Class: 2013 Summer Accelerator
Ubersimple, a NH based software company, has developed "AppPack" (a mobile app and website), to make it quick and easy to give out referrals within the mortgage and real estate industry. Professionals that rely on referrals for business can include their trusted business partners to participate, which allows consumers to have direct access to a network of professionals, locally and privately. See a 90 second video at http://see.apppack.me
8/14/2013 Entrepreneurs Tell all
It's an amazing thing when you group a bunch of entrepreneurs together in one space. The energy is shocking. We went to visit a prior Sandbox winner Brenna Schneider of 99Custom in Lawrence, MA.
99DegressCustom is a non-profit that does custom apparel manufacturing, with a social impact of offering jobs to people that might not otherwise be able to work flexible shifts.
Everything about 99Custom was textbook startup done right:
Without giving too many details, Brenna epitomizes how to start a business without going over budget.
There is a lesson to be learned here: You can start up and be on your way without having to having to spend a ton of money upfront.
We like this methodology too. At Ubersimple, we don't invest heavily into traditional things early on, like office space, desks, chairs etc. We use what we have until we need something different. We do however invest in our product heavily since that's what our customer will see.
Brenna talked about how they don't want to be a run of the mill apparel company, but rather service a niche. There are not many local or even U.S. Based manufacturing companies, so 99Custom services that audience.
Companies like Reebok even have interest in doing custom work locally vs internationally and have reached out to Brenna. Exciting!
So alot of our day was learning about how Brenna started her company, her story, he background, and her passions. When you hear the story, you see it was just a natural fit of how 99Custom all came together. This is true for many Entrepreneur stories and their ideas. It's why we get the courage to follow our dreams. It's also good to note that this is why not many others copy your idea, they don't have the same set of factors to get them to where you are, nor the same passion.
Ideas are copying, at least in some variation, for better or worse. So don't worry about people knowing of your idea, it's better if they do.
Some of the closing discussion we had was around the company values and principles.
Values and Principles are timeless.
They will get you where you are going, get you through tough times, and unite your team.
Companies succeed because of the team, not just the product itself.
This also leads to why you can't just hire a few folks to take over your business, it has to be you that runs it.
This does not mean you can't sell it, you should always build your company with an "exit" in mind. Knowing the exit helps create a path to follow.
In Ubersimple's case, we see our exit as an acquisition of our technology, called "AppPack" to larger entity who can incorporate it into their portfolio. The software could run without us directly involved, and the management team will be able to take over sales and operations.
8/14/2013 Entrepreneurs Tell all
As part of the MV Sanbox Entrepreneurs tell all series, we heard from two more entrepreneurs who offer a different perspective.
Joe Lane - Safe Path Medical
Parul Singh - Gradable
Both Joe and Parul were able to offer so much valuable information. Some of it was even on their own strategy and tactics which helped immensely.
You hear that other entrepreneurs "got successful", but you often wonder what they did that you haven't figured out yet.
Here are some highlights:
"Don't go at it alone"...it will take longer, and you are not the expert on everything.
"Give more than you take"...a life lesson we all know, but it works great in business too.
"Ask people for advice"...you don't know everything.
"Don't isolate yourself...Network"... You will meet interesting people, get your word out, and make contacts
"Demonstrate you have done your homework"...or risk losing opportunities, time, or money
The above lessons were great to hear, much of what we all know, but to hear it again, and from people who have stood in our shoes not too long ago was a good reminder.
Beyond the quick lesson, we actually learned some tactical things that were both low/no cost and easy to do that delivered big impact to their success.
Things such as:
Asking your customer audience to look at and evaluate your idea is good, but how?
1) On their schedule
2) Wherever they choose to meet
3) Try to use your network to connect to them
Getting Testimonials...again, how?
1) Ask them if it's OK
2) Meet them to do it, use your phone to record
3) Have some bullets that you want them to cover...not a full script. It needs to be their words.
4) Mail them a $99 FLIP camera with the bullets to read and return envelope.
5) Get varying levels of credentials.
- An Expert can say how great it is, and how easy it will be for beginners
- A general practitioner can say how it has helped
- Each person should talk about a different aspect of your product
Use the video for different parts of your pitch and presentation.
Let people know these are "Real People" so the reactions are 100% authentic, and might be dry at times.
But stress, these are future customers!
The Presentation, what to include?
1) The more realistic the better.
2) Show your current iteration
3) Use the testimonials
3) Talk about the "benefits"
- Example: Gradable helps save time, and allows teachers to be more efficient and accurate.
The School Principals don't care so much about time, (i.e. it's not a manufacturing shop), however, if you tell the principals that "Product X" will help them save face to parents by demonstrating that they are taking initiatives in classrooms is a benefit that justifies having the product.
You have to think of the various ways your customers will benefit, and time and money are not always the factor.
We take this and relate it back to our product.
AppPack helps save an immense amount of time. It makes it faster and easier to give out referrals.
But the real "benefit" to our customers is that they have a way to share their professional network out so that clients can take advantage of them easier.
It demonstrates that professionals are helping each other, and in turn helps strengthen business relationships.
August 8, 2013 - Entrepreneurs Tell all
One thing about Entrepreneurship, is while it all feels the same for everyone, the stories as to why and how we do what we do is always different.
Learning from other entrepreneurs is valuable, because it helps us learn what drives and pushes us to take the risk not everyone does.
We heard from David Parker of Merrimack Valley Sandbox and also Trisha Blanchet of "Operation Delta Dog".
Their stories were very similar to most entrepreneurs.
"I saw or experienced a problem, and I wanted to do something about it."
Whether you are already starting out, or thinking about it, some of these details will relate to all entrepreneurs:
-Starting is hard
-You are always growing
-The are always challenges...it's an up and down cycle
-It's what you put into it
-Be prepared for the unknown (pivots)
-What you plan for won't happen
-Things can be bleak and dark at times and challenges mount up
-Progress is day to day
-You can be passionate and broke
As you take your idea on, you have to stay tuned into everything. Customers, co-founders, and team. "How the founders run the company is important". People look to you as their leader, mentor, or problem solver.
One thing to remember, is that in the face of all challenges, don't underestimate yourself. "You achieve feats"...that's how you started.
When the tough times come at you, just remember why you are doing this.
-It's just better
* it shouldn't always be just for money.
At Ubersimple, we do it for all the reason above. We hate seeing people waste time, effort, and their own opportunity because technology hasn't been made easy enough yet. We see our opportunity to make things better for millions of people, and it happens to be a great challenge of our own skills and intellect. We know that in the end, our company will be around and profitable because we choose to help people first.
8/7/2013 - Pricing
Capturing Value - The basics of pricing
The speaker today was Valerie Kilewski, Ph. D, UMass Lowell
This class was a great one since we had been debating our revenue model from inception, as I imagine most companies do. How do you price, whay that way? and how will customers perceive it?
We started off with some audience questions. With many companies in the room, we had a variety of questions about pricing our products and services like:
Volume Pricing (This was our question)
Charge for incremental benefit
"Medical model" pricing - i.e. co-pay
Cost Analysis - done by accountants
What does cost have to do with value?
Leasing vs. Buy - depends on customer
So how does Cost and Value relate?
(short answer, they don't)
* Internal numbers, Cost is used for cases of Internal numbers:
In the case of "Cost plus", it is a reactive action where you add some amount to the cost to produce and charge customers. (It's not a way to calculate "value" to customer. It's a way to know if you will be profitable.)
* Competitor situations uses an Experience Curve. This is a proactive method. (every time you double your volume, your cost decreases). This can be used to drive competition out of business, i.e. like Intel with computer chips...the better they get, the harder they are to compete with since they can keep doing more for less.
* Customer situations use: Value in use (what the value is to an individual customer)
* Groups of customers with a perceived value is more of a Market approach
At Ubersimple, we were most aligned with "Value" because our customers used it for their own needs and could realize the gain individually. But then how does the price get calculated? It can't just be a factor of what development and maintenance costs are.
You do need to know your costs before you price so that you know if your model will be profitable. But simply using cost is typically never the ideal solution to pricing.
Let's define costs:
Sunk Costs - your time, or money up to pricing/sale...
Fixed Costs - office, lights, A/C, salaries
Variable costs - paying someone to speak, host an event, etc
Then there are other costs which cannot be excluded:
your own salary
family, friends, fools, loan repayment
Employee income tax Withholdings
Forgetting to add these line items means you could quickly go negative balance on your revenue.
So you need to then work out what your break even volume is
This is known as the "Contribution Margin" calculated as (SalePrice - Variable.Costs = ContributionMargin)
Not going into all the gory detail, this basically means:
Set your price too low, and you have to sell more units. = Company might fail if you don't sell enough
Set your price too high, customers might not realize the value. = Company might fail if you don't sell enough
So the idea is to know what pain your customers experience, and what it is costing them. Then price your solution to a point where it has a value to them.
Another aspect to pricing is that you should not price yourself cheaper than your competition just to compete, you might lose, and you can rarely ever increase your prices successfully. Another approach is to offer your service with all the benefits and attributes you are selling, and if customers feel you are overpriced, you might be able to negotiate some of the attributes out to lower the price instead of lowering the price with all the attributes still included.
Pricing your product or service can seem complex, but a little research and asking questions can help identify the level you should be at, or at least the ceiling price.
Once you know your price, you can use cost to calculate profit, and how many units are needed to sustain your business.
We used this process in our pricing structure and were able to adopt the logic to our revenue model.
Since we offer a software service, we use value pricing on monthly billing basis. This allows us and our customers to have the profit and value we each need to mutually benefit.
MONEY, MONEY, MONEY
We all want it, but, how do you get it?
Today we learned about Fundraising. We had our panel consist of:
Dan Pullman - Fresh Source Capital www.FreshSourceCaptial.com
Barrie Atkin - www.AtkinAssociates.com
David Parker - of our very own MVSandbox accelerator
The conversation wanted to address a few topics such as:
Sources of Money
Attitude about asking for money
Why do people invest
Preparing for meeting
One important thing that came about was that:
[At any time before or during your startup] If you take money, make it clear what the expectations are. And you need an agreement in writing.
or else there could be alot of confusion later as to what the money really bought. It's happend to others, and it's preventable with an agreement.
There are many places to get money if you think about it.
Here are some common Sources of Money:
Friends/Family, Business Colleagues, Advisors
Credit Card, Loans, Banks(forget about banks, it ain't gonna happen)
Professionals - Angels, Social Ventures Capitalists
Others? - Pitch Contest, sponsorships
Limited Offering - limited stock, sell the stock, to the limited number of people (If you do this, GET AN ACCOUNTANT & ATTORNEY)
**A quick note on VCs....VC want 10 times their money, on a few million dollars investment.
Also, VC's usually like to have control over the business. They try to always hold the lever that can swap out the management team. (you've been warned, make sure your deal gives you enough to live on in the event your equity can't be cashed in for years to come)
If you have Friends & Family involved, and you want to get angels or VC's involved, let the Friends & Family know things are going to be a bit more formal, and more contracts and formal notices will be sent regularly.
Angels, for the most part, are within reach of many Entrepreneurs. Angels have a high net worth, and are sophisticated investors, deemed by Government standards.
Angels can do checks from $10,000 to several hundred thousand dollars.
Angels do alot of networking, so get out there and talk.
Angels tend to like technology based companies.
You might have to show how your startup can deliver a 5x or even up to 20x return.
If your business does not forecast an exit (IPO orSell off) and you are looking at a self-business that sustains your lifestyle, the discussion changes with investors to "so how would I get the money back? and when?" as opposed to a true exit when its measurable that upon IPO or sale, your money gets returned, with growth.
What to do when you have "The Meeting"
1) How much do you ask for?
Find out how much they have given in the past! Look on their website for news archive.
It might tell you when, to who, how much, and how often.
It might even tell you about how to ask.
2) See who they gave money to and see if you know any recipients, and network with them.
3) Relationship is the #1 thing about asking for money.
Call the person, and ask them what they are needing.
See if you can find someone you can ask some questions to. Then call and start building the relationship.
4) Know who you are talking with and what benefits them.
Do some research
5) Smile Time!
Smile for 30 seconds before a meeting - it increases endorphins
Jump up and down, deep breaths.
Do research on the people.
Understand the dress code/style
6) Have a sense of persons names (first name or nick name)
befriend the receptionist
Have business cards ready
Find out where they went to school.
So why on earth would someone want to give you money?
To make money
They might believe in your mission
For a social benefit
Possibly just for Name association - "I'm investing in a company Mr. Gates is invested in."
***Because they were asked*** (Most important thing on this post)
You demonstrate that you are passionate
The way to ask, is to be comfortable about your business.
We are going to make big difference.
Your money is going to help us do X,Y and Z.
Amounts will help us reach our goal.
Don't be afraid to ask.
The other person wants to give money to a company they belief in.
Foundations HAVE TO GIVE AWAY their money, so get in line.
A good Mantra we learned:
If you want to get money, ask for advice.
If you want advice, ask for money.
Have answers to questions like: "Why should you invest in me? "
If you are making a deck, and get discouraged, remember, The Deck takes time. Just work on a slide a day, and get it done in stages,
A few last tips:
When presenting, start with asking the listener: "How much time do you have for this meeting?"
It's fair to ask:
What do you think about this idea?
Do you know anyone one this is a fit for?
How can I improve this
Tell me what your objections are
YOU HAVE TO MANAGE THE TIME..... Be quick with your deck or there is no time for questions or discussion. (i.e. the deck should be a conversation starter, not a deal closer).
This means, Skip slides if it saves you time.
If you need to say why you are skipping slides, keep a phrase handy like
"Guys i've got to respect everyone's time...but I got to cut it short"
At the end of your presentation, Always be cordial, thank them for their time, and
Always ask for referrals!