27 January 2008
Another good quote from Paul Graham is regarding angel investors:
“Basically, the angel investors played chicken with us. They knew we couldn’t get money from anyone else, since we didn’t even know for sure if we owned our software. So they proposed to do a cramdown round where they would refinance the company, I believe, at a pre-money valuation of zero—meaning all the common stockholders were completely wiped out. To keep us around, since they kind of needed us to write the software, they were going to give us options. So we called their bluff. We said, “If you do that, we’re leaving.”
I’ve experienced two types of angel investors – someone who believes in you or is passionate about your product and the professional angel investors. From my experience, the former are much preferable, but you’ll probably get more money and more rounds of investment from the later.
Professional Angel investors are taking high risks by investing in startup companies, so expect high returns. One formula that I’ve seen is that they expect 1/10 to succeed, and they are looking for a 3x return on their money over 3 years. They have to treat each investment as if its the one that will succeed, so they expect a 30 x return on each investment.
Its no wonder that they often negotiate so hard … especially when they know the founders are desperate.
Rod has some useful info about Angel Investors.
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Posted by Andrew
26 January 2008
Jessica Livingston has interviewed a number of successful entrepreneurs in her book ‘Founders at work‘. One of the interviews is with Paul Graham, founder of Viaweb, one of the first SaaS providers who made it big.
Paul makes some good comments about software startups, the first of which is:
“If you make something users want, they will be happy, and you can translate that happiness into money. That is the basis of a startup. A startup is a company that builds some kind of technology that people want. The mistake that a lot of founders make is to build something they think users want, but that users don’t actually want.”
There’s often a big gap between what users ask for and what they want and if you’re building what your users are asking for, then you’re still playing catch-up with your competition. Most successful software stories have pre-empted what users want and have led the way by innovating in their field.
Most of my favorite software takes me beyond what I can already do and gives me higher productivity/enjoyment/success. I rely on experts to lead me in their field, so I can focus on becoming/being an expert in my field. I don’t want software to give me what I ask for, because then I either have to pretend to be an expert at everything, or I just won’t grow my capabilities because I’ll ask for what I’m familiar with.
Innovating in your field of expertise is leading users to higher productivity, enjoyment and success and in turn, letting them focus on what they do best.
1 Comment | Business, SaaS, Software | Permalink
Posted by Andrew
22 January 2008
… to upgrade your small business accounting system to Xero.
Xero have just released their 19th update within the last 12 months and its only getting better and better.
To make it even easier, Xero will also get you up and running from your existing accounting system for $NZ199, so now’s a perfect time to get setup in time for the new financial year.
Shameless Xero advertising follows …
1 Comment | Business, Finance, SaaS, Software, Xero | Permalink
Posted by Andrew
13 January 2008
I watched (and laughed) for a couple of years while Tom used his TableTop CRM, but based on his sales, it works! And who cares about pretty reports anyway – its getting results that matter, so here’s how a top sales person does it:
Find out more about TableTop CRM
Of course, a CRM doesn’t close the sale for you, so TableTop CRM has some motivational plug-ins, such as this one which installs nicely above the desk:
1 Comment | Sales | Tagged: CRM, TableTop CRM | Permalink
Posted by Andrew
10 January 2008
Steve McConnell has released the results of his classic mistakes survey – an update on the original 36 classic software development mistakes that he published in 1996.
You can read the white paper and presentation here. According to the survey, the top mistakes commonly made in software development are (ordered by frequency and severity):
- Unrealistic expectations
- Overly optimistic schedules
- Shortchanged quality assurance
- Wishful thinking
- Confusing estimates with targets
- Excessive multi-tasking
- Feature creep
- Noisy, crowded offices
- Abandoning planning under pressure
- Insufficient risk management
Its interesting to note that none of these top 10 mistakes are caused by technology. Assuming you’ve got good people, then a lot of these mistakes arise from either working under too much pressure, or not enough pressure. The trick is to find the right balance of stress so everyone is working on challenging problems, not crappy problems.
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Posted by Andrew
