The beauty of partnership…

January 25, 2007

Seth and I have been working together for some time now on OnCard. The one thing I realize is how much I appreciate having a partner with whom to share the experience (and all the work). I realize how much work there is to do to launch a new business, ranging from sales, marketing, technology, operations, finance, book-keeping, legal, PR, vendor relationships, etc. The list goes on. This is a lot of stuff for one person to do. Starting a business from scratch is hard enough for two people. I can only imagine the pain that would be required to start a business like ours from scratch with only one person. There are companies out there that are started by one person, but I have to imagine that doesn’t last for long. As in our situation, Seth and I have different skill sets, and I am hard-pressed to believe that one entrepreneur has both the time and abilities to handle all these critical responsibilities.

I think that partnerships can be a double-edged sword. Having partners means that you need to share decision making responsibilities, which is not normally desirable for some entrepreneurs. Many business owners like to be the one in control, but that is neither optimal or feasible for most start-ups.

If our situation, Seth and I always talked about going into business together. We are close friends from college and have always gotten along well. However, people warned that going into business with a friend would mean the end of that friendship. Luckily for us, that does not seem to be the case. It has actually worked out very well for us, because we have that long-standing friendship. We both feel that if only one of us had started this business, it would have been incredibly isolating and lonely, and we wouldn’t have had the support structure to get through the hard-times. Also, having a good friend to share the experience with has made it all the more fun and rewarding.

Some people say that they’d rather struggle alone than risk bringing on the wrong kind of partner. I agree with that rationale to a point. However, if you bring on the right partner, I believe you increase the chances of success for your start-up exponentially, or at least that is what Seth and I hope is the case with our start-up.

In fact, things have worked out so well so far that we are considering bringing on an additional (third) partner to help run the company. This will be a trickier decision because we will not have the pre-existing level of trust that goes with knowing this guy from college. This will be a challenge and will require some good advice by others who we know have been through this process before. We’ll just have to let you know how it plays out…

JT

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Meeting with investors

January 10, 2007

So we sent the business plans out to approximately 20 people in the mail before the holidays. Most of the potential investors are friends and family, which will hopefully invest “love-money” in our company. I’ve also spoken with and are beginning to speak with business angels and VCs about our business. They seem intrigued with the idea and have complimented us on how thoughtful we’ve been with our strategy and planning. Like everybody else, they want to see execution, which we’ll hopefully be able to show them by the spring. At this point, I think that convincing an early-stage VC to invest in us is futile. Barring the fact that they would probably want 51% of our business for $250,000 (not going to happen), they are probably not that excited about investing in a start-up with a couple of young guys only a few years out of undergrad. I can understand this but am disappointed nonetheless. I always thought that VCs invest in start-ups, but that seems not to be the case, unless you define start-up as 10 employees, management with gray hair, and $1,000,000 in revenues.

There are several business angels (wealthy businessmen) who have read our plan and are interested. There is a possibility that any one of them would invest up to $250k, but that’s a slim risk. The tough part here is that most of these guys are full-time executives and are very busy with their everyday life. Following up with them to discuss a side investment is time-consuming and difficult. But then again, nobody said raising money was easy… It will probably require months of follow-up and proof of execution (a working technology) to convince any of these guys to jump in. We’ll just have to keep you posted.

JT