February 17th, 2010 09:39pm
skmurphy
I blogged last year that a trade show is fundamentally a stag hunt:
(see “cultivating a community” for more on this paradigm) It’s an effort by a collection of firms to create a larger shared opportunity that even when divided yields them a larger benefit than if they prospected separately. Any one hunter or set of hunters can defect from the larger hunt and either hunt on their own or form a smaller hunting party, but if they would have been better off with a smaller share of a larger pie, at some point they will return…
Here is a non-technical definition from the Game Theory Dictionary
The French philosopher, Jean Jacques Rousseau, presented the following situation. Two hunters can either jointly hunt a stag (an adult deer and rather large meal) or individually hunt a rabbit (tasty, but substantially less filling). Hunting stags is quite challenging and requires mutual cooperation. If either hunts a stag alone, the chance of success is minimal. Hunting stags is most beneficial for society but requires a lot of trust among its members.
So I was very intrigued when I caught an announcement for an interesting new event that is designed to foster collaboration among entrepreneurs. It’s Anuj Singhal’s Game Club
I had a chance to talk to Anuj this afternoon and he was kind enough to drop a short note afterward:
The inaugural Game Club workshop is being held tomorrow in San Francisco from 5:00pm-10:30pm with dinner, register online for $65, full details here: http://www.thegameclub.org/events/ . Along with inspirational entrepreneur stories, the speakers will be sharing their current challenges in their present venture and inviting participants of the workshop to contribute. Topics of discussion will include hiring, fundraising, marketing, personal development and building teams, all areas of importance to bootstrappers.
Anuj hopes develop a framework for entrepreneurs to cooperate to create greater shared value. He is inspired by the “Stag Hunt” paradigm from game theory and techniques developed in the microfinance industry to foster entrepreneurship.
February 16th, 2010 05:47pm
skmurphy
George Grellas has been practicing business law in Cupertino since 1984. He had some brief remarks relating to formation issues at today’s breakfast and then he opened it up for questions. What follows is an edited transcript of his opening remarks.
Startups are interesting. It’s a rather grim time in a macro-economic sense but for early stage startups it’s a pretty amazing time because the infrastructure has been built out. There is a lot of opportunity to launch companies creatively without the capital intensive needs that were there a decade or two ago.
Of course there are many situations where you have capital intensive needs and that occupies the traditional VC realm. But there is a huge and expanding area in the last decade, and the last few years in particular, where with creativity and innovative focus on areas like enterprise people can leverage very interesting business models in ways that used to be unthinkable without a lot of money.
So today is a time of expanded opportunities and many many people are venturing into startup mode. When they do there is always a desire to keep costs low on the legal side–which is a legitimate desire obviously–but I think that sometimes leads teams to ignore some strategic issues that they should focus on.
There are some distinctive elements of startups that set them apart from standard small businesses. Most of them have to do with the fact that most of the value is largely associated with intangibles like intellectual property. So when you form a startup you can have tax issues that arise from intellectual property that standard small businesses won’t see.
You have capital combined with entrepreneurial innovation. If they match at the same time you can have service income attributable to the entrepreneur unless it’s planned right. These are reasons to incorporate earlier rather than later.
Just to illustrate: if you have a new venture that you are launching as an entrepreneur and someone is going to put in 100K for 10% of the company, if you do that at the same time for the same class of stock you can have potential service income attributable to the entrepreneur or founding team, as much as 900K in that hypothetical situation.
The other major attribute of a startup is that you want some “strings” on the stock for the same reason: the value being contributed by each founder is often tied to the services they are providing going forward. So usually instead of outright stock grants you have restricted grants. Meaning that the founders stock is subject to repurchase at the original price if the relationship with the company should terminate.
So, when people do these “insta corps” on-line they will often have a founding team and not factor these issues in as they are trying to save money. They will get the kit and issue stock and then you have a situation where founders can walk away and keep their stock instead of having to earn it.
The other thing that people tend to forget about is capturing intellectual property (IP) properly. They are working together as a founding team, they haven’t formed the company yet, and they are not focused on the fact that everyone working on the venture, in so far as they are doing things that may be generating IP, that IP does not belong to the venture it belongs to the individuals. They don’t factor in the need for an IP assignment agreement in exchange for stock in a corporation.
Related Links:
February 11th, 2010 05:31pm
tshafer
Leonard (Lenny) Greenberg is Founder and CTO of Assistyx LLC, a software company specializing in products for non-verbal autistic children. Prior to that, he was co-founder and CTO of Pathlore Software Corporation. Lenny led technology direction and development at a variety of enterprise software start ups including HxManagement, Sigma Imaging Systems, Document Automation Corporation and Instinet. He started his career in the Cleveland, OH office of Accenture with a specialty in banking and law firm Automation.
February 11th, 2010 05:28pm
tshafer
Massimo Paolini is the owner and principal analyst of MPThree Consulting, a web analytics business based in Silicon Valley. He speaks at various organizations on the power of social media and works with several businesses around the country to increase their web presences, understand their site traffic, and improve profitability.
February 11th, 2010 05:14pm
tshafer
Elaine Levenson has been on the Bootstrappers Breakfast team since 2008. With over 20 years experience in the sales and marketing at Amdahl/Fujitsu, Borland Software, and various startups, Elaine recognizes the importance of strategic planning. Her strong organizational and management skills have been instrumental in the organization’s growth. She handles the details behind the Bootstrappers Breakfast operations, and will answer any of your organizational questions and issues.
February 4th, 2010 02:06pm
tshafer
Join us on Tuesday, February 16, in Sunnyvale where George Grellas will present a short legal guide for entrepreneurs (Register at https://www.123signup.com/register?id=jnjns).
George is a veteran Silicon Valley startup business lawyer who heads a boutique firm that specializes in early-stage technology startups. Since 1984, as a founders’ lawyer, George has worked with thousands of entrepreneurs in helping them with their strategic planning, entity formation, IP protection, funding, acquisitions, and the whole range of their startup legal needs involving both deals and disputes. He is the author of the Startup Law 101 Series of tutorials for founders and entrepreneurs.
George’s style is practical, direct, and down-to-earth, emphasizing a strong working knowledge of technical issues (including tax) explained in a manner that is made understandable and helpful for those new to startups as well as for seasoned entrepreneurs.
Bring your questions for George and the other entrepreneurs around the table. There will be time for your general questions and concerns as always.
February 2nd, 2010 02:27pm
tshafer
Kevin Spreng is an entrepreneur and a business lawyer. Over the last 20 years Kevin has focused his career on working with tech oriented entrepreneurs and the investors that help them build businesses. He has been lead counsel in hundreds of financing and acquisitions transactions and has worked as in house counsel to a global venture capital firm. Kevin helps his clients with technology transactions, financings, acquisitions and general corporate matters. Along the way Kevin has also founded several companies and learned first-hand the benefits of bootstrapping.
February 2nd, 2010 02:24pm
tshafer
Justin Bacon is new to the world bootstrapping. He had the good fortune to be introduced to the work of Steve Blank and Eric Ries in 2009. Since then he has pursued his interest in working within the software tech startup community in his home town of Minneapolis, MN by volunteering to help bring Bootstrappers Breakfast to the Twin Cities. He is excited about participating and helping to facilitate an active community of early stage software entrepreneurs through the Bootstrappers Breakfast meetings while being eager to learn along the way.
February 2nd, 2010 02:20pm
tshafer
Steven Moody, a modern entrepreneur, Steven works in online marketing by day i365, and develops niche web businesses at night, StevenMoody.com . At i365, A Seagate Company, Steven is responsible for Google AdWords initiatives. When he isn’t paying the bills, Steven launches web businesses, and is currently developing two in the travel and music industries. If you have a patent for a medical device providing optimal caffeine intake, he can be reached at narcoleptic@stevenmoody.com Steven is currently working on a MBA from San Jose State.
February 2nd, 2010 02:11pm
tshafer
Tim Kennedy provides business and legal counsel to entrepreneurs and startups. His firm, Law Office of Timothy I. Kennedy provides entity formation, intellectual property strategy, drafting and reviewing contractual agreements. Tim is an experienced business professional who decided to go to law school. He spent years working as a Financial Analyst and Business Analyst for Juniper Networks, NetScreen Technologies and Franklin Templeton Group. This experience has cultivated flexibility in his approach to business problems, a flexibility which can help you in your efforts to establish and grow your business.
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