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i'm will dennis. these are my movie reviews and thoughts. i don't proofread before publishing so forgive the editing or lack thereof

Month: April, 2013

How Can I Help You

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By definition, first time start up founders are unqualified for their job. Every day, they’re doing something they’ve never done before. What an amazingly scary privilege.

So. How can I help you?

I’m extremely appreciative of all the people who have helped me over my short entrepreneurial career. I still have so much to learn, but I’d like to start returning the favor.

Whether it was an in-person intro by a friend or a cold email I sent, the people who took 30 seconds to help are the ones I truly appreciate, respect, and remember.

They’re also the ones that make the start up ecosystem great.

So respond to emails. Take that coffee meeting. Hop on a quick call. Take down your email autoresponder. Ease up on your get-in-touch-with-me-gauntlet-from-hell. Brighten someone’s inbox when they’re stressed-the-fuck-out at 2am.

Just. Be. Helpful.

Because as founders, we’re all over-caffeinated and under-resourced. Sometimes a quick note from someone with a little experience is all it takes for you to make a more informed decision and inspire you to keep pushing.

I’ve included below an unordered list of things with which I have at least some experience. If you think I can be helpful in any of the below areas (or any other area for that matter), please send me an email at williamldennis@gmail.com or hit up @willydennis on Twitter.

You can also find out more about me at willdennis.com.

And of course, it’ll come with a big ‘ol grain of salt.

  • Raising Angel Funding
  • Pivoting
  • Raising VC
  • Designing for iPhone and Web
  • Learning Ruby on Rails and CSS
  • AngelList
  • Hiring Contractors
  • Firing Employees
  • Hiring Employees
  • Determining Equity Splits
  • Convertible Notes vs Equity
  • Finding a Technical Cofounder
  • Maxing out Credit Cards
  • The NYC start up scene vs the SF start up scene
  • Being broke
  • Managing a relationship while starting a company
  • Failing and restarting
  • Divesting
  • Getting press
  • Rebranding
  • Logo Design
  • Applying to Incubators
  • Building a pitch deck
  • Acquiring your first 5,000 users
  • Peer to peer marketplaces
  • Online video
  • Mobile apps
  • Being in an incubator
  • Investor relations
  • Learning Photoshop and Illustrator
  • Cold calling/emailing
  • Pitching at a tech conference
  • Having a booth at a tech conference
  • Starting more than one company
  • Work life balance
  • Partnerships
  • Figuring out if your idea is any good
  • et al.

A new approach to building companies

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THE PROGRAM

The program is one year long and consists of 24 founders who enter the program as teams of two through an application process. The goal is to end with 3 extremely strong 8-person companies through the following process.

THE SCHEDULE

Month 1-2:

Each team of 2 works to prove out their concept as compelling, viable, and large. Should have a compelling prototype, user feedback, and tight deck by end of the two months.

Month 3-4:

The group votes, along with a panel of early-stage VCs, and the top 6 concepts are selected to continue. The founders whose ideas are not selected are recruited to join a winning team. We keep the teams equally sized so now there are 6 teams of 4. The teams continue to build, pivot if necessary, and prove a big opportunity.

Month 5-6:

Another round of voting by the founders, partners, and VC’s. 6 teams become 3 teams. Teams go from 4 people to 8.

Month 6-8:

Product launch. Metrics. Traction. Necessary pivots based on any new learnings.

Month 9-11:

Fundraise based on product, team, market, and traction. The panel of VCs have already voted positively for the surviving concepts, so they are likely candidates to lead the round.

Month 12:

Close $2m. ($10k per person per month for 18 months plus cushion).

RESULTING TEAM DYNAMIC

The two founders who entered the program as teammates would be the primary two executives (CEO/CTO/COO/CDO).

The other 6 teammates would all retain cofounder status, with appropriate VP level titles.

EQUITY AND FINANCES

Cap table after 12 months:

Founders: 10% each (80% total). 4 year vesting starting at program end with a six month cliff.

Program Partners: 10%

VC/Angels: 10%

Program Cost:

Six partners: $100k each ($600k)

Twenty Four Founders: $60k each ($1.44m)

Three Support Staff: $50k each ($150k)

SG&A: $250k (web services and expense of the companies).

Total: $2.5m

WHY THIS MAKES SENSE FOR STAKEHOLDERS

Founders:

You’re always working on a winning idea.

You’re surrounded by hustlers.

You build and test assumptions quickly.

Your team can build.

Although there is only one CEO, everyone on the team gets equal equity. This prevents fighting for an idea simply because you have a greater stake in it.

If your idea is not selected, you have a few chances to get on a team with an idea that excites you.

You don’t have to deal with hiring for the first 12-24 months of your start up.

VC:

Each of the three start ups is comprised of great team members.

The concept that emerges is significantly de-risked after having survived for 12 months.

All employees are founders so there is less team risk.

The company is pre-qualified as investable based on the program.

Program Partners (and their LPs):

Traditional Accelerator:

10 teams at $115k per team fo 8% equity stake (after convertible notes convert). Program is for three months, 2 programs a year.

Cost of investment: $2.3m per year

Equity received: 8% in 20 companies.

Value of a company after 3 month program: $4m

Total Value: $6.4m value (8% of 20 x $4m)

The New Model:

Cost of investment:$2.5m

Equity received: 10% in 3 companies

Value of company after 12 months: $20m

Total Value: $6m (10% of 3 x $20m)

Conclusion:

The longer, more intense program would have to make companies 7 times more likely to hit a homerun to make sense. (3 companies a year versus 20 with the traditional model).

Given that the program results in a strong 8 person team and a concept with 12 months of rigorous proving, support, and testing, I think the likelihood of a company’s success is 10x the average, at least.