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More Startup School Discussion

The New York Times picked up on Startup School and Y Combinator... and then Slashdot picked up on that.  Joel's quoted in the NYT article and I'm referenced in the first slashdot comment (not mod'd to oblivion):
KC Send private email
Tuesday, February 21, 2006
I gave up on the /. discussion when I got to the guy equating seed funding with a pyramid scheme.
Jonathan Ellis
Tuesday, February 21, 2006
I don't think the equation was seed money = pyramid scheme, but Paul Graham's take = pyramid scheme.  Seems like a reasonable argument, even if you disagree.


Pretty damn funny.  Never appreciated slashdot until this article.

"Are you ready to convince angel investors that your fooseball table is an integral part of your creative environment?"


"Are you ready to convince gullible members of the public that your particular URL is worth several million dollars?"


"You, maggot! Front and center! What's you're name?"

"Smith, sir!"

"And what do you do, Smith?"

"Program, sir!"

"Well goddamn, a white boy who thinks he can program! Are you half-Asian, boy?"

"No, sir!"
Bankstrong Send private email
Tuesday, February 21, 2006
Creating a company for the purpose of acquisition is not a pyramid scheme.  All successful businesses eventually require an excellent distribution channel.

For some businesses this takes the shape of partnerships and OEM agreements.  For others, value-added resellers.  And for the small tech startup, it's often the acquisition -- the parent company becomes the distributor by right of ownership.

Paul Graham's proposed model for incubating startups is timely.  His methodology is arguably less wise, but at least he is thinking about the moment in which we live.  And he's thinking about real businesses, which more often function as partnerships than as cowboy ventures -- one horse can only carry so much, so far.

The simple fact is that sales and marketing teams at large companies enjoy an economy of scale that small startups do not.  They have existing relationships to sell into, and a brand.  Taking innovative products and fitting them into that model can be a lot better than recreating the wheel -- spending a lot of money on building a sales and marketing force, from scratch.
Tuesday, February 21, 2006
which is great if you want to "get the product out".

not so great if you want to work at a company that fits with your values.

Tuesday, February 21, 2006
I have a very wise attorney who has been around the block you could say.  He's dealt with and seen a lot of things in business.

His advise to me when I have "wholly shit" ideas, is to come to him; he's my friend and confidant in business.  He suggest staying away from VCs like the Y-Combinator.

His advise is that you should first get a patent the idea then sell a prototype.  I don't have first hand experience on using VCs but he does -- he talks to me all the time about a guy who invented a lunch box that allows you to slide pictures in and out of the front & back face.  The guy who invented this worked in a machine shop of a plastics company.  He invented a way to make lunch boxes in one stamping rather than two stampings.

When he went to sell the idea to Walmarts, they turned him down -- asked him how he could possible supply all their stores with the product.  With the help of his attorney he sold the idea to Disney.  He then went back to Walmart to say, Disney has our product, do you want to be left out? (or something to that effect).

I realize this is one of those exception to the rule scenarios but the point here is that if you have a really good idea -- you really don't need VC funding.

I've bootstrapped 3 companies with out VC funding and everytime I got great legal advise on the ways of business and how to do things....

I suggest if you have a really great idea, you get a really great attorney to help you...  They are worth their weight in gold.  Great attorneys are ones that strategize with you.
Eric (another ISV guy with his company)
Wednesday, February 22, 2006

Your lawyer friend sounds like a good resource, but I suspect he has little experience with software companies:

"His advise is that you should first get a patent the idea then sell a prototype."

You can't patent software. (There are some options for patenting methodologies, but I think that's rather uncommon.)

Mr. Analogy {uISV} Send private email
Wednesday, February 22, 2006
Um, I'm not a lawyer and my lawyer says -- yes you can patent software.  My EDI software has a patent.  (EDI = Electronic Data Interchange) an ANSI standard for exchanging documents.

My attorney, correct, does not help me on software related things but his friends do!  This is why it's important to get a really good attorney who will strategize with you.  The good ones are well connected and talk to each other.  His patent attorney friends were called in when we needed to patent the way our software represented data for a particular industry. 

My patent is, in legal terms, classified as both a Utility and a Design Patent in the paper work we filled out for our software product.  Words like "ornamental design" and invention of a "useful process" were used.
Eric (another ISV guy with his company)
Wednesday, February 22, 2006

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