Dharmesh Shah


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No Capital? No Problem. What You Get For Free Is Priceless

By Dharmesh Shah on June 10, 2011

The following is a guest post by John Williams.  He created Logo Garden to give everyone starting their own business access to professional looking logos. John is a long time member of the advertising industry and has written about branding on leading websites. His experience with branding led him to make an easy to use logo maker available to startups and DIYers.

No Capital?  No Problem.  What You Get For Nothing Is Priceless

You have an idea for a business.

But you've got obstacles.

You weren't born with a silver spoon. You sold your silver spoon last year to pay your mortgage. You've got no connection to deep pockets. Your idea is so far-out no one listens long enough to grasp its brilliance. Whatever the reason you can't secure capital for your start-up, or whatever your excuse for not moving forward with your idea, forget about the opportunity your non-existent investors are missing out on and think about the opportunity you're missing out on.

Starting a business without any capital can be a hugely rewarding experience.

Here's what you can expect to get in return for starting a business with no outside funding:

Organic Growth

A large infusion of cash might instigate growth your business isn't ready for. Using only your own money means you can grow at your own pace as your business has the resources to handle it. Investors, on the other hand, are all about the bottom line and the deadlines for getting there. Who could blame them? But sometimes a business needs to flesh out its problems and work out the bugs in fits and starts without the pressure or forced reckoning of goals imposed by someone on the outside. Being small and independent means you can be flexible and adjust your business as needed. Being beholden to investors means you may have to adjust according to their say or their expectations rather than taking your business the direction you see fit.no cash

As you grow your business organically you benefit from constant reality checks at every turn - whether it's unexpected expenses or a sudden change in market conditions. No one is pushing you forward or filling your head with dreams of newsworthy buy-outs or what you should name your super-yacht. No one is letting you feel as if you have a cushion where you don't and then comes calling for a pay-out.

Recession-Hero Status

During economic times like these the hedge-fund-manager manner of excess is downright tacky. Instead, what's in style is the image of a frugal and innovative operator who thrives in the face of daunting conditions using only his or her wits, sweat, and discipline. Steve Wozniack and Steve Jobs quite famously started Apple in a garage. Barbie got her humble start in a garage as well when Ruth and Elliot Handler began a business making picture frames. Being resourceful they made dollhouses from the wood scraps and before they knew it the doll-houses were outselling the frames. That dollhouse business became Mattel. Clients, customers, and potential future investors love these stories. They're hugely inspirational. And while Apple and Mattel grew to bounds their founders could never have imagined, think how many highly successful smaller businesses are out there quietly growing and earning profits after starting from nothing? Entrepreneurs sporting frugal style and practices all the way to the bank and inspiring people along the way.

Efficiency and Operations Boot Camp

With financial backing not of your own making, you may get a false sense of where things stand. In a recent Harvard Business School newsletter, HBS Senior Lecturer Shikhar Ghosh warns that one of the reasons start-ups fail is too much up-front funding: "It covers up all the mistakes, it enables the company and management to focus on things that aren't important to the company's success and ignore the things that are important." But when it's your own seed money you must depend on, you are all too aware of the implications of each expense. You are constantly reevaluating operations to make them more cost-efficient and productive so that your hard-earned money isn't wasted but is smartly invested in the growth of your business.

From the initial budget to managing overhead, creating a business from slim funds is a hands-on sink-or-swim crash course in keeping a business afloat. When it's your money, your whole livelihood is depending on every choice you make so choices are made carefully and thoughtfully. You'll quickly dismiss fancy office space with high rent and fashionable interiors and think about working from home for the time being. You may even have to keep your day job to pay your bills at first. You'll want to work hard because you won't be able to pay anyone else to help you. You'll want to start with an idea that costs more in sweat equity and time than expensive materials or manufacturing. You'll want to bend over backwards to provide superior customer service because it costs you nothing and it just may separate you from your more established competitors.

The Fruits of Your Labor

The credit, the satisfaction of single-handedly guiding your creation from conception to execution, the experience, and the profits are all yours when you're on your own. The fruit of your labor could even be a character-building exercise in failure, but at least you can own and learn from that experience instead of having to navigate it via someone else's terms. Independence can be scary, but that scary reality is all yours.

Whether you succeed or fail, you will emerge as a business-person with experience in every aspect of owning and managing a business. That experience will serve you well in future ventures, and you will know that you've done what others said was impossible. That's the kind of confidence that breeds more confidence and more success. The story of how you did it is something you will carry with you from the garage to the corner office or to somewhere you haven't even thought of yet. The journey is yours and where it will take you is up to no one but yourself.

Topics: guest capital
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Tips For Getting Started For The Non-Technical Web Entrepreneur

By Dharmesh Shah on May 6, 2011

The following is a guest post by Fan Bi, the Founder of Blank Label Group, including the sites Blank Label, Thread Tradition and RE:Custom.
 
No programmer wants to be the technical co-founder of your IDEA, no angel will fund your IDEA, no customer wants to buy your IDEA. Do you see the pattern? If you’re at ground zero with an idea, the best thing to do is to make your idea into something real. 
 
1. Pitch everyone your idea 
 
The Winklevoss twins are still going to end up with eight figures to their names. You should be so lucky to have someone take your idea. The most useful thing you can do when you’re at the embryonic idea stage is talk to everyone humanly possible about it. A lot of people won’t get it, a lot of people will tell you it’s dumb. That’s okay, just treat them as data points. After all, startups are an experiment and you’re at step one of testing your hypothesis. Make sure you take down the contact info of the people you meet as you’ll want to follow-up with them as you progress down these steps. Once you have a one sentence pitch and a 60 second pitch down-pat, you’re ready to move on.
 
2. Mockup wireframes 
 
You’ve got a much better sense of the idea, you’re received feedback from other entrepreneurs, and hopefully some customers. Now put your idea on a whiteboard. Draw out what your homepage looks like, no color needed; just think about language and layout, study other sites that have good design, look at the existing players in the space, and understand what works well and what doesn’t. The goal of this homepage is to test whether people are going to apply an action (like give you their email address) in exchange for promising to solve their problem at some later date. This is a good example of something that’s super simple, here’s a better example. Once you’ve drawn up your homepage in a wireframing tool like Balsamiq, you’re ready to move on.
 
3. Hire a designer 
 
Go to 99designs, an oursourcing site like oDesk, or even Craigslist to find someone to design a homepage. This should cost you anywhere from $150-500. Again, show them sites that have design that works for you, send them your wireframe, and make sure you ask for at least three revisions in your fee. The three revisions should be used in three series of feedback, with the people who’ve given you feedback along the way. If you’re not familiar with Photoshop, make sure you ask for individual JPGs of the different images, as well as the JPGs of all three versions of the homepage (this will matter for the next step). Once you’ve got something that you think looks good, and other entrepreneurs and potential customers are on board with, you’re ready to move to the next step.
 
4. Do customer development
 
Now the fun stuff begins. Host the three versions of your homepage on Unbounce. You now have a website, congratulations. Next you’ll want to sign-up for Snapengage so you can talk to customers when they get to your site. Then you’ll want to sign up for Optimizely so you can create even more versions of the homepage, to test button placement, wording and images. And you’ll want to sign up for Google Analytics to get even more data about how people are using your homepage. Finally you’ll want to sign up for Mailchimp, so you can properly collect emails. All of these services have free accounts for beginners, and they all work with each other seamlessly. With around $200 on Adwords, you’ll want to start talking to potential customers. Starting Adwords does have quite a steep learning curve, way outside the scope of this post, but for a non-programmer, it’s a very important skill to learn. With all the tools you’ve placed on the homepage, you can test what language and layout works best based on given metrics, e.g. how long they spend on it, how many people take an action, and you can have real-time conversations with them to learn why they visited, what about the site makes them uncomfortable, etc. Keep going until you have 200 unique visitors to your page.
 
5. Make good connections with investors and advisors
Even if you’re not looking for financing, it’s always good to have a perspective of how investors view your business, especially your business area. Every now and again, they’ll also provide some useful feedback. In addition, you should start to more aggressively form relationships with informal advisors, people that have some domain expertise who you can go back to every month or so with simple questions and meet every quarter or two. You’ll also have a much better time recruiting a team if you have investor relationships and advisors to point to.
 
6. Develop relationships with press
 
Research journalists that write about your area. That should mean topically, and geographically. As an example, at Blank Label, as a web business we talk to tech journalists, as an apparel company we talk to fashion bloggers, as a custom brand we have lifestyle articles written about us, because we’re Boston based we get local press, because I’m from Australia we’ve been written about there too, and of course there are a ton of journalists writing about stories like yours everyday from Entrepreneur Magazine to small business section of New York Times. The important thing is to refrain from pitching them; just drop them emails about their articles, providing insightful feedback. You should comment on all their posts. They will inevitably ask you what you’re up to.
 
You should be able to move swiftly from steps 1-6 within 2 months. After those 9 aggressive weeks, you should go back to the programmers, angels and potential customers, and see if their decision to work with you has changed.
What do you think?  Any tips for folks that are not technical, but looking to start an Internet company?
Topics: guest starting
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