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Author Topic: Top ten geek bussiness myths  (Read 3353 times)


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Re: Top ten geek bussiness myths
« Reply #1 on: September 07, 2009, 10:32 PM »
a good read! :up:

Paul Keith

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Re: Top ten geek bussiness myths
« Reply #2 on: September 08, 2009, 01:29 AM »
I found these two comments more worthwhile than the original article IMO:

pasting this here because the comments can be long and these can be easily missed[/quote]

But you can put a less-ironic spin on it and say[...]

Although that maybe isn't the best example of it, I think that we can agree on one thing: Venture capitalists and those looking for venture capital are often speaking different languages.

Computer-geeks are often a lot like scientists (of the Einsteinian type); meaning that instead of saying "I saw a market need for a theory regarding [this&that]", they're talking about something new, something never done or discovered before...

The average person on the street can, when reading that, relate and understand that side of it all; when you explain to that same person that there are lots and lots of new ideas out there, but that for the venture capitalist to be able to invest in an idea he must be able to see that there will be some kind of paying customers (let it be that they look at ads or really pay in $$$)... the average guy on the street will understand that also.

So where's the problem? If just about anyone can understand that, why can't these computergeeks, that are supposed to be so damn smart, understand it and focus on the need that they're targeting?

That can be explained by a single word: Culture.

Each and everyone of us living in a certain part of town, hang out with a certain kind of crowd or come from a certain country have, statistically speaking, certain characteristics.

Computer geeks often impress eachother with what's new, and they can often have an Asperger's disorder-like personality/be introverts; and on top of that a high IQ/be damn smart and really really know the stuff that they're doing.
These people are often used to talking to other people with a well above average understanding of what's going on within their field; and people within the same field can easily extrapolate/logically explore what you're saying so that they can instantly see what's so new/fantastic about what you're doing even if you just say a few words.

If you're more "normal" and outside that field you'll have a very hard time understanding not only what they're doing, but also the implications of that work/discovery.

The culture from which that geek comes (combined with his personality; and you could here discuss if his personality attracted him to that culture, or if that culture at least partially formed his personality) makes him want to take second seat and let his work do the talking; after all, his work is what makes him king of the nerds and very suitable to get invested in, right?! As we already know, that's wrong; maybe not because he's wrong, but because there's way too much lost in "translation" for the venture capitalist to understand the value of the one sitting infront of him.

Here's an example for the non-techie/math people out there; you're asked to invest everything you own in this (and we do assume that it works, so there's no risk that there's anything wrong with the math behind it nor that computers of today wouldn't be able to handle it), so all you really have to figure out is if there's a need for it, if that need is great enough and what the real world implications would be:
With a 10% increase in signature-length the MD5-algorithm becomes collision-proof and fully reversible.

Give up? Well, if your Internet-access is still by dial-up modem then the above (fictional) breakthrough would result in you being able to download in minutes or seconds what before would take you many many days... HD-video could be sent by standard SMS to your cellphone... You'd be able to install several independent huge software-packages into non-networked computers simply by typing less than a blogposting... and you'd never be able to fill up another harddrive because of downloaded movies (at least not if you intend to view just a fraction of them before you die of extremly old age).

Not a bad thing to invest in, but if you didn't understand the implications while the presenter focused on the math behind it all instead of the need, then you wouldn't invest a cent.

That's an extreme example, and most people can view computer geeks as an extreme(ly odd) group of people; but the same works for most groups approaching venture capitalists, no matter how "normal" they might seem to be. They know what they know, and they are looking for both money and financial expertise to take what they know and package it for everyone else.

These people usually need more people to get their work done, or they at least need more people being available to work, so they tend do describe their needs based on the number of people needed; this might sound logical, but it's a huge problem for people talking to venture capitalists.

You might include a 3 people team doing such things as designing/programming/supporting the website, getting graphics done for your stationary/business cards/business sign and so on. 3 people isn't a lot, and you see them doing a lot of different things so you want them to be very efficient and able to do more than just work within their own core-area; they need to be able to run to the printers to pick up everything, deal with the printers regarding price and quality, talk to some other companies about the electric sign for outdoors and so on...

Finding the right kind of people for that will take you a very long time, and if they really are good enough to handle all that then they'll know to charge you both arms and legs (as well as your first-born for 3 generations) for their services; you'll both waste a lot of time and you'll scare off the venture capitalist by saying that you want to get stuck with those kind of people on the payroll.

So what's all that in more suitable venture capital-speak? Perhaps a one time fee of anywhere between a cpl of hundred and a cpl of thousand to have it all outsourced to a company specializing in that; and that's only to be paid when you're close to going public, not from the first day of development.

What's the word of the day, kids? OUTSOURCE!

On your list there might be 2 people working support, but they're not really needed either until your business starts taking off; so they're off the list, and depending on what kind of business it is you're starting the secretary answering the phone or the programmers will do the support initially... Secretary? Yeah, some people think that those are needed from day one, but most likely an automated system can do that work initially (setting up the automated system is outsourced to the VoIP-guys handling the phone; the automated system could be included, or added for free just to make sure that they get your growing business).

And you can keep doing that, outsource or remove people so that you're down to maybe half or even fewer of the people that the venture capitalist-seeking person initially thought he'd ask for.

Venture capitalists don't want to turn any clients away, they don't want to have a huge bank account just sitting there collecting dust (and a at these times quite modest interest)... they want to invest... they want to own a piece of the next Bill Gates... they want to get in on the action before the company name risks verbification and the whole company risks being reclassified as a mutual fund due to all the money it has (Google)...

So why don't they accept and learn how to understand those other cultures, so that they can spot the good ones and do business at an earlier stage and with more people?!

Well, they're trying to, every now and then a geek/scientist starts working closely with a venture capitalist to help him find these treasures; the problem is that the dark force is too powerful, so they are almost instantly turned into business/VC-people; and not before long they're telling the other geeks/scientists how wrong they are by writing lists about "geek business myths"... (Sorry, Ron, I just had to... ;-D)

Before meeting a venture capitalist the venture capitalist should send out a single paper listing what he's really looking for, and especially what it is that he wants to hear during the first presentation (like: "focus on the need, the tech. behind it all will anyway just get looked at and verified by someone else than me"); then directly after the initial and somewhat short presentation they should sit down so that the venture capitalist can, quite frankly, say what was wrong about the presentation.
He'd cut people and reprioritizes like I did above, say what he heard too much about and what he didn't hear about at all or enough about.

That'd just be a trial-run; instead of letting the poor money-seeking guy talk himself blue by saying the wrong things for two hours, that could be over in an hour. Then he's less nervous, more focused and a hell of a lot better prepared for the second, the "real, meeting/presentation.

Could you really do that? Could you really risk losing that important first impression by having a trial-run? In some cases you can, and in some you can't... But what most people don't know is that there are organizations all over the world that will help you do such trial-runs; some will help you for free (sponsored by local governments or businesses that want to attract more businesses to the area; including some venture capitalists), they'll collect some of the local business leaders to listen to and comment on your presentation, and they'll make sure that those business leaders aren't in a situation that they might be tempted to steal your ideas, not to mention that they'll have all the paperwork set up to help clarify any and all later missunderstandings regarding such things.
Such events will not only provide great feedback, but they might also give you your first clients... Some might even give you a downpayment, making it possible for you to start without the help of a venture capitalist, or to greatly enhance your chances when later on talking to a venture capitalist.

Just a quick comment for DrMagu...

Start by going to your old/current school's website and look for any information about helping people start businesses; for the past 10 or so years more or less all schools at university-level have focused more and more time and money on helping their students created businesses around the work they're doing.

Then drop by the business/economics- (or whatever it's called in your parts of the world) department, there you'll find people better than you at running businesses; they might lack experience when it comes to running real world corporations, but unless your school really really sucks they'll be used to working in teams and they'll have all the theory needed stuck in their heads.

The people there are still studying, so they don't know everything there is to know about doing business (then again, who does?); but they'll be years ahead of you, and they can help you turn what you want to say into what the venture capitalists wants to hear.