Benjamin Kuo’s Blog

I’ve recently been pondering the myth of “the Big Idea” — the belief that if you come up with an earth-shattering idea, you can rule the world. It’s the idea of a better mousetrap, an idea for a widget, the idea for a better startup. Unfortunately, it’s just that, a myth.

I used to have a coworker who collected ideas, swearing that he had all these great ideas, and that he should be a millionaire for having come up with those ideas (but never actually having done anything about those ideas). If that were true, there would be a lot more millionaries in the world, because — if you spend enough time in the technology and startup world — you soon find out that not only do lots of other people have your idea, lots of other people are executing on that idea.

You run into this a lot with very early, first time entrepreneurs, who — when asked what they are working on — tell you that you have to sign an NDA before they can talk to you about it. They use the same line of the venture capital investors and angels, as well. Consistently, the successful entrepreneurs I talk to tell me it’s not the idea, it’s the execution.

Sure, you have to have a great idea, but the difference between the successful and not-so-successful entrepreneurs are those that are able to turn those ideas into reality. It’s a common myth of entrepreneurs — think up of an idea, sell that idea to Proctor and Gamble/Microsoft/Google/whoever, and have it made. So, my advice for aspiring entrepreneurs: great, you have an idea — now go make it happen!

John Greathouse, a partner at Rincon Venture Partners, and also an experienced executive with lots of experience dealing with corporate investors, shares his tips on dealing with corporate investors in a piece in our Insights and Opinions section today. In How Entrepreneurs Can Get The Love Without A Bear Hug, John goes into great detail on the pluses and minuses of corporate investors, and how best to deal with them.

In the 1960s cop show “The Mod Squad,” Linc played a vital role as the tough, street-savvy member of the hip, made-for-TV crime-fighting team. When you shake down a drug-addled informant, Lincs are a great asset. However, when you are negotiating with a Big Dumb Corporate Investor (BDCI), links between the strategic aspect of your partnership and the investment terms can be fatal to your venture.

John has served as SVP of Sales and Business Development at CallWave, CFO and SVP of Strategic Development at Expertcity/Citrix Online, and also served as CFO and VP of Business Development at Computer Motion. Having been involved in Expertcity’s sale to Citrix, and Computer Motion’s IPO, he has a wealth of experience dealing with corporate investors.

Omid Rahmat, former publisher of Tom’s Guide Publishing, has just added a new article to our Insights & Opinions section, entitle Don’t look for first mover advantage. Rahmat takes a slightly contrarian view of “innovation” and gives some business advice to entrepreneurs.

Microsoft didn’t invent the OS, Google didn’t invent search, Facebook didn’t make social networking, and Apple didn’t come up with WIMP, digital music, or mobile phones all on its own. Every entrepreneur looking to succeed should think seriously about how far ahead of the curve they want to be these days.

I listen to a lot of startup pitches. All the time, for folks who want coverage, or helping out with venture conferences, etc. I wanted to share my “pitch” peeve of the week, which seems to be increasingly common.

Don’t cite your mention on blogs, news, or elsewhere as validation of your company

I see this a lot nowadays, particularly on very, very early startups — think “two guys and a dog in the garage” — where the very first slide you see about the company is that they were covered by such-and-such blog, this-or-that web site, etc. Maybe it’s just me (as a publisher), but given the plethora of blog sites and the amount of material they turn out, being mentioned on a site is not validation of your company. Sure, it’s good for you to get the word out about your company, but a mention of your company on a post (including on our own site) is not validation for your idea/company.

I can’t count the number of companies I’ve seen who have cited (insert- your-  favorite- Web-2.0- touting- web-site-here) who later went under, that VCs won’t touch, or who don’t have feasible business plans. (i.e. “We provide social networking for left handed, Bulgarian dentists! We’re going to be completely ad-supported!”)

Instead, the best thing is to include a quote or proof from your users, partners, or customers. The best citations are I have seen–and the most successful companies–are the ones who can bring a customer–whether that’s a consumer, a corporate customers, or OEM–who has said “you’ve solved a big problem, we love it, and we want to pay for this!” Second best (IMHO) is a partner, with experience in the space, who can give you some testimonial on your usefulness, i.e. “we partnered with so-and-so because they were the only solution in the space, we really needed their product in this industry, and they’re really ahead of the curve”

Anyway, that’s my opinion on the subject…

There’s a number of areas entrepreneurs have to know about pitching their companies to investors — how to do an “elevator pitch,” how to put together a good PowerPoint presentation, and know how to best present their business in an executive summary. I am often asked about good examples of all three, but, until a post this week by Frank Peters of the Frank Peters Show (a great podcast on technology, technology companies, angel investing, and more) — I didn’t have a good place to point people to.

Frank put together a great “cheat sheet” on writing an executive summary. I liked it so much I asked Frank to re-post it to our Insights & Opinions section on socalTECH. Frank writes:

Last time I looked I couldn’t find a good cheat sheet on writing an effective executive summary (ES). I guess that means I must write one. I certainly get enough ES’s and many times I enjoy offering a critique; many ES’s need a critique, so put away your ego and get ready for some feedback.

Of course, I don’t love ES’s; it’s just me being smart-alecky. But I hate business plans even more; no one reads business plans. Why? Because there’s no time; I’m not that interested at that point of first contact, and I’m not alone. I don’t know anyone who wants to see your business plan. That’s why the heavy lifting falls to the ES.

We’ve just posted a great article from attorney Sam Wu on Pre- and Post-Money Valuation in our Insights & Opinions section. For most first time entrepreneurs (or, even some who have done it before but haven’t handled the financial aspects of finding funding) it’s well worth an in-depth primer on what pre-money and post-money valuation is and how to calculate it.

Our anonymous commentator, “Uncle Saul” has contributed a new article to our Insights & Opinions section, entitled Roping In The Legal Eagles. “Uncle Saul” gives us the lowdown on working with an attorney with your startup.

Johnnie Cochran was an effective, albeit smarmy, defense lawyer who would say or do anything to defend his clients (anyone up for a glass of OJ?). He was a master at encouraging jurors to disregard facts and base their legal verdicts on emotions and conjecture. Yet, despite his exceptional courtroom theatrics, you would be foolhardy to hire good old Johnnie to review your software cross-licensing agreement.

We’ve just posted an article in our Insights & Opinions section from Brian Ring, from Ernst & Young, about Seven secrets to entrepreneurial success. Our Insights & Opinions section is where we feature voices from the community about some aspect of the high tech industry. If you’re interested in contributing, please send me an email.

1. Stay alive during the bad times – Dogged determination is what Hal Washburn, BreitBurn Energy Partners and EOY finalist, says is the key to being a successful entrepreneur and weathering what can be a vicious cycle. There are good times and very bad times, and you’ve got to be creative to stay alive during the bad times.

2. Don’t hire your best friend – Brad Jones, Redpoint Ventures and EOY judge, warns the most common mistake is not insisting on having the highest-quality people on the managerial team. Too often entrepreneurs hope that someone who’s a nice person or whom they’ve known a long time can do a job that they haven’t done before, instead of finding the most qualified person who understands the pitfalls. If the team is really good, the business usually works, he says. (continued…)

The Pasadena Angels have just launched their weekly blog, Ask The Angels Blog, where their members will be giving advice on fundraising, starting up your company, and other relevant topics for startups. We have just re-posted a great article in our Insights and Opinions section from Pasadena Angels member Steve Reich on Your First Sales Hire (original here):

Every startup faces the question of who to hire for their first sales position. Do you look for that fantastic VP of sales who is not only a great closer, but also a master strategist? Do you hire that friend of the founder who is young but promising? How do you decide?