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MenuWould like to build a better search engine for business results (not searches for Katy perry).
Do I look for a single developer as smart as Sergey and Larry or partner with a company to build it? Need help in building on the idea.
Answers
I always feel the next step once you have an idea is to validate it by creating something simple that you can put in front of someone, so they can review and give feedback.
This can come in different forms
1) Verbally describing the solution and getting feedback from target customers
2) Design simple 1 page brochure to describe the solution and it's features.
3) Clickeable prototype using Keynote, Balsamiq or other.
You don't need to build a working solution ... first start on defining what the problem is, and see if anyone cares.
The key to doing this right, is:
1) Don't tell them it's your idea, say it's a friends project and your helping him collect feedback.
2) Only get feedback from your target customer (i.e. Entrepreneurs, VP's of Marketing, etc) - whoever is going to use or pay for it.
3) DONT SELL. If they don't like it, ask why - but don't sell the idea.
Your goal at this stage is to learn. Another tip if you're up for it, is to ask them to give you $20 for early access. Most people don't have the guts to do this, but it's the fastest way to know if you're truly building something of value, or a nice to have.
I covered how to prototype in this answer if you're curious.
https://clarity.fm/questions/933/building-an-mvp-for-an-online-reward-system-for-consultants-freelancers-va-s
Great answer with loads of information: my problem is somewhat similar however it goes one step further: I have created a functional prototype using a simple web design platform for my application. I do not have the necessary skills to develop the true program myself and I currently find myself at a standstill:
Do I launch a simpler version of my concept now, using the features of the prototype that are functional? Or do I use seek the proper financial support to properly hire a true developer.
See, I originally created the prototype so I may start testing demand and functionality for the purposes of attracting angel investors and possible team members...however the development of the prototype was a great learning experience because it showed me those ideas that work and inspired some new features to be added or adjusted. Here I am 12 months later with no seed financing or co-founder to develop it: however I have just applied to a local tech incubation firm (Chicago), and I have begun exposing my idea to the startup community at Angel.co (https://angel.co/philip-higgins). It's a critical time for me to make the right next steps.
Designing search engines is about more than skill. It's an act of war. You're invading the country of Google + Microsoft with your team.
Even with the best minds at your disposal, they won't have access to sufficient infrastructure and data to get off the ground -- not without piles of money. And you'll be competing with the biggest companies on earth -- companies that employ armies of highly paid engineers, dominate the market already, buy up patents to cover everything under the sun, and who can afford to throw millions at an idea ... or to crush an upstart.
You'd want to be VERY sure you can conquer that country before the invasion.
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As a startup, is it better to find a way to pay for services (i.e. design) or trade equity for it?
Before I get to your question, let me give you a tip: always aim settle questions of payment before the work happens. It is ten times easier to agree on a price beforehand, and having done that doesn't stop you from changing it by mutual agreement later. The problem with paying cash is pretty obvious: you don't have a lot of it. The problems with paying equity are subtler. The first one is that early-stage equity is extremely hard to value. A second is that equity transactions require a lot of paperwork. Third is that entrepreneurs tend to value their equity much higher than other people would; if not, they wouldn't be starting the company. And fourth, people like designers are rarely expert in valuing businesses or the customs of of startup equity valuation. In the past, I've both given and received equity compensation, and it's a lot more of a pain than I expected. In the future, what I think I'd try is convertible debt. That is, I'd talk with the designer and agree on a fair-market wage. E.g. 100 hours x $100/hr = $10k. The next time we take investment, the $10k turns into stock at whatever price we agree with our investors, plus a discount because he was in before the investors. Note, though, that this will increase your legal costs and your deal complexity, so I'd personally only do this for a pretty significant amount of work. And I'd only do it for somebody I trusted and respected enough to have them around for the life of my business.WP
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Business partner I want to bring on will invest more money than me, but will be less involved in operations, how do I split the company?
Cash money should be treated separately than sweat equity. There are practical reasons for this namely that sweat equity should always be granted in conjunction with a vesting agreement (standard in tech is 4 year but in other sectors, 3 is often the standard) but that cash money should not be subjected to vesting. Typically, if you're at the idea stage, the valuation of the actual cash going in (again for software) is anywhere between $300,000 and $1m (pre-money). If you're operating in any other type of industry, valuations would be much lower at the earliest stage. The best way to calculate sweat equity (in my experience) is to use this calculator as a guide: http://foundrs.com/. If you message me privately (via Clarity) with some more info on what the business is, I can tell you whether I would be helpful to you in a call.TW
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What legal precautions can I take to make sure nobody steals my startup idea?
I've discussed ideas with hundreds of startups, I've been involved in about a dozen startups, my business is at $1M+ revenue. The bad news is, there is no good way to protect ideas. The good news is, in the vast majority of cases you don't really need to. If you're talking to people about your idea, you could ask them to sign an NDA ("Non Disclosure Agreement"), but NDAs are notoriously hard to enforce, and a lot of experienced startup people wouldn't sign them. For example, if you asked me to sign an NDA before we discussed your Idea, I'd tell you "thanks, but no thanks". This is probably the right place though to give the FriendDA an honorable mention: http://friendda.org/. Generally, I'd like to encourage you to share your Ideas freely. Even though telling people an idea is not completely without risk, generally the rewards from open discussions greatly outweigh the risks. Most startups fail because they build something nobody wants. Talking to people early, especially people who are the intended users/customers for your idea can be a great way to protect yourself from that risk, which is considerably higher than the risk of someone taking off with your idea. Another general note, is that while ideas matter, I would generally advise you to get into startup for which you can generate a lot of value beyond the idea. One indicator for a good match between a founder and a startup is the answer to the question: "why is that founder uniquely positioned to execute the idea well". The best way to protect yourself from competition is to build a product that other people would have a hard time building, even if they had 'the idea'. These are usually startups which contain lots of hard challenges on the way from the idea to the business, and if you can convincingly explain why you can probably solve those challenges while others would have a hard time, you're on the right path. If you have any further questions, I'd be happy to set up a call. Good luck.DK
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