In this session, Mark Evans talks with VC and blogger Rick Segal of J.L. Albright and Jason Fried of 37signals.com.
- Both agree that if you don't need money, don't take it.
- Although some companies can start without VC funding, the norm is most companies do need it to move faster.
- Jason: How do you monetize your product? Charge for it! If you can keep your costs relatively low, you can become profitable real fast.
- Advantage of BaseCamp is that it is consumer facing. People who buy the product is also the user so they can see instant value. In the enterprise market, there's a disconnect between the two.
- Rick: VC's tend to stay away from companies that offer free services and plan to monetize off their massive number of users or eyeballs.
- Jason: Free isn't bad. I like to think of myself as a drug dealer. Give them a puff or a smoke to get them hook and then charge them for more.
- Jason: Build products that are manageable and don't require 15 employees to maintain.
- Rick: The problem with Canada is that there are not enough people starting companies and companies with success stories. Everyone thinks you need to goto Silicon Valley.
- How do you keep costs down? Jason: Mainly, keep your head count low. If your product requires 5 developers, your product is too complex. You also don't need expensive hardware. We used one box to run BaseCamp for the first year.
- Jason: You can out spend your competition or out teach your competition. Share your experiences.
- Jason: You can create talent. You don't need to have a degree just need to be able to work hard.
- Rick thinks the Canadian VC market doesn't take enough of risks, there are not enough failures for VCs to learn from them.
- You might not need money to start, but you might want money to grow. But consider the additional risk of failure, shared ownership etc.
- Rick: When I do valuation of a company, I consider two things: How much capital do you need to start? What can I do so that at the end of the day the entrepreneur will feel like they have won.
- Rick: I'm not too worried about being able to protect your intelluctual property. If you can convince me your customers will be passionate about your product, that is the best defensibility of your business.
- Jason: What protects a business is to keep your happy customers happy. Don't worry about trying to suit every customer's needs.
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