How to Pre-launch a B2B Start-up

"I have been toying with a B2B concept for a while. I think it has great potential. How do I take it forward?"

As an entrepreneur, I often get this question from budding entrepreneurs.

First off, a B2B Service is one of the most challenging segments to penetrate. Consider these steps to pre-launch a B2B start-up:

1. Conducting a Pilot – If you have a good job, do not jump ship. Instead, take some time off and try out a pilot "live." If your concept/invention pertains to the same industry you are currently employed, have an attorney review your employment contract for "conflict of interest" and "no compete" clauses. Since start-ups do not qualify for SBA loans, hire a qualified consultant to review your financials (both business and household), type of business formation (S, LLC, C, etc.), liability insurance, etc.  

2. Implementing Marketing Plan – Make sure you implement your marketing plan (from the actual business plan) to promote the pilot (as if it were the real launch!). It's better to have an average concept backed by a super-duper marketing plan (recipe for success) than a super-duper concept supported by an average marketing plan. Therefore, a significant amount of time and effort must be paid to developing the marketing plan. Ideally, it should also be reviewed by a marketing expert or a social media consultant, thus ensuring that the bases are amply covered.

3. In the Case of Local Service – If it is a local service, some meaning networking is critically coupled with several live campaigns (with real money) to get a good reaction for the future clients' actual outcome. When campaigns are launched or conducted without real money, they could lack the kind of intensity that is generally needed to get the right feel for the market. For instance, if the product or service relates to the real estate valuation market, it is critical to network with the local appraisers, assessors, realtors, social media consultants, etc.

4. In Case of National Service – If it is a national service, it's essential to mobilize the marketing Rolodex (LinkedIn, FB, Instagram, etc.), with an announcement that you are open for business. Before promoting national service, it's essential to understand the industry trend, especially any emerging trend. It's good to visit one or two seminars or conferences where national vendors display their products at the exhibit hall. While attending such conferences could be expensive and time-consuming, the resulting rewards generally far exceed the associated costs.  

5. Campaigning on Twitter – Campaigning on Twitter is more specialized than other social vehicles, so it's crucial to simultaneously implement the marketing campaigns. The campaigns need to fine-tune, and rerun (or re-implemented) based on Twitter Analytic, which could often be an iterative process to optimize the marketing plan, and short-cut could lead to an inefficient strategy. It might be a good idea to even consult with a well-known Twitter expert to iron out any hidden inconsistencies. The point is, the marketing plan must virtually back the product or service being promoted.

6. Advice from the like-minded – Seek advice from the like-minded B2B entrepreneurs – both successful and struggling – to avoid reinventing the wheel. It will save you many trips to the ER, so to say. Locally, it complements networking and, nationally, it saves a ton by not having to attend some vital industry seminars. As long as the product or service is not directly complete with theirs, most would welcome and satisfy your curiosity by sharing their road to success, critical in developing self-confidence.

7. Publishing the Underlying Concept – If you have already written a book highlighting the invention's underlying concept, it might be a good idea to join the Amazon Marketing Service to beef up its sale, bolstering "indirect" marketing before the actual pre-launch. The Kindle version alone is not enough; the Paperback is equally essential. Additionally, Twitter and other social campaigns need to be developed with direct links to the book. Ideally, the book's publication should coincide with the pre-launch of the actual product or service to intensify the marketing efforts without having to split the advertising and marketing costs.

8. Business IT Concept – If it is a Business IT concept, it's imperative to copyright it, leading to patenting; otherwise, the market protection would be virtually absent. While it's costly to patent it in a host of other countries at the outset, it is prudent to start the process here, gradually followed by the nations as they would be penetrated. The filing of the US copyright and provisional patenting will, at least, prevent the foreign companies from doing business here from directly infringing on yours. The provisional patent application will buy you 12 months to prepare for and submit the actual application (during which time "patent pending" could be added).

9. Analyze the Pilot Results – Analyze the results from the pilot as they come in, preferably in direct collaboration with a well-known marketing consultant, and seeking analytical help from a consulting data scientist could make sense as well. If you find that the results far exceeded your (and your consultant's) expectations, work on initiating a much larger pilot with the updated service coupled with a vastly upgraded marketing plan, adequately factoring in the initial pilot's inputs. If the follow-up growth curve is exponential (at this point, linear growth is not good enough!), you are "on to something."  

As indicated above, a pre-launch is a critical interim stage that must not be ignored. Far too many budding entrepreneurs make the mistake of launching the product/service without a meaningful pilot, thereby depriving them of the market knowledge, a priori, to face the competition.

-Sid Som, MBA, MIM

homequant@gmail.com

Link to the Book

How to Protect Intellectual Property from Serial Thieves Posing as Investors

You are an innovator with a brilliant mind. With years of hard and smart work, you have developed an AI-based solution that you are ready to commercialize. But you do not have the capital to move forward with it. You realize you are at the mercy of outside investors. You contact a whole host of accredited venture capitalists and angel investors. Months pass by—no positive news. You are becoming impatient, perhaps somewhat disheartened. As desperation kicks in, you start to contact the so-called small investors from online lists. They give you big stories about their investment philosophies and portfolio companies without verifiable track records.

You are so eager to get started that you are ready to sign up with the one with the sweetest talk and biggest promises. You know you are supposed to check them out (i.e., do some due diligence). Other than a handful of references listed on their site (perhaps developed elsewhere where English is the seventh most crucial language), you have nothing else to go by. However, after speaking to one of them, it did tell you that those references could be fake. Yet, you are ready to take the plunge.   

Wait!

Within this particular investor group, there are too many serial thieves waiting to steal your invention. Since these serial thieves are intellectually incapable of differentiating between a digital watch with a new alarm tone (wow!) and an AI-based solution that advances humanity's cause, they will steal anything. But they are generally good at three things: serial lying (they tend to believe truth is for the devil), serial stealing (they will steal anything to satisfy and advance their greed), and running Ponzi schemes (to keep some hard-nut clients quiet).

Of course, they primarily develop their business by stealing client contacts. Some of those contacts do fall for these thieves' flashy lifestyles, constant lies, and pushy salesmanship, becoming future portfolio investors (a.k.a., victims) themselves. At one point, you will find out about it. Anyway, it doesn't matter how well you know your investors, do not (share or) introduce your contacts to them; let it take its natural course. The contacts-turned-investors (or future investors) are outside this chapter (couldn't care less!).

So, how do you protect yourself from these serial thieves? Here are some red flags and safeguards:

1. Check them out at the local BBB and Chamber of Commerce – Ignore the positives (could be cooked up as they often hunt as a pack) and zero in on the negative reviews/comments, even if the ratio is 10:1. Contact that one negative reviewer and find out what the underlying story is. If the investor does not subscribe to the local BBB or Chamber of Commerce, I would be very skeptical of their intentions (despite the falsehood you might get from them "Oh, that's old-fashioned; nobody cares about them anymore, etc."). The genuine ones will brag about their local BBB and Chamber of Commerce standing, etc.

2. Try to avoid the Key-man Insurance – Since it's a start-up, the investor may insist on taking out a large (relative to the money being invested) key-man insurance on you. Try to avoid it or defer it until the product (based on your concept) has been launched. If you have to do it, insist on having your spouse or parent as the co-beneficiary, preferably 50/50. If they continue to insist on their business entity is the sole beneficiary, I would be very skeptical of their intentions and consult a lawyer for legal safeguards. 

3. Initial IP Patent Filing must be in your name – Do not fall for a joint patent filing (with the business). If the relationship works out, you can always transfer it to the company for a substantial fee or equity option. Either way, it benefits the business. Suppose the initial filing is in the business name only. In that case, the serial thieves will do everything possible to push you out or will create an intolerable atmosphere wherein you push yourself out. If they insist on their way, show them the highway and look elsewhere. This clause must be anchored in the first agreement itself, which provides you with the primary protection.

4. You must be the CEO of the new corporation – If the whole business is going to be founded on your IP, you must be the CEO of the new company with total hiring authority – no two ways about it. The legitimate investors will insist on your stewardship. The serial thieves, on the other hand, might fuss about it. Starting, if you are not in charge, despite what the serial thieves say, your innovation would be road-killed, just a matter of time! You can always step down down the road, paving the way for a professional CEO, which is quite common. Again, this must be clearly laid out in the charter.

5. Insist on your own Independent Office with the long-term lease – This will give you more stability and independence. If you are forced to work out of a room inside their offices, you will gradually lose ground and become their pawn. It's a trick the serial thieves often play. If they think your IP is valuable, they must do everything possible to accommodate, nurture, and promote your requirements. While the parent company would be responsible for all rents and utilities, the lease must be in your company's name.

6. Insist on owning 51% shares of the new company – If you own 51%, you may not be pushed out quickly. When dealing with a small investor, you are inherently in a high-risk situation, thus requiring higher rewards. Similarly, please do not allow them to place majority directors of their choosing on the board. Also, try to hire an independent CPA and Lawyer for your company; it's not a question of bias, rather a problem of transparent billing, meaning your company must not subsidize their other portfolio companies.  

7. Negotiate a sizable salary during the gestation period - Due to the high ownership percent, if they are unwilling to give you a salary, you must nonetheless negotiate a decent wage, at least, until the company becomes profitable (easily two to three years), post which you must be allowed to sell a certain percentage of your unrestricted shares now and then on the open market, thereby enabling you to take care of your family expenditures. 

8. Insist on having the pre-negotiated capital locked in escrow – Since you are dealing with a small investor, you must ask them to put up the entire money in escrow, with a lawyer acting as the escrow agent. The lawyer will then disburse the working capital monthly. This is a critical test; while the legit investors will not have any issues with this, the serial thieves will invariably try to talk you out of it. If you succumb to their sweet talk, this is what will happen: Once the business is up and running, one sunny morning, you will get a call for an emergency meeting where they will announce 'we are out of money.' And, there goes your dream. Now you have to get hold of an expensive lawyer to get yourself distanced from those serial thieves. Meanwhile, they will go around and tell the world (primarily your contacts that they managed to steal) how you have destroyed a considerable sum of their extremely hard-earned (LOL) money without producing anything. Do not walk into this trap!

9. Do not outsource your IT or other essential services to their overseas portfolio companies – Outsourcing IT services to a quality US-based portfolio company would be fine. But these serial thieves often set up some portfolio companies overseas, luring you to outsource some of your essential services, primarily IT, to them. In return, you will get shallow quality products and services coupled with hefty bills. In no time, your working capital will dwindle, forcing you to sell a significant chunk of your shares back to them, to stay afloat – and it will be difficult for you to get out of this cycle until the eventuality hits the fan ('we are out of money'). And, it's all by design.

If you are dealing with a well-known/accredited venture capitalist, you are in safe hands. Your success is their success so that they will stand by you through thick and thin. But if you have to deal with a small, unverifiable investor, do your due diligence. We know you are not greed-filled. When you succeed, humanity progresses, and we all grow.

Do not let a low-life, greedy criminal steal your dreams!

Disclaimer -- The characters portrayed here are hypothetical, and any likeness to any individual or entity is strictly coincidental. The author does not offer this post as professional services advice in any form or manner. Every investor is different, so seek a competent professional's advice, preferably an experienced attorney, before deciding on a non-accredited investor.

- Sid Som, MBA, MIM

homequant@gmail.com

Link to the Book

How to Protect Intellectual Property from Serial Thieves Posing as Investors

You are an innovator with a brilliant mind. With years of hard and smart work, you have developed an AI-based solution that you are ready to commercialize. But you do not have the capital to move forward with it. You realize you are at the mercy of outside investors. You contact a whole host of accredited venture capitalists and angel investors. Months pass by—no positive news. You are becoming impatient, perhaps somewhat disheartened. As desperation kicks in, you start to contact the so-called small investors from online lists. They give you big stories about their investment philosophies and portfolio companies without verifiable track records.

You are so eager to get started that you are ready to sign up with the one with the sweetest talk and biggest promises. You know you are supposed to check them out (i.e., do some due diligence). Other than a handful of references listed on their site (perhaps developed elsewhere where English is the seventh most crucial language), you have nothing else to go by. However, after speaking to one of them, it did tell you that those references could be fake. Yet, you are ready to take the plunge.   

Wait!

Within this particular investor group, there are too many serial thieves waiting to steal your invention. Since these serial thieves are intellectually incapable of differentiating between a digital watch with a new alarm tone (wow!) and an AI-based solution that advances humanity's cause, they will steal anything. But they are generally good at three things: serial lying (they tend to believe truth is for the devil), serial stealing (they will steal anything to satisfy and advance their greed), and running Ponzi schemes (to keep some hard-nut clients quiet).

Of course, they primarily develop their business by stealing client contacts. Some of those contacts do fall for these thieves' flashy lifestyles, constant lies, and pushy salesmanship, becoming future portfolio investors (a.k.a., victims) themselves. At one point, you will find out about it. Anyway, it doesn't matter how well you know your investors, do not (share or) introduce your contacts to them; let it take its natural course. The contacts-turned-investors (or future investors) are outside this chapter (couldn't care less!).

So, how do you protect yourself from these serial thieves? Here are some red flags and safeguards:

1. Check them out at the local BBB and Chamber of Commerce – Ignore the positives (could be cooked up as they often hunt as a pack) and zero in on the negative reviews/comments, even if the ratio is 10:1. Contact that one negative reviewer and find out what the underlying story is. If the investor does not subscribe to the local BBB or Chamber of Commerce, I would be very skeptical of their intentions (despite the falsehood you might get from them "Oh, that's old-fashioned; nobody cares about them anymore, etc."). The genuine ones will brag about their local BBB and Chamber of Commerce standing, etc.

2. Try to avoid the Key-man Insurance – Since it's a start-up, the investor may insist on taking out a large (relative to the money being invested) key-man insurance on you. Try to avoid it or defer it until the product (based on your concept) has been launched. If you have to do it, insist on having your spouse or parent as the co-beneficiary, preferably 50/50. If they continue to insist on their business entity is the sole beneficiary, I would be very skeptical of their intentions and consult a lawyer for legal safeguards. 

3. Initial IP Patent Filing must be in your name – Do not fall for a joint patent filing (with the business). If the relationship works out, you can always transfer it to the company for a substantial fee or equity option. Either way, it benefits the business. Suppose the initial filing is in the business name only. In that case, the serial thieves will do everything possible to push you out or will create an intolerable atmosphere wherein you push yourself out. If they insist on their way, show them the highway and look elsewhere. This clause must be anchored in the first agreement itself, which provides you with the primary protection.

4. You must be the CEO of the new corporation – If the whole business is going to be founded on your IP, you must be the CEO of the new company with total hiring authority – no two ways about it. The legitimate investors will insist on your stewardship. The serial thieves, on the other hand, might fuss about it. Starting, if you are not in charge, despite what the serial thieves say, your innovation would be road-killed, just a matter of time! You can always step down down the road, paving the way for a professional CEO, which is quite common. Again, this must be clearly laid out in the charter.

5. Insist on your own Independent Office with the long-term lease – This will give you more stability and independence. If you are forced to work out of a room inside their offices, you will gradually lose ground and become their pawn. It's a trick the serial thieves often play. If they think your IP is valuable, they must do everything possible to accommodate, nurture, and promote your requirements. While the parent company would be responsible for all rents and utilities, the lease must be in your company's name.

6. Insist on owning 51% shares of the new company – If you own 51%, you may not be pushed out quickly. When dealing with a small investor, you are inherently in a high-risk situation, thus requiring higher rewards. Similarly, please do not allow them to place majority directors of their choosing on the board. Also, try to hire an independent CPA and Lawyer for your company; it's not a question of bias, rather a problem of transparent billing, meaning your company must not subsidize their other portfolio companies.  

7. Negotiate a sizable salary during the gestation period - Due to the high ownership percent, if they are unwilling to give you a salary, you must nonetheless negotiate a decent wage, at least, until the company becomes profitable (easily two to three years), post which you must be allowed to sell a certain percentage of your unrestricted shares now and then on the open market, thereby enabling you to take care of your family expenditures. 

8. Insist on having the pre-negotiated capital locked in escrow – Since you are dealing with a small investor, you must ask them to put up the entire money in escrow, with a lawyer acting as the escrow agent. The lawyer will then disburse the working capital monthly. This is a critical test; while the legit investors will not have any issues with this, the serial thieves will invariably try to talk you out of it. If you succumb to their sweet talk, this is what will happen: Once the business is up and running, one sunny morning, you will get a call for an emergency meeting where they will announce 'we are out of money.' And, there goes your dream. Now you have to get hold of an expensive lawyer to get yourself distanced from those serial thieves. Meanwhile, they will go around and tell the world (primarily your contacts that they managed to steal) how you have destroyed a considerable sum of their extremely hard-earned (LOL) money without producing anything. Do not walk into this trap!

9. Do not outsource your IT or other essential services to their overseas portfolio companies – Outsourcing IT services to a quality US-based portfolio company would be fine. But these serial thieves often set up some portfolio companies overseas, luring you to outsource some of your essential services, primarily IT, to them. In return, you will get shallow quality products and services coupled with hefty bills. In no time, your working capital will dwindle, forcing you to sell a significant chunk of your shares back to them, to stay afloat – and it will be difficult for you to get out of this cycle until the eventuality hits the fan ('we are out of money'). And, it's all by design.

If you are dealing with a well-known/accredited venture capitalist, you are in safe hands. Your success is their success so that they will stand by you through thick and thin. But if you have to deal with a small, unverifiable investor, do your due diligence. We know you are not greed-filled. When you succeed, humanity progresses, and we all grow.

Do not let a low-life, greedy criminal steal your dreams!

Disclaimer -- The characters portrayed here are hypothetical, and any likeness to any individual or entity is strictly coincidental. The author does not offer this post as professional services advice in any form or manner. Every investor is different, so seek a competent professional's advice, preferably an experienced attorney, before deciding on a non-accredited investor.

- Sid Som, MBA, MIM

homequant@gmail.com

Link to the Book

How to Pre-launch a B2B Start-up

"I have been toying with a B2B concept for a while. I think it has great potential. How do I take it forward?"

As an entrepreneur, I often get this question from budding entrepreneurs.

First off, a B2B Service is one of the most challenging segments to penetrate. Consider these steps to pre-launch a B2B start-up:

1. Conducting a Pilot – If you have a good job, do not jump ship. Instead, take some time off and try out a pilot "live." If your concept/invention pertains to the same industry you are currently employed, have an attorney review your employment contract for "conflict of interest" and "no compete" clauses. Since start-ups do not qualify for SBA loans, hire a qualified consultant to review your financials (both business and household), type of business formation (S, LLC, C, etc.), liability insurance, etc.  

2. Implementing Marketing Plan – Make sure you implement your marketing plan (from the actual business plan) to promote the pilot (as if it were the real launch!). It's better to have an average concept backed by a super-duper marketing plan (recipe for success) than a super-duper concept supported by an average marketing plan. Therefore, a significant amount of time and effort must be paid to developing the marketing plan. Ideally, it should also be reviewed by a marketing expert or a social media consultant, thus ensuring that the bases are amply covered.

3. In the Case of Local Service – If it is a local service, some meaning networking is critically coupled with several live campaigns (with real money) to get a good reaction for the future clients' actual outcome. When campaigns are launched or conducted without real money, they could lack the kind of intensity that is generally needed to get the right feel for the market. For instance, if the product or service relates to the real estate valuation market, it is critical to network with the local appraisers, assessors, realtors, social media consultants, etc.

4. In Case of National Service – If it is a national service, it's essential to mobilize the marketing Rolodex (LinkedIn, FB, Instagram, etc.), with an announcement that you are open for business. Before promoting national service, it's essential to understand the industry trend, especially any emerging trend. It's good to visit one or two seminars or conferences where national vendors display their products at the exhibit hall. While attending such conferences could be expensive and time-consuming, the resulting rewards generally far exceed the associated costs.  

5. Campaigning on Twitter – Campaigning on Twitter is more specialized than other social vehicles, so it's crucial to simultaneously implement the marketing campaigns. The campaigns need to fine-tune, and rerun (or re-implemented) based on Twitter Analytic, which could often be an iterative process to optimize the marketing plan, and short-cut could lead to an inefficient strategy. It might be a good idea to even consult with a well-known Twitter expert to iron out any hidden inconsistencies. The point is, the marketing plan must virtually back the product or service being promoted.

6. Advice from the like-minded – Seek advice from the like-minded B2B entrepreneurs – both successful and struggling – to avoid reinventing the wheel. It will save you many trips to the ER, so to say. Locally, it complements networking and, nationally, it saves a ton by not having to attend some vital industry seminars. As long as the product or service is not directly complete with theirs, most would welcome and satisfy your curiosity by sharing their road to success, critical in developing self-confidence.

7. Publishing the Underlying Concept – If you have already written a book highlighting the invention's underlying concept, it might be a good idea to join the Amazon Marketing Service to beef up its sale, bolstering "indirect" marketing before the actual pre-launch. The Kindle version alone is not enough; the Paperback is equally essential. Additionally, Twitter and other social campaigns need to be developed with direct links to the book. Ideally, the book's publication should coincide with the pre-launch of the actual product or service to intensify the marketing efforts without having to split the advertising and marketing costs.

8. Business IT Concept – If it is a Business IT concept, it's imperative to copyright it, leading to patenting; otherwise, the market protection would be virtually absent. While it's costly to patent it in a host of other countries at the outset, it is prudent to start the process here, gradually followed by the nations as they would be penetrated. The filing of the US copyright and provisional patenting will, at least, prevent the foreign companies from doing business here from directly infringing on yours. The provisional patent application will buy you 12 months to prepare for and submit the actual application (during which time "patent pending" could be added).

9. Analyze the Pilot Results – Analyze the results from the pilot as they come in, preferably in direct collaboration with a well-known marketing consultant, and seeking analytical help from a consulting data scientist could make sense as well. If you find that the results far exceeded your (and your consultant's) expectations, work on initiating a much larger pilot with the updated service coupled with a vastly upgraded marketing plan, adequately factoring in the initial pilot's inputs. If the follow-up growth curve is exponential (at this point, linear growth is not good enough!), you are "on to something."  

As indicated above, a pre-launch is a critical interim stage that must not be ignored. Far too many budding entrepreneurs make the mistake of launching the product/service without a meaningful pilot, thereby depriving them of the market knowledge, a priori, to face the competition.

-Sid Som, MBA, MIM

homequant@gmail.com

Link to the Book