How to find a driven business partner like Steve Jobs?

[EEVblog]

No, that would be a very nice position. As long as the goods sell and I can focus on technology. Some people want to be in charge. I just want ownership of the technology I create.

Once you take VC money, the game is up, you don't own it any more, the investors do. You just have a part share, and very likely a non-controlling one.
They can even fire you.

Essentially, I want to create my own ideal job with ownership rather than work without ownership in somebody else's business.

It's never ideal when you owe people something.

[John_ITIC]

I suppose I would want to have someone with a proven business track record to give more credibility. Just because one can create a product doesn't guarantee that one knows how to build a business around it.

That's typically what the angel investor / VC's are for. They will often help with that and even appoint their own CEO's and directors etc.
They don't usually just give you money and hope for the best, they offer advice, help find people etc.

That's exactly what I need. They are apparently very interested in finding coachable entrepreneurs so should be a good fit.

[ivaylo]

I couldn't tell if you already have a business plan or you need someone to help you with that. Because no investor would talk to you without one. Then most of them are morons who only care what would their ROI be in X years. Your product is niche, non-consumer (this is where the Jobs/Woz parallels don't quite work) and you are probably competing with a few massive companies (not sure, I haven't studied the space). If your "value proposition" is only "lower price than Keysight model X" your market is probably hobbyists and smaller third world companies. I was tempted to say find an honest partner in China and flood the world with decent non-expensive signal analyzers, but that's a tricky proposition too. Dave Johnes' advice above seems decent. In any case good luck, I wish we had more products like yours available...

[John_ITIC]

It's never ideal when you owe people something.

Technically, I would not owe anyone anything. I'm not taking out a loan. I am rather getting a partner that provides much needed money and expertise while I provide the technical knowhow and products.

Regardless, I have pretty much decided to:

1) Do proper research to find out the dollar amount of the potential market. High-speed protocol analysis can be used for much more than simply protocol analysis. Perhaps even NSA would be interested in buying some units to snoop on our phone calls. I'm sure this travels on high-speed serial links as everything else these days.

2) Put together an investor presentation in both PowerPoint and YouTube video format.

3) Submit to the local angel group to see what traction it has.

Anything I've missed? Has anyone here actually gone through the funding process and can give advise? Are there any internet forums that discuss the funding process specifically?

Thanks,
/John.

[John_ITIC]

I couldn't tell if you already have a business plan or you need someone to help you with that. Because no investor would talk to you without one. Then most of them are morons who only care what would their ROI be in X years. Your product is niche, non-consumer (this is where the Jobs/Woz parallels don't quite work) and you are probably competing with a few massive companies (not sure, I haven't studied the space). If your "value proposition" is only "lower price than Keysight model X" your market is probably hobbyists and smaller third world companies. I was tempted to say find an honest partner in China and flood the world with decent non-expensive signal analyzers, but that's a tricky proposition too. Dave Johnes' advice above seems decent. In any case good luck, I wish we had more products like yours available...

Yes, I have studied the funding process actually over a few years but not really felt I have done all I could myself before going to that stage. Now, my funds are running out so a good time to get out of the comfort zone and actually get it done. The value proposition must be better functionality for a lower price. The biggest cost is the engineering cost for FPGA and software designs. Cheap production is not going to be a big factor since not high-volume products. Coming up with a USP (Unique Selling Proposition) is a bit of a problem since already multiple players in the market. Having that said, there are many more uses for high-speed data capture and analysis than lab equipment. Data communication monitoring and analysis comes to mind. This is where an experienced business executive that know the space would be very valuable. Once on top of the technology it will be possible to create various equipment on top of the technology platform. It is quite common that the final "success" product is not what companies start out with.

Edit: There could be military and commercial contracts for custom protocol analysis hardware etc. Also, consulting services within the field comes to mind. Once the know-how is there I'm sure there are many uses for it. But there must be people pounding the pavement and working the phones to make that happen. Right now there's just a guy in a lab...

Edit: Investors also want to have an exit-strategy: I can envision a buy-out by a larger corporation if sufficient value has been built (i.e. people and revenue).

[Galenbo]

The last person you want is a Steve Jobs type person.
Unless you want to give up all control to them and be a silent partner.

"Steve Jobs" types of guys are known to consume honest sounding guys like "John_ITIC", and throw them away when sucked dry.
You never know how the real story of those millionaires is, maybe Woz had the luck he was just enough of a psychopath himself to not be completely eaten by the Shark.

[dannyf]

"As an analogy, I'm more like Steven Wozniak that needed his Steve Jobs to get anywhere business-wise"

Here lies the central problem for any engineering types that want to get into business: it is much harder to find a jobs than to find a Wozniak. Ie., your value-add in this partnership is considerably limited, relatively speaking.

If I were to advise you, I would suggest that you avoid a jobs type at this point. Get a business person, either a partner or an employee, and learn from him or her as much as you can the softer side of business. So in the next round of fund raising or future projects, you don't rely as much on the jobs type as much.

The marginal return for your learning about business greatly outweighs the marginal return of your learning engineering.

[Kalvin]

<sarcasm>
Maybe you should contact the Batteroo-guys. They seem to be very market-oriented people and are able get news coverage for their non-existent product. What is more impressing, they were selected as one of the coolest gadgets of the 2015 by the CNN Mon(k)ey even if there is no actual product yet. That's what I call marketing!
http://money.cnn.com/gallery/technology/2015/11/24/coolest-gadgets-2015/9.html
</sarcasm>

[edavid]

I've tried using distributors but their cut is too small to give them a real incentive to work hard. They rather sell Agilent than ITIC. Much better margins.

Wait a second, why does Agilent (you mean Keysight) have better margins?  Why aren't you giving distributors an adequate discount?

[cdev]

The truth is, Jobs and Woz got into making the Apple sort of by accident, it was originally designed to be an early "hacking device".

A lot like the Russian computer with the programs loaded by a tape drive mentioned in another thread.

They were basically hippie geeks.

[cdev]

The last person you want is a Steve Jobs type person.
Unless you want to give up all control to them and be a silent partner.

"Steve Jobs" types of guys are known to consume honest sounding guys like "John_ITIC", and throw them away when sucked dry.
You never know how the real story of those millionaires is, maybe Woz had the luck he was just enough of a psychopath himself to not be completely eaten by the Shark.

That did happen many times but at the same time he wasnt as much of an ***** as to not also be liked by many people. All in all, a complicated man and story that doesn't translate well to generalities.

Also, I agree with Dave and others in that debt is like poison. Its also often poison to creativity.   And health.

[nctnico]

The plan would be to find a partner with the skills, personality and perseverance to first attract seed funding and later venture capital for future growth of my business....

If that's the value-add of your partner, what is yours? why does s/he need you?

20 years engineering experience, 10 years and $500, 000 product development and working products in a fairly hot niche segment. In addition, I have existing distributors in about 10 countries, including Japan, EU, USA, Australia, India, China etc. What is missing is business-savvy and cash-infusion to get to the next level.

I'm sure there are lots of educated, experienced, business-savvy people looking for good technologies to sell. The question is *where to find such people*?

I'd go hunting for specialist investors in tech startups if you want to sell part of your business. They usually have the money and access to people who can catapult your product into the right market but they usually want a controlling share. Still you'd need to get a clear overview of the potential of your busines. Because you already have customers I'd ask them what kind of products they expect from you in the next couple of years. You can turn this information into a outlook of your turnover and profit margins for the near future.

However, it seems much better in your case to borrow money from a bank and hire a sales person to do sales (partly on sales commissions). That sales person must have experience selling similar equipment so he/she already has a network in place.

[donotdespisethesnake]

I've tried using distributors but their cut is too small to give them a real incentive to work hard. They rather sell Agilent than ITIC. Much better margins.

Wait a second, why does Agilent (you mean Keysight) have better margins?  Why aren't you giving distributors an adequate discount?

Yeah, anyone with business savvy would home in on that.

Talking of Steve Jobs, while Apple products may be better products, they also have fantastic margins which is the real reason for a successful business.

[all_repair]

Have you considered licensing your product to an up-and-coming China test equipment OEM? Or even selling your company to them?  Or any other test equipment that can offer a higher value, or offer the best package.  As a single product maker, after a long detour, with dilution through additional parties, your past decades of hardwork may still end up as a part number of a larger test equipment maker.  You might as well get the best deal for all your effort and investment now.   Of course, you are going in to negoitiate  with a stronger hand after tempting a few investors to put their cash on the table, or liquidate youself in other means.

Which OEM need your product, and you,  the most?  This is the question I would be asking if I do not want to bother in doing business, and just want to a hired hand (CTO or not, may not be up to you).

[miguelvp]

What you need is an "As seen on TV" type of product to get most VCs interested.

If you can sell to the that it's an invaluable tool for all IT departments in the planet, you'll get their ears perking.

[nctnico]

I've tried using distributors but their cut is too small to give them a real incentive to work hard.

I think your answer is right here out in the open: talk to your distributors and find out what price levels/margins they would like to see! If your products add more value to their business they are likely to invest more time into selling them.

[John_ITIC]

If I were to advise you, I would suggest that you avoid a jobs type at this point. Get a business person, either a partner or an employee, and learn from him or her as much as you can the softer side of business. So in the next round of fund raising or future projects, you don't rely as much on the jobs type as much.

Yes, after the feedback I'm set to go down this route. Thanks.

[John_ITIC]

<sarcasm>
Maybe you should contact the Batteroo-guys. They seem to be very market-oriented people and are able get news coverage for their non-existent product. What is more impressing, they were selected as one of the coolest gadgets of the 2015 by the CNN Mon(k)ey even if there is no actual product yet. That's what I call marketing!
http://money.cnn.com/gallery/technology/2015/11/24/coolest-gadgets-2015/9.html
</sarcasm>

Anything can be sold with great marketing. One of my US competitors has superb marketing but not very good products. I definitely need more resources on the marketing side - luckily this can quite easily be hired. Essentially, to create a good web-presence, have good artwork, datasheets etc.

[John_ITIC]

I've tried using distributors but their cut is too small to give them a real incentive to work hard. They rather sell Agilent than ITIC. Much better margins.

Wait a second, why does Agilent (you mean Keysight) have better margins?  Why aren't you giving distributors an adequate discount?

The big players have huge resources at their disposal so can take fully advantage of the product business cycle, selling advanced products when the price it at a premium. Lacking the engineering resources, one is forced to get to the market later, which results in lower prices and sales. Less revenue to pay for engineering results in a death spiral, where one never will catch up with the market.

In short, resellers will rather sell the large brand-names because their margins are much higher and they have an easier job selling well known brand.

[John_ITIC]

The truth is, Jobs and Woz got into making the Apple sort of by accident, it was originally designed to be an early "hacking device".

A lot like the Russian computer with the programs loaded by a tape drive mentioned in another thread.

They were basically hippie geeks.

Well, the acronym for LUCK is Laboring Under Correct Knowledge! Wozniak had spent years designing computers on paper and he was extremely dedicated due to his introversion. Jobs had raw intelligence, a chip on his shoulder (wanted prove himself) and together things happened. Had jobs not spent weeks (months?) making phone calls around the Santa Clara Valley trying to peddle the goods and/or get funding then things would not have happened. Once the money was added to the mix, great things could happen.

[John_ITIC]

I'd go hunting for specialist investors in tech startups if you want to sell part of your business. They usually have the money and access to people who can catapult your product into the right market but they usually want a controlling share. Still you'd need to get a clear overview of the potential of your busines. Because you already have customers I'd ask them what kind of products they expect from you in the next couple of years. You can turn this information into a outlook of your turnover and profit margins for the near future.

However, it seems much better in your case to borrow money from a bank and hire a sales person to do sales (partly on sales commissions). That sales person must have experience selling similar equipment so he/she already has a network in place.

Well, I wish I knew where to go where these technology specialist investors hang out. If anyone could tell me who to contact it would make things easier. Regarding product roadmap; for the current customers, it is obviously a USB 3.0 protocol analyzer that is needed. Very little sales in USB 2.0 analyzers these days.

Borrowing money would do me no good; I would not know what to do with it. I want an "advisory  package" with business advise + cashflow such that a "peddler" and "strategist" can be brought on. Given the bad situation of competing on lowest price, I can envision that this technology can be taken elsewhere. For that, contacts and knowledge about the business landscape is needed. This is exactly what angel investors are doing.

[John_ITIC]

Have you considered licensing your product to an up-and-coming China test equipment OEM? Or even selling your company to them?  Or any other test equipment that can offer a higher value, or offer the best package.  As a single product maker, after a long detour, with dilution through additional parties, your past decades of hardwork may still end up as a part number of a larger test equipment maker.  You might as well get the best deal for all your effort and investment now.   Of course, you are going in to negoitiate  with a stronger hand after tempting a few investors to put their cash on the table, or liquidate youself in other means.

Which OEM need your product, and you,  the most?  This is the question I would be asking if I do not want to bother in doing business, and just want to a hired hand (CTO or not, may not be up to you).

Yes, these are good questions. The problem is how to find the answers. These are all business strategy issues that a seasoned business person would easily navigate through. For an engineer, not so simple. Just as a businessman would not have a clue understanding board design, FPGA digital design and software engineering, I don't live in the business world. This is why a partner would have been good, or as 2nd option, hiring the right competence once funding is in place.

As a side-note: I did contact one of my smaller US competitors, asking if they wanted to acquire the PCI Express protocol analyzer technology. They blew me off, of course.

[John_ITIC]

What you need is an "As seen on TV" type of product to get most VCs interested.

If you can sell to the that it's an invaluable tool for all IT departments in the planet, you'll get their ears perking.

VCs are not interested unless they can invest millions into a huge project. Angel Investors are local, private investors that contribute expertize, funds and contacts to help smaller entrepreneurs along the way. They offer mentoring, which is what I need at this point. Money alone would not do me much good.

https://en.wikipedia.org/wiki/Angel_investor

[John_ITIC]

I've tried using distributors but their cut is too small to give them a real incentive to work hard.

I think your answer is right here out in the open: talk to your distributors and find out what price levels/margins they would like to see! If your products add more value to their business they are likely to invest more time into selling them.

See my previous post for an explanation; when introducing a product that lags the product life cycle, one will not be able to charge as high prices and, consequently, the margins for everyone (vendor + reseller) will be lower. The only way to make sufficient margins is to get to the market quicker, which requires more engineering, sales and marketing resources. That requires investor money. Growing organically doesn't work for products with a product life cycle that is at best 5 years.

I watched an interview with the Linear Technology funders on YouTube (part of the computer history museum oral history) and they mentioned something very interesting; a big key to their success was to develop products with a 20-30 year product life cycle. Examples were low-voltage dropout linear regulators (7805 etc.) as well as jelly-bean op-amps (741 etc.) , which are selling in good quantity many years after being designed. With a business model like that, one can build revenue on top of existing products. For protocol analyzers, things are quite different.

[nctnico]

Still the question which bothers me is: is the market big enough to support a company consisting of 4 to 5 persons? That is what you are talking about IMHO. You'll need yourself, a secretary to answer the phone, a salesperson, a support person and probably a techie to do all kinds of simple jobs. Perhaps you have to think about a second design engineer as well to reduce the risk in case something happens to you.

To look for investors I'd start on Linkedin and initiatives which help startups. Over here there are also several annual startup competitions. You don't have to enlist in one but talking to the companies which have enlisted and the ones which invest probably gets you valuable information. Just start asking questions and at some point you'll get the right answer.

Teaming up with a competitor is not a bad idea either. Perhaps there are more but I'd start with the ones to which your products are complementary.

Still I think you'll be giving up a lot of your freedom if you want to pursue the protocol analyser business! Why not concentrate on the contracting business and let the protocol analyser business die?