Get a Lawyer

Are partners or team members in a startup really equals? When you start your business, you are filled with enthusiasm and excitement about the possibilities that the future holds. You’ve even managed to inspire others to follow you on your journey into the abyss. Maybe you disregarded my advice not to involve family and friends. They’re trustworthy after all, right? Unfortunately, as you get into the weeds, things become more complicated. People get angry or disappointed. Some folks might even walk away. Your job as a founder is to mitigate these risks at the outset. In other words, it’s time to get a lawyer.

“But lawyers are so expensive…”

Now your stomach is in knots. “Lawyers are so expensive”, you say to yourself, “and legal terms are so complicated”. Wherefore..you shall..who cares! Why do I even need this? Can’t I just download some forms off the internet or use agreements from my relative’s business? Absolutely not, unless you want things to get more complicated and expensive down the line.

Not all contracts are equal

Some might call me biased as I am lawyer. But trust me, I am only looking out for your best interests. Not all businesses are created equal. Legal agreements are contingent upon the facts and circumstances surrounding the parties. Do you manufacture widgets or are you a software company? The former might require detailed supplier agreements and greater capital expenditures, while the latter primarily involves the protection of intellectual property. Who can help you determine the difference? Lawyers.

Getting a lawyer = less complication

Perhaps one of your partners is providing capital while you and your team are doing the heavy lifting to get your product or service off the ground. How do you determine the partner’s rights and ownership interest in your business? Lawyers. Maybe you need to raise capital to jumpstart the business and aren’t familiar with the different legal instruments and regulatory compliance required to do so. Who you going to call? Hint: It’s not Ghostbusters. Ah yes, Lawyers. 

While legal assistance is expensive and complicated, it can save you from a world of hurt down the road. So, don’t wait!

How to Successfully Build a Team

You’ve done a lot of work over the past couple weeks and deserve a lot of credit! You’ve found a problem to solve, established a market, and identified your competition. And if you haven’t, no problem! Click the links above to learn how to do so. But so far we’ve just focused on you and your idea. Very rarely, however, does a founder operate under a silo when executing on their idea. Today we’re going to give a few tips on how to successfully build a team.

“If you want to go fast, go alone. If you want to go far, go together”

African Proverb

1) Avoid Building a Team of Family & Friends

This seems counterintuitive, but in my experience, it is the ideal path for successfully building a team. The business world is complicated and often times ruthless. It can bring out the absolute best in human ingenuity, but also underscore the worst tendencies of human nature. You have to be prepared for relationships to fundamentally change for better or for worst when operationalizing your idea. While in the trenches, you may become extremely frustrated, lash out, or even have to fire people in order to bring your product/service to market. Further, family and friends are foundational elements for a well-lived life.  So, stick with Happy Fourth of July barbecues and keep family and friends on the sidelines for your new endeavor.

2) Build a Team of Experts

When recruiting team members, make sure they have mastered their craft to maximize the potential of your idea. Don’t be cheapskate, quality work is important. It’s important to ask prospective hires questions about their previous work experiences to see how their skills fit in with your overall framework. Choose the best to beat the rest.

3) Hire Your Weaknesses

To successfully build a team, you must take a survey of your strengths and weaknesses. Do you have any special gifts or talents? Are you an expert or licensed professional? By leveraging your strengths, you can save money and time building your concept. Perhaps you are a gifted salesperson but fail miserably when it comes to coding. That’s okay. None of us are perfect, so invite people on board that compliment your skills.

4) Everyone Must Love the Idea

Read that that ten times over. Startups are grueling and resources are scarce. Therefore, you have to find people that champion the mission when times get tough. Founding teams will often work for free for months to years on end before revenue or investment capital comes into the company. Therefore, you should pick people that are absolutely devoted to bringing your idea to life.

5) Build a Culture

Businesses aren’t just numbers and deadlines. Interact with your team, create social events, and build a culture around the idea. Brian Chesky, co-founder of Airbnb, often refers to himself as the “Mayor of the Airbnb Community”. By emphasizing community, Brian defines the culture around the brand that in turn propels the business forward. Your mission is their mission, so ingrain a culture of success right from the start.

Who is your Competition?

You’ve picked a problem to solve and you’ve identified the market. Great! However, did that preliminary Google search  really yield no results? You must ask yourself, who is your competition?

Who is your competition?

Many entrepreneurs operate in a vacuum. They generally assume that their solution is undeniably better than anything in market and it blindfolds them from reality. You may indeed have the greatest product solving one of humanity’s biggest problems, but you cannot underestimate your competitors. Let’s take a look at how to define the competition.

Step One: Identify them.

Seems simple enough, but it may not be so clear. In fact, other firms are undoubtably approaching the problem from a different angle than you are. That’s why it’s so important to do exhaustive research on these companies before executing on your model.

Step Two: How do they create value?

Once you define your competition, you have to understand how they create value for their customers. What type of technology are they using? Are they B2C (business-to-consumer) or B2B (business-to-business)? How do they integrate with their customer? Are they a stand-alone product/service or do they require technical integration with an existing system? What is their sales distribution model? Do they use a lot of intermediaries to distribute their product/service (e.g. intensive distribution) or is their product available through a limited number of distribution partners (e.g. selective or exclusive distribution)? Go deep or go home!

Step Three: What is their business model?

Sometimes competitive business models are what really make products or services enticing. Perhaps they are a low-cost producer and offer competitive pricing to their customers. Maybe they offer their service for free for customers to “try before they buy”. Maybe they offer discounts for longer term subscriptions or service agreements. At the end of the day investors (cash earned) and customers (cash spent) need to know this information to make informed decisions about your product or service.

Step Four: How are you different?

This is the most important question you’ll answer for customers or investors. Once you’ve identified the competition and how they execute on their business model, you have to demonstrate how your product/service is different and superior. The easiest way to do this is to list general attributes (e.g. pricing, integration, etc.) and walk through points of differentiation with your audience. If you do this effectively, you’ll likely make a successful sale or pitch. Go get em!

Establish a Market for Your Idea

You’ve decided to become a problem-solver, great! However, in order to become a great problem solver, you need to establish a market for your idea.

Using the Problem Paradigm, how scalable is the market for the problem you are trying to solve? You can address this question by qualitatively and quantitatively defining the market. 

Establish a Qualitative Market

The Qualitative: What characteristics or features make this product or service an inevitable fit for the marketplace? Does the product or service address a growing trend? What qualities differentiate it from anything else that exists? Is your product undeniably superior to other solutions? Do you have a compelling branding idea that would really resonate with potential consumers? You have to define these attributes to create a product-market fit. 

TAM, SAM, and SOM

The Quantitative: You can use your new best friends TAM, SAM, and SOM to define the market as it exists today. The Total Addressable Market (“TAM”) is the total market demand for a product or service. This figure represents the entire universe of potential customers available, THINK BIG. The Serviceable Addressable Market (“SAM”) is the portion of the TAM that is directly served by your product or service. So maybe your product or service targets just one planet within the universe. Side note: I can hear theoretical physicists groaning about dark matter already, I’m sorry in advance. Finally, you have to be real with yourself. And I mean real real. The Serviceable Obtainable Market (“SOM”) is the percentage SAM you can realistically envision using your product or service over a set period of time.

Example: Supporting Local Business

You want more people in the United States to shop at local businesses to support their communities. Your web platform allows consumers to receive points that convert into coupons at any of their local businesses after a certain number of purchases. In exchange for driving consumers to these businesses, your company shares in the revenue created by these coupons. Now you want to establish a market for your idea. Your TAM might be the total number of annual retail sales at brick and mortar stores in the United States. Your SAM might be the total number of retail sales at independently-owned brick and mortar stores in the United States to account for local businesses. Finally, your SOM might be the total number of retail sales at independently-owned brick and mortar stores in your state to prove your test market.

Finally, you live in Michigan and want to start small, so you decide to only target businesses in Southeast Michigan in your first two years of business as your SOM to prove the model and gradually scale the platform from there. Congratulations! You have defined a market and are well on your way to becoming a successful entrepreneur.

The Problem Paradigm for Entrepreneurs

This is a picture of a light bulb to illustrate a light bulb moment.

We’ve all had that light bulb moment in bed at night or out on the town with friends. “I just know that this is going to be the next multi-million-dollar idea, it’s genius!”, you tell yourself. You open your laptop, consult Google, and find no comparable results! Bingo. Excitement builds as you ideate over the possibilities, you even contemplate quitting your day job. At this stage most prospective entrepreneurs want to put their foot on the accelerator pedal. World be damned, you are going to make your dream a reality! Well today, we’re going to discuss The Problem Paradigm.

Is there a market for this problem?

This is the exact moment when it’s time to pump the breaks. Seriously, slow down. Excitement is only natural when it comes to novel experiences, but building a successful business is an entirely different story. It’s not time to quit your job, it’s time to put your head down and research. Why does the world absolutely need this product or service? Is there an addressable market? If there is a market, is there a trend necessitating your product or service? In short, are you really solving a problem?

Most people get entranced by their own ideas and the outcomes stemming therefrom. Your primary job as an entrepreneur, however, is to create value and you create value by solving actual problems

Solving Problems = Creating Value

It’s not about your innate brilliance, it’s about making the world we live in a better place. The better you can articulate the problem to yourself and others supported by actual data, the more likely you are to execute on the idea and succeed. This is the Problem Paradigm.

Interview with Cronicle Tech News

Cronicle Tech News logo

Joseph Shanley, recently had an interview with Cronicle Tech News. In the interview, he discusses how medical device startups are affected by the COVID-19 pandemic. He illustrates this phenomenon using his client Seraph Biosciences, Inc. Seraph Biosciences is a biomedical device company seeking to commercialize its real-time pathogen detection platform, Seraspec®. Seraph is a participant in the National Institute of Health’s Rapid Acceleration of Diagnostics (RADx) program. Through RADx, Seraph hopes to obtain Emergency Use Authorization for Seraspec® from the FDA for SARS-CoV-2 human use applications. Below you can find an excerpt from the interview with Cronicle Tech News.

Cronicle Press Interview Excerpt

“Awen Innovations founder, Joe Shanley, will discuss the realities of being a medical device startup during a pandemic. Joe serves as a legal and business consultant for Seraph Biosciences, a Detroit-based medical device company. Seraph is working with multiple stakeholders to build its Seraspec® platform and refine its research and development strategy at this time. Cronicle Tech News will highlight the issues Seraph is navigating because it’s a great illustration of what so many startups are struggling through right now. We hope that you find some ideas or encouragement in the story of Seraph’s progress during these challenging times.“

Click here to read the full interview from Cronicle Tech News.