Startup FAQ 12: From the day you decide to founding day _D.CAMP
Ryu Jung-hee
12 questions about founding a company, and *personal* answers
* Am I the right kind of person to start a company?
- Wrestle with it fiercely, and get a clear answer.
- Figure out when you're a happy person.
- Be honest about your desires and share them with people.
- Think about how long you'll keep doing it.
* Will the family accept it?
- Time with family drops dramatically.
- Stress levels spike dramatically.
- Your first customer for the business plan is family. If you can't even convince them, drop it.
* What should the item be?
- Pick something that solves a problem around you. Something you know well and bump into often...
- "Only I know this" or "maybe 100 people know?" If so, even something modest can work.
- You have to define the problem well. Then you can find the answer.
* Who should you do it with?
- People the business needs right now. (Hire now, use later—doesn't really work.)
- Write a detailed Job Description for the person you need.
- Dive into wherever that person is (communities, etc.).
- Pulling in the essential people is the alpha and omega of a business. There's no shortcut.
* Get a mentor
- Always keep a mentor on your side. (You've got a phone!)
- Someone who has gone through one cycle of a business like yours.
- Use the mentor like you use GPS.
* Money
- If you have savings, use those.
- Don't borrow money (even from parents—ask them to just give it).
- If you don't have it, find a way to do it without it.
- Use business funds only up to the point that would still change your life. If you're out, go make money first.
* When do you actually set up the company?
- Found only after you've calculated the seed money needed to survive until you have a meaningful product to show investors.
- Best case: build the prototype while still at your job, then set up the company.
- If you've left your job, file the corporate registration without hesitation. No dawdling here.
* How much investment should we take?
- Investor equity is decided by company valuation and how much money is needed.
- Push valuation up, push the amount needed down.
* Equity split among co-founders?
- The CEO must hold 51% or more, period. Otherwise, nobody will invest.
- The CEO is the one with the best qualifications. The most desperate person takes the CEO role.
- The person with the financial capacity to contribute 51% takes the CEO role.
- Money exchanges between co-founders are bad news.
- For CTO, CMO, etc., it's good to split equity by how important their area is to the business.
- When giving equity to outside people, the CTO can give it to devs and the CMO can give it to marketers.
- Take home a salary bigger than your previous job.
- You can convert salary into equity too. (In that case, find a tax-saving method.)
- Put all of this in writing. Don't rely on verbal agreements.
- Sole proprietor vs. corporation? You need to be a corporation to take investment.
- If someone lacks the ability, even the CEO must be willing to step aside. If your early dev isn't CTO-grade, place them as acting CTO.
* Patents
- If the business is Unique, file a patent when you can. It's cheaper in the long run.
* The first project
- Plan and budget generously, and make sure it succeeds. Failure tanks trust in the CTO fast. From there, things drift off course easily.
* Differentiate!
- There are countless factors that differentiate a company. These are huge levers for marketing.
Source: http://blog.ajkuhn.com/180
