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Friday, May 29, 2009

Why the Space Shuttles SRB's are the size they are

Some tounge in cheek lessons for the techie start up below, have an awesome weekend.


The US standard railroad gauge (distance between the rails) is 4 feet, 8.5 inches. That's an exceedingly odd number. Why was that gauge used? Because that's the way they built them in England, and English expatriates built the US railroads.

Why did the English build them like that? Because the first rail lines were built by the same people who built the pre-railroad tramways, and that's the gauge they used.

Why did 'they' use that gauge then? Because the people who built the tramways used the same jigs and tools that they used for building wagons, which used that wheel spacing.

Why did the wagons have that particular odd wheel spacing? Well, if they tried to use any other spacing, the wagon wheels would break on some of the old, long distance roads in England, because that's the spacing of the wheel ruts.

So who built those old rutted roads? Imperial Rome built distance roads in Europe (and England) for their legions. The roads have been used ever since.

And the ruts in the roads?

Roman war chariots formed the initial ruts, which everyone else had to match for fear of destroying their wagon wheels. Since the chariots were made for Imperial Rome , they were all alike in the matter of wheel spacing. Therefore the United States standard railroad gauge of 4 feet, 8.5 inches is derived from the original specifications for an Imperial Roman war chariot. Bureaucracies live forever.

So the next time you are handed Specification/Procedure/Process and wonder 'What horse's ass came up with it?' - you may be exactly right. Imperial Roman army chariots were made just wide enough to accommodate the rear ends of two war horses. (Two horses' butts.)

Now, the twist to the story: When you see a Space Shuttle sitting on its launch pad, there are two big booster rockets attached to the sides of the main fuel tank. These are solid rocket boosters, or SRB's. The SRB's are made by Thiokol at their factory in Utah .

The engineers who designed the SRB's would have preferred to make them wider, but the SRB's had to be shipped by train from the factory to the launch site. The railroad line from the factory happens to run through a tunnel in the mountains, and the SRB's had to fit through that tunnel. The tunnel is slightly wider than the railroad track, and the railroad track, as you now know, is about as wide as two horses' behinds.

So, a major Space Shuttle design feature of what is arguably the world's most advanced transportation system was determined over two thousand years ago by the width of a horse's butt.

And you thought being a horse's butt wasn't important?

Ancient horse's butts control almost everything... and CURRENT Horses Asses are controlling everything else.

Tuesday, May 26, 2009

The business plan's weakness

">Your business plan outlines your estimated (operational) expenses but how do you know an investor is not going to look at these numbers and say...'are you kidding me' and right then and there you could loose the guy (his interest)..."How can you as an entrepreneur build these projections most accurately and in a way that will maintain credibility with potential investors? What could be defined as the "best practice" for entrepreneurs dealing with this subject?

Answer by Brad Feld from Mobius Venture Capital, As I’ve said (Brad) in the past, I’ve never met a financial plan for an early stage company where the revenue side was correct. However, I’ve met plenty where the cost side was correct (or – at least – appropriate). The key here is simple – you want to have a cost structure that makes sense, covers all the bases, but doesn’t assume a big revenue ramp to be supportable.

If you are in the very early stages (e.g. a few people and an idea), recognize that your investor is likely going to be funding you for about 12 months to see how things play out. The biggest mistake first time entrepreneurs make is that they fall prey to the idea that they need to put together a five year P&L forecast and cash flow projection. I can guarantee – with 100% certainty – that this model will be wrong. As an investor, I don’t really care about this; rather I want to see how you are thinking about getting to “the next stage” of your business. You get to define the next stage, what it’ll cost you to get there, and what things will look like when you get there.

If you are a first time entrepreneur, go find an experienced entrepreneur to act as a mentor. She can be a first line of feedback your cost model and likely will know a few “financial people” that can help you put together a simple, yet credible model. In addition, when you spend time with potential investors, don’t try to bluff. Tell them it’s your first time building a model like this and that – while you had help – you know you lack experience and are looking for feedback. Try to engage the investor in the process. Listen the potential investors feedback and iterate on your model.

Simple message – don’t be afraid to ask for help.

Thursday, May 14, 2009

Some advice on Pitching to the Investors

When you Pitch:

When you pitch to investors one size does not fit all, you have to pitch to your audience, if you are talking to a niche VC who invests in your sector they you can be a bit more techie, if you are infront of the "Bog Standard" VC, then reduce the techno speak and keep it simple, do not try to impress, if you can't get your story over in 8 to 10 slides then it's to complex. I always keep stuff in reserve on the juicy bits, so if they want to dive in on the detail you have it at hand. I have picked up some handy hints on pitching from Matt Eventoff, he works as a communications strategist for senior executives at Fortune 100, Fortune 500 and Inc. 500 institutions, litigators, entertainers, and political leaders throughout the U.S and abroad.

Startups and Venture Capitalists Beware

There are two communication “killer apps” that I witness plague startups with frightening frequency. These danger zones are lethal to a startup, especially one seeking funding.

If you are pursuing venture capital funding, read this prior to presenting. You will be glad that you did.

Killer App # 1 – No Central Message

I have witnessed this over and over and over again. Brilliant entrepreneur(s), fantastic concept or prototype, great ideas, detailed business plan…and no central message. You can have every fact, figure, and statistic on your side, but without a central message, it all doesn’t mean much.

This is crucial for a startup seeking funding. We are in extremely difficult economic times, venture capital is much more competitive and difficult to come by, and every entrepreneur believes that their concept is different, special and deserving – every entrepreneur.

There are countless books advising on how to stand out, what to say in a presentation, how to put together a funding request, etc., but very few, if any, on putting together a message.

If you are the entrepreneur you must be able to communicate your message in a manner that anyone and everyone can understand.

What are you trying to accomplish with your concept? If you are pursuing funding, you must be able to identify how you will deliver a return on that investment, profits, and you must be able to do this in a manner that is clear, consistent, and easy to comprehend – remember, you are asking people to invest at a time when investing, no matter the size of the VC firm, is a scary thing to do.

President Obama had a solid message as to why voters should support him and what he would deliver to them - Change. His message – clear, consistent, and easy to comprehend, and he won.

Killer App # 2 – No Practice. No Preparation. No Funding!

This can, and often does, occur whether an entrepreneur has a central message or not. The entrepreneur begins his or her funding presentation. The slides come out. There are lots of numbers, lots of writing, lots of information and not a lot of time to present it all.

The entrepreneur is nervous because this is THE meeting with THE potential future of the company – the funders. He begins to read the slides, all the while moving awkwardly around, or maybe standing still, resembling a statue. “Well, umm, XYZ has, umm, developed what we, uhh, believe is, ahhh, a revolutionary way to, umm…” and the presentation continues on in this painful manner until mercifully, it is over.

Your product or idea might be THE biggest and best idea the VC has ever seen or heard. The VC just doesn’t know it because he or she has been so focused and distracted by the verbal noise – umm, uhh, ahhhs, the body language, the speed and the lack of clarity that he or she has not been able to focus on the quality of your concept or product.

In this case you are better off simply dropping the presentation off for the VC to review at his or her leisure but for one problem. Once you have received the funding you are going to have to sell the concept to other investors and to the marketplace. Think that first VC is going to be confident in your ability to do that?

Some people are better presenters than others. Some people are more naturally charismatic than others. Some people are better storytellers than others. Having the benefit of a communications trainer is priceless, but often not in a startups budget. Practice does not cost anything other than time. Every person benefits from practicing before presenting.

You will identify verbal noise, tendencies toward awkward movements or word placement, pitch, tone, mannerisms, etc., you will identify places in your presentation or pitch where there is duplicative information (happens constantly), you will identify when you are providing TMI (too much information). If you practice, review, practice more, review again, and continue practicing - you will improve and you will give a better presentation, guaranteed.

I encourage practicing in front of people who are not on your presenting team or even in your industry – chances are that if they don’t “get” what you are delivering or are bored or distracted by your delivery, there is a decent chance the potential funder won’t either “get” it either.

***A note to Venture Capitalists – once you have invested, or made the decision to invest, make sure whoever is going to be the “face” of your company before the marketplace is a strong presenter. The landfill of lost investments is littered with great ideas that have been poorly presented to the market.

Friday, May 08, 2009

Patents: "The Good and the Bad"

Patents: fixable, or the next weapons of financial destruction?

The big issue of the evening came from a discussion of the treatment of so-called "non-practicing entities" or NPEs—organizations that hold patents and assert them, but do not conduct a business that applies the patents.

By Ron Wilson, Executive Editor -- EDN, 5/7/2009

A panel sponsored by the Commonwealth Club of Silicon Valley last night brought together three significant players in the US patent-law debate to discuss the future of the patent office, the current reform legislation in Congress, and the future of intellectual property. The discussion ranged from pessimism over short-term fixes to a dire warning about the arrival of the investment banks in the patent business.

Steve Perlman, founder and CEO of invention-factory Rearden, David Simon, chief patent counsel at Intel, and Ronald Yin, partner at law practice DLA Piper, discussed the issues under the questioning of Wall Street Journal Deputy Bureau Chief Don Clark. Initial conversation focused on the pending reform legislation, which Intel, through the Council on Patent Fairness, has done much to promote.

Not surprisingly, Simon was supportive of the legislative efforts, citing three areas in which he feels the system needs reform: reduction of damage awards, limitation on plaintiff's choice of venue, and the question of willfulness. On this latter point, Simon explained that as the law is interpreted today, the simple fact that you have read other patents in an area can "put you under dire threat," to use his words, in case of later litigation.

Perlman in response dismissed the proposed bill, saying it did nothing to address the real issues in the patent system, and implying, without directly saying as much, that the bill served primarily the financial needs of the big companies in the Council. Perlman stated that in his experience filing many applications, just the time required for a patent application to get its first reading could vary between a few months and five years. Times for granting can be even more variable. Meanwhile, he said, patent applications made in other countries are published as soon as they are received, leaving inventors in the US unable to assert their rights in the US on an idea that is now available on the Web to anyone. Perlman charged that fundamentally the Patent Office is a drastically underfunded wreck, and that the supposed reform legislation is in fact a mess that could further corrupt the system.

A voice of moderation in comparison, Yin agreed with Perlman that the Office was underfunded, pointing out that Congress had for years used the Patent Office as a source of revenue instead of funding it to adequately perform its duty under the Constitution. And he agreed that the current proposals before Congress are not really reform. But he also argued that what the Office needs is not reform, but simply better internal management and a sense of business sense.

There followed a rather sharp debate on particular provisions in the proposed legislation, from which it mostly emerged that there are at least two versions of the proposals, one passed by the Senate, and one under consideration in the House. A conference will likely produce yet a third version. Yin warned that given all the things occupying the Congress this year, it's entirely possible that once again no bill will emerge from the process.

The big issue of the evening came from a discussion of the treatment of so-called "non-practicing entities" (NPEs)—organizations that hold patents and assert them, but do not conduct a business that applies the patents. Most often, the NPEs people think about are patent trolls, the panelists said. But Yin explained that it is extremely hard to target trolls with legislation—even if Congress had the will to do so—because it is difficult to hamper trolls without also hamstringing other kinds of NPEs: universities and research organizations, for example.

Yin went on to point out that patent trolls were "a creation of the industry's own greed." He said that years ago, most patents held by large corporations were bundled and licensed at quite reasonable royalties, because the holders feared that they would be charged under anti-trust legislation if they gave any hint of using their patents to restrict competition. But as conservative administrations lost interest in anti-trust issues, this changed. Yin traced the beginning of the change to Texas Instruments, which began by asserting a pool of DRAM patents against Japanese memory manufacturers, in effect turning their patent portfolio into a revenue source. Once people came to see patents as potential cash flows, Yin argued, the door was open for trolls: investors who would purchase patents simply to assert them in order to get royalties.

At that point Simon dropped a bomb. "This is something we should definitely fix," the Intel counsel said. "Right now there's $35 billion out there trying to buy patents and form them into pools. And I can tell you that there is much more money coming in soon."

Even more dire, Simon said that recently one of the experts on his team had been approached with a job offer from an investment bank. The bank is putting together a team to pool patents and create financial derivatives based on the pools.

This would, in effect, create a mechanism by which speculators could bet on the future cash flow from patents. Because more aggressive litigation would be expected to increase the flow, it is likely that a patent derivatives market would significantly further increase the assertion of patents by NPEs, and hence further increase the risk of innovation for real technology companies. Further, if huge pools of cash appear looking for patents to buy, the demand could substantially distort the intellectual property market in at least two ways.

First, the demand could make patents sufficiently valuable that they become all by themselves an exit strategy for a start-up company—just get going, get patents, make a reasonable show of reducing them to practice, and then dissolve the company and sell the patents into investment pools. Second, one suspects that patent factories—organizations created just to spin off large volumes of patents with potential value in litigation—would spring up to satisfy the demand. While both of these changes would provide jobs for engineers, neither seems like a positive step on the way to economic recovery.

Friday, May 01, 2009

The Heart and soul of a start up

I have been laid up sick for a while and not been able to post here, but I am back at work now and starting to get back into the groove, I will get through the back log of posts that I have promised over the next few weeks.....so to days post...what is the heart of your start up, this maybe be a slightly contentious view from Wil Schroter the founder and CEO of the
Go BIG Network:

If you asked me to point to the heart and soul of a startup company, I would not say it’s the people, the culture, or even the product. I would say it’s the pitch. The pitch is that one message that, when delivered, makes people say “wow, that’s a great idea!”. The pitch gets everyone in the room excited about getting on board with your product and your company. It’s the inspiration that carries everyone along for the ride.

The pitch also determines whether or not the company's offer has any viability in the market. For this reason the pitch should always precede any other developments or decisions. Your pitch is your divining rod that helps you make decisions on where to go next. So working on the pitch should always be the first step toward introducing any new concept.

Pitch Early

Pitching early is about as close as you can come to having your own crystal ball to see into the future. Getting a customer to say “yes” today, even though the product may not exist yet, is as important as getting them to say “yes” when it’s actually available. This process allows you to probe your customers’ objections early and understand where the fatal flaws in the model or product offering exist. Better to find out now that customers aren’t dying for your product than after you’ve mortgaged your house to finance your idea!

Pitch Everyone

For the pitch to work, you need to see how it resonates with all of the usual suspects - customers, investors, and employees, in just that order. Each of these constituents thinks about your pitch slightly differently and for good reasons. Customers are interested in how your service improves their life. Investors want to know that your idea can turn into a profitable enterprise. Employees want to know that selling your service will create a great (and steady) place for them to work.

The reaction of each member of this trifecta merits careful consideration. For example, if your customers love your product but investors don’t see how you’ll ever make money, you have a potential problem. You will need to successfully pitch all of these groups eventually, so pitching them effectively early on is critical toward refining your offering and insuring its later acceptance.

Build the Product With the Pitch in Mind

Knowing the pitch allows you to make much better decisions when developing the product. If what you're building doesn't add to the pitch, think twice about adding it at all. In a startup environment you have limited resources, so you need to concentrate your time and effort on features that will lead directly to the customer's, investor’s and employee’s decision to say "yes". Your product should always be built with the pitch in mind.

Sculpt the Pitch

French author and aircraft engineer Antoine de Saint-Exupery once said a designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away. Sculpting your pitch is no different. Keep paring your pitch down to just the most critical elements that make or break a customer's decision to buy. Anything else is just excess waiting to be scraped away, or worse yet, confuse the customer. Your pitch has become a masterpiece when it is as short and to the point as possible. The faster it hits home, the more powerful it will be.

Keep it Flexible

A good pitch is like a chameleon – it adapts and responds to a changing environment. You may find that what you once thought were the perfect selling points get morphed into a message that sounds quite different but is more effective. Don’t sweat it. There’s nothing wrong with changing the pitch over time as long as it continues to be more effective. There are no points won here for “getting it right the first time”, but there are plenty to be lost for never fixing it. Some of the best pitch masters out there are not only great at speaking, they are great at listening to what customers say and modifying their pitch accordingly.

If They Won’t Buy the Pitch, They Won’t Buy the Product

It’s rare that you will be present every time your customers are considering whether or not to buy your product. That said, if you can’t convince someone to say “yes” while you are standing there giving your pitch in front of them, you can rest assured you’re not likely to get a “yes” when you’re away. A good pitch should be so tightly integrated with your offering that it’s able to sell itself without coming from you. And it should be so infectious that customers can’t help but sell it to their friends.

Remember - if you can’t sell it, it doesn’t really exist!

Have a great weekend