it's the entrepreneur's job to convince them why other investors can make the pie bigger as opposed to re-configuring the slices.
  5. “We're investing in your team.” This is an incomplete statement. While it's true that they are investing in the team, entrepreneurs are hearing, “We won't fire you--why would we fire you if we invested because of you?” That's not what the venture capitalist is saying at all. What she is saying is, “We're investing in your team as long as things are going well, but if they go bad we will fire your ass because no one is indispensable.”
  6. “I have lots of bandwidth to dedicate to your company.” Maybe the venture capitalist is talking about the T3 line into his office, but he's not talking about his personal calendar because he's already on ten boards. Counting board meetings, an entrepreneur should assume that a venture capitalist will spend between five to ten hours a month on a company. That's it. Deal with it. And make board meetings short!
  7. “This is a vanilla term sheet.” There is no such thing as a vanilla term sheet. Do you think corporate finance attorneys are paid $400/hour to push out vanilla term sheets? If entrepreneurs insist on using a flavor of ice cream to describe term sheets, the only flavor that works is Rocky Road. This is why they need their own $400/hour attorney too--as opposed to Uncle Joe the divorce lawyer.
  8. “We can open up doors for you at our client companies.” This is a double whammy of lie. First, a venture capitalist can't always open up doors at client companies. Frankly, he might be hated by the client company. The worst thing in the world may be a referral from him. Second, even if the venture capitalist can open the door, entrepreneurs can't seriously expect the company to commit to your product--that is, something that isn't much more than a slick (10/20/30) PowerPoint presentation.
  9. “We like early-stage investing.” Venture capitalists fantasize about putting $1 million into a $2 million pre-money company and end up owning 33% of the next Google. That's early stage investing. Do you know why we all know about Google's amazing return on investment? The same reason we all know about Michael Jordan: Googles and Michael Jordans hardly ever happen. If they were common, no one would write about them. If you scratch beneath the surface, venture capitalists want to invest in proven teams (eg., the founders of Cisco) with proven technology (eg., the basis of a Nobel Prize) in a proven market (eg., ecommerce). We are remarkably risk averse considering it's not even our money.