Week 11 of 13: Running Short On Time

You can't stop time. But perhaps you can gain some control of it?

I have three post-it notes stuck to my monitor. Each has a to-do list of activities I need to complete. The to-do lists are accounted as one each for "customer/sales development", "product development" and "other stuff". As we run short on time, the focus in each area is quickly becoming less about completing work now, and more about how we can save time and effort on the work we complete later on.

On the customer development front, my most significant concern is hiring the sales person I previously discussed the need for. Since I will have a full course-load next quarter, I think having someone work full-time on sales will give this start-up the best chance of success. In reality, I don't think this person needs to be a sales person per-se. While the central activity of this person might be sales-orientated, the person taking the role just needs to be good at managing relationships and taking general responsibility for the business. So, thus far, my approach to hiring this person has been to reach out to people I know who may be suitable. I view the main advantage of hiring someone I already know to be that we don't have to spend several weeks figuring each other out, before actual productive work happens. However, while a few people have passed referrals to me, it's looking more and more likely that I'll have to hit the online job boards.

From the product development side, we have a product that is ready for operation. Nevertheless, parts of the content creation and publication process require quite a bit of manual labor. Consequently, in the remaining weeks our focus is on automating these manual labor tasks as much as possible. If we don't, when we get a customer, it will cost the business money to hire someone to complete these parts manually.

To buy myself more time to work on the startup during the second year, I've also been working on a side activity unrelated to the startup. I've spent some time this summer working an independent study project. Completing this project over the summer will effectively mean I have to do one less credit in one of my remaining three quarters at business school. Working with a classmate also working on this project, I spent the early part of this past week interviewing executives at food companies and media companies. We're looking at how each type of company approaches food media. In hindsight, it's a shame the project is not more related to the startup. I can only imagine how much more time I could have saved if it were.

Week 10 of 13: Company Formation

The name is settled.

My startup project is now called PreScouter. My classmates might remember a differing working title; but that name is entirely forgettable. The project has also moved on from the original business idea of a micro-consulting type service to something else. The service I'm launching is something like a trade publication, but much more personalized.

The first question anyone will likely have is why I'm naming the service "PreScouter". Surely IntraCaps is circa-1999 style? Surely this trademark protection on this thing is not strong enough? The answer is pretty simple:

• A good portion of the business's target customers will have "scout" in their job title. Others portions will specifically have this in their job description. The name is meaningful for the target customer.
• The name is also more memorable than others I considered. I tested a few names. I cited a list of possible names to some drunken friends, while we were on a night out. They remembered this name more than others.
• Finding an unregistered dot com name these days is hard. Since I'm boot-strapping, I don't want to spend money on a name someone else has already registered. This name was free.

At the start of the week, the paperwork got started for forming the company. I've been working on this with a SBOC team from Northwestern's law school. Rushing around the areas neighboring Northwestern's downtown campus, we arranged money orders and got everything together to form the company legally as an LLC. It's a milestone - PreScouter LLC will come into existence as soon as the state finishes processing the paperwork.

Ultimately, the most important issue on the legal front was whether we would form as an LLC or Incorporate.I am not looking for investment, at least until I have a few customers. Consequently, the LLC restrictions are not significant. If/when I do seek investment, I will just file the paperwork to change over to a Corporation. The LLC structure also allows for pass-through of taxes and avoids double taxation.

Moving the technical infrastructure forward, we now also have prescouter.com set up and ready to host the final product, when it is ready. While we were initially targeting EngineYard as the deployment platform, we'll now likely hold-off until we have a customer or two. This is so we can conserve cash. Just as many startups do these days, we're also using Google Apps to provision email from the prescouter domain.

As we head to the end of the Summer, it's good to see some of pieces coming together.

Second Open Innovation Summit

Many firms are now opening up to creating innovation from the outside-in.

World Research Group held the Second Open Innovation Summit this past week, August 11-13. Robert Brands recaps days one and two in some detail. By most measures the conference was outstanding.

Open Innovation relates to how companies collaborate with outside organisations to create new innovations. More than just outsourcing, Open Innovation relates to how two firms with compatible resources and strategies create an alliance to attack a market opportunity that previously could not be addressed by a single company. An example that Unilever presented at the conference was Starbucks ice-cream. Starbucks does not have the expertise to produce ice-cream. Unilever does have this expertise. The two firms were able to work together to create a product that might otherwise not exist or for which there would have been substantial hurdles to produce.

For me, by far the best presentation at the conference was given by Andrew Gilicinksi of Clorox. The presentation highlighted how Clorox relied on networks and communities of outside innovators. Through Clorox Connects, Clorox presented to the outside world some challenges that it was tackling and seeking solutions from the outside world for. There were two particularly noteworthy points about Clorox's approach. Though the company uses a third party firm to screen the proposals that they are sent, this third party firm is actually compensated based on the success of the proposals. This means that the "gatekeeper" actually has incentive to coach the people that produce proposals to make them more closely fit Clorox's requirements. A second notable point relates to confidentiality. This is an issue that many firms struggle with when it comes to inviting the external world to help solve problems the company is tackling. However, Clorox decided that there were many problems that, to the outside world, should be obvious that the company is looking into. For example, where new government regulation will change their approach to particular processes. As another example, "to some people it may even be surprising that we don't already have a dressing made of natural preservatives".

In other presentations, P&G highlighted their work with Ohio universities, creating a "master agreement" that allows P&G to work with any of the universities in Ohio under standard terms. Such an approach, if made nation-wide, would enable P&G to tap into a wealth of academic resources. Qualcomm presented an internal business plan competition they had used to stimulate innovation. Meanwhile, Cisco discussed the I-Prize competition that they had organized - a business plan competition that invited entrants from outside. I was impressed at the efforts Cisco makes to keep the company growing, billion dollars at a time.

The greatest take-away for me was that the difference between success and failure in Open Innovation efforts often comes down to the soft-skills of the people involved. As one seasoned expert remarked of one the more successful directors, "he might be all smiles, but I tell you - there is ferocious courage behind it".

Week 9 of 13: The Student Project

For good or bad, our prospective clients see us as students.

I could see him looking at me, slightly aghast. "These kids are students," I imagined him thinking, "and I thought it would be a charitable thing to do to help them with their 'student project'". So perhaps it's reasonable that he's now shocked and thinking, "so why are they now suddenly asking me for money?"

With a demo of the product ready, we hit the road to demonstrate what we've come up with to a few people. If we can obtain ten clients signing up for an annual subscription of $6,900 each, we will have enough revenue to operate the business. However, this is not a sum of money that people seem easily willing to part with. The reactions suggest that, for our prospective clients, buying into our service is almost as big a deal as hiring a full time employee.

The price point is comparable to a similar service offered by similar companies, such as NERAC. Unfortunately, NERAC is well established and has a rich history, with NASA as a flagship client. While I've tried to position our service quite differently to how NERAC is positioned -- as something that is almost complementary -- the service we're offering is not yet distinctive enough.

The people we've been speaking to are also perhaps surprised because they'd we'd originally approached them to seek advice on some ideas we had for facilitating collaboration between academia and industry -- for a "student project" of sorts. They probably did not anticipate that we'd take on their advice and revisit them with something that looks like a real product.

Week 8 of 13: Looking Beyond The 13 Weeks

Time to hire in a sales person?

It's a strange thing, to be two-thirds of the way through the Summer. We're far enough through now that I can be a little more realistic about what can be achieved. I'm excited that we might just have a pretty interesting product by the end. At the same time, I'm sad that we may not generate revenue - which was my original ambition for the Summer. However, if we look at this project beyond the 13-week Summer, this may not be necessary just yet.

My original plan was to do product development and customer development in equal proportions over the summer, building something and getting some trickle of revenue through to prove that what we'd built could be scaled. I could, I then thought, spend my second year at Kellogg "scaling the business". However, there have been challenges.

On product development, we now have something that can be cobbled together for demoing. However, as I have previously suggested, I may have expected too much of the undergraduate student interns. Consequently, I've had to dig in and get more involved than I'd originally have liked. On the flip-side, customer development has been, and continues to prove to be, difficult. Just simply scouting out the right person to talk to requires tremendous time and effort. Then following up with them and getting some of their time can be a sales effort in itself.

Knowing what I now know, I have to ask myself: what is the best use of our time and resources for the remaining 5 weeks of the Summer?

I've decided that we'll focus entirely on product development, turning our cobbled demo into a working service. As part of this, we'll continue to work with the existing handful of potential clients we've developed relationships with. However, we'll forgo the tremendous time and effort required to develop new relationships with new potential clients. The risk is that we won't have fall-back options, with respect to clients. The upside, though, is that we'll have a more substantial product to show people.

The second part of this "new plan" looks beyond the Summer. At the end of the Summer, with the money that I have remaining for this project, I'll hire a sales-person/operator to shop the service around and run it for three months, i.e. during Fall quarter. Given that this person will have a working product, and given three months of dedicated customer development by this person, we should know by the end of 2010 as to whether this thing "has legs".

As I look beyond the Summer, I have also started to think about what I'll be doing after my MBA. I need to figure out whether this business can support me, or whether I need to recruit for a job. I feel like I'm developing a skill-set in this early stage new venture development space. If I were to take a job around this area, what kind job in the area would it be?

Week 7 of 13: The Rhythm Of The Business

Agile Scrum is one part of the rhythm.

My Kellogg classmates are now looking to the end of their internships. Because many of them seem to have opted for an internship of eight to ten weeks in duration, they are starting to wrap up their projects. In contrast, I've planned on working on my startup project for the entire summer. So it's perhaps slightly ironic that it's only now, coming to the end of the 7th week, that we seem to be in a regular rhythm.

The "rhythm of the business", is based around the two interns developing the product and myself developing customers. The product development is based on Agile Scrum method. This means that we have a backlog of features. Every week, we determine what we are going to develop for that week. At the end of the week, we demo and review what was accomplished in the week. Whenever I've started using this method with a team unfamiliar with it, there is always a few weeks of confusion. However, once it gets going, it is a good way for a customer or product manager to maintain control of product development at a reasonable level.

While the product development is moving forward, it is distracting me somewhat from my task of customer development. In hindsight, I over-estimated what student interns could be capable of. I expected them to be more knowledgeable than they actually are. A Kellogg classmate summed it up best, "as an intern, you're doing it to learn something". So, I have had to coach and teach the interns a lot more than I anticipated.

The customer development process is relatively simple. I scout out leads for potential customers. I then email and then follow up a few days later with a phone call. I've developed a spreadsheet of where different people are in different parts of the funnel. The hardest part is scouting out leads: finding the right companies and the right person at the companies is time consuming. Just as the interns are learning, I feel I too am learning.

Yet, while we may how have a regular operational rhythm, I now need to start figuring out what this business will look like after the 13 weeks are over. To what extent will we be able to keep these processes going after the 13 weeks are over? To some extent, the answer to this is relate to my own personal goals for the future - something else that I need to figure out soon.