Alex Stamp

CEO of Cloudherd.com

More insights from launching Cloudherd.com- Alex Stamp

This is the third article in a series of articles from entrepreneurs that have been through Incubate, the University of Sydney Incubator program. Alex Stamp launched Cloudherd.com along with Mike Titchen and Luke Fries in 2012 as the first group of businesses in the Incubate program. Cloudherd is trying to solve the problems that farmers face when trying to sell their cattle, it’s a very inefficient market that seems to be stuck in the 1900s and Cloudherd is trying to drag it into 2013 with an online Auction system and cattle inventory application. The first article is here Launching Cloudherd.com and the second article is here Start-up execution @Cloudherd.com

 

So the third article in this series slipped. I suppose that as a hard charging, networking, all-singing, all-dancing entrepreneur it is a bit hard to finish three long form articles in three weeks.

I’ve also been having chronic laptop overheating problems with the recent warmer weather, so much so that I couldn’t even watch YouTube the other day unless I wanted my computer to turn into a kettle. The reality was that although I may have had the spare hour or two I would have needed to get this article out, I just didn’t. I’ll try to make up for that.

To round off my series of articles, which some have described as “bad”, “confronting” or somewhat favorably as “a sledgehammer of honesty to the face”, I thought I would talk about what not to do.

Lots of entrepreneurial articles essentially consist of generic buzzwords and lists and end up being “The four things about big data you have to know” or some equally banal piece of outsourced tripe. My list is better, maybe, since I wrote it myself and there are substantially more than four points, though some of them may be elegant ways of restating what I said in previous articles.

Team

Investors are always obsessed with the team, here is what not to do,

  • No one loves your idea as much as  you. If the idea is kind of your baby then don’t necessarily expect your other founders to work as hard as you or be as passionate about the business as you. They may not necessarily care about organic dog food, or whatever it is you are doing, but they’ve still agreed to work for no money and the Russian roulette of compensation known as equity. Respect that.
  • Glossing over tech issues. I see a fair number of young founders doing this particularly grievous sin. They get one guy on the team to learn PHP and they then brand him as the tech guy and gloss over all technical issues. You will get found out if you do this and it is embarrassing, admit what you don’t know and at least try to start your tech guys off from some tangentially related field, like embedded systems.
  • Your history probably doesn’t count. Don’t think that anyone will think you are a red-hot startup founder just because you did an internship at PwC, Deloitte or Random Professional Corporation #528. Everyone knows that your job was close to that of a monkey’s, except monkeys cost more to feed and house. If you weren’t a monkey then don’t expect anyone to believe that, you unfortunately have to prove yourself when you are a young entrepreneur.
  • Create a learning team. Your team’s skill base will affect how long it takes you to execute a given set of tasks but in the end what will determine the most valuable members of your team is how much they are willing to learn. Always be learning, and not selling. If you’re selling, you’re not learning anything about your customer, investor or partner. Socratic dialogue can be very powerful.

I’m also assuming that most of my audience is people thinking about starting a tech start-up, not organic dog food, and as such I’d like to also present some points about the small amount of technology implementation that I know and participate in.

prototype  inventory module

 

Tech

  • Patents.Don’t say your technology is patentable as you are lying in an obtuse manner. Anything is patentable in the US, including Amazon’s stupid one click shopping cart, put enough claims in and you can probably get a patent. If you invented cold fusion, or a way to stop cows from emitting methane, then maybe you can patent it but it will end up costing you a lot of money to protect it.
  • Algorithms. Stop running around like a parrot who has drunk a coffee, clucking about how your advanced analysis and algorithms will give you an unassailable competitive advantage. Not only do your competitors likely have the same data, if not more, they also have smart people working for them who can probably reverse engineer your algorithm or features. Furthermore your advanced algorithms which are likely to be slightly more complex versions of existing common algorithms,so you should use standard deviation to figure out outliers and then throw them out. I know a civil engineer who just wrote a GPS tracking algorithm to get rid of junk data; if he can do it, so can your competitors. All of which begs an interesting question, why do so many people use all the same statistical models?
  • No one will understand for a long time. If your technology is actually valuable no one outside the industry, nay maybe even a few people inside that industry, will actually understand what you are doing and how you are doing it. Expect lots of blank looks as you tell people about the complexities of serving genetic data from databases and that being why you had to partner with another company. Most people will never even bother to learn about this stuff even if you tell them about it.

Investors

I’ll finish on investors, as most startup founders will talk to them many hundreds of times during their lives. Investors give you fuel to burn and can bring a lot to the table; that said there are lots of things that you shouldn’t do:

  • Don’t spend too much time talking to investors. Outside of certain investor markets capital availability can be very poor and as such you should spend a lot more time executing than you should trying to hustle investors. If you can get a few paying users then you will be in a lot stronger position to talk to them; not that that is easy. Without any seed funding it can be extremely difficult to launch to certain markets.
  • Trust & Alignment. Don’t necessarily trust investors that don’t make their living from the startup scene. They won’t think twice about screwing you because their reputation isn’t their way of putting food on the table. Break out the NDA. (ed not sure I agree with this one, it just depends on the individual)
  • Persistence. Don’t think that investors will understand or even be interested in your idea based off one pitch session. There can be a lot of brutal, hour-long discussions about the ins and outs of the business on a microscopic level which will leave you exhausted before they even think about term sheets. That first pitch might even be a disaster, but don’t write things off as you might still have a chance to impress.
  • Do your own due diligence. Don’t be afraid to look into potential investors, you might be surprised what you find…..

Anyway, thank you for reading through my series of articles and I hope you found them amusing and useful. Though at times I may seem harsh I just wish to dispense with this American entrepreneur style of things that seems to affect some young entrepreneurs; they think that they will pump out a few weeks of code and then get funded to the tune of several million dollars.

This is not likely to happen in Australia and I encourage those thinking of starting a business to be realistic about what they hope to achieve. If you would like some more advice there may be a few more articles in future, and I’m always available to help if you connect with me on LinkedIn http://au.linkedin.com/pub/alexander-stamp/44/582/917/

 

 

 

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Start-up Execution – Alex Stamp – @cloud_herd

This is the second article in a series of articles from entrepreneurs that have been through Incubate, the University of Sydney Incubator program. Alex Stamp launched Cloudherd.com along with Mike Titchen and Luke Fries in 2012 as the first group of businesses in the Incubate program. Cloudherd is trying to solve the problems that farmers face when trying to sell their cattle, it’s a very inefficient market that seems to be stuck in the 1900s and Cloudherd is trying to drag it into 2013 with an online Auction system and cattle inventory application. The first article is here Launching Cloudherd.com

Introduction:

Alex Stamp - Cloudherd.com

Alex Stamp – Cloudherd.com – Credit Sunnysnaps.com

Hi, Alex here again. In this article I’m going to share with you every single trick for both business and technical execution.

Why am I doing this? Well as mentioned in my previous article execution is harder than thinking up the idea, it is a lot more expensive and it takes a lot longer. As such I believe every startup needs outside help with everyday start-up activities and this is my contribution to try to help other entrepreneurs to learn from our experience.

I’m going to share with you business execution strategies but as with so much in our industry technology and business overlap massively. There will be a lot of detail about services, languages and platforms in here as well.

This information will become dated over time but the general strategy behind the technical decision will assist you in progressing your implementation, be it 2013 or 2016. The business information is not likely to become dated in the near term.

Personal Execution

As much as an idea is the foundation of your start-up so is personal execution the foundation of your business execution. If you can’t discipline your personal actions and reduce your personal burn rate in the early stage of the business you’re in deep trouble.

You need to make sure that you can continue to live at a decent standard whilst conserving cash, as otherwise you’ll go absolutely batty and drive away the important people in your life.

Lots of people recommend that you move to another city or even another country to reduce your personal burn rate.

I believe this is bad advice as you will be starting from scratch with business networks, you will incur travel costs that might actually be higher than the savings and you lose access to your personal social networks. Furthermore, most of your team is unlikely to be able to move despite their relative lack of responsibilities as they will not have the money necessary to move or they will still be studying etc.

The first place to start is with the living expenses, as these are likely to be the bulk of your costs; Sydney rents and housing costs are out of control.

Live with other people, it’s as simple as that. You can always find people looking for flatmates on Gumtree or other equivalents like Craigslist, and you can save a whole tonne of money by putting up with a few annoying things like hair in the sink.

There are ways to take this further, including moving in with a partner or bunkbedding but it will become extremely oppressive for more than a few months and has a number of other downsides. There is also the problem with domestic disagreements and you suddenly having nowhere to live.

The ultimate extension of this is to live with your parents, but this may not be practical for a number of reasons and expect a lot of comments about how you are freeloader who is wasting their life.

Food is usually the next biggest item but there are many options available here to reduce expenses. My favorite one is fasting for most of the day and then attending networking or other business events where I can eat my body weight in food in a short time.

Your budget is not going to extend to filet mignon so become used to beans on toast, pot noodles and lots of cereal with the occasional bit of mince. No one in your social circle will understand your sudden aversion to eating out so make sure that you phrase it as: “Oh my apologies but I already ate.”

There are many other personal strategies that you can use to save money, I’ve only covered a small portion here. Others include showering at gyms, attending religious ceremonies for free food, taking the bus as much as possible, going to music schools for free concerts and many many more.

The only limits to saving money in this ‘life-hack’ manner are the law, your morals and whatever terms and conditions of use exist for the facility you are using.

Business Execution

Now that you’ve reduced your personal burn rate, and stopped having an enjoyable social life, you should be able to redirect your monetary reserves to business execution and activities that are more likely to generate a return. There’s one principal to remember here though, don’t pay for things that you can get for free, especially interns. Free doesn’t mean equity.

For instance there are a whole bunch of seedy lawyers out there who have done one or two things for start-ups before and then will suddenly start selling themselves for start-up equity or even a fair bit of cash. Avoid these guys if you can, a good start-up lawyer will know that the real way to earn money off start-ups is to make them love you via doing things for them on the cheap and then getting a really steady pipeline of work when they grow.

Accountants are in the same boat, I shouldn’t be charged $500+ to help me file a company tax return that simply says I didn’t make any money. Think back to the first article here, you need to focus on your product and business so that you can achieve success, but you can’t focus effectively without outsourcing some of the more specialised administration tasks.

But that’s all law and accounting work really is in this early stage start-up context, administration work, so don’t pay too much for it. Unless it’s to do with patents, but that’s another whole article in itself.

Keeping your team on track is something else that can be done for free or very cheap, here are our favourite tools:

  • Google Apps and Gmail for Business (getting company emails makes you seem more professional from day 1 and as a young entrepreneur you will need to seem professional)
  • You will also be almost certainly using Google Analytics to start with as well and various other Google products. Even hardware companies need a website!
  • Asana (we could use Google Docs but Asana is a pretty nice way to keep track of things, we may move to Atlassian solutions as we grow)
  • Dropbox (avoid putting videos on Youtube where your competitors might discover them and they take five hours to upload, just use Dropbox instead)
  • Continuing the above there are so many ways to use Dropbox that you’d be foolish not to at least have it on your computer. Asana also integrates with Dropbox.
  • Various mobile applications for business card scanning to tame the veritable mountain of business cards you will receive, especially if you go to a conference.

Keeping your team on track has the added bonus that your administration expenses with external accountants and lawyers will be greatly reduced. Put it this way, what do you think is cheaper? Getting an accountant to read your 500 paper receipts or keeping track of it in an Excel document on Dropbox?

Technical Execution

Don’t program in PHP unless you know web security. The end.

Just kidding, it’s a little joke everyone seems to throw around.

Writing this section is a little difficult because there are many kinds of start-ups and some will be more reliant on hardware than software. However, there are many general principles that can be applied to both fields and that can be future proof. Let’s start with prototype.

Cloudherd App

Cloudherd App

Prototypes

Prototypes should not suck and by saying that I have just offended a number of lean startup proponents. If you do not have the technical skills on your team to construct a prototype that does not suck in the language you have chosen, or the engineering skills to solve unpleasant problems like capacitance, current draw or C memory allocation be prepared for a really rough time. I already mentioned a little about this in the first article and now I’ll expand upon it.

Not one of us knew Rails before we started programming the site prototype in it and it has been a long and painful journey to learn Ruby, Rails, Unix utilities, SQL, JavaScript, HTML and various libraries of such. If you can’t get a tech co-founder on your team, you can’t seem to teach yourself programming or you just don’t have the money to out-source then I would say that you should probably consider duplicating the process manually in WordPress. You will be extremely miserable with weird errors that you get from JS incompatibilities if you choose to start the site from the ground up without some technical experience.

If you are prototyping Hardware choose a platform like Arduino if it can achieve your desired form factor; programming in C  with hexadecimal maths is really unpleasant and Arduino already solves silly problems for you like voltage regulation right out of the box.

Focus on a working prototype and avoid futile striving for perfection that will doom you to many hours in a process I call: “Falling down the tech rabbit-hole”. This principle can also be applied in software, i.e. use Bootstrap for your front end not obscure graphics framework #569.

Your prototype just has to be good enough that people will pay money for it; just using it for free doesn’t count. This means that if you can convince customers to make an agreement to pay for your product, even if they are in principle, you have succeeded.

This is what we have done particularly badly on, though we are partially constrained by our business idea in that a large part of the system must be complete to achieve revenue.

It’s a fine balancing act. I advocate these ideas not from a lean point of view but from a technical risk and standardisation point of view as these are far more conducive to actual failure than not running lean.

Platforms

The second area of interest for this article technically is making sure that you choose the right platform to operate your business from. You need to make sure you don’t get locked in, that your platform is compatible with the systems you need and that it isn’t falling out of fashion.

There are a lot of good things about software platforms that are properly documented, act in a predictable manner and are used by lots of people. However, if you can’t get your code out at the end and make it run on another service you’ve really just tied yourself to the fate of the other company as well. What happens if Google discontinues the Google App engine service and your whole platform is based on App Engine? You’re going to have a bad time. This pertains to data as well.

Lots of Rails developers use Heroku for various activities and Heroku has a lot of great aspects. However, you will also spend half your development time fixing compatibility issues and trying desperately to make core application logic work.

Of course, Heroku has paid alternatives to these, but that’s not why you were using it in the first place. If you’re particularly unfortunate here you could end up in a situation where you have developed the app from the ground up and then the chief piece of software you need, i.e. a scheduling gem, doesn’t work on a particular technology stack. Then you have to tear the whole thing down.

I’ll finish with a really bad electrical engineering joke. How do AC and politicians differ? The frequency at which a politician oscillates is far higher. What I’m trying to say is, don’t be the one guy who keeps producing DC electrical generators when the whole world is essentially moving to AC generators. Which if you are a massive Tesla nerd, you would know already.

Stamp Cattle

Conclusion

Well I appear to have well and truly blown through my assigned word limit but hopefully you’ve learnt something from my experiences. For the more experienced entrepreneurs among us I’m sure this article might have been a bit of a well tread road but it should have proved amusing nonetheless.

Always stay thinking about how you can be more effective, about how you can achieve more success and about where your next free meal is coming from. Please tune in again next week for a look at some of the really stupid mistakes that you can make, especially with investors!

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My experiences launching Cloudherd.com – Alex Stamp – Student Entrepreneur

Cloudherd

This is the first article in a series of articles from entrepreneurs that have been through Incubate, the University of Sydney Incubator program. Alex Stamp launched Cloudherd.com along with Mike Titchen and Luke Fries in 2012 as the first group of businesses in the Incubate program. Cloudherd is trying to solve the problems that farmers face when trying to sell their cattle, it’s a very inefficient market that seems to be stuck in the 1900s and Cloudherd is trying to drag it into 2013 with an online Auction system and cattle inventory application.

Cloudherd Team left to right - Luke Fries, Mike Titchen, Alex Stamp

Cloudherd Team left to right – Luke Fries, Mike Titchen, Alex Stamp

Introduction

Hi, my name is Alex and I’m an entrepreneur.   Sounds like something from Alcoholics Anonymous doesn’t it? Well let’s face it, entrepreneurship and start-up culture can be downright crazy sometimes, especially if you’ve just starting out in your professional or working life. There’s a lot to learn and not everyone is so fortunate to have the learning experiences that can transform people’s way of thinking about business and technology. That’s why I’m writing this short series of articles, to help the young entrepreneurs and even aspiring entrepreneurs save a lot of time, grief and heartache. I’ve been very fortunate myself to learn from some top quality mentors, especially through Incubate, (the student business incubator launched by the University of Sydney Student Union), whilst I’ve been working on my start-up CloudHerd but there were still many things that I wish I had learnt beforehand.

Cloudherd

Cloudherd

This post is mainly about the first stage an entrepreneur goes through, the ideas stage. The next posts will cover the execution of the idea and finally not what to do. I hope you find it informative.

Ideas

The old tired cliché is that ideas don’t matter. This is a meme propagated by various guilty parties, most notably investors looking for the most sweat equity out of you as possible, programmers who want to be free to reuse code in lots of different projects and rapacious industry giants looking to steal your idea and throw resources at it. The idea matters, the execution matters more, but the idea still matters. If you build a house on sand or if you don’t let a tree establish a solid root system then you will have an extremely poor root structure indeed. Lots of countries essentially monetise ideas through the patent system, so how can an idea not matter?

I spent a lot of time in Matt Barrie’s Technology Venture Creation class at University of Sydney thinking through a whole

Matt Barrie - Freelancer

Matt Barrie – Freelancer

range of ideas. Knowing what I know now, some of them were idiotic, some of them were too hard and some would never make money. So you probably have a great idea about now and you’re reading this article to figure out how to go forward with it. Just don’t. Stop and do some due diligence first, stop and prepare some documents and stop and canvas your idea with some relevant people.

Matt thought 2/3 of my initial ideas were terrible and I was one of the lucky ones, we all got hammered about stupid ideas in his class. You probably won’t be as lucky to have access to someone who can hammer you so hard as to refine your idea into pure, naked steel but you need to work out whether or not your idea has potential. I would recommend the following structured brainstorming process, in addition to the various lean business canvas propaganda that keeps floating around:

  • Does your idea solve a real problem? The corollary to this is that sometimes you have to lead the market a bit. Ideally you should have some first or at least second-hand experience in this area, otherwise you will have difficulty designing product features. Investors might also laugh you out of the room, despite the value of an outsider’s view.
  • Will your idea make enough money to cover its costs and support your team? This whole start-up business is too hard outside cushy fiefdoms like Silicon Valley, where the revolving door of big tech companies and venture capitalists makes entrepreneurship less risky, to slave away for nothing. The investor wants a return, make sure you get one.
  • Will the physical/software implementation of your product be within your capabilities within a time period that will not drive you over the edge? So it’s cool that you have an idea about a sonic based sensor network for rural applications…..but do you have any idea how to make this? Do you know if it is even going to work? What about software for it? This is something that we should have spent a lot more time on; if you can’t get information on this make sure you ask an expert.
  • Will you actually be able to make any money out of the first version of your product? When we finished our first release of the Cloudherd inventory system no one would use it, even for free. It just didn’t have enough features for our test users and as such we were really flogging a dead horse (Ed: or cow…) with our marketing and other business development activities. Make sure you can make money with version one of the product unless you have a big trust fund or some other form of support, see point below for more on this.
Cloudherd App

Cloudherd App

  • Will my financial resources stretch far enough to let me work on the project for as twice as long as I think it’ll take? No one cares about your product, you got fired from your part time job, you have no money in the bank and you have to pay the rent. What do you do? The project will take a lot longer than you’d think if you are a first time entrepreneur or relatively inexperienced developer and as such you need to have some fallback for life’s necessities.

Of course I could continue the list forever and waffle on about this subject for hours but I’m going to try and focus and bring the story back on track. Focus is something you, the baby entrepreneur, should be fanatical about.

Focus

You can have side interests, side projects, or spend time on a few dead ends but in the end you can’t spend too much time on side projects if you want your main project to succeed. You do need to preserve your mental health and retain some identity outside of your start-up so a few other interests are good. If you don’t, you’ll be depressed once demo day happens and no one wants to invest. This does happen, especially in Australia.

Indeed focus begins at the idea stage, don’t try to include every possible feature in an attempt to differentiate your product or you’ll fail at about month six or seven.

Focus on your team’s technical skills, if you have a team, and focus on what you can actually implement. Moonshots are not recommended for your first start-up, even though you should always have ambition. I’ll talk more about doing and the actual implementation in next weeks article, which has an expected arrival time of 7.5 days,(the 0.5 is wiggle room, you always need some wiggle room as a start-up).

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