Today marks an important day in my life. I become an entrepreneur.
I’ve owned my company Grind Software Inc. for about 3 years now. It’s start was a bit shaky, mostly because I convinced myself that I needed a partner. As it turns out, unless you find the right person, a partner is just an obstacle in your way toward achieving your goals. That partner is gone now, along with about $20K in buy-out money. Tough price to pay for a startup, but I don’t regret my decision. Now it’s just me, my employee of 1 year and a few trusted sub-contractors.
Grind used to be “Onshore.ca“, I started Onshore as a sole proprietor, which means every penny of profit was taxed on my personal income. If you have a full-time gig plus a few contractors, your tax bill becomes really big, really fast. Grind started it’s life as an Incorporated entity. Incorporations are taxed at a much lower corporate tax rate on money which is left in the company. But aside from that, Grind pretty much does the same thing Onshore.ca did, and that is: consulting. You might have guessed by the old company name that the consulting is mostly done in a remote fashion, my target market continues to be the largest economy in the world: the U.S.A. Since Marissa Mayer made her statement banning remote workers at Yahoo!, things have been a bit troublesome but nothing I can’t handle. Besides, I know what I’m doing.
The goal for Grind Software Inc. was simple: Make money via consulting and spend it on product development. Product development is what I’m really interested in – and not someone else’s product – but rather one I own and nurture while (eventually) turning a profit. The reality? Grind Software continues to chase it’s tail in the consulting arena. With the exception of a small iPhone app called You Meme It!, Grind does consulting services for other companies and their products.
I’m really not willing to put my financial future, or that of my family’s at risk by going into massive debt. So that removes “mortgaging the house” as a viable funding option. Actually, I couldn’t do that if I wanted to, a recent divorce has taken away that option all together.
I have to put Grind’s money where my mouth is and take those hard earned consulting dollars and fund my products. It’s time to step out of my comfort zone and “not have a full-time contract” It’s time for heads down development of Grind Software Inc’s first real property. It’s time for rain making, people!
But will the banked consulting dollars be enough? I’ve been tempted to go for outside investment. My first thought was “can I find an Angel Investor?”, someone I know who has a lot of money and isn’t afraid to take a risk. The problem is, I live in Winnipeg. Winnipeg does have people with money and I even know some of them, however the following points always stand not only in my way, but I’m assuming in the way of many entrepreneurs:
- Will they understand my vision?
- What can I give them in return for investing?
I don’t know if I’m a good explainer/convincer or my ideas are “just that good”, but I’ve yet to meet someone to whom I’ve explained my product vision who wasn’t really excited about my idea. That’s very encouraging! I can’t imagine how the Twitter fellows felt when they proposed “a system which allows 140 characters (not more than that!) to be shared”. People must have said “Why? Who will use that? Where’s the money in that?” And then when they executed the concept, the thing was slower than molasses in January. But look at them now! They are an integral part of the very fabric of the internet.
As far as carving out a chunk of the company in exchange for funding, well, I’m smart enough to know that owning a smaller percentage of an idea that gets off the ground is much better than 100% of one that can’t be realized due to lack of funding. To be quite honest though, I don’t think I need money, not yet. Grind has a bit of cash in the bank, essentially what I’ve been able to nest away over the past 9 months or so. It’s enough of a runway, in my mind, to know whether or not the idea will take off. It’s risky, I mean guys my age (pushing 40) should be socking away for retirement, but we’ll still be supporting our clients when they need us, so that will bring in some much needed funds.
So honestly I have no idea, absolutely no idea how much control/percentage of your company you give away in order to accept funding. I listen to Jason Calacanis’ show This Week In Startups and it sounds as if Venture Capitalists strive toward owning around 30% of a company they invest in. In my mind, that’s gotta be quite the investment! It’s gotta be the type of money that will get you everything you need to succeed, be it software developers, marketing people, office space, servers, etc… An interesting book I’m working through is called Slicing Pie. Maybe once I’m done with it I’ll have a better understanding.
So for now, “the idea” is being self funded with possibly some government assistance in the form of grants (which I’ll blog about at a later time).
Jeff Atwood is the reason I’m blogging about my startup idea. I found it so enthralling to listen to him and Joel Spolsky wax prophetic about StackOverflow.com on their podcast. I felt I was a fly on the wall watching a product get made and executed. How one might cultivate a vision into reality. All the trials and tribulations, all the successes, all out in the open. I also admire how they were able to bootstrap their company without external funding. When they finally did seek funding, they had such a great advantage over a “guy with just an idea”.
Not to mention, Jeff’s philosophy for StackOverflow was “we want to make the internet a better place”. That’s exactly my goal.