Garage Tech Venture Chairman: No entrepreneurial rules for VCs

Someone once told me that an entrepreneur's chance of getting a venture is like being struck by lightning in a swimming pool on a sunny day.　　But in my opinion, the metaphor is too optimistic. In the current hot money surging business society, good companies never lack of investment, of course, the prerequisite must be that this is a good enterprise, at least it looks promising business. At the gates of these firms are long lines of investors, whose wealth has spoiled these businesses, and as long as they speak, the money is big. But for most fledgling start-ups, all of this is not a good thing, investors in front of them is completely another face, domineering since needless to say, the rich is big ye they may use various excuses to refuse to invest in your business: you are not a "convincing" team, no "superior" technology is not in a "promising" market, or if your company simply does not have "venture capital"-that is, it is not possible to go public or be bought by large sums of money, or if your organization is disturbed by too many government or environmental factors, and so on, and so on.　　It seems that companies that have worked hard have failed in the first piace. So if you don't get any venture capital, should you give up? The answer is no!.　　A firm and resolute answer, as investors reject you. I can cite an example to show that for many companies, too much money is worse than too little money-not that I don't want to run a business like the NFL Super Bowl one day. But until that day becomes a reality, you have to be down-to-earth and start from scratch. And I'm going to tell you some of the art from scratch: Pay attention to cash flow rather than profitability theoretically, profit is the key to survival. The problem is that theory can't be used to pay bills. In reality, you pay your bills in cash, so please focus on the cash flow. If you want to start from scratch, then your business should have these characteristics: less required funds, a shorter sales cycle and payment period, and a repeatable income. This means you have to give up the big orders that take 12 months to complete orders, shipments and accounts.　　Cash is everything to an entrepreneur. A bottom-up forecast for many entrepreneurs is a top-down prediction: "There are 150 million cars in the United States." Even if only 1% of the cars installed our satellite radio system in the first year, that would be 1.5 million sets of systems. "In the first year, we were able to open 10 installation sites," he said. Each installation point is installed on an average of 10 systems per day, the first year of sales will be 24,000 sets. "The 24,000 sets and the 1.5 million sets of conservative estimates from the top down are clearly far from it.　　Which one do you think is more likely to be achieved? First shipment, then test I have heard the criticism: "How can you suggest sending those imperfect goods?" "Wait a minute, wait." "Perfect" is "good enough" enemy. When yourWhen the product or service is good enough, submit them to the customer as soon as possible to obtain cash inflow. Moreover, spending more time does not guarantee the perfection of the product and will only produce more unwanted functionality. After delivery, you can also understand what the customer needs you to really solve the problem. Of course, this requires a tradeoff between your credibility and your cash flow: You certainly can't send a bunch of junk to your customers, but you can't wait for your product to become flawless.　　Note: Those companies related to life sciences, please ignore this suggestion. Forget that the "convincing" team is too demanding-especially when most people define it as a group of people who have worked for a mega-company over the past decade. These people, accustomed to a certain way of life, but not a self-made way of life. Hire people who are young, cheap, and eager to work, those who are quick but don't necessarily have full experience. Once you've achieved a sizeable cash flow, hire the senior managers.　　Until then, you'd better use the people you can afford, and cultivate them into good employees, not bad. Start with a service if your idea is to eventually set up a software company and get people to pay for your software, it's certainly a very clear business and a perfect business model. However, you can also provide consulting services based on your medium-term products before completing your software. There are two advantages to doing this: you can get immediate income and let real customers test your product. Once your software has withstood a variety of tests and trials, you can turn the company into a product type. [Page] focus on functionality rather than form I like the good "form". Apple notebooks, Graff Skates, Bauer Skis, a Centennial watch. You can also cite a lot. But when shoppers are shopping, they focus on functionality rather than form. The above forms, the corresponding functions are: calculation, skating, skiing, understanding time. These features do not require expensive forms. A chair is used to make your butt sit on it; it doesn't need museums that look like modern art.　　You have to design noble things, but sell cheap things. There are selective battles for entrepreneurs to fight selectively. They won't go to war on all fronts because they can't afford it. If you want to open a new church, do you really need a 100,000-dollar multimedia audio-visual system? Or the gospel from a rostrum? If you want to build a website that relies on advertising revenue, do you need to write your own client advertising software?　　I don't think so. Hire as few employees as possible many entrepreneurs reserve employees for the best that can happen. "conservative estimates (Top-down), the first year of satellite radio system sales will be 1.5 million sets." We'd better open a 24-hour customer Support Center. "What's the result?" You can't sell 1.5 million systems at all, but you did hire 200 employees to train them and put them in a50,000 square feet of electronic market in the heart. Entrepreneurs should hire as few employees as possible because they know that anything bad can happen. The shortage of manpower, according to the Silicon Valley, belongs to a "benign problem". Believe me, when an entrepreneur calls for more money because of a surge in sales, any venture capitalist will be pleasantly surprised.　　Surprises are called surprises because they rarely happen. It is best not to have a third party between the entrepreneur and his client in the direct marketing approach. Indeed, stores offer access to consumers, and wholesalers provide a way to distribute goods. But God invented e-commerce, so that you can direct your goods and achieve higher marginal profits. God's wisdom is that through direct marketing, you can learn more about your customers ' needs. Stores and wholesalers are used to satisfy demand, they do not create demand.　　If you can create enough demand, you will always find a way to meet it later, and if you can't create enough demand, then the worldwide distribution channel is meaningless to you. Do you use the industry's leader to do a lengthy ad without money? Never mind. It's better to do it with the industry leader. Toyota is selling Lexus in this way: Spend half the price, buy Mercedes quality. Toyota does not need to explain what is "Mercedes quality". Think about how much it would cost them to advertise!　　Others like the "cheap ipod" and "the popular Bose noise-free headset" have the same effect. Confronting the dismal truth is just like Neo's decision in the Matrix. The red pill will let you know the whole truth, and the blue pill will make you wake up feeling like you just had a nightmare. Entrepreneurs don't have the luxury of choosing blue pills. They are busy every day to know the truth-how deep the rabbit hole is. A simple formula is: The total amount of cash divided by the rate of burning money. Because it will tell you how long you can live. As my friend Craig Johnson likes to say: "You're dead when the money is spent, and most startups die like this." "As long as you have money in your hand, you are not out."