Academic Business Plans

I just finished reading and commenting on a business plan written by a professor at a prestigious University. I found some things in common with previous business plans written by professors and academics and I thought I would capture that here.

First, the easy comment — too many words. And often passive verbs. The important parts of a business plan do not need much exposition. Investors look for gems, concepts that could explode out of the limitations on the way an industry currently works, technology that cannot be easily duplicated, and well-timed introductions to the market.

The main point — don’t be a professor and educate the investor without making your pitch.

Academic business plans provide a lot of education. It is one of the reasons I enjoy reading them — I learn a lot. The professor provides the information they would normally provide to people in their world: an administrator, a student, a donor, or a visiting scholar (from outside their specialty). It is entirely possible to finish reading the plan and love the concept — but want to invest in a completely different company pursuing the same opportunity. To be convinced by the compelling education and put off by a lightweight description of the company (the investment vehicle). Investors cannot invest in a concept, they have to invest in companies. So don’t blow your chance to sell your company’s strengths in addition to the market idea.

Maybe this is the way to put it: Let someone else educate your investor on the market space, your job is to educate them on why your company will conquer the space. Not the other way around.

What are the key things that academics forget and would be evidence for a good investment?

  • People. Who are you? Is this research that you have spent 10-20 years perfecting and no one has replicated the full technique but you? Are you the most cited person in the field? Have you been part of academic spinouts before?
  • Technology. What have you built that exceeds all commercially available techniques on the market? Patents, of course. What is the speed/throughput/accuracy/benefit where your method outpaces commercial solutions (real #s from real tests)?
  • Risk mitigation. Are you using a SBIR grant for development? Can you get another? Is your intellectual property negotiation complete?
  • Have you sold anything yet? Most academic plans have not, but if you have….
  • Plans. Do you know your next two big milestones and how long you think it will take? What are proof points that make the company more valuable?
  • Established space, labs, personnel. Many plans have none of this yet, but if you have any, specify. This includes working prototypes in your academic lab.
  • Many people put in partners and potential customers — an interesting read, but too easily duplicated. So many people will “take a meeting” and that ends up in a business plan as a “sure thing”. Use sparingly.
The comment below is duplicative of the point just made, but I like it, so let me hammer the concept with the hope this additional description is beneficial:

Generic-proof your writeup. Imagine one of your college sophomore students who writes well has just written something nearly identical to your plan — just a generic, “someone ought to do this” plan based on a lecture you just gave. What have you put into your plan that this imposter cannot? What space have you wasted writing material that this imposter has just duplicated? Examples of generic-resistant points–

    • Your degrees and position.
    • Your papers and citations.
    • Prototypes – real results from prototypes.
    • SBIR and NIH/NSF grants.
    • Established commercial lab, company formed, employees on payroll (if you have any of these).
    • Customers & revenue. Gold standard.
    • Patents and legal agreements owning IP or license to IP.
    • Previous commercial success, partners with previous success, including advisors.

None of these can be duplicated by an imposter and most cannot be duplicated by a colleague in your field at another university. Make your company unique; a good investor knows there are other options, so they have to believe you are the best or only one that can do your main thing.

Side note: Your introduction may still need to inform (within reason) and avoid jargon. But your technology or product description section can be filled with jargon. Good investors will be handing it to another PhD or an established businessperson in your space to solicit an evaluation. I have done many of those evaluations. Lack of any detail anywhere in the plan loses the opportunity to impress an expert in the field.

 

 

Favorite Hacks and Tricks

This post is going to suffer from lack of focus at the outset. Sometimes, I discover that a working model, somewhat similar to a life-hack, for doing something technical is both simple and effective. These are also subjects that I have rarely, if ever, seen written up in the various books and wikis and FAQs and advice centers. Other than I think these are interesting and without a solid alternate reference, there isn’t much unifying the list.

Maybe someday a pattern will emerge as I add to the list and I will have material for a book. In the meantime, enjoy — let me know if you like something, or if you think it is covered somewhere else even better than my attempt here.

Business data analysis

Spreadsheet jocks, powerpivot users, SQL report writing.

Date fields are everywhere and most data analysis involves either putting data into bins by day/week/month/year or putting in date order and summarizing by time period. The problem is that sort and summary algorithms work horribly on date fields. All report writers, by default, summarize based on data that is IDENTICAL (address counts for each state, for example) If the reports you need are not pre-summarized by month/year, etc. then it seems like a huge amount of work to divide up.

Solution: create a new column or field and use this formula (pseudo-code):

newfield = STRING(YEAR(mydatefield)) & STRING(MONTH(mydatefield))

It is important that the months all come out 2-digits. Some languages allow for formatting by template — you would use YYYYMM. This new field now SORTS in alphabetical order by year/month and summarizing functions (e.g. Excel Subtotal) will subtotal for each month.

IT Staff for Small Company

Desktop management and repair when short-staffed.

Let’s face it, all IT at small companies is short-staffed. So a user reports a fleeting problem — computer crashes, blue screens, software acting up, possible virus, hard disk is full, or a driver seems to be missing or went bad. Diagnosis time is one of your most precious resources. And many of these problems don’t seem to stay “fixed” when you finally figure out what you think went wrong. Dual problem — you don’t know if your diagnosis was correct and you don’t know if your fix returned your user to full status.

Solution: Do not diagnose. As part of an upgrade cycle for all desktops/laptops in the organization, purchase 1 or 2 extra computers and install them to “company standard” configuration. User reports a problem that can’t be fixed with 15 minutes of review and training… immediately install the new computer, transfer the user’s files (without any personalization, humour apps, music streaming, other crap) and reclaim the non-working computer. Now reformat the old computer to FACTORY settings and install it to company standard. Another user reports a problem — take your refurbished computer and install it, transfer the user’s files and reclaim the bad one. Continue the cycle.

The biggest key here is that every user with a problem receives a “new” computer (new to them). And you have a known-good state that you delivered it. No diagnosing and no guessing. It just turns out that users with factory-installed OS configurations have fewer problems than those that were repaired or the registry was updated or bad software removed. Those techniques work, but they never return the computer to a known state. By purchasing new computers regularly, this method also rotates in newer equipment and can be used to rotate out ancient equipment. Other variations help support power users by replacing their equipment with new, refurb their old (probably powerful) computers and distribute them as “new” to other users. Over time, the entire base of hardware is updated.

Another side benefit is better handling of hardware problems. It turns out hardware problems are really rare if you implement a 4-year upgrade cycle. What looked like a hardware problem often completely goes away if you do factory restore on the computer. And if you compare the price of hardware (written in 2015) to IT staff time, you find that hardware diagnosis and repair is almost never worth it. If a computer will not restore to factory OS, then trash it or part it out.

 

 

Question from Quora about MVPs – Minimum Viable Product

I recently got interested in a question posted on Quora and I want to share an expanded answer here as well. I won’t rewrite the books or try to rehash the definitions of a Minimum Viable Product. See here or here.

But the question posed related the generic concept of an MVP to how an entrepreneur implements a vision for a much larger company and much richer product. Here was the question.

How do you release a MVP that you personally find inadequate then charge customers for it?

Would it not soil your brand’s reputation?

And here is my slightly expanded answer…

  • I personally find a compact pickup truck inadequate for my commuting needs, but it is a viable product.
  • I personally find coffee to be uninteresting and inadequate, but it is a viable and successful product.

To establish a brand, you are creating a value exchange — your product for the customer’s money. My definition of viable (as in MVP) is that the customer enters into the agreement not as a fool, but as a willing and satisfied participant. Not satisfied to their total desires, but satisfied to the amount you charged.


So my first answer to your question is: your personal opinion of a product has nothing to do with its target market. You want either objective or market-tested subjective evidence that the customer values the product more highly than the price you are charging. The customer will consider it a good buy. See pickup truck and coffee examples above.

The second answer to your question is: don’t let your vision get in the way of offering a product that the customer will consider a good buy. This is the reason the word viable is in MVP.

Say I am hungry and you offer me a $3 high quality hot dog. I may desire a full steak dinner, but I am aware it would cost $50 and you may not be capable of providing that or could not maintain quality serving that. I am still quite likely to want to buy the hot dog.

Your job is to communicate to me as the customer that your brand is about great hot dogs at $3 today even if you have a vision to serve great steaks next year (at a higher price). The way you phrased your question, it sounds like you plan to tell your customers they are getting steak today when all you have is hot dogs. That would be bad for your brand and in my mind is NOT an MVP.

Your vision includes steaks. But an MVP is about selling great hot dogs. Don’t sell a vision you can’t offer yet. That’s the whole point of an MVP.

There is a tricky side issue here — do you tell your customer the vision? Telling a story for the future makes the hot dogs today taste better, right? Not always. If the product is hot dogs and steaks, I would say no, don’t get your customer focused on something more than you have today. There are many technology products that I wish did not get me distracted with promises of “steak”. There are reasons, however, for some products and brands to sell a viable product for the moment with the promise of an expanded product in the future. It can lock your customer into you and keep them from looking elsewhere — but it can also lock you into promises you made and may later not wish to keep. Choose wisely and promise carefully.



What do you think of THIS company? They have a vision.

I have done some angel investing, with such mixed results that I have never concluded that I should be an “investor” either as an individual or part of managing a fund. Sometimes I remain mystified about what it really takes to do “investment” right. Hence my confidence in Give Forward (www.giveforward.com) and Firefly Energy, both gone now. It really does take an entire portfolio to make any sense of it — I get too involved, I think.

But I have a lot of startup company experience and have seen, followed and been a part of more companies than most people. That includes taking a company public, starting several from scratch (employee 1), selling or parking a few, moving on and watching others continue the journey, and unfortunately closing one or two of them down. So I get asked a lot — what do you think of this company? And there is one pattern in those questions that I want to point out.

I receive the pointer to a web site or the company presentation or overview. They usually contain the “business plan in miniature” and go over the business plan categories that the books and classes recommend. I can get a solid first impression of the company and what it does. Of course, some are written by idiots, some megalomaniacs, some with so many grammar errors I can’t focus. But several of the good ones have something in common.

The vision is correct, but the investment is way out there.

The presentation starts out breezy and important — the question is usually, “is this going to be a thing?” And the answer is definitely YES. And then they proceed to explain that this company will be the next YouTube or eBay because they thought of it. Examples that I actually received include:

  • A company targeting body or wearable cams for recording one’s every waking, and maybe non-waking, moment. The next evolution of Go Pro or Google Glass?
  • A platform for coordinating a complete, high-dollar digital ad and retention campaign. Think emails, Tweets, contests, sporting events, and Instagram.
  • A device and SAS platform for monitoring home energy use and/or controlling lights, appliances, etc.
  • An On-demand delivery capability for delivering prescriptions to office or home.
  • A platform to pay bloggers and big Twitter personalities to do brand support.
  • A device to GPS track your kid, including at places like Disney, in case they get lost. (this was some years ago)

And I can easily respond, “yes, this will be a thing”. This market will be real — in fact, I sometimes know of other, better backed examples in the market. And I often know of other companies with related products — many of them big enough to buy out this startup, should it succeed.

However, the overall question referred to me is “is this a good investment?” Aye, there is the rub.

Ask yourself what are the characteristics of a company that is likely to capture the largest portions of these emerging spaces?

  • Big companies like Google, Facebook or Microsoft who have huge R&D going towards the effort. Often these do not work or the big company buys the startup (see Oculus, Instagram), but it sets the bar very high.
  • Silicon valley companies who have access to $10M’s in investment to go after huge markets.
  • A company built around a genius engineering or marketing team with a proven track record. These companies almost always lead their business presentation with their proven success and/or working prototypes or “trial” communities instead of the “vision.”
  • A small team or individual with years of nursing along the idea before it became a thing. Think PlentyOfFish or Twitter or YouTube or Facebook.

When I receive the presentation, it never represents one of the above. The point is, by the time a presentation like this gets written, when the “thing” starts to become really obvious, the real window is already gone. There are entrenched players and hundreds of other people with middle-tier resumes pursuing the idea, which frankly, is pretty obvious. So my answer to the question always starts with, “yes, this is a thing or it is going to be a thing, but why would I believe that THIS company is the one to make it big in this category?” Rarely is it compelling.

And let me be the first to criticize my own theory — there are the “WhatsApp?” and “Echo Global Logistics“ and other companies to come along and redefine an obvious category or find that spark that takes off. But what is more common (also for those so-called overnight successes) is years of toil and redefining of a company and its idea before it hits critical mass.

The rest of them fail.

So, on a statistical basis, no. No, it is not a good investment.

But some people buy lottery tickets. And some people find that raises their spirits and hope for the future. And some people win. That won’t make me say your investment is a good prospect. Maybe better than the lottery, but not what I would call “good”.

 

Touchpad “Tap to Click” is Ruining IT’s Reputation

If you are at all responsible for IT support, you may want to think this through.

Every laptop with a touchpad has that pad located right beneath the keyboard where it is likely to get tapped several times while typing anything. And every laptop I have recently installed has the “tap-to-click” feature ON by default.

So, count on your users accidentally tapping the pad and causing a mouse click quite often. I can train myself to avoid the accidental tap, but I find it very difficult. Not only do I doubt that users can train themselves to avoid it, but when you do accidentally click while typing, the results are amazingly confusing. The screen seems to rearrange itself randomly and the focus for typing moves.

My conclusion: computers are mysterious enough for many users. How many times have you been told the computer “just did something” and they had nothing to do with it? What the manufacturers have done by making tap-to-click the default is to reinforce that meme with something close to reality. Through no conscious act at all, users see random changes on their screen, window flipping, everything disappearing (just move your mouse pointer to the lower right and “accidentally” tap) and reappearing, and the words they type refuse to appear.

No wonder people hate IT. We do it to ourselves. Please disable tap-to-click — I always do for my installations.

 

The Tragedy of Save and Save As

Yesterday, a good friend hit the Save button in MS Excel, left the window open, went and clicked on a few things, came back by clicking on the file — and it reverted to the previous version. The underlying problem was related to file downloading and syncing, but that is not my point. With all of the disk space available, why was the previously saved version not easily recovered? Shouldn’t every single version be saved, intentional or not?

In 1982 I was introduced to the Digital Equipment VAX/VMS operating system on a VAX 11/780 and its unique way of keeping track of multiple versions of files. Every single Save command created a new version of the file, conveniently numbered 1, 2, 3, 4…. Because of limited disk space, a command called PURGE went through and cleaned up the old versions. My favorite command was PURGE /2 which saved the last two versions of each file. I rarely lost any work I could not recover easily.

About 20 years ago, I developed the habit of using Save As every single time I edited a file (beyond trivial corrections). About 10 years ago, I started putting my own revision numbers in the file name, sometimes with the date. At my current company, another engineer got us organized around a specific system. File names start with the date (year first), followed by a version letter, followed by the name. e.g. “140620b My Project Plan”. This has the advantage of listing all of the versions in date/version order.

So, the tragedy is, every time a friend or colleague of mine loses edits because of Save problems, I either say or want to say, “I always use Save As, you should, too.” However logical my conclusion and the success of my method at avoiding loss of work, I don’t get thanked for my tidbit. I get anger and angst because these people believe the Save button should work. They don’t think of it the way we computer science people do, that a new version is put down and then the old version ERASED. And real people (not us geeks) should not have to know this any more than they need to know the spark timing of their car engine. Usually that engine works and so should Save commands. Very sad.

If Windows or MacOS has already implemented good version management or plans to soon – someone point me to the feature. I’ll be interested in seeing how well they do compared to that 1982 VAX system. Not a new idea, folks.

Round Lake Designs

Hello everyone,

I am Tim K and I have been using roundlake.com and Round Lake Designs as d/b/a business names since 2002. I even operated a trucking freight company called Round Lake Freight for five of those years.

At some point, I will figure out what to do with this blog. I might start posting entries on items that amuse or interest me.

I often get asked for advice on startup company (aka entrepreneur) activities and I usually can give people some interesting perspective on their company ideas. Hopefully, I will get inspired to write down my most common bits of advice for a later blog post.

Don’t expect much and you won’t be disappointed.

Feel free to reply – if your post is boring, insulting, or irrelevant, I will delete it. No harm done. [Edit: The reply queue has been getting spammed, so sorry, any replies will need to be sent to me via email. You can guess my email address.]

 

Quotes

At the risk of being completely and non-redeemably unoriginal –

There are a few quotes that I have been collecting… (I will update from time to time). If you think they should be corrected, please reply post.

  • In preparing for battle I have always found that plans are useless, but planning is indispensable. — Dwight D. Eisenhower
  • Education is the kindling of a flame, not the filling of a vessel — ancient Greek saying.
  • Life’s journey is not to arrive at the grave safely in a well-preserved body….. but rather to skid in sideways, totally worn out, shouting “holy shit… what a ride!” — from a “seasoned” friend