More than 25 years of Linux

This recent interview with Linus Torvalds is not just an “historic balance” of 25 years of the Linux kernel but comes with a lot of worthy advice to project managers, entrepreneurs and technologists. You just need to read  with attention and interest…

For example:

“…The fact that I didn’t really know where it would end up meant that I was perhaps more open to outside suggestions and influence than I would have been if I had a very good idea of what I wanted to accomplish. That openness to outside influences I think made it much easier, and much more interesting, for others to join the project. People didn’t have to sign on to somebody else’s vision, but could join with their own vision of where things should go. I think that helped motivate lots of people.”

http://spectrum.ieee.org/computing/software/linux-at-25-qa-with-linus-torvalds

The Economic Impact and Benefits of Culture and Heritage in the Waitaki District (New Zealand)

On the 25th of June 2012, at the beautiful Oamaru Opera House Erdödy Consultancy Ltd will present its recently completed project “The Economic Impact and Benefits of Culture and Heritage for the Waitaki District”.

Commissioned by the Waitaki District Council, this potentials study presents original strategies and links the economic impact of the beautiful Cultural Heritage assets of the district with a proposed Economic Development Strategy based in a Weightless Economy in the region

Slides from the presentation Culture Heritage WDC 25.6.12

Resources for Entrepreneurs looking for Investment

The world of Venture Capital and Angel Investment is fascinating but painful if you don’t know how it works. Like every industry it has a jargon and like every “human tribe” has its own rules.

Research and previous reading will give you a better preparation: there are several free resources available online. Below is a brief selection of what I recommend to entrepreneurs and from people that I know. However everything comes down to practice: just reading a good cookbook won’t make you a chef.

My advice: look at these resources and take on board what is suitable for you and your venture or idea. Then start to practice in the real world!


Garage

It was early 2008 when I first met Bill Reichert in Palo Alto through a common friend. We had a good number of conversations around technology, particularly about multicore software, which continued during his visit to New Zealand in 2009. His firm  Garage Technology Ventures has a number of resources for entrepreneurs which are very simple and easy to read. Don’t miss “Small is beautiful” and the “Top ten lies of Entrepreneurs” (then go to the “Top ten lies of Venture Capitalists“)

Dr. Exit

In July 2007 NZVIF organised a seminar in Christchurch about angel investment presented by Tom McKaskill. It was a small and friendly gathering (I ended in a conversation in Hungarian with Katalin, Tom’s wife). His books are now freely available online. Most of them are written for investors, but won’t hurt you to have a look. And you need to read “Raising Angel & Venture Capital Finance – An entrepreneur’s guide to securing venture finance” and Ultimate Growth Strategies – A practical guide to engineer high growth into your business”

NZTE

The website of New Zealand Trade and Enterprise is a real mine of general information. It has been improving its presentation and organisation over the years. The “Investment Ready” guide is now presented on the website (the first edition was a small booklet in 2004) and its topics are very easy to follow through compelling headlines. You can download the full guide or work with the “Investment Ready Planning Templates“.

Amadeus

In February 2010 I had a long conversation with Hermann Hauser about the present and future of parallel programming. It was the first time that we met personally but we have been exchanging emails for a year after being introduced by Andy Hopper.

I was impressed for his calm and structured approach to the conversation. When you visit the website of his firm, Amadeus Capital everything follows a sequence: first you learn how to submit a proposal. Then it is an investment criteria to be met. But what is really interesting is the submission form because this is “real”. It’s not a template or recommendations about how to pitch: it is the form that will introduce you to a 473 million pounds venture capital fund .

This is a completely different approach to a Silicon Valley fund. Tom Perkins (founder of KPCB) said that they don’t read business plans submitted to their office because if an entrepreneur cannot find a way to get an introduction to one of the partners through networking, then he will be hopeless trying to generate sales for the new venture…

Good luck and have fun!

Nicolás Erdödy

The Four Words Sequence

We all have a wish list. Or a “bucket list“. It could be full of ambitions. Maybe unfulfilled dreams.

But when it comes down to business, the wish list should have some boundaries. It will make it real.

The best way to make a dream real is to put some figures around it. Not necessarily numbers for an accountant. Not every business starts by thinking about money. But it helps to think about figures.

For example, you want to achieve something, you really, really want to make xyz happen!

Then the first step is to set up a time-frame.

“I want to be a very good soccer player in 3 years from now” sounds more realistic than simply say “I want to be a very good soccer player”.

Then you need to work out if it is feasible to achieve that.

Which is your definition of being “a very good soccer player”?

Today I am an excellent soccer player if I can play 20 minutes with my 9 years old son and not end exhausted. 25 years ago I wanted to be Diego Maradona

Every time that an entrepreneur comes for advice or I do a Due Diligence, I mentally try to classify the proposal using the “Four Words Sequence”.

Dream –> Idea –> Project –> Business

Many people imagine a “business idea” and spend a lot of time talking about it. Rarely does something else. I simply call that “business idea” a dream.

When you are able to put some boundaries to your dream, set up a starting point and achievable milestones within a realistic time-frame, then your dream is becoming an idea.

Then you are in the position to bounce around that idea and I sincerely recommend doing it.

At certain stage you’ll realise the need to list the resources needed to make it happen. Also to define exactly where is the starting point A and how you will reach point B. Someone would say that you “need a strategy“. Yes, that’s correct. When you start to think about resources, strategies and some of the friends that listened to your idea, are also interested, then you have a project.

But you really have a business idea, when your project has realistic figures around it.

Then you are ready to write the draft of your first business plan!

Know your numbers and you will be closer to a realistic definition of your business idea.

Nicolás Erdödy

Business Plan (1) – Definition

What is a Business Plan?

If you are in business or you are an aspiring entrepreneur, you either heard about this concept or someone already said that “you need a Business Plan!”

Could be your accountant or lawyer, or your bank manager or even a friend with “business experience”.

Then you have a big question mark in front of you: what actually is a Business Plan (BP)?

There are many resources available online for free (if you prefer to pay, I’m sure that you’ll find software that will promise to make everything for you) but still there is one thing that Business Plans cannot do for you: they can’t run your business.

Let me go step by step.  Go to Wikipedia and read about the topic. Ask around. Your nearest public library will certainly have one or dozens of books on BP. New Zealand Trade and Enterprise (NZTE) has a wealth of resources on its website. Particularly useful are the “Guides to starting a business”, which include “Planning for Success“, a do-it-yourself kit. It is completely free, you can download it or ask for a hard copy

But there is still “a problem”: who will do the homework through the templates?

“Preparing an effective business plan for a startup can easily take 250 to 300 hours. Squeezing that amount of time into evenings and weekends can make the process stretch over 4 to 12 months” (Timmons & Spinelli, “New Venture Creation – Entrepreneurship for the 21st Century” – one of my text books at the Master of Entrepreneurship at Otago University).

So if it takes so long, how can be people out there offering to do a BP for you in one – two days?

The answer is simple: they can write down a few of your ideas in a way that others can read it. The only problem is who are those “others”?

In the following days, I’ll be posting comments about what is useful to be included in a BP, based in my experience as venture capitalist who between 2005 and 2008 reviewed around 3,000 proposals, did formal due diligence in 300 but only invested in three of them…

Like in every area of activity, you can write whatever you want, but the question that remains is simple: will achieve the desired outcome?

Some BPs are for the internal use of your company. Others are written to be presented to the bank for a loan. Or you are looking for an external investor that could become a partner.

You can be an established company that had been trading for 10 years. Or you are just playing with an idea that is looking feasible but has no numbers around it. Every case requires a different approach, but in general, a BP should cover the following items

1- Executive Summary

2- The industry and the company and its product(s) or service(s)

3- Market research and analysis

4- The economics of the business

5- Marketing plan

6- Design and development plans

7- Manufacturing or production and operations plan

8- Management team (existent and to be recruited)

9- Overall schedule

10- Critical risks, problems and assumptions

11- The financial plan

12- Proposed company offering (In case that you are asking for money)

13- Appendices

This table of contents is adapted from Timmons (ibid) but there is no standard rule “written in stone” that says that “this is THE way to write a BP”. It is similar to write a CV: it must achieve the goal of finding a job for the applicant, not to be written in a specified format…

I will discuss the above contents in detail. But remember two things:

a) It’s different to prepare a BP for a high tech start up in an unknown scenario than one for an existent business that operates in a known industry with existent and recognised benchmarks

b) Do not completely outsource the process of doing your BP. No one knows YOUR company better than you. I can help, advisors can provide assistance in many specialised areas, but the BP needs to be clear and understood for the people that will be implementing it: that’s YOU and YOUR TEAM.

And you know that the best way to learn things is doing them.

Nicolas Erdody