By this point we had so many things going on it was important to actually turn the business into a real company. And for that you need one of Gods most evil creations – lawyers.
If there is one thing I’ve learnt it’s that lawyers are like plumbers. They charge an arm and a leg to move things around, it’s hard to find a good one – and if you don’t double-check everything they do you’ll be swimming in trouble.
We met with a few lawyers to find the one we were comfortable with, who didn’t want a share in our company and that we could afford (and $300/hour is not easy for us to afford). Eventually we met a very patient and experienced lawyer who dealt a lot with commerce and companies. This was good for us because he took care in explaining every process. We put up the money and through him incorporated our company.
The lawyer drew up contracts for our employee and consultants – as well as a founders agreement. He pretty much ignored all the details we asked him to put in and we had to make corrections almost a dozen times just to get things done.
One of our consultants sent the contract to his lawyer but apparently never told him what we already agreed on. He wanted “a few small changes” – which meant money. So we had a conference call between lawyers and ourselves to settle things. Our lawyer was so friendly he kept pushing everyone to compromise. That was his way of doing things. We weren’t going to let someone jerk us around to we ended up taking control of the conversation and dealing with the other lawyer ourselves.
We made it clear we wouldn’t change any principle part that was already agreed on. The consultant and his lawyer caved and our lawyer seemed so proud.
And I was thinking “I just paid $300/hour to do the talking and for him to be proud?”
When we wrapped things up we decided we needed to go with a different lawyer who could keep up with us better. We got a much younger guy who was very skilled and very inclined to help young startups – including with better payment plans. So far it’s been going much better.
Each business is different – depending on its model for making money. Our business model was based on selling products to be integrated into existing communication infrastructure. So we needed to elbow our way in with the infrastructure suppliers and the suppliers to the suppliers.
Because our product is far from ready we had to be very careful who we chose to approach. In general I think that the strategy of forming partnerships before you’ve based your technology is a great way to get a running start but it’s also an easy way to kill the business before you’ve started if you aren’t careful.
The key is picking the right company to partner with and building the right type of relationship with them.
Now we’re a small business with very little in our hands. So we figured we have to be careful not to just give our idea away to someone who could do it better\quicker than us (I’ll talk about the whole patent thing later on because that’s a looong topic).
At the same time we wanted a partner that would really see the value in working with us. We realized that this was just like any other relationship – the more both sides benefit the more each side puts into it.
So we did the math:
not-to-big-company + could benefit from our technology + has added value in the market to give us = a “middleware” supplier!
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In transportation communications – you usually have a big supplier that works with the client and gets most of his stuff from contractors in the middle. Like Boeing works with Rockwell Collins to get computers on a plane. If we would find a smaller company in our niche we could definitely find a place to benefit them while not having to worry about them stealing.
So we went online…again. I swear the internet deserves a cut of the profits from this company. We started researching companies that supplied to the suppliers. Saw what their expertise was, who they worked with etc. We narrowed down to about 3-4 companies we felt comfortable approaching.
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Then it was all about chutzpah. My partner was a little reluctant but I just picked up the phone (skype really because some of the companies were in Europe) and called the highest ranking people I found in each company (which wasn’t a big deal in small companies). Each time I presented myself as the CTO of a company that provides communication solutions that was looking to expand our products.
I didn’t say we were only just starting. I didn’t say we don’t have any clients yet. I didn’t say we’ve barely written code yet. That would have killed the call then and there.
I said we provide and want to expand. And that’s true(-ish). It also created curiosity.
We made a list of questions and I interrogated each company:
Who do you work with?
What products do you have?
What products are you producing?
What resources do you have?
Etc.
Thanks to my straight-to-business introduction everyone took me seriously. As far as they were concerned I was sitting in our corporate offices overlooking a heard of developers, when I was actually at home.
After the interrogations we had made a good “click” with one European company that developed communications-layer solutions and supplied them to bigger suppliers. They had 10 years experience, decent revenue and weren’t too big. Our application layer solutions were very interesting to them because they would add “depth” to their solutions and their solutions gave a strong and tested foundation to our products.
As the director of the company I spoke with called it “Synergy”.
We started formulating our partnership after a few phone calls
From my home
Without ever meeting
Without any product on our end
If we could meet our technical deadlines – in a few months our product would be ready to integrate and market with an experienced company making a much shorter time-to-market.
Getting your business started before you have a product can pay off, but you have to sell it right.
You can get a lot done before anyone in the world even knows your working on something – no matter how big that something might be some day. And you can find yourself in a position where your technology development is lagging behind your business development.
That’s not always a bad thing – but even if you don’t need partners to create your technology you’ll still have it sitting on a shelf collecting dust before you can start profiting from it and that’s a waste.
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I also think it’s a huge benefit to get feedback from people in your industry about your product when you’re still in a position to make strategic changes if you have to.
So with that in mind we started building the business end of our company before we even had anything to show. Yeah – that sounds like a bad idea but think about it for a minute. As long as I don’t put another company in a position where they can loose time or money why would they care about what I’ve already got? If they feel confident that you can supply the goods – they’ll treat you as if you already have them. It all comes back to marketing and the image you project.
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The steps we needed to do to build our business along side the technology
1. Finding good partners to work with and step into the market with
2. Getting the word out about ourselves in a targeted way
3. Building the base for selling
4. Raising the money to put
Usually people refer to money as the fuel of a startup. I disagree. I think 1 through 4 above are the fuel. Them money is the light that starts the fire going. If you don’t have good partners and a step into the market the light will burn out when you run out of fuel. But the stronger position you have the more fuel you have (and more access to more money\matches).
I think that with a B2B business like ours – having 2-3 strategic partners are the major key to achieving the rest of the goals. More on that – next post.