Before you take the step to becoming a fully-fledged entrepreneur, in HPC of all areas, ask yourself why? Is it because you want to be your own boss and call the shots, are you a risk taker, want the flexibility, you have such a good idea you can’t not do it, or you just want to make a lot of money like your college roommate who just made $100M and you are smarter. Despite what Hollywood portrays in recent movies being an entrepreneur is not all glamorous and a jet set life style. Check out a recent Economist article – Entrepreneur Anonymous.
Out of the 64 million things that need to get done where do you start.
In the mid 1990s, so last century, I taught Entrepreneurship and Innovation at UCSD for a couple of years and the majority of students wanted to be their own ‘boss’ for several reasons, more on that later, but didn’t know how to get going or what to do.
The idea is usually where it starts. You may not have an idea so how do you come up with one? A good place to start is to look around the market place and do some grass roots research. Ask lots of questions to identify unmet needs or an untapped or poorly served niche. When researching your idea think beyond traditional HPC market needs. If you can come up with an idea that can transition or directly address a need in the general market or enterprise HPC your market opportunity will be greatly expanded.
Once you have the idea, test it out by talking to friendly advisors and potential customers to collect evidence that you have identified an untapped opportunity or solving an existing problem in a unique way. It is a good idea to write this all down in a plan. This plan does not need to be a hundred page document but the better you can articulate the idea the more you improve your chances of success – and the briefer the better.
Now you have the idea and you have a plan, which will also help you focus. Next, really find out everything you can about your target audience. Who are they, how do they select products or a service, how large is the opportunity, are they receptive to change, and so on. The more you know the better.
A big part of starting up your own business is the ability to take a risk and the finance to support early stages. Understand your personal finances and choose the right sources for money to fund your business. The type of business you want to start will probably dictate the finance sources. It is very common for early stage companies to be self-financed or use funding from family and friends. Clearly you may have serious financial commitments. Also ask yourself when is the right time to leave the security of your existing job? Don’t leave too early or you’ll regret it.
Create a support network. A team of experts, mentors, in all facets of building a business is good to have in place that can help during the personal struggles the long hours and stress. At the right time you need to get the word out. Whether you are looking to raise capital or hire the first employee or ready to go to market with you solution. Your network can help you with this.
As you move from the idea stage to the concept stage a key decision is to determine what kind of company you want to start and build. This is important, as it will help identify the amount and source of financing you need to develop your idea. The type of company you create may also dictate the investor exit strategy – how do you and your investors get money back at what multiple and when. There are many different types of companies, for example, a life style company and its need for financing is very different from a high potential venture with the goal for a Wall Street IPO.
Your need for capital may also be driven by the type of company and the money you require as you transition from concept stage to the product development stage. Developing a professional service business is very different than an application software business to, say, next generation FPGA-based accelerator. There are many sources for capital depending on where you are in your company development stage – debt and equity financing, commercial banks to finance accounts receivable or loans for inventory and equipment, cash flow financing, SBA loans, government SBIR, R&D partner ships and private placements with individuals (angels) or institutional investors (VC community).
No matter the type of company and your need for capital infusion you will need to get out there and pitch your idea. Create a simple PowerPoint, or similar, that clearly explains the idea or product and why the target customer needs it. The potential investor will want to know what is unique and useful, who is going to buy, why they are going to buy, where will they buy it and what is the price. Naturally they will also need to have some idea of the revenue and gross profit you can generate. The more funding you need, the more you are in the realm of building a significant company that usually requires working with VCs. A VC strategy is about backing many start ups whose goal it to build a large profitable company that can have a successful IPO or corporate buy-out. Not every investment makes it but when one does, there is a potentially gigantic return.
No matter the source of finance, be careful what you ask for. Money can come with baggage. Be prepared to ask questions as you may need and want more than just the money – can the bank introduce you to potential customers, can the VC firm open corporate doors or customer doors, do they have experience with firms like yours, what equity position do they require, will you still be majority shareholder, will they want or expect a board seat, etc.
Now you have your idea, you have developed the solution, and you have access to capital. What next? Well it is time to go to market and find customers and generate revenue. At this stage you are probably the chief salesperson for your company. If you thought developing the solution was hard, now you need to find people that will actually hand over money for your solution and once they do you have to ship it, install it, and fix it if it breaks. Commercialization of your idea is hard; welcome to the introductory stage and start of the product life cycle.
Here is a recommended approach, start small and focus your efforts on a well defined niche of customers who really need your solution, create a leadership position in that niche and move on to the next niche. This is a good way to start and can increase probability of success. Companies such as Amazon and eBay started this way and have become industry powerhouses. Whereas high profile start-ups such as Solyndra crashed and burned as they tried to solve the world’s alternative energy crisis.
In short, it is not just the idea and the product, but also the team, staying focused, and execution. Never compromise hiring standards – hire smart. A-team players will hire A-team players whereas B-Team players hire C-team players. You need A-team players. No matter how good someone sounds or looks on paper check references very carefully and thoroughly, get unsolicited references. Your team can make or break your company even before you get to market.
Finally, do not forget about branding. Branding is a critical component that is not well understood by technology entrepreneurs so seek help from the experts before it is too late.
As a HPC Technology entrepreneur, if you are attending SC14, go check out StartupHPC, http://www.startuphpc.com/. StartupHPC is a grass roots community for STEM- and HPC-inspired entrepreneurs, corporations, VCs, and support organizations. Their inaugural event will be a mini conference focused on how to become an entrepreneur, featuring a roster of all-star speakers. It is held on Monday Nov 17th in New Orleans, where the Supercomputing-14 (SC14) conference is held this year.
There is a lot you need to know: intellectual property, corporate structure, governance, regulations and compliance, etc., etc. This has barely scratched the surface.
There is a lot of ‘free’ information on the Internet, no shortage in-fact, so a search engine can be your friend, but always verify if you can and make sure whatever advice you get is applicable to your unique situations. Finally, here is some recommended reading; Zero to One, The Tao of Leadership, The Hard Things About the Hard Things, and The Facebook Effect are just a few examples of excellent reading material.
Go get ‘em!