ETech Day 1: From Coder to Co-Founder

Related link: http://conferences.oreillynet.com/pub/w/43/tutorials.html

It's Emerging Technology time again! This conference is still my favorite conference that spoils me for all other conferences. In so many ways ETech is a reunion for me, when I get to see cool people that I haven't seen in months.

And this ETech is shaping up to be even better than previous years. The format change from last year has been held over -- this year there are a number of high order bits sessions and other smaller presentations (like the conversations carried over from Web 2.0), that make the conference a little more fast paced. Which, in and of itself is scary, given that ETech is already very fast paced to begin with. O'Reilly is obviously doing something right -- the conference sold out last week!

Today was the first day of ETech -- the day of tutorials where a few select topics are dissected in detail in the course of the morning or afternoon. Since having bootstrapped my own high tech non-profit in the last year, I felt compelled to attend Marc Hedlund's "From Coder to Co-Founder: How to Move from Engineering to Entrepreneuring" tutorial.

And true to ETech fashion, Marc dumped a bucket of useful information into the audience, broken into three sections: Proverbs, funding and case studies. Covering each of these would take a little long, so I will focus on the proverbs section, since it contains the most useful nuggets of knowledge. Overall, Marc's tutorial focused on what pieces of knowledge tech heads should arm themselves with if they are considering moving from writing code to starting their own business. Quick side-note before I dive in: He suggests that going to get an MBA is usually not the best route for geeks to become entrepreneurs.

Marc's proverbs were:

1. It's good to be king -- its good to be an entrepreneur. Its good to be in charge and each day brings new challenges; things don't get boring.
2. Losing sucks -- laying off people when it doesn't work sucks. Paying off the IRS from your personal cash really sucks. On average, entrepreneurs fail three times before they succeed.
3. Building to flip is building to flop -- building a company with the sole hopes to sell it soon is not a good strategy. Acquisition is not a business model.
4. Prudence becomes procrastination -- if you talk to too many people about your idea, they can talk you out of anything. Be prudent and talk to people, but don't go so far as to put off starting your business.
5. Momentum builds on itself -- make a prototype. Build something. Get things rolling. People will start to help out when they can see that things are materializing.
6. Jump when you are more excited than afraid -- It's OK to be afraid and you're deceiving yourself if you aren't. But you need to be excited about your new venture; if you're paralyzed with fear, you'll never make it off the ground.
7. Pay attention to the idea that wont leave you alone -- if I have to convince myself to work on it, its bad idea. If you can't sleep because of an idea, its a good one to pursue.
8. If you keep your secrets from the market, the market will keeps it's secrets from you -- it's better to talk to people and get feedback than it is to develop it in a vacuum. Talking to people will allow you to learn and observe others as they react to your idea.
9. Immediate yes and immediate no: If the idea is too good, or too perfect, other people are liable to be working on it. Each year the New York Times reviews the best ideas of the year: Don't found a company on one of those ideas -- everyone reads the NYT!
10. Give people what they need, not what they say what they need -- part of your job is to figure out what they need, and people are not always correct about what they think they need.
11. Your ideas will get better the more you know about business -- anything you learn will make your ideas better -- just about any education will improve your ideas. Thinking about how your customers will use the product also rounds out your knowledge.

He also shared these proverbs focused on people:

1. Three is fine; two, divine -- 2 or 3 founders should get along and share a vision. 4 founders can't make a decision to save their lives.
2. Work only with people you like and believe in you, naturally. If you're going to work with people for a few years, make sure to do it with people that mutually believe in and like each other.
3. Great things are made by people who share a passion, not by those who have been talked into a vision. If they are not ready, don't push people. They need to share a vision -- if people join your team because you persuaded them to, chances are that they are not sharing your vision.
4. Cool ideas are useless unless people are willing to pay for them. A cool idea that brings no money in won't pay the bills, and thus wont make a company fly.
5. Build the simplest thing possible (race to a working product) -- let people start using it NOW. This is great for getting feedback and convincing VCs that you have a real product and not just a shaky idea.
6. Solve problems, not potential problems -- Don't spend time implementing things that you may not need. Is it worth it to overspend to address all possibilities? Probably not -- companies who suffered some downtime are still around and successful.
7. Test everything with real people -- watching people lets you observe them making obvious mistakes. Watching users is torture and it will motivate you.
8. Start with nothing and have nothing for as long as possible. Building something out of nothing will get you a lot more credit when you start talking to VCs. Unless you've been working for VCs no one is going to cut you a big check like the $8M that epinions started with.
9. The best pitches are plainspoken and entertaining (not in that order) -- you may not need projects and business plans. Simple and easy to understand businesses are good. If you are complicated and you need to lie to a VC to get their attention, thats a problem. (make sure you or your co-founder is entertaining -- it really helps)
10. Never let on that you're keeping a secret -- VCs will tell everything to anyone. And you can't make a VC sign an NDA. Solve this via the politician route: Answer some other question and carefully avoid the pointed questions. You have to answer the investors questions, but you don't need to answer them the same way for everyone.
11. No means maybe and yes means maybe -- Marc received 5 term sheets, including 3 from people who said no. No means no, right now. Don't take no for an answer and keep giving potential investors updates. (Marc also posits that an inverse relationship exists between the people who are enthusiastic and promise the world and those who actually follow though. Look for how they act and not what the say.)
12. For investors, the product is nothing. If your pitch has 11 slides on the product, 1 on the business/team, you'll be shown the door. You need to talk about the company and the overall vision.

Phew. A lot to digest in the space of a couple of hours. I'm sure the rest of ETech will bring tons more information overload. Stay tuned!

Do you have any nuggest of wisdom to add to this list??