intellectual property

In my experience IP protection is a necessary part of creating any non-commodity related business. Even though the patent may never be defended it is a check mark for customer, partners, and venture capitalists that is a sign that you've done your homework in bringing the product to market. That being said, the patent process can be an extremely frustrating excercise and is somewhat enigmatic.

As I said before, if you have a non-commodity company than you must have some special sauce that enables you to do something better or faster, or something that was not possible to do in the past. Identify that thing and do your homework regarding whether it is truly novel or whether someone has done something similar either in your space or in other markets in the past. Even if there is a similar invention in existence this does not mean your idea is unpatentable. What it means is that you have to discover what makes your idea unique. Now, you have to do this for the business anyway in order to build out your marketing collateral identifying your differentiating characteristics.

If you can afford one, the next step is to contact a patent attorney. You can file yourself, but a good patent attorney will make a big difference in following the patent through to issuance. An interim step that you can also pursue is to file for a provisional patent. The provisional patent is n't laid out into formal clams but does outline what your invention does. This puts a date stake in the ground that is documented and placed on file in the patent office. The provisional patent is not public information and will expire within 1 year if you do not file for a full patent. The provisional patent does let you claim patent pending and has a much lower cost of filing.

Once you have filed, you wait, and wait, and wait. The clerks in the patent office are buried in patent review work. There are not enough of these guys/gals to handle the number of patents coming in and they typically have broad but not deep experience. Therefore, once your patent reaches the top of the heap, the clerk assigned will need to learn enough about the area of your patent to make a determination whether to approve or reject the claims you have made.

Claims will be individually accepted or rejected. If a claim is rejected, the rejection must either be refuted or the claim take out altogether. You will typically write a number of claims in your patent application beginning with very general and moving to more specific. General claims are often rejected. The more general of a claim that you can get accepted the broader the patent's applicability will be. For the claims that are more specific and your company's IP hinges on you will want to refute the rejections (this is where a patent attorney comes in handy). I've copied a section out of a patent I'm currently working on and you can see what I mean...

The undersigned also questions the motivation to combine X and Y as the two systems solve different problems and propose incompatible methodologies for identifying ------- performance issues. For example, X attempts to identify a current problem in a -------- by comparing current data collected regarding a --------------- to its associated --------- whereas Y is focused on ------------ problem by way of evaluating company policy regarding maintenance procedures, the time required to complete maintenance work, performance criteria, observed changes in the ---------- and projected performance criterion. Consequently, the undersigned is not in agreement with the Examiner’s conclusion that “[o]ne of ordinary skill in the art … would have been motivated because it is desirable to have a ----------- system that detects problems or potential problems” (page 6 of the Office action).

In the overall scheme of things the success of the company will not come down to IP protection but market value of the product, sales, and execution. IP protection is a tactical component that will come into play in the early life as a company before it can be valued by ttm revenue.

The Cramer Effect

Since beginning my new company I've done a fair bit of research on stock market sentiment and what moves it. If you haven't seen Jim Cramer's show, Mad Money, on CNBC, you should check it out. This guy seems to be a sentiment power house. He was also recently on the cover of Business Week magazine and has developed a significant brand in the area of stock picking. I believe BW said that he has around 400,000 daily viewers of the show now. Jim Cramer is a value stock picker but every mention of a stock by Cramer seems to cause the stock to gap up the next morning. Recent case in point was Salesforce.com (CRM). They were Cramer's pick of the week and gapped up by almost 10% the next morning.

sell what you've got

Early stage companies thrive on the speed of idea generation and prototyping. You start with a reasonably good idea, test the market, iterate on the idea to make it a great one, and deliver on the first stage of the product.

At this point you've got your first sellable merchandise. You also have another wheelbarrow full of additional ideas where you can take the product based on customer feedback and the natural evolution of the original idea. It is tempting to keep selling the dream. Unless the first incarnation of your product is ill received it is important to sell that concrete thing which you have just completed building. Now it may have a few warts and one of the arms isn't quite fully developed, that's OK. Sell what you have and co-opt your customers into helping you define the next stage of the product.

If you are continually selling the dream (or the next generation of the product) your trial periods will extend indefinitely. This will result in much slower revenue (and revenue recognition) and effectively shorten your runway. So do not short change yourself. Sell what you have today, execute to over deliver what you've sold, and your happy customer will help you refine and pay for your ideas of tomorrow.

MWL

Is it possible to not be myself? A physical object in the universe, a man, a sentient being? What is life, but an aggregation of discrete moments, meaningful, connected by the vast slippery dark matter of meaningless moments in five dimensional space? Who are you but a reflection of my one true self, the summation of existence, my molecules mixing with your molecules?

To recognize that transience as simply transformation has power. It has power to guide the transformation as a regeneration of three dimensional space, the sameness of thought yet the evolution of thinking, leaving indelible marks as blips in the filmstrip of the universal record. What comes next is a self assured dream of what comes next.

web 2.0

If any of you haven't caught up on the latest craze out there, it is web 2.0 (my appologies for the clarity of the Meme Map image. A better one can be found by the author at the previous link). Web 2.0 is service driven. It fulfills the needs of the long tail ( another link). It listens to the collective wisdom of information by collecting, transforming, analyzing, and summarizing. Web 2.0 encourages participation, knowing that it's strength grows with interactivity. Web 2.0 is more than a craze, it's the inevitable evolution of the web as it blends into our lives, making information more accessible and participatory.

balancing act

Please permit me to reflect for a few moments on the use of time. Time is the most valuable currency we all have. We can choose to spend our time in many ways. There is constant tension in our lives with competing demands on our time. I believe these fall into four major buckets.

Our families require time in the form of attention, affection, and assistance (help on homework, help around the house, etc). This time remains fairly constant with the exception of periods of crisis (which may require most of our time).

Our jobs require time in the form of physical or mental labour to help produce something of value. This time requirement is most likely cyclical where it has some lower bound but ramps up around events or seasons. As companies grow larger these cycles tend to be more predictable as the business achieves it's natural rhythm (this is offset by periods of economic uncertainty where layoffs may place more of a time burden on the employees who remain). The smaller the company, the more chaotic are the demands that get placed on time capital.

Then there are hobbies and socializing. My hobbies are triathlon training and golf. I've also become addicted to the television series 24. Thanks Brad ;)

The last time bucket is sleep.

I haven't quite figured out the balancing act in my life as much as I feel I should by now. My current inclination goes in this order.

1. Sleep is a necessity for me. I try to get around 7 hours of sleep per night. I can run on less for short periods of time but fairly soon (around a week) all of the other time suck activities start to run in slow motion (that is they take some multiplier of normal amounts of time for the activity) and they rarely run smoothly.
2. Family - These are the most important people in my life. I try to give them the attention and affection they deserve, but often fall short. I have learned to recognize the warning signs and head off trouble early. If this area is not maintained properly it will affect all other areas of your life (sort of like not getting sleep but in much more painful ways). When I'm not traveling (which joyfully is the predominant case currently) I try to honor mornings before school and early evenings (6-9pm) as sacred.
3. The working out part of hobbies - My triathlon training is necessary therapy for me. It relieves the day to day tension and forces me to have better eating and sleeping habits. I probably work out 1 to 1.5 hours per day. I don't let this interfere with work or family for the most part but occasionally sleep gets sacrificed.
   
4. Job - My work is fairly flexible, which I admit has a great deal to do with maintaining the first 3 priorities. My schedule does fill up with meetings and as a startup, will go through rapid periods of lots of meetings and then transition into execution time. In periods where many meetings are not necessary (i.e. we're not fund raising or refocusing the business model) I will push back on extraneous meetings. I let execution time fill in the reasonable sized chunks in my day (1 hour or more). Most of my socialization time requirements are also met at work (My guess is that this is likely one of the most important things that gets taken away from Moms who've decided to stay home - and why play groups get created)
5. Other hobbies - These I consider regenerative therapy (like right now). There are other things I could be doing currently than writing this blog entry, but doing so gives me a chance to reflect and helps me do those other things better. This could also be golf or snow boarding or something else that offers the other side of being reflective and forces you to live in the moment.

I would say I'm far from being well balanced, but I'm trying to understand, and perhaps one day it will all become clear (i.e. make enough money and the mandatory part of the job time sink goes away making lots more room for the other activities)

I appologize for double linking to Brad Feld, but do think he has some good insights into life balance that he published in a recent blog entry as well.

Any other thoughts or insights out there?

status update

We're now five months in and the baby is doing fine. We've grown from 2 to 7 people, raised startup capital, validated our approach, and written code to automate the collection, transformation, and analysis of market sentiment data. Our group has gelled and is now functioning as a team (we also just finished climbing a 14'er together, an annual tradition I've fostered at the last two companies). We've delivered 7 development iterations and met approximately 100 advisors, investors, prospects, and potential employees. We've also added two new languages (i'll blog on these later) to our arsenal that I believe will substantially increase productivity.

Yes, we've had hiccups along the way. These have had mostly to do with lack of resources where we've had to make due with less (for instance, in the first 3 months we were running development off of one server that included source control, database, and production software). None of our mistakes have been mortal however and we've been able to learn from them and move on.

The next two months will be critical as we complete the research on our second proof point and alpha test with a handful of customers. As you can tell we're very much development focused at this point. Things will begin to shift sometime in the first quarter of next year as we begin to gain sales traction.

on being agile

Strength, speed, and agility are the hallmarks of success in athletics. A startup requires versions of these qualities as well in order to compete with larger competitors. I would categorize strength as intelligence, speed as the ability to move quickly and unencumbered, and agility as the ability to quickly adapt the product and business to changing business conditions. I've already talked about speed in Terminal Velocity. Today I want to talk about agility.

Agile software development has been around for a few years now and has started to gain hold even in large companies. I have used the Extreme Programming version of agile development in my last two companies and am currently using (and am a big fan of) software from Rally Development to manage this process at my current company. The tenets of agile development are mostly common sense and extend beyond the boundaries of managing the development effort. Here are a few:

• Keep in constant touch with the customer - make sure you are delivering a product with the highest value to your customer
• Integrate Often - Don't wait til the end of a long development cycle to see if everything hangs together, instead, constantly integrate to ensure that modules don't drift apart.
  
• Refactor - Is there a simpler and more elegant way you could have accomplished something? If so, change how it is done.
• KISS - you all know what the acronym stands for. Find the simplest way to deliver what the customer needs. Refactor later if new requirements emerge.
• Deliver often - At the end of each development iteration show the customer the product to get feedback as to whether you're on course or not.
• Pair programming - Two heads are better than one. At least on critical components of the code.
  

All of these tenets can be applied to running the business as well. Agile development methodologies center around delivering high value to the customer. You do this by including the customer in the development cycle and testing with them to constantly course correct. This gives you the agility to tweak product direction rapidly.

Here are the tenets applied to business:

• Keep in constant touch with the customer - developing a close relationship with the customer will: 1. keep them happy, 2. help you focus on what is important to the customer base, 3. build a good reference account that can be used for further pipeline development.
  
• Integrate Often - keep your departments in sync with one another. Have a unified goal for the company and make sure all departments are striving towards this goal. Proximity does wonders. I remember speaking to the CEO of Freshwater Software a few years back (bought by Mercury Interactive in 2001). She mixed up the seating arrangement in the company so that people built personal relationships across departments. This fostered inter-department communication and helped keep the company on track.
  
• Refactor - Is there a simpler and more elegant way you could have accomplished something? If so, change how it is done. This advice is good across the board. If licensing doesn't make sense for how your customers do business, change it.
  
• KISS - you all know what the acronym stands for. Find the simplest way to deliver what the customer needs. Refactor later if new requirements emerge.
• Deliver often - If something needs to change in the business, test market this with customers. This goes hand in hand with bullet one and further emphasizes a focus on customers. Remember, you're in business to deliver value to your customers.
  
• Pair programming - Two heads are better than one. At least on critical decisions in the company.
  

The concept of agile development applied to the business may be a stretch, but I have applied the simple concept of focus on constant customer feedback to drive business decisions in the last two companies with a high degree of success. I bet you can too!

So now you have money...

You've just raised a round of angel or venture capital. You're flush with cash, you can pay your staff and maybe even yourself. For one brief shining moment you are not asking anyone for money (assuming all checks have promptly arrived and have been deposited with your latest friend, the banker). This won't last long, so bask in the glory of the moment, crack open a bottle of mad dog 20/20 (the opus one comes later) and promptly get back to work.

You now want to focus 100% attention to operations and R&D. First review your budget in great detail. You will want to put together a couple of plans with different assumptions. The first assumption is that you take in no revenue and have no other source of capital than the money you now have in the bank. How long can you stretch the almighty dollars you have just painstakingly raised? This is known as your runway and will help give you a feel for when you should start raising your next round. This will also give you much needed parameters around prioritization of cash going out of the company and when you absolutely need to spend money. The second model you put together should have revenue assumptions. What is the earliest (realistic) date you could start bringing revenue into the company. Revenue both extends the runway of your company and leads to higher perceived value.

What are the stumbling blocks to realizing this second model? What is the most efficient expenditure of capital to get you there? i.e negotiate, but do not cut corners on expenses along your critical path to revenue. You must find the right balance on time to market with least amount of cash out. I like to think of it more in terms of "time to value" instead of time to market. To me, time to market implies sales and marketing teams. In an early stage company you should not have a sales and marketing team. These are called "founders." Try to drive to something of value that can be sold as quickly as possible, testing the market along the way with advisors and prospects.

When you've struck your hypothetical value proposition (or some other value prop you've found laying along the roadside) you'll know because you'll have a smiling customer on the other side of your handshake. Now is the time to take in that next venture round (or a strategic round from your smiling customer) and ramp sales, marketing, and of course, customer support.

... but we're getting way ahead of ourselves. Months before that you will need to start meeting with VCs, prospective customers, and building out that golden nugget of value

Explanation of Marketing

I came across this in the Blogsphere. It explains all of the types of marketing as an anecdote of trying to marry a gorgeous woman. Very funny.

http://ambatigan.blogspot.com/2005/07/marketing-concepts.html