US Administrative Headaches

I'm so caught up in Bureaucracy, I've actually met some of these people.

As I write this, I'm on the Purple line train on Chicago's metro system - the "El". I'm headed back to Evanston from the Internal Revenue Office in downtown Chicago. Getting a bank account set up for my business is proving to be a headache. With the school Winter quarter kicking off next week, I'm feeling a little pressure to get administrative issues resolved before my endless list of things to do gets even longer.

It all started simple enough -- I just want to open a bank account so that I will be able to cash in money from customers. I got a few recommendations for banks. The mainstream consumer facing banks, such as Citibank and Chase, charge monthly fees. For a business with little revenue, I found this a ridiculous proposition. The Levy Center kindly pointed me to a few banks that offered better terms -- TJMcCue First Bank & Trust, Harris, and Charter One. Of these, Harris was the most interesting, in terms of keeping my fees at zero. To open an account, I found I need an Illinois Tax number for the business. So how do I get this number?

The Illinois Tax number need to be applied for from the state revenue department. However, to get this number, I need another number -- the Employer Identification Number (EIN). The EIN is the federal level number that identifies your business for tax, employment and other business purposes. While I pondered why the state needs a different tax number to the federal government, I began looking around for how I might get a EIN number.

Fortunately, the EIN number can be applied for online. Unfortunately, the online form is only available during office hours(!)... you can imagine how crazy this must make a person wanting to apply for such a thing at 11pm at night. So I waited until the morning and started filling out the online form. As I filled in the boxes and moved from one screen to the next, I eventually got to needing a number that seems to be the root of all things US -- the social security number. Because I was not employed over the Summer, and was instead working on the business, I didn't get a social security number. It appears I need a Individual Taxpayer Identification Number (ITIN) in its stead.

The application for the ITIN is via postal forms. Following phone calls to automated voice recordings and angst that it could take weeks to get this numbers, I'm headed to the Inland Revenue Office to see if they can give me a helping hand. I don't have anything to file for a tax return, which is when an ITIN number is typically filed for. To reduce the risk that I didn't have all the document I needed my visit to the Inland Revenue Office, I decided to empty out my desk tray of important documents into my rucksack.

At the Inland Revenue Office I was greeted by a sign that something to the effect of, "Due to weather, traffic and staffing issues, we are only accepting tax payments. Please come back at another time for everything else". A receptionist imparted some advice, "You think you can just walk in here and get an ITIN number? It's a long detailed process that will take 12 weeks. It requires a lot of homework". I almost cried.

GEW50

PreScouter competed in the GEW Startup Open and was acknowledged as part of the GEW50.

Global Entrepreneurship Week (GEW), November 15-21, came and went. Did you notice? The startup that I'm working on, PreScouter, was recognized as part of the week's GEW50.

Global Entrepreneurship Week, founded by the Kauffman Foundation and Enterprise UK, facilitates a week of organization of local, national and global activities designed to help young people explore their potential as self-starters and innovators. One of these activities was the Startup Open -- which recognizes startups attaining significant "launch" milestones during Global Entrepreneurship Week.

In the case of PreScouter, by the end of Global Entrepreneurship Week on 21st November, the week before Thanksgiving, we had completed our campaign to interview (and put the product in-front of) as many interested parties as possible. Our placing in the GEW50 is a nice recognition of the strides the business has made.

The power of the team

Teams can be more effective than an individual.

Over the Summer, I spent an inordinate amount of time cold-emailing and calling people -- typically alumni of the McCormick Engineering School at Northwestern and others. I wanted to reach out to potential clients of the service I was developing, to understand their problems and get feedback on some product ideas. It was a bad experience. I was sure this Fall quarter's efforts would be similarly bad. I was wrong.

On one particular day over the Summer, I recall having scheduled 30 calls - each roughly separately into 30 minute slots during the day. It was a long and exhausting day, calling one person after the next. Half the of the time, I would not even get through to the person. At other times they were a little cold and unwelcoming. I had designed this process myself - emailing people and then suggesting when I would call them, and calling them -- irrespective of whether they had responded to the email or not. This method had worked when I was looking for an internship at a VC firm, before I started business school. In this case, it was was a complete disaster. In fact, it was not until the last call -- at 9:15pm of that day -- that I got even a vaguely positive response. The alum was curious about what we were doing and we were able to quickly arrange a meeting. After so bad outcomes in the earlier calls, that last call was a nirvana moment. Nevertheless, the whole process left me discomforted about the sales and outreach effort need to get the service I was developing to market.

As I previously mentioned, this academic quarter I used my MKTG450 Research Methods in Marketing class to effectively do the same thing. This time I had a proof-of-concept in hand, but essentially still needed to reach out to alumni - this time of Kellogg - to gauge their interest in it. The results can not have been any more different to my experience over the Summer.

With five brains working on this project, we designed a different process. This time, it was more of a funnel -- an initial email to invite interest, a second email to arrange a phone call and then the phone call to discuss the proof-of-concept. In hindsight, this was clearly a far more sensible process that what I was doing over the Summer. On the calls themselves, there would be at least two of us on each call. As we interviewed each person, we could each jump in with different thoughts and angles. On some of the calls, we even dared to ask if they would be willing to trial the service, paying a small amount of money to do so.

So it was on the first call, of the 34 that we ultimately completed, that three of us were sat listening to what seemed like overwhelmingly negative feedback. Nevertheless, towards the end of the call, one of my peers pushed to ask if the interviewee would trail the service. It seemed crazy to me, "have you heard what this guy has been saying?" I did so any, and the response came -- "Absolutely, I'll try it". I was astonished. From the experience of struggling to even get people to talk to me, here was someone willing to try it. Ultimately, some 10 of the 34 that we interviewed expressed interest in trying the service.

Working as a team of five did not mean that the amount of work done increased five-fold. Yet, the productivity and effectiveness has been orders of magnitude more than working as an individual.

What happened after the Summer?

I've developed a great appreciation of calendar management.

A few people who follow this blog have sometimes asked me, "What happened next? Did you hire the sales guy? Have you put the business on hold? What happened next?" My posts since the end of the 13 weeks of the Summer have done little to explain how things have been progressing with the business. At the start, this was because very little was actually happening. The momentum has, however, picked up.

Ultimately I did not hire for "the sales guy". This was because I was not certain that this would be the best use of the remaining money that I have. Instead, with school in session, in contrast to a summer spent working solely on the startup, the activity around the business this quarter has centered around the group project for one of my classes - MKTG450, "Research Methods in Marketing". MKTG450 is an interesting class, if only because I know of no other class that allows you to reach out to so many potential clients.

For MKTG450, teams have to conduct a marketing research project. Typically these project teams choose to conduct an internet survey. This survey, for example, could be asking peer students about food options at Kellogg (with Kellogg's catering facilities being the client). My project team choose to work on PreScouter, the business that I'm developing. As such, it quickly became clear that we could use this opportunity to approach company R&D labs. Why not conduct a survey of prospective clients? Instead of doing an internet survey, why not talk to them up over the phone and present the product to them?

Fortunately, both the professor for the class and my project team agreed to this approach. As a consequence, my project team has spent a gigantic amount of time arranging and conducting interviews. To think about it is scary. We first reached out to Kellogg alumni in relevant job functions and industries. We then identified a list of executives working in external research / open innovation roles and also approached them. We then scheduled phone interview with all those that responded to us.

So far we have completed 26 interviews. I'll leave it to your imagination to determine how many hours this has taken in email exchanges, phone conversations, write-ups and other activities. However, we only need a few more interviews to complete the survey and it's already been a great experience for me and fantastic for the business. In scheduling interviews alone, I've gained an appreciation of what a hard task that secretaries and PAs have in managing peoples' calendars. I've also learned how powerful it can be to have a great team. I'll expand on this, and share the results of the project, in the next week or two -- as we come to complete the project.

The Startup Visa

Where art thou, startup visa?

Over the years, business schools have helped develop great insights and theories into how markets work. However, there are times when these market theories don't work. Often the reason for this is because there are non-market forces at work, changing the dynamics of an industry. As an "international student" studying in the US and starting a company in the meanwhile, it is one of these non-market forces that is currently foremost on my mind. The issue is this: if the business I'm working on starts to gain traction, how am I going to get a visa to stay in the US, so that I can continue working on the business after my MBA?

Fortunately, someone seems to have anticipated my dilemma. A new bill is moving through the legislative process. For me, this bill provides the best opportunity to continue what I'm already working on. In essence, a new visa category will be created to support alien entrepreneurs able to raise $200k in investment to start a company. For the type of business that I'm working on, I think an amount slightly more than this - $300k - is a good amount of investment that can attain good returns for those who invest. Raising $300k is a realistic goal for me to target for by the end of the academic year. Having raised $25k before the Summer, and used it to reduce a lot of risk around the business, $300k seems achievable.

Without the Visa, my options seem to be as follows:

• Rely on the current version of the "startup visa" - called the E5 visa. The E5 visa requires the entrepreneur to raise and invest $1M in a US business. This is a substantial amount, and in excess of what my business, PreScouter, requires.
• Generate enough revenue with the business to support 3 or 4 people - under a so called Treaty Trader/Investor Visa. I estimate this requires generating revenues close to $0.5M a year, which I think is particularly aggressive for my business.
• Convince someone to employ me, so that I can continue to work on the business. Perhaps there is a role of "entrepreneurial researcher" somewhere out there? Or perhaps a company might consider employing me for the purposes of making this business work, in return for an equity stake?

Neither of the first two options quite fit my needs. I just need a little bit of bridge funding to get the business to $0.5M a year of revenue and beyond -- something that is only provided for under the proposed Startup Visa act. The third option would be interesting, if it existed.

So the question for me is, "when will the Startup Visa Act become law?!". It seems like I'm not the only person wondering this, as this question has also been posted in on Quora. Fortunately, I was able to get five minutes with Brad Feld, one of the great proponents of the Startup Visa bill, at the TechCocktail Mixology conference that took place earlier this week. Brad seemed bullish that the act could become law by the time I graduate, in June 2011. Still, I don't think this will stop me tracking the progress of this bill with bated breath.

The method to the madness

Contrary to popular belief, there can be structure to the process of starting a company. This is one such structure.

Sometimes people say, "Wow - starting a company: that's so unstructured! That's so hard. You have to make it up as you go along. It's not like consulting, or any other job, where there is a clear route". In my opinion this is a mis-perception. A good starting point to rectifying this mis-perception is the structure provided by Steve Blank's book, The 4 Steps to Epiphany.

Starting a company is not any more or less structured than becoming a partner at top consulting firm, CEO of a consumer goods company or MD of a trading desk at an investment bank. Are the paths to any of these goals clear? Kellogg, and I'm sure other business schools also, provide some of the tools to get these. However, the trick is probably in sowing these up into a plan to get there - a structure. What do I need to know? What skills do I need? Where do I need to be?

If there is one lesson that one tends to learn over and over again in life and business school, it is that "failing to plan is planning to fail". Creating a plan ensures you've thought through a number of issues and at least mitigated some of the risks. It provides a route to get from A to B. In the realm of startups, a business plan is a kind of plan for starting a business. However, it usually describes the destination - point B - of what the business will look like, rather than actually describe how to get there.

How do you get to point B? It transpires that there are entrepreneurs who are systematically more successful than others. What is it that they know that others don't? What are they doing differently? From what I know of the start-up space, Steve Blank's The 4 Steps to Epiphany is the clearest codification of what successful entrepreneurs do right. It is dry book, written very much like a technical manual. However, it provides a real structure to starting a company.

At the simplest level, the structure that Blank provides is

• Customer discover: Develop hypotheses for the problem you are trying to solve and test them against real potential customers.
• Customer validation: Get a sales person, sell to initial customers, verify business model.
• Customer creation: Establish a repeatable process for creating demand for and selling the product.
• Company building: Attain mainstream customers, build functional departments.

My journey to date has centered around the first two phases of the process. I've gotten to know and understand some of the concepts from these parts of the process. For example, Blank repeatedly insists on the need to "get out of the building" and talk to potential customers. My posts from the early part of my 13 week Summer provide some insight as how the plans for my business changed as a result of this. Perhaps more subtle is his advice to "find customers for the product you're already building". If you listen too much to customers, you change your requirements so frequently that it becomes impossible to building a finished product.

Blank provides a sample, a great blog I should read more of and others have now even started rewriting the parts of the book so it's a little more digestible.

Week 13 of 13: Beyond Another 13 Weeks

As one set of 13 weeks finish, another starts.

As I come to the end of the Summer, I've been spending some time reflecting back. One of the great puzzles I've been thinking about this Summer is the question, what makes people do the things they do? I wonder why I've put myself through this painful process and what this means for my life.

The Summer experience has been tough, exhausting and pushed my mental and emotional limits. In large part, I put this down to the mental pressure it has placed on my self-perception. To get some grasp of the emotional zig-zagging I've gone through, you only need look at some of these choice thoughts that have zipped through my brain over the past weeks:

• "I'm certain I can sell this to someone"
• "Why won't people pick up the phone? Maybe I can't sell this?"
• "These interns are awesome!"
• "Why are these interns taking so long to complete this?"
• "If I were an R&D Director, I would love this"
• "He is an R&D Director, and I think he's saying he doesn't love it"
• "We're never going to get this done"
• "Hey! We got something done!"
• "This guy is perfect to join my team"
• "Why won't this guy join my team? Doesn't he realize he's perfect?"

In the same way that many of my classmates will now be reflecting back on their Summer internships and wondering if their experience lived up to what they'd hoped for, I too am now doing the same. My initial thought was that it was quite a painful experience. Surely I should be finding more joy in all this? Then I came across this:

As wonderful as flow is, the path to mastery - becoming ever better at something you care about - is not lined with daisies and spanned by a rainbow. If it were, more of us would make the trip. Mastery hurts. Sometimes - many times - it's not much fun. That is one lesson of the work of psychologist Anders Ericson [...] as he puts it, "Many characteristics once believed to reflect innate talent are actually the results of intense practice for a minimum of 10 years".

The paragraph is from Dan Pink's book, Drive. For a long time economists have argued that incentives are what drive people to do what they do. The increasing popularity of voluntarism, from Wikipedia to Net Impact, calls into doubt the simplicity of this explanation. Pink argues that people are most motivated when they have autonomy, a sense of attaining mastery and a sense of purpose.

As painful as the Summer has been, it has provided me with a lot of satisfaction. I feel I've made a lot of progress on my startup project. I have a product and a realistic plan for getting it to market. More importantly, I feel I've developed a clear sense of purpose. This is also a theme resonating in Kellogg's hallways: Dean Blount has blogged and written about the importance of finding meaning in one's work.

Just as my classmates will be affirming what place consulting, banking and other careers will play in their lives, I've decided what gives my life meaning is creating things - products and businesses - impactful things that did not exist before. My experiences in new media lead me to believe that this is the area where I can do this best.

As I look forward, another thirteen weeks await. Next week is pre-term for Kellogg's second years, followed by 11 weeks of Fall quarter, with a week of thanksgiving nestled within. Though I will have a full course load for this duration, with lots of other distractions to boot, I have definite ambitions for progressing the business over the next thirteen weeks. I look forward to more emotional zig-zagging... well, sort of.

Week 12 of 13: Launch

We're open for business.

"It requires a special touch," begins the interviewee. "Each situation requires mastered skills that allow for the proper unraveling of each client's potential". I wondered whether we were still talking about sales. We launched our website this past week, www.prescouter.com. For a web/email business, this is significant. We're effectively ready to operate. With the focus shifting to revenue development, I've been interviewing for a sales person to work on bringing in customers. The folks I've been interviewing for the sales role certainly have had interesting things to say.

"But you don't really want to charge everyone the same amount, do you?" continues another interviewee. "You want a model where for a customer like Ford, you could sell for four times the price. You need a pricing standard." Yet another interviewee challenged my route to market, "Why restrict yourself to medical device companies? Hit everyone who has R&D departments! And what's your upsell strategy?". While I have a lot of experience interviewing people for technical software development roles, this was the first time I was interviewing outside that remit. Given that I am learning a lot from each interviewee, I clearly have no idea of what I'm doing.

The process of interviewing for a sales person has been turning into free consulting on the marketing and sales side of the business. For example, one interviewee suggested using a webinar to show people what the technology did. "Showing up at trade shows reaffirms your presence," said another. This was tactical information beyond anything taught at school. There were even some ideas that were more within my budget and means. "On the website, if we could get people to submit the keywords they'd use for the reports, that would be a real live lead". Wow, that is a good idea! Another suggestion was to create a group on LinkedIn for the type of people I'm looking for as clients.

Armed with just some advice from the internet, I had posted my job ad for a sales person not only on the university's career board, but also on Craig's List. People flocked to the ad on Craig's List - people from all walks of life. The problem I have with many of the candidates is one of trust. Given that I'll have a full course load next quarter, I'm not going to be able to provide a lot of supervision. I really need someone who can get a grasp of the product and take their own initiative. It's time I sought some advice from people who know a little more about this.

While interning at a venture capital firm last Summer, I learned of a model that some firms use to evaluate business. The model measures businesses on three axises: market risk, execution risk and team risk. Later stage companies have more of these risks mitigated, while earlier stage companies still face many risks on some or all axises. Getting customers will reduce the market risk of my business and prove that there is a market for what we're doing. Execution risk relates to the product. We've now launched a product. In doing so, we've reduced the execution risk. For me, this is the achievement of the Summer.

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.

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.

Week 6 of 13: Piecing Together The Business

Starting a business means piecing together buyers, suppliers, operational systems and all sorts of other bits.

One of the really interesting aspects of business school is that you're thrown in with people from all over the place: people who have done all sorts of different things in their career to date. Even casually speaking to these people, I get a lot of useful feedback on what I'm doing from a variety of different angles. Though a lot of my classmates have fled town for the Summer, to pursue their internships, a fair number are still around Evanston. I have also started to get to know some of the students from the One Year Program. This is a four quarter program that starts in the Summer. Talking to a student from the One Year Program this week, I realized I really need to get a solid product working, and that I need to have all the other pieces around it in place, so that it works as a business.

With time ticking away, I get an urge to just call potential customers up and start doing some kind of selling. However, I know this will be disastrous. How do I know this? Because I've already tried it in little drips. Without anything to show, I find it difficult to even know how to broach the subject: "Erm, so we're building a product that looks a bit like X and does Y... is there anything preventing you buying right now?". I inevitably end up explaining why it's not like ten other things available right now. So we've been beavering away at getting a version of the product ready for sales purposes. The plan is to get something completed by the end of July, ready for showing around during August.

Another activity this past week has been testing whether it's going to be possible to get some of the non-customer parts of the business in place. Getting a startup going is like piecing together a system of different parts. In some senses, the business plan is written to try and describe how these parts fit together. But hypothesizing on paper is different to actually getting the parts together in real life. In real life, there are egos to be massaged and hidden personal incentives to be accounted for. I've spent some time this week meeting a few people and checking things over. Will I be able develop relationships with universities? After the summer, who could help run this business on an ongoing basis, given that I have another year of school left? Should the company be incorporated as an LLC or C-Corp? I've been fortunate in making some positive strides in answering some of these questions, at least tentatively until revenue starts flowing through the machine.

In the meanwhile, the scent of Fall quarter is already apparent. Bidding for courses has finished, and the free-for-all for unclaimed class spots has started. Some student clubs are starting to think about their plans for the next year, including one I look after - The Merger, Kellogg's school newspaper. The deadline for CMC's resume book looms just over a week away. I've said before that I feel the only significant obstacle that I face is a lack of time. With Fall quarter on the horizone, it's difficult to not feel the grains of sand falling through my fingers.

Week 4 of 13: Distractions and Alterations

The old look. Unavoidable blog changes were among this week's distractions.

The twin advantage and disadvantage of working for yourself is that you get to set your own schedule. At school, there are multiple deadlines, determined by the course schedule. You effectively have to work to these deadlines. In the Fall quarter of the first year, working to these deadlines meant that you didn’t even get time to finish unpacking. At work, there are also deadlines, but not as predetermined, frequent or granular as those during business school. Working for myself, as I am now, I am mostly setting my own deadlines.

The disadvantage of setting my own deadlines is that it’s easy to succumb to distractions. These are distractions that would normally be set aside during the business school term. During the summer period – the only time during the two year program when you can catch up with life – it not even desirable to ignore these distractions. If I’m not going to pay attention to them now, when will I?

The "distractions" have included a long July 4th weekend hosting family, as well as making preparations to move apartments at the end of July. I even carelessly let a squatter take over the old domain of this blog (managingmagic.com), accelerating some changes to moving everything over to this domain (blog.dinogane.com). Another time sink has been a project with Playboy. This was a group project completed for MEDM431 during the Spring Quarter, but it was only this past week that we presented back to them what we developed. Add to all this the progression through the World Cup of a team I’ve followed since the late 1980s, Holland, and I almost feel the momentum this past week has not been as strong as in past weeks.

However, it’s difficult to drive forward at full momentum all the time. The advantage of working to your own schedule is that you can slow down. You can regroup and take a reality check, asking that all important question: are we really building the simplest thing someone will pay money for? Taking on board the feedback from potential clients during the previous week, the nature of the business has now changed. So this week has also been a period of accounting for these changes and change in identity: "we thought we were building X, but we’re actually building Y". This week has been about making adaptations.

The two interns, both software developers, working on this project with me are now adapting the software we’ve been developing. Some of the previous work is now not as critical, while other features are now more important. It’s been a confusing time for them, so I’m conscious of providing a clear vision of what it is that we are doing. “You need to work on your elevator pitch” says a professor who is advising me, so complete clarity might not be quite there yet. In the meanwhile, a team from the SBOC has taken on my case. This provides some relief in taking care of some of the legal aspects, such as company formation. Despite the distractions, we are still moving forward.

Week 3 of 13: Hypothesis Testing

Until you test the hypothesizes on which your business plan is based, you don’t know how crazy these hypothesizes really are.

This week, I managed to finally get some interviews with consumers completed. These were the interviews that I had set up during last week’s emails and phone calls. Speaking to both researchers in industry and in academia, it was a whirlwind week. I laid out my hypothesizes for these consumers, the ultimate judges of my proposition. How did they respond?

This was not the first time I was speaking to consumers. I had previously spoken to some end consumers in March. A Marketing Research Methods class had also done further interviews during the Spring Quarter. Both of these sets of interviews were more exploratory in nature. In this third iteration of interviews, my main goal was to present some fleshed out ideas and also, where appropriate, demo the prototype that a software engineering class from the Spring Quarter had completed.

I spoke to researchers in industry both in person and over the phone. One these researchers had recently become a victim of the downsizing that many R&D labs have been undergoing due to the recession. Meanwhile, another firm boasted that they were spending more on R&D than ever before. A particular woman I spoke to on the phone exclaimed that she had an awful employer – her only reason for speaking to me must have been to warn me away from ever working there. Perhaps most extraordinary was meeting someone who had attended the same middle school as me in the UK. The varieties of circumstances were fantastical. Driving on the "wrong side of the road", the travel was exhausting too.

Perhaps because all the academics I spoke to were based at Northwestern, there was less variation in the circumstances of the academics. It was clear that some professors were superstars and had carte-blanche autonomy to do as they pleased. The administrative staff seemed at times to struggle with this. It transpires that consulting is something that is discouraged, though in some areas parts of the university it is rampant. Academia also has interesting and divergent priorities to industry, particularly with respect to publishing intellectual property.

I’m still digesting what I’ve learned from all these interviews, but one thing is clear: the hypothesizes that my business idea is based on do completely hold. The incentives are not completely aligned. For some people the conflicting priorities of what academia and industry prefer stifles the creation of value that I propose for both parties. However, I am not completely dismayed. I believe this is part of the process. After a previous iteration of talking to consumers, I refined my target customers from anyone in industry to researchers in industry. Following this set of interviews, and the latest feedback, I now need to refine another part of the business plan. My only worry is whether I'll run of time and money before I have a business that holds up when the hypothesizes it is based on are tested.

Week 2 of 13: All the worst jobs

"At least we don't have to do the cleaning," says one of the interns.

While doing various jobs in the eight year period before business school, I would sometimes come across other people doing other jobs - jobs I would deem "worse" than my own. I would be grateful that I was not one of those people doing those jobs. Yet, this week I have been doing those very same "worse" jobs - and learning a lot.

My first job out of undergrad was as a software developer. In that role, I would often work with software testers - people who would go through and test all the functionality of the software that we developed, making sure it all worked perfectly. During the early part of this week, this was exactly what I was doing. As we polished up the first iteration of a prototype developed by a software engineering class during the Spring quarter, I've been getting my hands dirty making sure it all works perfectly for when it comes to demo.

Later on in my career, as I moved into managing software development teams, I would sometimes peer over the wall towards the sales team and watch them trying to develop new sales leads - so the software development teams would have something to develop. Developing customers is how I spent the latter part of the week, sending out numerous emails and making calls. This was all with the purpose of setting up meetings with the types of people who may be our customers. We want to test our assumptions against these end consumers to ensure it has value for them.

The end consumers we are targeting are of two varieties: researchers in academia and researchers in industry. The academics have been relatively easy to meet with - the professors at Northwestern have been pretty open to meeting. The researchers in industry have not been as open. I've been using the Northwestern Alumni directory to reach out to these folk, but often the contact details are wrong. Secondly, when I do get through to the alums, they will often not be inclined to help. This is a learning process though, and I'm getting a better sense of the approach I should take.

Through all this, I've developed a minor health problem, which has been affecting my level of positivity. A less than positive mental attitude signals all the wrong things to the rest of the team (the interns), as well as the people I meet. Part of this game has to be projecting confidence and believing success will come - creating the virtuous circle where confidence and success reinforce each other. So I've turned to music to keep my spirits up; it has been surprisingly effective. We might be doing the "worst" jobs, but at least we can do them the way we want to, playing music in the office that we want to. This week, it's a lot of AC/DC.

Week 1 of 13: Starting Up

My startup is incubated on the top (attic) floor of Fisk Hall, the home of Northwestern's Medill School of Journalism.

"I never thought any of this equipment would see use again," says one of the staff members at Northwestern's Media Management Center. Pulling out computers from the basement of Fisk Hall, we are literally dusting off old equipment and piecing together what we can to get ourselves set up for the thirteen weeks we have of the Summer. Thirteen weeks is all we have to develop and prove a business model that will generate revenue. Thankfully, we are building on work already completed during my first year at Kellogg.

My focus this past first week has been on getting things set up, as well as team-building. I've hired two software engineering students from Northwestern's McCormick School of Engineering as interns for the summer. Out of my keenness to get them on board with the mission, I had us all review the team-related slides from the MORS430 (Organisational Behavior) course. A highly rated course at Kellogg, I genuinely believe in the importance of this stuff.

The MORS430 course explains the differences between high-performing and low-performing teams. For example, in high-performing teams there are clear divisions of responsibility in the team. There is also greater emphasis on co-ordination of activities than any one person leading. Also, as we learned in a Lego game during the course, the better the team does in initial planning, the quicker and easier the team finds it in ultimately executing the necessary activities. Thankfully, the interns thought the material to be as interesting as I do.

As much as this is the first week of a summer adventure, this is just the current phase of my ongoing project. This is the project I undertook, when I started business school, to start a new media venture. During the Spring Quarter I was fortunate enough to have a number of student teams take on my startup as part of their class projects:

• A software engineering class at the McCormick engineering school developed some mock-ups and a basic outline of the web-based service that we are building.
• A marketing research class at Kellogg (MKT450) completed market research on some of the end users that would use the service, developing some findings on their preferences and motivations.
• An entrepreneurial selling class at Kellogg (ENTR903A) developed a slide-deck and sales presentation for presenting the business to channel partners.

During the Winter quarter I was even more fortunate to have won funding, via Northwestern's Media Management Center, from the McCormick Journalism Foundation. This funding is what provides the financial support for the summer activities that I am now undertaking.

With all these past efforts from the Winter and Spring quarters, another part of "setting up" this first week has been getting together and shaping up what we already have, so that it is ready for use in the upcoming weeks.

At this stage it is difficult to say how these thirteen weeks will unfold, but it will perhaps be a more interesting ride than the MBA admissions process or even the first year of business school.

What lies behind the Business Plan

Spring quarter has started at business school, which means it is business plan season.

Business plan competitions with strange acronyms are flocking from every corner, from RBPC to NUVC. For someone like me, who is starting a business from business school, these competitions are great motivators and milestones for writing and rewriting my business plan.

The competitions rarely ask for a full business plan, as least in the early stages. Instead, an executive summary or abstract is asked for. Someone recently said to me that, in selling my business, I need a 1 minute pitch, 10 minute pitch and 45 minute pitch. These summary documents are analogous to the 10 minute pitches.

So I've been writing these "10 minute" summary versions of my business plan. As I write these documents, I realize that for every line in a one page document, there is probably tens of hours of work of work behind it. Yet this will not be apparent at all in reading the document. Take, for example, a line that says "a team from an undergraduate class will build a prototype". This line does not describe the other alternatives I had investigated and thrown away, such as looking to contract software engineers or developing relationships with researchers who might help build it. It will not even describe the pain experienced in some of these not working out.

At first, it is tearful to not unravel the full story behind the window dressing that is the business plan. But it is important to realize that the business plan is largely window dressing. I'm learning more and more that a business plan is not a document with intricate details that you design and create to carefully help you navigate yourself to your dream. It is not even an aid to help people understand how you will set up your business. A business plan is a marketing document. Its sole purpose is to convince people - to excite people into giving you whatever it is you need.

Though I have only entered two competitions thus far, I already feel that each competition helps iterate and refine my ideas - solidifying them, creating more punchy descriptions and ultimately improving what I'm working on. I'm looking forward to what my business plan will look like at the end of Spring quarter, at the end of the business plan competition season.

A lesson in winning resources