{"id":13441,"date":"2022-11-11T09:56:25","date_gmt":"2022-11-11T14:56:25","guid":{"rendered":"https:\/\/alumni.cornell.edu\/cornellians\/?p=13441"},"modified":"2023-01-10T09:53:00","modified_gmt":"2023-01-10T14:53:00","slug":"startup-tips","status":"publish","type":"post","link":"https:\/\/alumni.cornell.edu\/cornellians\/startup-tips\/","title":{"rendered":"I Have a Great Idea for a Startup. Now What Do I Do?"},"content":{"rendered":"\n

The author of a new practical guide offers tips on parlaying your brainstorm into a viable business<\/p>\n\n\n\n

By Beth Saulnier<\/strong><\/p>\n\n\n\n

David Muchow, GR \u201966\u201368, has spent decades as an attorney, entrepreneur, investor, and consultant. Now, he has channeled that experience into a hands-on guide: <\/em>The 7 Secret Keys to Startup Success<\/a>. <\/em><\/p>\n\n\n\n

It covers a host of practical dos and don\u2019ts\u2014from creating a business plan and courting investors to managing risk and safeguarding intellectual property.<\/em><\/p>\n\n\n\n

\"a<\/figure>
\n

<\/p>\n\n\n\n

Muchow<\/em><\/a>, who is based in the Washington, D.C., area, spent two years at Cornell Law School before leaving for roles in the Johnson and Nixon administrations. While he completed his JD at Georgetown, he has remained an active Big Red alum.<\/em><\/em><\/p>\n\n\n\n

What are the most common pitfalls for startups?<\/strong><\/p>\n\n\n\n

There are many reasons they fail. For example, startups often don\u2019t budget enough for expenses; don\u2019t put things in writing, which leads to personnel and legal disputes; and fail to protect their intellectual property.<\/p>\n\n\n\n

What are the perils of asking friends and family to invest?<\/strong><\/p>\n<\/div><\/div>\n\n\n\n

It doesn\u2019t matter how many times you tell them, \u201cThis has to be money you can afford to lose.\u201d If you lose their money, you feel bad, and it affects those relationships. So I recommend investments from sophisticated investors. They understand that failure is often a reality.<\/p>\n\n\n\n

When launching a startup, why is it vital to have formal contracts?<\/strong><\/p>\n\n\n\n

Suppose you\u2019re the CEO and your employee says, \u201cI\u2019ve been working hard and I haven\u2019t been paid yet.\u201d You say, \u201cDon\u2019t worry, I\u2019ll take care of you.\u201d Three years later, when the company is making $10 million a year, the employee\u2019s lawyer shows up and says, \u201cWe want 30% of the company, because that\u2019s the value the employee added.\u201d So with deals or making promises, put it in writing.<\/p>\n\n\n\n

That means hiring a lawyer.<\/strong> How can the average entrepreneur, who might not be able to afford big bills, get proper legal advice?<\/strong><\/p>\n\n\n\n

Find a lawyer from a referral or the Internet who has worked in the startup space. Lawyers do deals, so say, \u201cI\u2019m a startup. I don\u2019t have any money.\u201d Some lawyers will do work pro bono, or let you pay them over time.<\/p>\n\n\n\n

Why hire a lawyer? One client gave me a sales document to review. Buried in it was a clause that held the entrepreneur personally financially liable for anything that happened. Getting a good lawyer and accountant costs money, but will save you more.<\/p>\n\n\n\n

How much market research should one do?<\/strong><\/p>\n\n\n\n

At startup, your business idea is only a hypothesis; you don\u2019t really know what your product is, or who your customer is. To find out, talk to 100 potential customers. If you don\u2019t, you\u2019re likely to create something that doesn\u2019t work and has no market.<\/p>\n\n\n\n

At startup, your business idea is only a hypothesis; you don\u2019t really know what your product is, or who your customer is.<\/p><\/blockquote>\n\n\n\n

How can someone launch without a lot of resources?<\/strong><\/p>\n\n\n\n

First, you need traction. Investors often say, \u201cShow me that your product is smarter, better, or faster, and will sell.\u201d You need a first deal. If you don\u2019t have sales yet, try this: have a prospective customer sign a letter that says, \u201cIf you can do what this product claims, I will buy X number of units over Y period of time.\u201d That might help\u2014but of course, a paying customer would be better.<\/p>\n\n\n\n

Could you explain the \u201cvalley of death\u201d\u2014and how to avoid it?<\/strong><\/p>\n\n\n\n

It\u2019s the point at which you\u2019re working on developing your product or service\u2014you\u2019ve spent all your money and called all your friends and relatives\u2014but you still don\u2019t have a product or income. You\u2019re spiraling down into a deep hole.<\/p>\n\n\n\n

You can help avoid that by having a realistic budget over three to five years. When will you need money, and how much? Set up kill dates for failing projects; run lean. If you have money, you can make mistakes and still do well. But if you don\u2019t, your startup dies.<\/p>\n\n\n\n

\"the<\/figure>
\n

In the book, you warn that just blogging about your idea can get you in trouble. How so?<\/strong><\/p>\n\n\n\n

It\u2019s hard not to tell folks about your new idea. But, with exceptions, if you give away your secret sauce by blogging, then it\u2019s in the public domain\u2014no longer \u201cnovel\u201d in patent speak\u2014and you may not be able to get a patent.<\/p>\n\n\n\n

Here\u2019s the dilemma: you need to talk about your product to investors and potential customers, but you don\u2019t want to give away your intellectual property. How do you do that? Just talk about what your product does<\/em>. But don\u2019t talk about your \u201csecret sauce,\u201d such as how it\u2019s built, operates, and is designed\u2014because if those inventions are \u201cnovel,\u201d they can be patented.<\/p>\n<\/div><\/div>\n\n\n\n

Another thing you stress is that even though startups are notoriously time-intensive, work-life balance is vital. Why?<\/strong><\/p>\n\n\n\n

You can run a startup and still maintain healthy relationships that are not destroyed by working so hard. For instance, I try to walk in the woods for 20 minutes every day. When you have so many inputs, your brain can only deal with the most urgent things. When I come out of the woods, I\u2019m more centered and ideas pop up that I never would have gotten behind a computer screen.<\/p>\n\n\n\n

A philosophical question: are some people great at coming up with ideas, but not so great at running a company?<\/strong><\/p>\n\n\n\n

You bet. It\u2019s a different skill set. As a CEO you need to be humble and honestly look at your strengths and weaknesses. Where are the gaps in your skill set\u2014and whom do you want on your team?<\/p>\n\n\n\n

As a CEO you need to be humble and honestly look at your strengths and weaknesses.<\/p><\/blockquote>\n\n\n\n

You worked your way through law school as a door-to-door salesman. What did that teach you about marketing?<\/strong><\/p>\n\n\n\n

Use a soft sell. The homeowner comes to the door. You\u2019re on your knees with your sales kit. You hand out three free samples, one after the other; the fourth thing is the Fuller Brush<\/a> catalog. By this time, there\u2019s this poor guy on his knees trying to make some money, and he\u2019s given you three things in a row. The odds are more than 75% they\u2019re going to buy something.<\/p>\n\n\n\n

How does that translate to the startup world?<\/strong><\/p>\n\n\n\n

Finance your product up front, so the customer doesn\u2019t have a capital expenditure. Say, \u201cI\u2019ll let you try this out for six months. I\u2019ll still own it\u2014but if it meets these criteria, you agree to buy X number of these at Y price.\u201d<\/p>\n\n\n\n

Some entrepreneurs are excited just to get something field tested and hear people say they like it, but they never end up with a contract. You can give some samples away, but make sure you structure the deal to lock in a sale at the end.<\/p>\n\n\n\n

Top: Illustration by Cornell University<\/em>.<\/p>\n\n\n\n

Published November 11, 2022<\/p>\n","protected":false},"excerpt":{"rendered":"

The author of a new practical guide offers tips on parlaying your brainstorm into a viable business<\/p>\n","protected":false},"author":68,"featured_media":13448,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"alumni_hub_syml_posts":[],"footnotes":""},"categories":[225],"tags":[],"cornell_year_post":[],"post_folder":[],"class_list":["post-13441","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ask-the-expert"],"yoast_head":"\nI Have a Great Idea for a Startup. 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