Talk to customers, get feedback, and shape your product into something customers will pay for.
These were some of the words of motivation that Barry Thornton
offered in talking to the Bootstrap Austin Ideation Subgroup
on July 21, 2008, which can be heard on the BootRap Podcast
. Thornton, founder of Clear Cube
and current owner of startup Austin Medical Research, offered a number of insights into the bootstrap process, one that he has repeated frequently since launching a concert promotion business in college.
Thornton's philosophy involves starting from wherever you are. He said the startup idea doesn't have to be perfect. All you need is an idea and a passion to get started. By talking to customers, you will mold the idea into a workable form. Then by injecting passion into the idea, others will follow.
"I don't ever think of anything myself," he said. "Ego gets in the way a whole lot...I find the best people to come up with ideas for me are customers, people who will give me money for the idea."
He noted that in his current business, a medical pain relief device seller, he made the first series of sales because the customer's feedback is paramount in discovering the strengths and flaws of the product.
Thornton noted that too many people become entranced with their idea trying to perfect it over time without getting customer feedback. "You can fall in love with something and wind up destroying yourself in the process," he said.
Thornton emphasized repeatedly that entrepreneurs who don't talk to customers will fail. He discussed a recent business model review for a university group which he cut short. The group was trying to present a case for a business and secure $500K in investment for a business model that had never been floated to any customer. Having learned of this omission, Thornton said he told them, "'this session is over.' If you've never taken the idea in front of a customer, then it's science fiction."
Thornton has used the bootstrap method to start several businesses with about five succeeding and ten failing, by his account. Clearcube was among his successes. His experience in entrepreneurship began with a college club at Berkeley that the university provided with funds to promote the club. Thornton and his colleagues used the opportunity to land several concerts, including one Jimi Hendrix. After three shows, the money poured in, but the Berkeley dean was not amused. The dean called the club members in and told them they had to forfeit the money or face an indirect form of suspension. Thornton decided to split, creating another business in mobile sound.
Founders have a special role
He said that entrepreneurs should recognize the uniqueness in being founders. They have taken the great leap of creating something from nothing, and that step garners respect from all others in business, including CEOs. They can try whatever means to justify their position, but they will always be secondary to the founder.
"They (CEOs) will come to you because they don't have what you have- a glow inside," he said. "You changed life. They didn't, and that difference is profound. If you don't remember it, you'll put too much hope in them and expect too much to them. They will try to modify it for something they think it's better." He encouraged the group to embrace their roles as founders to call on business leaders, saying that the title of founder alone will enable the opportunity.
Use Patents Wisely
Thornton offered some surprising feedback when asked about patents, also echoed in his previous blog post. Because he's the owner of 45 patents and a specialist in patent "workarounds," one might expect him to recommend the patent process for new entrepreneurs. Not exactly. Instead, he noted that patents on their own hold no value. Patents solely represent knowledge.
He said, "I know Francis Bacon said 'knowledge is power.' "No, knowledge alone is not power, knowledge plus action is power." Quoting Thomas Palmer, he said, "'Mere knowledge is not power; it is only possibility. Action is power; and its highest manifestation is when it is directed by knowledge.'"
When asked about how an entrepreneur should use patents, he gave some candid advice: Don't wait for the utility patent. Instead, all the value lies in the provisional patent, in which the claims are filed and sealed for one year. It allows the entrepreneur a moderate means of protection without the need to disclose precise terms. Without having to disclose the precise patent claims, an entrepreneur can promote the business model without the specific claims and provide competitors with a foundation to find loop holes. If the entrepreneur decides later to file for an actual patent, then he/she has the opportunity to rewrite the claims with knowledge gained from the point of filing the provisional.
Thornton said that his work involves finding ways to discover opportunities to operate within an environment heavily covered by patents. Based on his experience, he can interpret the true meaning of a patent and direct his clients to work in adjacent areas not covered by the patent.
Watch Out for VCs
Finally, Thornton had some special feedback about working with venture capitalists: beware.
"their (VCs') need for success is as not as great as their need for more investors," said Thornton.
He said that they are in their third generation of VC managers, a group of MBAs without experience in running businesses. He said that through the use of preferred stock, they have incentives that are completely misaligned with doing what's right for the customer. In a recent experience of his, he discovered the VCs had worked behind the scenes to cash out of the company in a way that would have destroyed the value of the company.
Thornton closed by reiterating what he said at the beginning - you as an entrepreneur have to move to be successful.
"My only last thing to say is to execute - do: an entrepreneur sitting on his ass is an "'entremanure.'"