Startup basics: own yourself
February 26th, 2008 by Benjamin KuoThree things, as a startup, you really need to own. Forget all the talk you hear about “virtual companies” and how you can “outsource everything,” if you don’t have these, no one will take you seriously. I thought these would be self-evident, but I’ve run into a few companies recently who lacked one (or all) of the following:
1. Domain name. This seems pretty obvious, but I’ve run into several entrepreneurs lately who told me they were going to raise capital and go acquire some popular generic domain name. Folks, a single domain name does not make a business; and no one is going to fund buying your “ultimate” domain name. Really–did Amazon.com before Jeff Bezos have anything to do with selling books? Conversely, having a generic domain name does not guarantee that what business you put there will be worth millions–it’s what you do with that domain, not the domain name.
2. Engineering talent. If you are a high tech startup, where technology/software/hardware/etc. is your competitive advantage, you have to own your architecture, engineeering, or software talent. If you don’t, your competition will out-develop you, your development will taken ten times as long, and will cost several times what having the right, in-house engineering team can. Sure, you can outsource some development, infrastructure, and other elements of the business–but if there isn’t someone in-house who owns, architects, and understands your technology, I wonder how “high tech” your company can be?
3. Source code. I thought this one was also a no-brainer, but I recently found a company which was in quite a bit of trouble because they did not own the source code to their fully outsourced software. Either through fault of hiring the wrong contractors, a bad contract, or bad faith from their outsourcer, they did not have actual source code for their web site and the software behind it. If you don’t own source code to your own software and web site, you don’t have a company.
