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10 Tips For Starting A Startup

Budding entrepreneurs mingled with startup veterans at a meeting this week hosted by the Pittsburgh chapter of TiE, a national association that promotes entrepreneurship and innovation. You could read volumes on how to start a company, but nothing's more valuable than talking to people who have done it. Here are some do's and don'ts from the TiE meeting.

The event took place on the campus of Carnegie Mellon University, which is among the local institutions and businesses behind Pittsburgh's emergence as a center of innovation in software, life sciences/medicine, and robotics. Apple, Intel, and Google are just some of the tech companies with offices in the area.

TiE's roundtable discussions were organized around eight topics, ranging from fund raising to intellectual property to exit strategies. I gravitated toward two topics for people who are just getting started: "day zero" planning and seed money. Thus, my 10 Tips list is geared toward the very beginning of the process.

1. You don't have to be a twenty-something MBA to start a company. A good number of the entrepreneurs who attended the meeting are mid-career professionals aspiring to run their own businesses.

2. There are many sources of funding. In addition to boot-strapping your company, getting family and friends to invest, and angel investors, there are regional development organizations with money to share. In Pittsburgh, for example, there's Innovation Works and Pittsburgh Life Sciences Greenhouse.

3. It's OK to go solo. InformationWeek has a story on one-person companies earning $1 million annually. Co-founders are sometimes essential, but not always.

4. Seek experts for advice. Get-togethers like the one hosted by TiE Pittsburgh will get you quality time with experts in a variety of disciplines--finance, marketing, and business partnerships, for example. (TiE has chapters around the country.) InnovationWorks has executives in residence who provide advice and mentoring. And people like Gary Rosensteel of Nucupro specialize in advising startups.

5. Know your intellectual property. Ultimately, investors want to know what it is that makes your company special and that leads to an assessment of IP, those things that might be protected by copyrights, trademarks, or patents. Any technology innovation is sure to be a part of this.

6. Bring structure to your company early in the process. Two guys in a garage is a fine starting point, but hopefully you'll outgrow that. Articulate job responsibilities, expectations, and ownership sooner rather than later.

7. Make adjustments. One of the downfalls of startups is that founders are overly focused on their original game plan or otherwise inflexible. "Learn to listen to stuff you don't want to hear," advised one expert.

8. Don't get hung up on valuation. It's natural to try to figure out what your company might be worth in anticipation of growth and VC funding. Cross this bridge when you come to it; it's not a talking point in the early going.

9. Ownership is relative. The rule of thumb is that founders lose 50% of the company to investors with each round of funding. Remember: The size of the pie is more important than your slice of it.

10. Network like crazy. There are many events where would-be entrepreneurs can get beyond these basics. One is Startup Camp, hosted by my colleague David Berlind. The next Startup Camp is just a few weeks away in San Francisco. You can sign up here.

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