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Month: February 2012

Difference Between Co-founder and Founding Member

This is my definition. Co-founder is someone who can understand your vision and give well-thought-out opinions that sometimes conflict with yours but help the startup differentiate itself from others in many ways.

On the other hand, a founding member is much more like operator who only believes in a vision thrown by the founder(s) and executes the tasks that are only relevant to his/her professional field.

The first thing you as entrepreneur have to do before formulating a startup is to find co-founders, not founding members. If you think you already have co-founders, think of above criteria and ask yourself a question “Do I really have a co-founder?”

If you find yourself making all strategic decisions alone or finding your prospective partners being not up to the mark where you cannot get the level of feedback you were expecting, you don’t have a real co-founder.

Your prospective partners might be able to give you lots of ideas and opinions, but these are so instant that you already thought of once or already have the answers.

I wouldn’t say it’s easy to find a co-founder who has ready-made ability to excel your level of thinking. However, I believe this is super important and very critical to the company’s success in the future.

What if you find yourself having only founding members? There are three ways to solve this. 1) Educate your founding members to become co-founders. 2) Look for someone else. 3) Dismiss your startup and start with other idea that is easier for people to understand.

At my recent startup I’m not following the latter two approaches yet. Instead, I’m sharing with my team members lots of information, sometimes too much, that I find useful on a daily basis. These information include updates from the competitors, new startups doing similar things, investor’s comment on industry trends, etc.

Someone might argue that giving too much information only introduces a chaos or creates an impression of the founder being not able to decide anything. I think that’s wrong because the environment surrounding a startup changes constantly and people in startup have to adjust them to new environment very quickly by consuming whatever information relevant to them. Otherwise, they will lose.

Startup Weekend is a great place to meet aspiring entrepreneurs and passionate people with startup mindset. Perhaps, at the same you have to realize that not all of them are qualified to be real co-founders especially at the moment you meet them for the first time.

Whether or not they can become real co-founder is completely up to you.

How to Practice Your Pitch

TechStars published few days ago a great post about practicing your pitch to the prospective investors. Here is a quick summary of what I learnt from Next Big Sound’s pitch.

  1. Show that you have industry experience.
    Co-founder & CEO Alex White worked at Universal Records, the world’s biggest music company.
  2. Show that you experienced the same problem.
    Alex showed his frustration by putting hands on his head.
  3. A bit humor.
    “# of girls in backstage” made the audience laugh a bit.
  4. Start demo after 1 minute.
    No more talking. Jump into to actual product demo.
  5. Talk about the problem details.
    Alex showed his product can produce better result than $4,000 worth industry report, which brings a bit ‘wow’ factor to his pitch.
  6. Talk about your vision not just your product.
  7. Don’t talk about the features you are going to implement in the future.
    While there are many startups talking about their future milestones, Alex did not mention the things he is going to do when his startup gets some investment in the future.
  8. Show that you are targeting a big market.
    “It’s going to be difficult for the record labels to business without us (Next Big Sound)” gives the audience a very strong impression that they are following a big market and going to be the game changer.
  9. Don’t talk about your competitors.
    Simply investors are not interested in hearing the name of your competitors. They are interested in how you differentiated yourself from others.
  10. Introduce your team members (with a bit humor)
    “It’s cheap to keep us alive” = “We don’t need lots of investment to make this happen.” is excellent way of introducing your team members while giving an impression that you understand a ramen noodle startup model.
  11. Show your customers.
    Needless to say, this is the best way to gain your credibility.

Also interesting is that according to TechStars CEO David Cohen, Next Big Sound had a different product idea when they joined the program. This is another indication that TechStars is making the investment in people (I say people, not a single person) but not in ideas. I believe this is true to the most accelerator programs such as Y Combinator and 500 Startups.

Lastly, huge congrats to the folks at Next Big Sound who secured $1M seed funding after this pitch and the following $6.5M series A funding in January.