How to start a startup at IIM Ahmedabad 07-31

How to start a startup. Talk by successful entrepreneurs at IIM Ahmedabad  

Video Embeds from IIM Ahmedabad YouTube  channel.

How To Start A Startup (HTSAS) | Season 1 - A Look Back

1. How to Start a Startup | Session 1- Sanjeev Bikhchandani

2. How to Start a Startup | Session 2 - Raghunandan G Founder Taxi for sure

3. How to Start a Startup | Session 3 - Girish Mathrubootham  Founder Freshdesk

4. How to Start a Startup | Session 4 - Sahil Barua Founder Delivery

5. How to Start a Startup | Session 5 - Ritesh Agarwal Founder OYO Rooms 

Please also view my article

"How to Formulate Strategy for a Startup"

Preserving Innovation Flair 04-17

Preserving Innovation Flair,

Budding start-ups often aim at the big prize of either going public or getting acquired, but both avenues can hurt innovation. What’s the best path to growth while maintaining your firm’s creative flair?

Facebook’s bumpy first year as a public company recently sparked debate about the creative benefits of private ownership. The social giant drew heavy criticism for what some felt was an awkward adaptation to the increasing importance of mobile, as well as for a series of copyright and privacy controversies. Only in recent weeks did Facebook’s share price top its IPO price.

Before its inevitable listing, the company is said to have worried about the effects of public scrutiny on its innovative potential. Now it wrestles with the beast that is the public marketplace and is grilled on new projects and tweaks to its model at every turn.

Meanwhile, Dell’s innovation slump and its founder’s buyout proposal are due to the pressures the company has felt at the hands of a demanding public market.

When entrepreneurs ask themselves whether they should take their startups public or sell to the highest bidder, they are in fact putting their firm’s innovative potential in question, according to a new paper by INSEAD professor Vikas A. Aggarwal and Wharton professor David H. Hsu.

In Entrepreneurial Exits and Innovation, the first paper to address how entrepreneurs should evaluate the alternative liquidity paths available to them, Aggarwal and Hsu find that going public or being acquired does in fact influence a firm’s innovation output.

By measuring the number of patents filed by venture-backed biotechnology firms that were founded between 1980 and 2000, along with the associated citations to these patents, the authors found three different innovation consequences for firms transitioning from being start-ups to being public or acquired firms.

The IPO effect

According to the study going public caused innovation quality to suffer the most.

Aggarwal and Hsu’s research determines that this is mostly due to information disclosure. As public companies must disclose their inventions as well as their results, managers may opt to back safer projects in order to produce results in the short term.

“What happens in the case of private companies is that you’re able to operate under the radar screen, and that allows you select projects that may have a higher risk of failure. That then allows you to make investments where you’re not under the constant scrutiny of larger owners or the public market,” said Aggarwal in an interview with INSEAD Knowledge.

“The competitive aspect of disclosure can be quite important, particularly when you have to disclose what’s in your pipeline and who are you partnering with; this influences the types of projects you will select” he added.

This mechanism of information disclosure is accelerated under analyst scrutiny, as more information is uncovered and divulged to investors hungry to know about pipelines and future share prices.

“Analyst scrutiny and the number of products a firm has in its early stage pipeline are both metrics for which there is greater oversight and risk. When analysts are scrutinising a company that has a lot of early stage projects in the pipeline, those are the conditions under which we would expect the disclosure mechanism to be most salient” Aggarwal said.

Getting acquired

In a merger, the effects are also negative when the company in question is bought out by a publicly listed one. While acquired firms saw an increase in the quantity of their innovations, they experienced a decline in overall innovation quality. This has to do with managers of the acquiring firm pushing for short-term and observable outcomes. Such a focus however may be detrimental to the long-term innovation potential of the organisation, according to Aggarwal.

It’s not all bad news for firms that get acquired though. In the study Aggarwal and Hsu found that companies being bought by a private entity rather than a public one see an increase in innovation quality. This is because private acquirers maintain more information confidentiality relative to their public counterparts. Lower technology overlap between the two firms also helps insulate the acquired firm, protecting its ability to innovate.

The Silver (Lake) Lining

“This has important implications for private equity ownership,” says Aggarwal. “In particular, it says a lot about the value that private equity firms can create. Dell is a great example: One of the reasons they’ve been less innovative over the past decade or so is because they’ve been under constant public scrutiny. Part of the motivation behind the buyout is to spur innovation at all levels of the company.”

Of course, Aggarwal readily admits that it’s possible to go public without losing the capacity to innovate (think Amazon). “I think the question is: Would Amazon have been more innovative under a private ownership regime? We know that Facebook held off on its IPO for as long as possible, in part because it feared the consequences of being in the public eye and the possible innovation implications that would have; while we of course never know the counterfactual, what our research tells us is that private relative to public ownership for a given company is likely to spur innovation.”

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Start-up Innovation: Who Else Shares Your Partner’s Bed? 04-17

Start-up Innovation: Who Else Shares Your Partner’s Bed?

Strategic partnerships can be essential to a start-up’s innovation output. But are your partner’s other alliances affecting the value you get out of the relationship?

A new company’s performance is often judged by its innovation outputs. The greater the output the greater the competitive advantage it will have in the marketplace, and the more likely it is to attract the financing and resources necessary to survive. Gaining access to diverse sets of knowledge and recombining this knowledge in new and interesting ways are key drivers of innovation output, particularly for early stage start-ups. Forming strategic alliances is an important route to accessing these knowledge-based resources. 

But a strong partner for your company is often a good fit for your company’s competitors as well. It’s generally the case that when it comes to young businesses the more like-minded companies there are working in close proximity with one another, the more innovative and productive they are likely to be, but what is often overlooked is the competition that arises when these companies compete for the attention and resources of a shared alliance partner.

Although the value your company might achieve when it comes to a future M&A or IPO might be higher with a more connected alliance partner, when it comes to relationships where deeper, ongoing interactions are necessary – like R&D alliances – the “non-scale free” nature of your partners’ resources could mean that you end up fighting for your partner’s time and attention.

When it comes to the knowledge production process, valuable innovation outcomes are more likely to arise when your partner can devote a larger share of mind to your relationship.

My recent study Alliance Portfolios and Resource Competition: How a Firm’s Partners’ Partners Influence the Benefits of Collaboration, looked at 281 fledgling venture capital-backed biotech companies and found that when a start-up’s R&D alliance partners had a higher share of R&D alliances in their portfolios, together with a greater overlap in the R&D function between their own relationship and that of their partners’ partners, then access to shared resources was diminished, innovation output was lower, and the benefits for the start-up of collaborating with the partner were thus significantly reduced.

But not all alliances will have this effect. The study also found that when start-up firms in the sample could draw on a larger pre-existing knowledge base, thereby capturing a higher share of the knowledge spillovers that occurred through ongoing interactions between themselves and their partners, the downsides of any R&D alliance overlap were diminished. In addition, a higher level of functional overlap between a firm’s alliances and those of its partners were found to be beneficial in boosting the firm’s legitimacy and enhancing its value when it became time to exit, particularly when the alliances in question were marketing-oriented.

It’s a complicated scenario, but one that highlights the importance of knowing who else shares your partner’s ‘bed’, what their relationship involves, what resources they need, and how much attention they are receiving from the alliance.  It also highlights the need for companies to ensure that they are more attractive to the shared partner. If resources are constrained, then it is the start-up with the larger knowledge base and the mechanisms to codify incoming knowledge and put it to productive use that will be more likely to attract the shared partner’s attention and resources.

Strategic partnerships are essential to innovation, but scrutinising a potential partner’s resource portfolio is not enough. The nature of those resources is conditioned by the characteristics of the potential partner’s other relationships.  It’s important to think about how they have configured these relationships and the number of other partners who will be competing for their non-scale free resources.

Before entering into alliances start-ups should identify what their objectives for the relationship are, what resources and space will be allocated to them, and how much time and attention the strategic partner is able and willing to give. Not taking these issues into account can affect the future innovation prospects of your company.

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A STARTUP "FACTORY" THAT STRADDLES THE BERLIN WALL IS TWITTER'S NEW HOME IN GERMANY 06-12

A STARTUP "FACTORY" THAT STRADDLES THE BERLIN WALL IS TWITTER'S NEW HOME IN GERMANY

ZENDESK, SOUNDCLOUD, AND MOZILLA ARE AMONG THE FIRST TENANTS OF A MASSIVE BUILDING THAT INCLUDES FUNDING FROM GOOGLE FOR ENTREPRENEURS.

“I want robots, I wants drones flying around,” says Simon Schaefer, bounding into a meeting room on the top floor of the main Factory building, waving an espresso. As this extraordinary 170,000 square-foot campus--Berlin’s first major startup hub--finally opens after a 30-month gestation, its 37-year-old founder is entitled to think big.

Indeed, even before the first tenants, which include Twitter, Mozilla, SoundCloud, and Zendesk, have unpacked, Schaefer is scouting the city for more space. Not even the World War II grenades that were recently unearthed in what will become the main courtyard, when deemed safe, have dampened his enthusiasm for grand designs. He rolls a detonated shell around his desk. Factory, says Schaefer, will be “a playground for entrepreneurs that will help to transform Berlin.”

The campus straddles the former Berlin Wall, including a section that was known as the "death strip." One side of the main building--which has open-plan wooden flooring, full-height glass, and resort-size terraces--actually formed part of the interior of the Wall. When complete there will be a health club, lounges bars with “big music systems,” a deli and restaurant, and, as this is Germany, saunas and loads of sporting events. Programmers and designers can apply for free on-campus accommodation, for up to six months at a time.

Rendering of the FactoryImage courtesy of The Factory Berlin

The venture is a pretty striking symbol for this reinvented city. “Out of the first hundred people working here, there are 30 nationalities,” Schaefer tells Fast Company. By September, around 500 people will be bedded in, many drawn to Berlin by its hedonistic-meets-grown-up lifestyle. Indeed, MTV's recently revamped Berlin headquarters look a bit staid in comparison with Factory.

This coolness factor is partly why Twitter, whose popularity lags behind other social networks in Germany, has chosen Factory as its base to reboot its operations in Europe’s most dynamic economy--especially as the company is moving aggressively into mobile advertising. Twitter’s 15-person team will be led by two senior executives. Thomas de Buhr, most recently Google’s branding chief for the German speaking countries, will create a sales team to target advertising agencies in Germany. Rowan Barnett, meanwhile, will try to raise Twitter’s profile by encouraging politicians and celebrities to tweet.

"The success story of Twitter can be an inspiration for Berlin-based startups," said Barnett, speaking outside Factory earlier today. "We are delighted to be working at this historic location."

Google executive chairman Eric Schmidt was also on hand to deliver a rallying speech about inclusivity, he ended by congratulating Germany "for finally becoming a Start-up Nation." Google, which has a notoriously prickly relationship with Germany as a result of often falling afoul of the country's strict privacy laws, has pledged €1m ($1.35m) to the project through its “Google for Entrepreneurs” program.

SoundCloud’s expansive digs, meanwhile, will incorporate “a den” which will feature a functional fireplace, a record player, and absolutely no computer screens. The idea is that here people can disconnect a little.

Startups have free use of a 400-capacity auditorium to host events, and there will also be a startup fair every summer and dinners where founders meet other people looking to interact. Although the idea is that tenants will cross-pollinate each other financially, Factory plans to launch a €100m fund in the next few weeks to bridge the gap between late-seed and early series A funding. “Getting traction at that point is the hardest thing for startups in Germany,” Schaefer says.

“It is vital that we create an environment where smaller local companies can learn from established ones,” says Schaefer, citing companies such as software startup 6 Wunderkinder, which now has 90 employees, and Lime Makers, a new 3-D-printing venture, backed by Skype and Spotify investors.

While Factory may seem quirky and quite German, it is a template that Schaefer aims to replicate in other cities throughout Europe and beyond. “We created Factory as a model that we could license and I think it would work in places such as Athens, Barcelona, Lisbon, or Tel Aviv. I definitely want to open at least one somewhere else," he says. "For now, I guess, it's ‘watch this space.'"

[Photo by Bernd Von Jutrczenka, Picture-alliance, Dpa, AP Images]

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A $32,000 Startup That Was Sold for Millions 03-25

A $32,000 Startup That Was Sold for Millions

I meet entrepreneurs all over the world who think that venture capital is a prerequisite for starting a company. They write business plans and ask for introductions to venture capitalists. I tell them that they should instead bootstrap their startups. That what would have cost millions of dollars a few years ago now costs thousands.

Think about it. Today’s laptops have the same processing power as the minicomputers which cost millions of dollars in the 1980s. For storage, you once needed server farms and racks of hard disks. Today you have cloud computing and cloud storage—and these are cheap.

You can also bootstrap hardware companies like Nest (which Google acquired for $3.2 billion). Sensors such as those in our smartphones would have cost tens-of-thousands of dollars a few years ago. They now cost practically nothing. Entrepreneurs on shoestring budgets can build smartphone apps that act like medical assistants and detect disease, body sensors that monitor heart, brain and body activity, technologies to detect soil humidity and improve agriculture.

Entrepreneurs can also participate in the genomics revolution (here is an article that explains this). It cost more than $100 million to sequence a full human genome about a decade ago. It now costs $1,000. Genome data will soon be available for millions, then billions of people. Anyone anywhere can write computer code that compares one person’s DNA with another; learns what diseases people with similar genes have had; and analyzes the correlation between genomes and the effectiveness with which different medications or other interventions have treated a given disease.

There are similar advances in robotics, artificial intelligence, 3D printing and many other fields.

In 2011, I mentored a startup called Beat The GMAT that figured out how to rebuild and bootstrap itself on just $32,000. The company was acquired last year for millions of dollars by Hobsons. Its founders Eric Bahn and David Park say they are really enjoying their financial freedom and are glad that they took the risk. It wasn’t easy, but was the most incredible experience they have ever had. Below is a version of an article I wrote for Bloomberg BusinessWeek about how they did this. There are valuable lessons that you can learn.

* * *

After graduating from Harvard Law School in 1999, David Park founded discussion forum service Coolboard.com. It took more than a dozen software developers, product managers, and quality assurance staff 18 months to build the company's core technology. To fund it, Park raised $10 million in venture capital, of which $4 million was spent before the company was launched. It went down in flames in 2003, a casualty of the dot-com bust.

In 2005, Park partnered up with his friend Eric Bahn to launch his next business, MBA admissions social network Beat The GMAT in San Mateo, Calif. Rather than take venture capital, they limited startup costs, spending just $119,000. The site steadily gained traction, but they were nervous that technologies like Facebook and Twitter would make it obsolete. So they chose to make it obsolete themselves.

In 2011, the team decided to rebuild the site and the company. Their goal was to create a social network for business-school applicants that had features such as aggregated GMAT-prep and MBA-admissions news; a way for members to connect with one another; and social gaming elements to keep members motivated. It makes money advertising test prep services. Amazingly, the new site took only four months and cost just $32,000 in total.

I was skeptical when Park and Bahn approached me last year to ask for advice on business strategy for the site. They were convinced they could build a bunch of sophisticated technologies in months—on a shoestring budget. They were determined not to raise venture capital. I had doubts. My two software companies had taken years and cost millions. Yes, technology is much easier to build today than it was during my tech days. But I meet Silicon Valley startup founders every week who tell me about their ideas and their plans; and no one says they can build their products for less than the cost of a BMW 328.

But Park and Bahn did. How? To start with, they crowdsourced the design. Instead of hiring a bunch of marketing people, as tech companies usually do, they asked their user community for volunteers to help conceive a new site. Then they selected a handful of the most eager users and trained them on the basics of Silicon Valley–style product management. Next, Park and Bahn needed to find a designer. They used 99designs.com, which hosts design competitions, for a two-week contest that attracted hundreds of designers, yielding a design they used as the theme for the new site. The contest, prize, and designer's time cost $9,200.

They broke up Web development into two tasks: front-end engineering (turning design artwork into code) and back-end engineering (making the code actually function). They built their technology on top of WordPress, phpBB, and Drupal—free, open-source platforms. Front-end engineering usually requires sophisticated coding done by contractors who earn as much as $100 an hour.

 Instead, the Beat The GMAT team turned to a service called PSD2HTML.com, which converts Photoshop design files into HTML and CSS code. The cost of this service, at $160 to $220 per Web page, totalled $4,500. For back-end engineering, they hired four developers from Hungary and Ukraine on the outsourcing website oDesk. They paid $15 to $20 per hour. The back-end engineering cost $18,000 in total.

In software development, things don't usually go as planned. Park and Bahn had their share of missed deadlines, buggy code, and product problems. Outsourcing always makes things more difficult, because developers are in different time zones, speak different languages, and don't always understand what is expected of them. It took many sleepless nights and lots of caffeine to surmount these obstacles.

In the result, a company that later sold for millions cost its founder just $32,000 because the relevant technology now is so inexpensive. The ability of entrepreneurs to build sophisticated technologies so cheaply in the Web world is even foreshadowing the marginalization of venture capitalists. Software startups often spend the first few months of their existence polishing business plans and pitching to investors. They can instead be working with smart people all over the world, focusing their energy on perfecting their technologies, as Beat The GMAT did. When a law-school grad (Park) and a sociology graduate student (Bahn) can build successful technology companies, the notion that website founders need computer-programming backgrounds too is outdated.

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How to build and scale-up your startup 03-23

How to build and scale-up your startup 



21st Century is considered to be the “Generation of Entrepreneurs”. You walk into a high-tech conference, a networking event or meet someone at the coffee shop for a casual chat, and the buzz word you will hear today is “Startup”. If you are reading this article, then I would think you are a fresh entrepreneur, a final year student looking to venture on your own or a person with decent years of work experience and you have decided to break-away from your unexciting job to start your own business. You might have a brilliant and innovative idea, and feel you are well equipped with all the resources needed to be a successful entrepreneur. However, it’s always better to take a planned approach – be proactive and ensure that you have the fundamental elements and assets required to succeed in your venture. 

Here are some useful tips for the Young and upcoming Entrepreneurs from Co-Founders of RapidValue Solutions – Rajesh Padinjaremadam (CEO), Sirish Kosaraju (COO) and Rinish Nalini (CTO). Understand your Ecosystem Before you get going on your idea, you should spend time in understanding what other players in similar space are doing. Research on your competitors’ service offerings and product features, find out if your product will have buyers and what are the buyers looking in a product/service. 

 If you are building a technology firm, you need to know other service providers and vendors would your product/service connect with. Choosing your Partners Entrepreneurship is tough – It’s a marathon and not a 100 meters sprint. More often than not you will need partners who will have to help you reach that 26 mile mark.  While doing it alone is not easy, incompatible partners can be disastrous for the business. It is critical to choose your co-founders carefully.  Two to three co-founders is usually an ideal number and your co-founders should bring complimentary skills. For example – If one is good in sales, then the other should be good at product development. Apart from the skills, the founder team should have a similar risk profile as well as similar ideas of what the dream, and more importantly the path to take to achieve the dream.

Life At RapidValue Be Prepared for the Tough Times Before you plan all the resources and logistics needed for your business, please be prepared to cross the hurdles during this journey – long working hours, interactions with demanding customers, and to find and invest in talented human resources. You need to understand completely that entrepreneurship isn’t simple and doesn’t guarantee success. Have a Business Plan Now that you have decided to take the risk, you need to have a business plan. You need to think through a few key aspects – What’s my product offering, how do I differentiate myself from the competition, who is my customer, why will user pay for my product, how much will he pay for my product, what is the cost of my product, what is my sales process and plan. 

Apart from the above, you need to set some realistic milestones for yourself such as: I will develop a prototype in six months Six months to validate the market i.e. get one or two paying customers If your plan needs funding, then you should have some funding milestones as well Scaling the business to ten paying customers etc. If you’re not hitting the milestones, you need to figure out why this has not happened and work twice harder to makeup or close the business or move the business another route. For example: If customer validation fails. You will also need to know the legal and regularity aspects of your business. Get in touch with a good lawyer and a Chartered Accountant to find out all the details before you go head and register your company.

 Cash Cash Cash You should start your business once you have a good network in the corporate world, or you can self-fund or you have ground-breaking ideas which might have higher chances to get VC funded. However, you shouldn’t depend on Angels and Venture Capitalists to finance you right away. This means that your initial customers will mostly be the ones funding your business through their cheques. Therefore, ensure that you conserve your cash and that you build cash inflows from your customers. This is absolutely critical for long term survival of any firm. Infact most Angels and VCs will expect you to have paying customers before they invest in your business. 

If you get to good cash flows then there are other forms of funding that you can look – Debt funding from banks, other financial institutions etc. Hire and Nurture the Right Team You might start alone, but eventually the aim is to build your team. First step is to hire the right team. Look for culture fit when hiring rather than just skills.  The initial growth phase is hard and you need to have a team which gels culturally together and also thrive in the uncertainty and chaos that a startup offers.  You need to know how to nurture your team. Everyone looks to grow in their career. Develop a good rapport with your team mates; it can be personal but at the same time keep it professional. Give them the opportunity to come up with new ideas and take ownership. Nurture a healthy work culture. ... read more on your story.com 

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How much does it cost to build the world’s hottest startups? 12-08

How much does it cost to build the world’s hottest startups?

The answer may surprise you !!!!

Could $100,000 and the right developer skillsmake you an overnight billionaire? How much does it really take to build a product like Twitter or Instagram? With mobile development agencies and product incubators on the rise and more corporate “labs” spinning out each day, there’s no shortage of talent to help you build the next great Web or mobile app.

We interviewed the heads of the top Web and mobile development companies, incubators, agencies and labs to understand what it takes to design and develop the most successful apps of our generation. Here are their breakdowns of the costs and time investments to create 10 of the world’s hottest startups.

1) Twitter

Henrik Werdelin, the Managing Partner ofPrehype, a venture development firm based in New York City that has helped build companies like Tradable, Barkbox, FancyHands, Basno andPath, says recreating Twitter isn’t necessarily difficult, but the layered features will take time to get right.

“The short answer is that it will take 10 hours,” answers Werdelin, who built a Twitter clone in a one-day Ruby on Rails course. “But a good developer could make it quicker.”

This means — assuming you already have a laptop — the cost is almost nothing to build the next Twitter. Assume $160 for a Ruby on Rails course plus free Heroku, a cloud platform as a service that allows you to instantly deploy an app.

However, Werdelin is quick to qualify his statement. “It’s not that simple,” he says. “These days, it’s less an issue of creating a technology stack and more about creating the ‘experience layer’ on top, the interface that makes a product relevant and intuitive for people to use while quickly demonstrating its value.”

Still, a product is nothing without scalability. “You can’t just build a product today, you need to build a venture. And that involves processes, structures, feedback loops, analytics and a community.”

Therefore, if you want to bring an MVP (Minimum Viable Product) to market, Werdelin approximates that you’ll need$50,000 to $250,000, depending on the skill sets of the developers and designers you hire.

Werdelin equates building a successful product to building a nightclub. “You need more than a DJ, a dance floor and a few bottles of alcohol,” he says. “You have to ensure that the right people come in at the right time, and you have the right decor, ambiance and music. And of course, the cocktails.”

2) Instagram

“Instagram is slightly more complicated to build than Twitter because you need a wider range of skills to handle image-filtering for iOS and heavy backend image loads. However, you could still build an Instagram-like product inexpensively, in the $100,000 to $300,000range over a three-to-six-month period,” says Werdelin.

“But even with a billion dollars of investment on day one, it’s highly unlikely that you’ll ever be in a position where you might grow as quickly as Instagram.”

Founder Kevin Systrom launched Instagram with 25,000 beta users on October 6, 2010; two years later, the app continues to see massive growth, recently reporting 150 million active users. Systrom, now a multi-millionaire after selling his company to Facebook for one billion dollars, turns 30 next month.

“Luck, timing and social engineering are bigger components than most entrepreneurs care to imagine,” adds Werdelin. And the best way to be lucky is to position yourself in a place where luck may find you.”

3) Facebook

Ben Schippers is the co-founder ofHappyFunCorp, a Web development company that has built sites for TeePublic, Of A Kind,Postography and Yeah TV!.

“If you asked me to build Facebook.com for you, I would quote you $500,000 and nine months of development and design time,” says Schippers. “Others would say one million or a much bigger number. But it’s a very challenging question to answer because what it would cost to build is a small number while operational costs are enormous.”

With the existing product in mind, the $500,000 would be broken out evenly over the nine months with the first three months dedicated to design, specifically user architecture, brand and polish design. The remaining six months would be focused on bringing the design to life, while the remaining would be focused on deployment and refinement.

Taking into account the difference in storage costs in 2002, Schippers estimates that Zuckerberg was spending $3,000 per month on hosting for the first year and about $10 million per month by 2006 as the network grew exponentially in that time period.

Considering Facebook’s scale, the company is now in the business of operating power plants to operate its servers, therefore, Schippers estimates that Facebook has a $30 million dollar monthly burn rate just for hosting. Suddenly, those multi-million dollar financing rounds that startups raise don’t seem so outrageous!

4) WhatsApp

“Real-time communication support can be more difficult than other apps that provide e-commerce or news,” explains Ryan Matzner, the Director of Strategy at Fueled*, a mobile development company based in New York and London that has built apps for companies such as Elevatr, Ribbon, UrbanDaddy and JackThreads.

“To put out an MVP of WhatsApp with basic functionality — something that verifies phone numbers, perhaps with a Twilio integration — and includes a payment management system would cost about $120,000.”

Follow that up with another $120,000 round for design, additional development and branding. And then another $25,000 to fix the remaining bugs and add a level of stability and robustness to the technology stack.

In total, that means WhatsApp would cost aquarter of million dollars and take approximately nine months to build, assuming you already have a large user base to assure quality and facilitate initial momentum.

5) Uber

Artem Fishman is the Vice President of Engineering at Huge, a full-service digital agency that has recently helped build NYC.gov,Revolt.TV and the redesign of TED.com.

The Huge team took a deep dive at the numbers on CrunchBase to work up estimates for Uber. The San Francisco-based company made do with $50 million to build its product from scratch to current iteration. Then Google and Benchmark pumped $258 million more into itthis past August.

“When you’re answering the question of what it takes to build the mere technical proposition, then the answer is, surprisingly, very little,” says Fishman. “Based on its early rounds, a minimum viable product for Uber cost about $1 to $1.5 million to develop.”

It becomes increasingly difficult when you’re trying to scale your business both from engineering perspective and market penetration. For Uber, the issues are more about local regulations than scale for the time being.

6) Pinterest

At its core, Pinterest, the popular photo-sharing pinboard site, is a very simple product. According to Sam Mathews, the founder of Neverbland, a product studio responsible for brands like Slate and Conjure.io, says Pinterest could be created with a team of four in just 120 days for $120,000.

Yet, it becomes increasingly more difficult to fathom Pinterest’s cost as its user base explodes from 1 to 75 million. “It’s not about the product with something the size of Pinterest, it’s about the economy of scale,” says Mathews, who estimates that it costs Pinterest, a San Francisco-based company with 150 employees, $2 million per month in developer and storage costs to maintain its current product at scale.

7) Shopify

To build a replica of the e-commerce platformShopify, Mathews estimates it would cost between $250,000 and $300,000 with highly-skilled designers, developers and product people.

These costs don’t take into account the many relevant systems within Shopify’s business such as maintaining its API, the infrastructure and server space needed to support its 50,000+ shops and designing and developing all of the beautiful templates that help make Shopify so successful.

“Oftentimes, the biggest costs with a product like Shopify come down to the decision-making process involved with the customer and product development expenditure,” explains Mathews. “But if you were to replicate the product exactly, all those decisions are made for you. You just have to figure out the architectural structure, which would take approximately four to six months.”

Riffing off of Paul Graham’s essay How to Start a Startup, Mathews says, “To build something complex you first have to build something simple. If you want to build something complex it will never work.”

The issue with building a product like Shopify is that it required seven years of iteration and feature roll-outs based on customer feedback and experimentation. Mathews adds, “So even if you replicated the product exactly from the outside looking in, you’re not going to have as robust a background system to manage all traffic and experiences that take place on the platform.”

8) Angry Birds

Our only viral gaming app on the list, we asked DJ Saul, the CMO of the DC-basediStrategy Labs, a DC-based digital agency that has built products like Grandstand and Social Machines for clients like The Washington Redskins and Nickelodeon, for input.

“First, you have to take into account the time to develop a brand identity including the logo, color palette and typography,” says Saul. “There’s the ever-important UX, both for the app itself and especially for the game. You need experienced game designers and engineers who can develop cross platform. Then factor in building for the expansive world of Android and you have a multiplying effect on costs!”

Saul estimates that he’d want a 20-person team working more than one year to deploy Angry Birds and at an average salary of $110,000 for a total budget of $2.2 million plus overhead. Of course, if you’re hiring an agency, you’re probably looking at 1.5 times that amount in total costs.

9) Tumblr

According to Saul, Tumblr would be much easier to build than Angry Birds as you wouldn’t need game-specific designers and developers. But the testing, refining and bug squashing would remain the same.

To develop Tumblr, which is currently hosting 140 million blogs, “The biggest looming variable would be hosting,” explains Saul. “On top of costs needed from the product marketing side, I would need a 15 person cross-platform development team working on Tumblr for just under one year. So 15 people at an average salary of $110,000 and you’re looking at about$1.65 million.”

10) Vine: Defining the MVP

“While the term ‘MVP’ is thrown around quite a bit in our industry, we consider an MVP to be when the product is at a “good enough” point to be released and gain traction in the market and begin to build a user base,” explains Paul Choi, CEO of Worry Free Labs, a mobile UX, design and development firm that has developed apps like KeyMe, Sendgine, TwizGrid and CraveMate.

To create an MVP of Vine, Choi estimates that it would cost between $125,000 and $175,000with four to six months of development and design time. He says that Vine is a relatively straightforward app that leverages the iPhone’s processing power to compress video files.

“With Vine, you’re building a backend system that stores video and a front-end that is a simple viewer and an easy way to share content out to social networks,” says Thadd Selden, Worry Free’s CTO.

For those just starting out building an app for videos, be aware of the escalating storage costs involved. While tools like Amazon Web Services and Parse can help you get off the ground, paying for the storage for 40 million plus registered users quickly becomes a major hit. Worry Free’s VP of Business Development Brian Badillo estimates that storage costs for an app like Vine can cost well over $50,000 per month.

All the grains of salt

Each of these Web and mobile apps has evolved over months and some over years. Estimating costs is incredibly complicated because it comes down to hiring the “right” designer, developer or product manager who could build each app for less. There’s an enormous amount of complexity that goes into each app’s environment: not just hosting costs but office infrastructure, product management and marketing to name a few.

There’s also the enormous looming cost of distribution — one that’s hard to measure and even harder to predict. Fifteen years ago, starting a business was primarily a technology problem. Now that the barrier to entry to start a business is so low — $100K in many cases — entrepreneurs are faced with a different problem: standing out from the crowd and getting their product into the right hands at the right time. In comparison to creating effective and data-driven distribution funnels to get your app out to millions, software is cheap.

“It’s always easier to copy a proven model than to conceptualize it yourself,” says Paul Murphy, VP of Betaworks, a New York City product network. “The hard part isn’t necessarily the tech, it’s building and validating the product and adjusting it until you find a fit. We could probably build an MVP of any one of these products using public SDK’s, frameworks and a rudimentary design at a weekend hackathon. But cloning something that’s been proven is the easy part.”

And truthfully, you couldn’t rebuild Twitter, Instagram or Facebook today for a billion dollars. But you could potentially spend a few million on an exact replica that no one will ever use.

As an aspiring entrepreneur you want to build something remarkable, captivating and new; something with better features, different features or fewer features. That’s what the next Jack Dorsey, David Karp Kevin Systrom and Mark Zuckerberg would do.

The way to get good ideas is to get lots of ideas and throw the bad ones away.

– Linus Pauling

How To Boost Your Company's Value: Mind the Intangible Assets 09-20

How To Boost Your Company's Value: Mind the Intangible Assets 

BY CURTIS KROEKER

You may not be able to touch them, but things like patents, processes, and a good reputation just might boost your business's price tag


Mention business “assets,” and most people think of actual physical items, such as equipment and real estate-;things that are tangible. But intangible assets--such as copyrights, trademarks, a brand, a solid reputation--play an important role in the valuation and sale of businesses.

In fact, all nearly all businesses, even those that exist solely in cyberspace, possess intangible assets. And if you’re selling your company, it’s critical to leverage such assets to both increase your own value and make your company more attractive to buyers.

Assigning value to intangible assets is also challenging. There are several different methods for estimating the worth of intangibles. With so much on the line, most sellers will be well-served to consult a business broker or professional appraiser rather than trying to value intangible assets on their own. However, there are several things you can do to highlight and improve the value of your company’s intangible assets as you prepare to sell your business.

Identify Your Intangible Assets. In the months leading up to a sale, sellers typically conduct an inventory of equipment, real estate, and other physical assets. But savvy sellers also include intangible assets in their pre-sale inventories. This list can be extensive. In addition to intellectual property, it’s important to consider the value of contracts, agreements, partnerships, customer relationships, Internet domains, brand recognition, and more. Essentially, any non-material asset that contributes to your company’s success has the potential to boost its value.

Document Such Assets’ Impact For business buyers, the value of an asset is limited to its ability to generate bottom line outcomes. This is especially true when it comes to intangible assets, since many intangibles don’t have value beyond the context of the business itself.

By documenting the impact of intangible assets, you can demonstrate their worth to prospective buyers. For example, loyalty metrics illustrate the value of customer relationships. Sales tied to proprietary processes show the dollar value of specific pieces of intellectual property.

Standardize Systems and Processes Intangible assets tend to be unique business elements and can intimidate buyers who are unsure whether or not they will be able to leverage them to achieve similar results. So as much as possible, try to standardize and document the use of intangible assets, highlighting how they are integrated into processes that rely on key employees, tangible assets, and other resources that will exist after you have exited the business.

Develop Your Intangibles Depending on the timing of your sale, it may be possible to create new intangible assets as well as increase the value of intangible assets that already exist. You can also make intangible assets more tangible. For example, if you have a proprietary process that differentiates your business from the competition, it may be beneficial to secure a patent for it before you list your business in the business-for-sale marketplace. Poof: something intangible becomes tangible.

Of course, some intangible assets are more valuable than others to prospective buyers. To avoid investing time and resources in intangibles that may contribute little to business value and sale price, consult a business broker early in the process.

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