- where to live
- domain registration
- development milestones
- communication - phone, email, and file sharing
- set up payroll
- the value proposition
1. where to live. Don (my partner) and I went through several iterations of meetings with our former employer about whether to stay on with that company or leave and form our next venture. Mobius was kind enough to allow us to use conference rooms during this period and it just became very easy for us to set up temporary shop there during the conception of the company. Startup space is not ordinarily this posh however. What is important is to find a place conducive to gestation. Necessities are: desk space, whiteboard, fax machine, laptops, broadband connection, ability to be undisturbed and to not disturb others, and fairly central location. I started my last company in my unfinished basement with costco tables for desks, a 4x8 sheet of Solid White Tileboard from Home Depot (cost $18), costco fax machine, and laptops we purchased from Dell on 1 year same as cash financing.
2. incorporation. Met with our attorney, Mike Platt at Cooley. They are an excellent full service firm, used to dealing with the intricacies of venture backed companies, and Mike was the lawyer for my last company. Cementing (as my friend Jim Lejeal puts it) the ownership structure early on is a very good idea, as it formally creates an entity with owners, shares, vesting terms, etc that can now take in investment, pay employees. We decided to incorporate as a Deleware C corp largely because it is the ideal incorporation type for taking in investment (perhaps Jim or Mike could write more on this). Knowledge required going in to this meeting: company name, company address, founders names, ownership split, number of shares, and vesting terms.
3. Domain registration. Perhaps this should be first due to the dearth of domain names available and the impact of domain name selection on company name. After settling on a set of names, we just went through a number of queries on yahoo's domain hosting site until we found a couple that we liked and I registered them.
4. Development Milestones. Being of the CTO persuasion, I believe it is important to get going on a development path fairly rapidly. There are usually a number of small to large research projects that need to be undertaken and if left unplanned will absolutely kill you later. I like to walk into meetings with VC's, advisors, and potential customers with a huge amount of confidence regarding what we can do and when we can do it. I think it's also important to establish the IP as early as possible. It sets you up for the unique way in which you can deliver on the value proposition.
5. Communication. I've found the earliest stages of communication can be set up simply using a Yahoo! group. From there you can post messages that will get emailed to the group, set up a calendar to keep track of meetings and events, post links and documents, that are relevent to research and the formation of the company, etc. You can use Groove as well. I just find Yahoo! groups easier to set up and maintain. Post that, it's good to get at least email forwarding up and running. Simply find someone with a sendmail server, set up your mx record to point there, and they can forward to your individual email accounts. There's plenty of time to get Exchange or something like it set up later. Everyone should have cell phones from day 1. In my opinion, it's imperative to have a lot of communication with the entire team early on. Communication helps build momentum early.
6. Payroll and benefits. Not something you will need early on, but it is good to know how much it will cost the company to plan for a timely introduction. I would say 3-4 full time employees is probably critical mass for introducing these types of benefits.
7. Banking. After incorporation you will get a tax id that enables you to set up a corporate bank account. We are using Silicon Valley Bank because they were with us on the last company and have a wealth of contacts in the startup community. Wells Fargo would do however. Things to think about here are whether the bank will give you a line of credit (will likely need to put up collateral unless you open with a substantial amount), and interest you get on the account. Interest may not be that important with the initial amount you open with, but it will be if you get a substantial investment in the company.
8. The Value Proposition. Equally as important as getting the development effort on a good trajectory is establishing the problem you are solving and how you solve it. We've spent a good deal of time working on this and will continue to work on it with advisors and potential customers. It is the most important non-logistical task you can get started on very early because it enables you to talk about what you do with coherence.
One week of organized chaos under our belts, we're now ready to double the longevity of our fledgling company. Look out! Here comes week two!