The CEO of a Start-Up( phase 2)

  • Understand that time is your enemy. You are bleeding cash. Your ideas will deteriorate over time as competitors inevitably crowd in. You have no time to waste. You are not going on vacation…for a while.
  • If your strategy doesn’t gain traction in the first two years which I define as positive cash flow, you will probably fail.
  • Leave your ego at home. If your original idea is not gaining clients, then change it.
  • Investment bankers are important to you. Just remember they are in it for the money–for themselves as well as you. You don’t need to be running around outside the office pitching investors with the Power Point your teenage son helped you put together. Let the pros do it for you. They have access to data and investor lists that would take you hours to replicate.
  • How much of your business will you sell to raise outside capital? The answer is as little as possible but as much as you need to get or keep going. When you get you back up remember if their demands seem outrageous, a 100% of zero ( you) is zero.
  • Don’t waste money on a lawyer to write you non-disclosure agreement. Find one on the internet and copy it. Institutional investors typically will not sign one. Secondly, a NDA is notoriously difficult to enforce. If having one makes you feel better, like a life jacket under the seat of your next commercial flight, then use one. Don’t make it effective for more than two years. You look naive enough asking for one. They are almost meaningless.
  • If you really want meaningful protection from competitors, gain market share through being the first mover, this is the best protection. Hackers will steal your code anyway, so go as fast as you can.
  • If the first four pages of your pitch book are disclaimers, you can be sure the investors knows you are wasting time and money on lawyers. You have neither, you are not GE. Do you really think you have to warn investors you are making forward-looking statements when you haven’t even started the business?
  • The monies you raise will determine the makeup of your board of directors. Press them to make introductions, after all, they have a vested interest in your success.
  • If you feel an advisory board might be useful, make sure you are only inviting experts in the business you are creating. Find a way to pay them.

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