Computer Guy

Computer Guy
Sunset at DoubleM Systems (, Del Mar, California

Friday, April 25, 2014

Selling Vaporware

Allow me to share with you one of the great secrets to success in business...

In order to be successful in business, the first requirement is that you actually BE in business, and it is to this topic that I refer.  Most startups never get to the point of actually being in business because they have to do (list of other stuff) first.  This strategy is flawed.

Most startups would argue that there is some initial period of being in business that is devoted to product development, whereby a product is built, and only then is the search for customers, and the ultimate exchange of cash for software.

What I mean by "being in business" is characterized by talking with customers about their needs and charging them real money to provide the solution. If you aren't doing that, you're not in business.

I learned this first-hand when I started my software company.  I didn't have a product, and I didn't have, and couldn't borrow, any money.

It is when your back is squarely up against the wall that you get most creative.

I had to sell a product that didn't exist.  In fact, I had to do that in order to get the money to live until I could build the product, so I could deliver the product and get paid.

I educated my first customer to understand what sort of a solution he needed, and then gave him the opportunity to enjoy this fine product in a couple of months, and all it would take to achieve this yummy goodness is his autograph on a check for half the price now and half on delivery. He readily agreed, and then I informed him that the only other condition about the software was that it would be my property, he would get to use it in perpetuity, and that he would get all support and updates for free. His forward-thinking reply was that it's irrelevant who owned the software, only that he gets the benefit of using it.

Imagine the beautiful moment when you turn an idea into words and then into cash!  This was the beginning of Remote Control International, and my product TeleMagic, the first CRM* product for the PC, in 1985.

Some startups think that they need seed capital in order to build a product, but I respectfully disagree as a general principle. Selling stock instead of selling your product (the one that doesn't exist) is a sucker play. Seed capital is the most expensive money your could ever get.

Because of the Vaporware approach I took, I was able to retain 100% stock ownership from startup through the Exit. It was very rewarding.  :)

Check out this neat post about the subject of Selling What Doesn't Exist. Interestingly, it is from another CRM ( founder.

*CRM is the acronym for Customer Relationship Management and describes a category of software that facilitates customer/prospect interactions.  Since TeleMagic was the first product of it's kind in 1985, there was no category.  Soon after I started selling, there were many competitors, and software of this type was known as Contact Management software, then Sales Automation software, and now Customer Relationship Management software. Whatever the name others gave it, I always saw it as one of the elemental products that every person needed.

Tuesday, April 15, 2014

Startup Disaster Clinkle

Business Insider just released an update on Clinkle, the 3 year old payments app startup with no product and $30 Million invested by big names, the largest seed round in Valley history!

VCs are supposed to be smart, but how smart a move was it to put megabucks into "just another payments app" run by a 22 year old first time founder, manager, CEO, product guy, etc. The website says he's on a 50 year mission. Seriously? No co-founders; only hired-gun outsiders who quit fast at the signs of trouble.  What could go wrong, right?  For the icing on the cake, these smart investors never saw the product that was supposed to be built, only a demo video.  Duh.

It seems that they are having their share of problems. If reading about how screwed up other companies are will help you see how good you have it, then read it here:

And for current real-world commentary and answers about how it is possible to bomb so badly, read more on Quora at

My guess is that Clinkle will crumple...

Friday, April 4, 2014

What I Wish I Knew...

Business Insider just did a neat bit on "25 Entrepreneurs Reveal What They Wished They Knew Before Their First Startup". This is well worth the read. Check it out now, and then come back to finish the rest of this post...

OK, now let's consider some of the things I wish I knew before I did my first startup, and the second, the third, the fourth, the fifth, etc. It seems there's always more to learn!

If I look back to my last big startup, Landmark National Bank, a collaborative effort with 14 other really excellent business people, the big thing I wish I knew was to stay the hell out of banking! What a miserable business, so many government regulations that bankers are afraid of their shadows and more concerned about their jobs than doing anything truly excellent. Due to some luck and some foresight, I got out without a loss before the big collapse of the financial system, and before the bank was forced to merge into another bank, who was then merged into another. Depositors were fully insured, but today there is no trace of the bank's existence, nor of the investors' money.

But most readers of this post are not going to be entering the banking business, so how about my previous big and successful software startup, TeleMagic, the first CRM product for the PC. I am frequently accused of being the "Father of CRM" or some such title, because I dreamed up, and programmed what would soon have hundreds of competitors in the "contact management" category, then "Customer Relationship Management". At first I had zero competitors, but that didn't last long as it was one of those products that seems so obvious when you look back on it, kind of like the wheel.

Here's what I wish I knew before the TeleMagic adventure:

1. Yoga! The life of a founder/CEO is just about the most stressful thing a person can do, so you need a method to turn off the madness and find peace and quiet, and perspective. Yoga is extraordinarily effective at this. It is great exercise, although it doesn't look like it when you watch it. Yoga is breathing and stretching and Focus. Focus is a key element in any startup. The stress can be a killer, and it was the final straw that lead me to sell the company. Although it was a very rewarding exit, if I could have handled the stress better, I could have stayed around longer and built an ever bigger, more rewarding business on the back of the Internet, which came around only a couple of years later!

2. Board of Advisors. Trying to be the only person with the answers is stupid. There will always be people who have more experience (even though this was about my 6th startup), and a clearer perspective, and who can ask smart questions, provide contacts, etc. One of the best things about enlisting the help of a Board of Advisors is that you get to meet on a regular basis (monthly) and address the key issues of the business and formulate plans for dealing with them. Without a Board of Advisors, the founder/CEO finds it all too easy to be distracted by the "Tyranny of the Idea du Jour" and he/she also has the power to Procrastinate for way too long on important issues. The regular meetings with your Board will serve as a management metronome and add great power beyond what you would expect. This power is often referred to as the "Mastermind Principle" as first discussed in the book "Law of Success" by Napoleon Hill. I finally put together a Board of Advisors only in my final (7th) year of the TeleMagic adventure, and the Board was assembled only for the purpose of positioning the company for sale. It worked perfectly and I feel certain that the sale would not have happened, or happened as well, without their help and perspective.

3. A mentor. Completely different than a Board of Advisors, a mentor is the ultimate resource for a founder/CEO. I never had one during my many startups, and always wish I did. It was a lonely, and highly stressful adventure, and when I finally got on the other side of startups, I resolved to be that mentor to help others going down that path.

There were many other lessons, of course, but these are the ones that come first to mind. Stay tuned for more. That's what this blog is all about...

Again, read the story that started this post:

Thursday, April 3, 2014

Lessons from Shark Tank

Good friend Mitch Russo just posted this excellent article, and I highly recommend it:

Mitch and I both sold our separate software companies to Sage Group Plc at around the same time, and he also now does CEO coaching, so we have some similar experiences, but I think he's a better writer, and I'm sure you'll get a lot from his posts. So, sign up for a free subscription, and tell him FastMikie sent you!