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
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.
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.
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?
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.
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.
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.
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.
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!