The answer to this question is going to be interesting and unexpected. It is also a more modern approach to the solution, and one that I see a lot of companies use, at least in conjunction with other things such as patents and trademarks.
I am not going to protect my intellectual property. I am instead going to create a superior product and brand, leaving no room for any direct competitors to succeed.
With the electronic instruments industry in particular, things are replicated easily and often. As I mention in my business plan, a company named Behringer is more or less the boogeyman within the industry for this reason. They don't make anything innovative or unique, and they don't have a real following or reputation. Instead, they take other people's products, replicate them within the confines of copyright/patent law, and manufacture them overseas with low quality materials. They then sell these things at a fraction of the cost. No company or product has been able to escape Behringer.
Additionally, companies that operate within the same market space will constantly vy to one-up each other and not be left behind. If Korg were to suddenly offer a product that did X, you can bet your entire savings account that Roland will be hot on their heels.
The approach that I am going to take is the same approach that most other successful company in the industry takes: compete and win. Brand loyalty and reputation is a massive factor in the purchasing choices that musicians make. As I detail in my business plan, I aim to deny any potential competition for my product by making a name for my brand, gaining a following, and selling my product at multiple price points to cater to every demographic (up yours, Behringer!).
Monday, March 12, 2018
Startup.com
A few weeks ago we watched an absolutely riveting documentary called startup.com. Well, it was riveting to me because it follows two people embarking on a journey that I am considering: starting a tech company. It was really interesting to get a firsthand look at how things actually happen. One thing that I did now expect was that the CEO, Kaleil, spent the majority of his time getting funding for the company. I do understand that a CEO, especially for a small or medium company, has to spend a lot of time managing people, keeping morale up, and acting as the face of the company. However, it was a little disheartening to see that Keleil barely had touch with the product at all. This may have just been because of their management structure; the other co-owner, Tom, was more or less the "tech guy".
This documentary has unfortunately led me to the conclusion that I don't think I want to start the company (or a similar company) detailed in my business plan, at least not as the CEO. I like my idea out of sheer passion for the product and vision statement. The company detailed in my business plan is a larger scale international company. It is also an idea that I have legitimately been entertaining for a year or two now. The fate of this company is kind of right back where the idea started: I would like to run a small boutique operation out of my garage if I am able to find the time. I think this will give me the ability to interface with the product the way that I really want to without getting bogged down by all of the things that come with a large business.
However if I could grow a boutique operation into something larger because people loved my product, I would love to bring on somebody else to handle the business side of things while I handled the direction of the product.
This documentary has unfortunately led me to the conclusion that I don't think I want to start the company (or a similar company) detailed in my business plan, at least not as the CEO. I like my idea out of sheer passion for the product and vision statement. The company detailed in my business plan is a larger scale international company. It is also an idea that I have legitimately been entertaining for a year or two now. The fate of this company is kind of right back where the idea started: I would like to run a small boutique operation out of my garage if I am able to find the time. I think this will give me the ability to interface with the product the way that I really want to without getting bogged down by all of the things that come with a large business.
However if I could grow a boutique operation into something larger because people loved my product, I would love to bring on somebody else to handle the business side of things while I handled the direction of the product.
Dot.com to Dot.bomb
The dot com boom and bust has been a term thrown around in our class all quarter. I could swear that our professor, Andrew Fry, specifically mentioned it no less than three times per class session. It started to feel like old news, but the combination of a lecture and documentary on the subject put things into perspective. I now understand its significance; it might be a no-brainier to someone older but keep in mind that I was still learning to walk during this time. While I won't delve into that, I will explore how I have been attempting to apply the lessons we learned from the dot com boom/bust to current industries.
When Shadrach White came in to discuss his endeavors, he explained that his company had found a niche int he medical marijuana business. He had no intention of doing so, he just happened upon an opportunity and seized it. He also mentioned that they made a point not to tie their versatile product to this industry, less for its divisiveness and more because he didn't want to limit their platform to a single industry. I asked him what advantages there might have been had he specialized into one industry and if he thought the marijuana business was a bubble. He explained that it's hard to tell if something's a bubble until after it bursts. This wasn't really the answer I was looking for; I was hoping he would have possibly related things to a previous bubble (such as the dot com bubble) to explain his reasoning. Other people had questions too so I didn't push it too much.
After some thought, I concluded that Shadrach wasn't even looking at things in terms of bubbles, he simply saw his company's ability to operate in a diverse field and didn't want to limit it. This more or less led me right back where I started, but I explain this because it helped me come to my somewhat disappointing and redundant conclusion about the dot com boom/bust and bubbles in general: It can be hard to tell sometimes, and investing all of your time and/or money into an industry that may be a bubble is simply a risk one has to take.
When Shadrach White came in to discuss his endeavors, he explained that his company had found a niche int he medical marijuana business. He had no intention of doing so, he just happened upon an opportunity and seized it. He also mentioned that they made a point not to tie their versatile product to this industry, less for its divisiveness and more because he didn't want to limit their platform to a single industry. I asked him what advantages there might have been had he specialized into one industry and if he thought the marijuana business was a bubble. He explained that it's hard to tell if something's a bubble until after it bursts. This wasn't really the answer I was looking for; I was hoping he would have possibly related things to a previous bubble (such as the dot com bubble) to explain his reasoning. Other people had questions too so I didn't push it too much.
After some thought, I concluded that Shadrach wasn't even looking at things in terms of bubbles, he simply saw his company's ability to operate in a diverse field and didn't want to limit it. This more or less led me right back where I started, but I explain this because it helped me come to my somewhat disappointing and redundant conclusion about the dot com boom/bust and bubbles in general: It can be hard to tell sometimes, and investing all of your time and/or money into an industry that may be a bubble is simply a risk one has to take.
Mission and Vision Statements
The mission and vision statements for my company have been floating around in my head for a while. It took a few iterations to come up with the most succinct and accurate ways to phrase them. Without further ado:
Our vision is for no musician to feel limited by their instrument.
Our mission is to provide augmentations for electronic musical instruments using a simple, modern, plug-and-play design approach; creating no-frills products that just work, straight out of the box.
The vision started out as "humans and instruments working together". I wanted to convey the idea that our company seeks to fix problems that people have with their instruments, specifically those relating to control. I went through a few different ways to phrase this, including "instruments that are the extension of one's body". The problem with this was that both of these visions are already true for any musician, as long as they have a high skill level. I realized that the problem I seeked to solve had to do with limitations or drawbacks musicians face from their instruments. I decided to look at things from the other side, winding up with my final vision statement. I think that it's imperative that the vision be a short, catchy, and refined sentence.
The mission, on the other hand, I intended to be more formal and informational. I did decide to keep things as one sentence (even though it's arguably a run-on) because it had the best flow. I included every key piece of information in here, making sure to stress our design ethos. I did this because I feel like our design ethos will be a big selling point for the company as well as something that sets us apart from the competition.
Sunday, March 4, 2018
Guest Speaker: Shadrach White
This week, after a couple delays, Shadrach White finally came in to speak with us. He is the CEO of a cloud services company and a seasoned entrepreneur. An older gentleman, he seemed to have a lot of life experience to draw from when giving us advice. His talk was much briefer; he spent about 20 minutes telling us about himself and then opened things up for a long Q&A.
One thing that stuck out to me was how flexible he was in the direction of his business. Although he had a very clear vision of what he wanted to do and why, he was also constantly open to identify and capitalize upon new opportunities. An example of this was how he took his cloud services company, which one might expect to operate in a consumer oriented market, and gear his service almost exclusively to government. In doing so they specialized themselves and built products pertaining to working with the government. He found and entered a very large and uncharted market. However, he still remains fluid and has plans to expand to the consumer market.
Another thing I liked was how Shadrach sells himself and his product simply by being genuine and passionate. People can detect when someone is the real thing and cares about their work. Personally, this is also how I get by. I'm not insanely charismatic but I am always completely genuine and honest with the people that I deal with. This has gotten me far in life. It was refreshing to see the same values being employed in such a high up place. He also mentioned that when you're selling your business to an angel investor, you are actually selling yourself. This cleared up the big difference between angels and VCs for me: VCs are strictly in it for the money, angels are in it for the passion.
In conclusion, this talk reaffirmed that my main selling point to investors/employers/any future business partners will be a genuine and earnest personality. I also learned a great deal about ways to raise funding for a company while doing the most to avoid things such as VCs that could potentially hurt your business.
One thing that stuck out to me was how flexible he was in the direction of his business. Although he had a very clear vision of what he wanted to do and why, he was also constantly open to identify and capitalize upon new opportunities. An example of this was how he took his cloud services company, which one might expect to operate in a consumer oriented market, and gear his service almost exclusively to government. In doing so they specialized themselves and built products pertaining to working with the government. He found and entered a very large and uncharted market. However, he still remains fluid and has plans to expand to the consumer market.
Another thing I liked was how Shadrach sells himself and his product simply by being genuine and passionate. People can detect when someone is the real thing and cares about their work. Personally, this is also how I get by. I'm not insanely charismatic but I am always completely genuine and honest with the people that I deal with. This has gotten me far in life. It was refreshing to see the same values being employed in such a high up place. He also mentioned that when you're selling your business to an angel investor, you are actually selling yourself. This cleared up the big difference between angels and VCs for me: VCs are strictly in it for the money, angels are in it for the passion.
In conclusion, this talk reaffirmed that my main selling point to investors/employers/any future business partners will be a genuine and earnest personality. I also learned a great deal about ways to raise funding for a company while doing the most to avoid things such as VCs that could potentially hurt your business.
Sunday, February 25, 2018
Guest Speaker: Jon Dimmer
Last week, a gentleman by the name of Jon Dimmer came in and bestowed upon us a tremendous amount of knowledge pertaining to the fiscal nuts and bolts of running a business. He seemed like an incredibly experienced and successful entrepreneur, owning a large network of equity and assets.
One of the most important things he talked about is the life cycle of funding a business. He showed us an awesome diagram detailing which stages require which types and amounts of funding. It was enlightening to see at what points in the company's life it would need to leverage different types of funding. More importantly, Jon explained when not to use funding. While there are a myriad of different options companies tend to go with at different stages, not all of them are necessary. Aside from grants, no form of funding comes without a drawback: loss of equity, interest, more board members to please, the list goes on.
In terms of my company, this got me thinking about how I could launch the operation while minimizing external funding requirements. In my case, I am starting with a small operation that has the potential to go large, but also to stay small and boutique. For my funding plan, I estimated the need for about $10,000 startup cash. This would cover R&D and advertising for a crude first product. It would work with no other employees besides myself and a small order volume. However, upon expansion I would need to look more carefully into funding. One option I personally like is using kickstarter to pre-sell products. Since the nature of my company is such that products come out in waves, so having pre-release funding would help with the cost of producing a wave in the correct volume.
In the far out future, VC funding would only be required if the company were to make a major expansion such as opening up a factory or increasing sales volume by a huge amount. As Jon told us, VC funding is okay as long as the received amount of money is less than the amount of growth it will cause your company (in short, there are other things such as dilution that should be taken into consideration).
One of the most important things he talked about is the life cycle of funding a business. He showed us an awesome diagram detailing which stages require which types and amounts of funding. It was enlightening to see at what points in the company's life it would need to leverage different types of funding. More importantly, Jon explained when not to use funding. While there are a myriad of different options companies tend to go with at different stages, not all of them are necessary. Aside from grants, no form of funding comes without a drawback: loss of equity, interest, more board members to please, the list goes on.
In terms of my company, this got me thinking about how I could launch the operation while minimizing external funding requirements. In my case, I am starting with a small operation that has the potential to go large, but also to stay small and boutique. For my funding plan, I estimated the need for about $10,000 startup cash. This would cover R&D and advertising for a crude first product. It would work with no other employees besides myself and a small order volume. However, upon expansion I would need to look more carefully into funding. One option I personally like is using kickstarter to pre-sell products. Since the nature of my company is such that products come out in waves, so having pre-release funding would help with the cost of producing a wave in the correct volume.
In the far out future, VC funding would only be required if the company were to make a major expansion such as opening up a factory or increasing sales volume by a huge amount. As Jon told us, VC funding is okay as long as the received amount of money is less than the amount of growth it will cause your company (in short, there are other things such as dilution that should be taken into consideration).
Sunday, February 11, 2018
What is the Price of my Product?
Recently, we have been tasked with determining the price of the product and/or service that our hypothetical business sells. Now initially, I thought this task would have a straightforward approach: determine the price of materials and production, factor in research and marketing, add a little bit for profit, then round the number to the nearest $5 or $10 and call it a day. This was, as I had wrongly assumed, the standard procedure for pricing a hardware product. It seems like the "fair" and "logical" way to go about it. At this point I will provide a brief reminder that my product is a piece of hardware (potentially with accompanying software) that plugs into a synthesizer (a.k.a. electronic piano) and provides, with its various knobs and sliders, an extra degree of control to the user.
I had assumed the aforementioned method of pricing until our teacher, Andrew Fry, told us a story about how a company he owned had increased the price of a piece of software tenfold so that corporations would take it seriously; not viewing it as cheap and sub-industrial. The surprising part of this story was that this tactic actually worked. It led me back to a conclusion that I had been led to working at a small retail business this past few years: a product is worth as much as people will pay for it.
This leaves me to make a decision. As Andrew Fry had stated, pricing a product is a combination of laser precise marketing science and wild, un-addled voodoo. Find the magic number that makes you the most money. On the other hand, my personal convictions do steer me towards creating a quality product and charging a fair and reasonable price for it. Looking at similar items in the market, I could imagine that my product would land in the range of $50-$200 depending on quality of materials, number of dials, etc. While I want to deliver a product with quality and affordability, I cannot have my cake and eat it. This leads me to the conclusion that I want to deliver my product in two tiers: a bare bones model priced at $50-$75 that contains a reasonable amount of hardware at a good price. This model would likely use lower quality materials in order to meet the price point, built to perform the core functionalities of the idea without any frills. I would then have a "pro" model priced at $125-$175 that is designed with quality materials, genuinely built to last, doesn't skimp on cool features, and contains enough hardware to satisfy any tinkerer. This would satisfy two distinct classes of customers. Since my product is easily replicable, I feel like I would have to keep prices competitive in order to lower the chance that another company swoops in and builds something similar for less. That being said, I am excited to learn about patent laws from our next guest speaker; being able to patent my idea and be the exclusive producer of such a product may change the game for me, so to speak.
I had assumed the aforementioned method of pricing until our teacher, Andrew Fry, told us a story about how a company he owned had increased the price of a piece of software tenfold so that corporations would take it seriously; not viewing it as cheap and sub-industrial. The surprising part of this story was that this tactic actually worked. It led me back to a conclusion that I had been led to working at a small retail business this past few years: a product is worth as much as people will pay for it.
This leaves me to make a decision. As Andrew Fry had stated, pricing a product is a combination of laser precise marketing science and wild, un-addled voodoo. Find the magic number that makes you the most money. On the other hand, my personal convictions do steer me towards creating a quality product and charging a fair and reasonable price for it. Looking at similar items in the market, I could imagine that my product would land in the range of $50-$200 depending on quality of materials, number of dials, etc. While I want to deliver a product with quality and affordability, I cannot have my cake and eat it. This leads me to the conclusion that I want to deliver my product in two tiers: a bare bones model priced at $50-$75 that contains a reasonable amount of hardware at a good price. This model would likely use lower quality materials in order to meet the price point, built to perform the core functionalities of the idea without any frills. I would then have a "pro" model priced at $125-$175 that is designed with quality materials, genuinely built to last, doesn't skimp on cool features, and contains enough hardware to satisfy any tinkerer. This would satisfy two distinct classes of customers. Since my product is easily replicable, I feel like I would have to keep prices competitive in order to lower the chance that another company swoops in and builds something similar for less. That being said, I am excited to learn about patent laws from our next guest speaker; being able to patent my idea and be the exclusive producer of such a product may change the game for me, so to speak.
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