Playing With Wire » Business The Internet Startup Blog Wed, 20 Jul 2011 18:45:29 +0000 en-US hourly 1 Raising Capital Part 1 — The Executive Summary and The First Pitch Sun, 01 Jul 2007 21:07:17 +0000 Writing a business plan is an important step in founding your business. Not only is it a required part if you’re going to raise capital, but it’s also very useful since it forces you to research your competitors and the environment you will operate in. As you may or may not know, the by far most important part of you business plan is the Executive Summary. Document

Recently I attended a seminar about executive summaries, delivered by Steve Foster, Partner at Texas Pacific Group Ventures with long experience from the VC industry. The focus of the seminar was executive summaries, but Foster also shared an insider’s view on what VCs actually value when they chose what company to invest in.

Most people with some business experience have some idea of what goes into an executive summary. Although the information that goes into the executive summary might slightly differ between industries, the main objective is always to summarize your business idea in such way that an investor will be enticed to invest in your company.

So how long is an executive summary supposed to be? Traditionally most people say that it’s supposed to be about one page. According to Foster, he would rather see a three to four pages long executive summary, since it’s too hard to summarize all the information in a single page.

How do you get a VC to choose your company over the rest in the huge pile they’re reading through? Well, let’s face it, it’s very unlikely that an investor will get through even your executive summary and much less the rest of your business plan. If you fail to grab the attention of the person reading the executive summary within the first five seconds, it’s quite likely that he or she will stop right there and move on to the next project. One of the more interesting ideas that Foster suggested was to not to play by the rules. Imagine if you were personally going through maybe hundred executive summaries per day: it’d become quite boring with the typical layout and design. Therefore, it’s crucial to find ways to stand out from the crowd. Here it’s more important to use your imagination than what’s considered standard. Don’t only use blocks of text, but rather combine it with quotes, graphs, tables, bullet points and so on.

Now let’s just assume that you managed to get a person at the VC firm to read through your executive summary. When they read through your executive summary, there are a couple of things that they will look for:


Who referred you? This is the single most important element. If you have a personal recommendation from someone within the VC’s network, you’re far more likely to be considered than if you just cold call.

Don’t e-mail

We in the tech industry have a tendency to do all kind of communication through e-mail. However, when it comes to sending your executive summary, this is simply a big no no. You’re up to tough competition, and the fact that it takes more energy to open up an attached document than it is to briefly skim over a piece of paper plays an important role here.

Is there a market?

Is there a significant market for your product or service?

Is there room for a VC-backed venture in the market?

This relates to the previous point, and relates to the size of the market. Is the market really large enough to hold a VC backed company?

Is there urgency?

What is the team composition?

According to the presenter, the optimal team composition in the tech industry consists of one programming/tech genius and one business person who knows how to apply the technology to the market.

Ok, so now you know what to include in your executive summary and how to increase your odds of being selected. Next you might wonder if there’s any good or bad time to submit your executive summary to a VC firm. The answer is yes. Generally you should try to avoid the summer, since many VCs are out of town. Also try to avoid submitting before a major holiday. Conversely, it’s a plus if you get your executive summary read the day after major holidays, since people tend to be in a better mood then. Another time to target is January, since that’s when people come back from their long Christmas break with more energy than when they left.

This was part one in the series “Raising Capital.” In the next part we will dive deeper in how to write your actual business plan. Stay tuned…

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Stop Wasting Money on Computers! Thu, 05 Apr 2007 20:27:19 +0000 If you’re a regular reader of our blog, you may remember an article a while back about a piece of software called Cacti. It’s a nifty little web-based program that gathers information from a variety of hardware using SNMP. Cacti then presents the data in easily readable graphs.

At the time of the article, I installed Cacti for one of the organizations that I administrate the IT infrastructure for. Not only did I get a better idea of the utilization of bandwidth and hardware on the servers, but I could also see how much CPU resources the workstations were consuming. Although I knew that the CPU usage on the servers was quite low, I didn’t anticipate that the CPU usage on the workstations was quite as low as it was.

The organization is quite a typical office environment with 20-some workstations running mainly our own software plus web, e-mail, word-processing and spreadsheet applications. The hardware is quite modern with CPUs ranging from 1.8 Ghz to 2.7 Ghz Celerons and RAM between 256 MB to 512 MB. All workstations are running Windows 2000 Professional. Before I installed Cacti, I thought that the CPU usage during day use would average maybe 30-40%, with some significant peaks pushing up the average. However, I was quite surprised to find out how wrong my estimate was. It turned out that the average CPU usage on these workstations was less then 10% for all machines, and less than 5% for most of the machines with only few significant spikes. It’s true that Cacti only polls information from the workstations every 5th minute, but it should still give a quite accurate value these passed months as I’ve been running it.

Cacti Monthly

Sample of the monthly view in Cacti

With this data on hand it’s quite obvious that we’ve been over-investing in hardware for the workstations. Even though I would rather overestimate a little bit than underestimate, it seems my estimates were far too high. Even so, when purchasing new workstations, we’ve pretty much bought the cheapest Celeron available from the major PC vendors, so maybe it would have been hard to adjust the purchases even with these figures on hand.

After some thinking I came up with three possible ways to deal with this problem:
1. Ignore it
I guess this is what most companies does. Maybe the feeling of being ‘future-proof’ is valued more than the fact that you have a lot of idle-time. The benefit of doing this is that you have modern hardware that is less likely to break than old hardware.

2. Buy used hardware
Most people in power would be scared of just thinking about this. However, since there is no really new low-end hardware available, this appears to be the only way. The first problem you will be facing is probably to find uniform hardware. As an administrator, you know how much easier it is to administrate 20 identical workstations, rather than 20 different workstations, both in terms of drivers and hardware maintenance.

The second problem I came thinking of is the reliability problem. Obviously 5-10 years old hardware is more likely to break than brand new hardware, and if it does, there is no warranty to cover it. However, if you buy used hardware your budget will likely afford you to buy a couple of replacement computers.

There are also security implications of buying used computers. Every modern company with an intelligent IT staff is really concerned about security, both software and hardware. If you buy used hardware, there is a chance that it might be compromised (hardware sniffers etc.) I guess the only way to deal with this problem is to carefully physically inspect all the hardware you purchase.

If you or your company do choose to buy used hardware, there are plenty of sources to do so. One of the more interesting pages I found was a company in Australia, called Green PC, which sells a variety of computers and peripherals for a reasonable price.

3. Donate idle-time (to internal or external use)
With the rise of clusters, distributed computing and virtualization, there are today plenty of ways to put idle-time to good use. One of the more famous projects that deal with this is Folding@Home, which is a project at Stanford University that uses the participants’ idle-CPU/GPU time to do medical research. More recently a project at Berkeley called BOINC created a program that lets the user choose between a variety of distributed computing projects within the same application. By participating in such project, the company will create positive publicity (if the participation is significant).

If your company isn’t interested in donating idle-time to charity/research, they might still be able to use the idle-time. If all your workstations are connected with a high-speed connection (preferably gigabit), you might be able to use the computers in a virtualization environment. However, this is doable in theory, but I don’t know how well this would work in reality. Another alternative might be to use the idle-time to internal computations. If your company is in the software-business, distributed compiling might be one way to use the CPUs more efficiently. If this is not interesting, there are plenty of distributed computing solutions that might be used for intranets for various calculations that the company might else use a 3rd party company to compute.

Hopefully you have a better idea of how you can use your idle-time more efficiently, but you should be careful though. Some people argue that today’s computers are not built to run at 100% utilization 24/7. This is a very valid point, since neither the components on the motherboard, nor the fans is likely to stand a 100% utilization for very long without breaking. Therefore it is recommended to try to find an optimal distribution algorithm that spreads the calculation over the nodes without pushing the individual workstations until they break. I have to admit that I don’t have any available data on how the life-time of the workstations will be affected by running these type of softwares, but I would guess that it will have some impact on the life-time.

To round up this article, I would like to discuss one question that is highly relevant: “Why are there no low-end, cheap computers available?”

If you go to Dell or HP’s homepage and look for their cheapest ‘office’ hardware, it’s still far more than what is required for most office use. So why is it this way? As I see it, there are several reasons for this, involving both the software and hardware manufacturers in a mutual effort to stimulate sales. Obviously, the hardware manufacturers want us to replace our computers as often as possible, since this is how they make their profits. The software manufacturers on the other hand, want to sell new versions of their softwares by implementing new fancy features, that is unlikely to add to productivity, but requires hardware upgrades to run properly.

Let’s say you’re onboard with my ideas, and that you decide to look for cheaper hardware, but still feel like used hardware is too risky. One possibility might be to go for some kind of ITX-solution. These comes with a less powerful CPU, and often includes everything you need for desktop usage, but costs less than regular computers. One benefit of using ITX boxes is that they are very tiny and light, which makes them cheap to store and ship internally.

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Hiring on Craigslist Thu, 15 Mar 2007 21:05:33 +0000 Both Alex and I have been very busy lately, and therefore we failed to find the time to write on the blog. However, this doesn’t mean that we’re not working. This passed weekend we added two job ads on Craigslist; one web-designer and one PHP developer.

For each ad, Craigslist charges $75, which must be considered quite low, considering the number of people you’ll reach and what the competitors charge.

Just a few minutes after we posted the ad the applications started to come in. Below you’ll find the distribution of applications we have received so far.

Craigslist Applicants

Next week, Alex and I are going to sit down and go through all the applicants in the ‘To Be Considered’-section to find the best applicants. When that process is done, we will contact the best applicants in order to set up an in-person interview.

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