I have a new idea for a product or technology. Should I consider patenting my idea and if so, what is the first step?
Instead of wasting time trying to patent your idea (which is both pricey and time consuming) I always recommend entrepreneurs work on building their business. It may sound harsh, but your idea is worthless. Execution is everything and your ability to execute on your idea or use your new product is what will determine success.
Remember, patents are only useful if you have the means to defend them in court (read: money to pay lawyers to debate endlessly in a courtroom). At the end of the day if you fail to execute and go out of business, it doesn’t matter if you have an entire war chest of patents because you will be back at square one with nothing to show for it.
Is it ever better to raise money than to bootstrap? Explain why and be specific.
Traditionally, there are 2 ways to build a business: slow growth (i.e. bootstrapping) and fast growth (i.e. raising venture capital). Raising venture funds allow founders to build their team faster as well as spend capital to learn faster. However, it may not be the best approach for everyone. Remember, when you have a hammer everything looks like a nail. When your company is flush with cash it’s very tempting to solve your problems by throwing more capital at them.
Before determining if you want to raise money at all, you first must decide how you would like to build your business. If building your business slowly is feasible, I always recommend entrepreneurs choose this route. While a bit riskier, I tend to see that the founders make more intelligent business decisions and are able to establish long term businesses that are more stable without diluting their ownership stake. This stems from the fact that when you bootstrap, the business is built from the ground up to prioritize cash flow and getting to the break even point so that the business can float itself and be self sustaining.
What should tech founders specifically look for in an accelerator or incubator? Why?
We’ve gone through 2 accelerators now and by far the most important thing they’ve done is given me connections and opened doors. Although accelerators provide mentors and advisors, no one knows your company better than you do, so don’t expect accelerators to provide you answers or solutions to any of your business needs. Instead, look for accelerators with outstanding reputations and connections with mentors and advisors that can help your business succeed from a business development standpoint. If you want to be connected with a person or a company, you should be able to go to the accelerator’s advisors and say ‘I need an intro to person X’. If the accelerator isn’t able to connect you, then chances are you should look for a better program.
Larger companies swallow up a lot of great talent immediately. How does a young company attract the best talent?
Large companies often grab talent by offering high salaries, with which most early stage companies cannot compete. However, not all talented employees are motivated by salary alone and if you want to attract top talent to your company you must find out what motivates them the most. We’ve used flexible work hours, increased vacation time, the ability to have more ownership of the product, as well as equity options as tools to hire highly talented people. In fact, we’ve actually used these same techniques to poach many people away from ‘Larger Companies’.
Do you go after the big fish or the small fish first when it comes to attracting clients? What are the risks/benefits of your preferred approach?
We used to have the saying ‘Whales, not minnows’ in my previous company. We instituted it after we realized that we were spending a lot of time on boarding new clients who were often not much bigger than ourselves (at the time we were about a 50 person company). Since it often takes roughly the same amount of effort to attract and land a large client as it does a smaller client, I always advise people to spend time landing larger clients. The outcome is often much better in terms of larger/longer deals as well as more stable income.