From: Kragen Sitaker (kragen@pobox.com)
Date: Mon Sep 25 2000 - 19:55:51 PDT
And they say there's no such thing as bad press. :)
Adam's off on travel, so I guess FoRKing this devolves upon me:
(From http://www.fsb.com/fortunesb/articles/0,2227,998,00.html)
Rohit Khare is trying to save his company. He has burned
through $300,000 in the last six months trying to get a new
company off the ground, and he hasn't got much to show for it.
He has no product, no revenues, no customers, no profits, and
no hope of seeing any in the near future. All he has is a cool
new technology and just enough money in the bank to cover one
more week of payroll for his seven employees. He needs help --
and fast. Which is why he's here on a ranch in western Montana,
500 miles from his office in Seattle, valiantly defending his
business plan as it is being shredded -- along with his ego --
by the last man to give a damn about his dying dream.
That last man is Rob Ryan, a rich, retired tech mogul whose
notion of early retirement is to wrestle new companies and
their founders into shape at his Roaring Lion ranch. Today's
project is Khare, who has just set off on a breathless
monologue, outlining his grand plan to revolutionize the
Internet. His idea is to get other new companies to embrace his
technology. Revenues will soar. Profits will follow. Khare, 25,
is spinning a wonderful fantasy, but Ryan isn't buying it. With
a single verbal skewer, he punctures the entire pipe dream,
telling the young entrepreneur that his plan is deeply flawed.
Why? For one, he says, Khare's customers are as financially
wobbly as he is. "You're a pygmy," Ryan says, shaking his head
in bemusement. "They're pygmies. Two pygmies dancing is a bad
scene."
. . .
Getting into Camp Ryan isn't easy. Some 1,000 entrepreneurs
apply each year. It's free; Ryan says he wants to help
bootstrappers. Most of them hear about the camp from other
alumnae or through a grapevine that twists through the nation's
high-tech hot spots. Ryan also meets a lot of candidates at
MIT, where he lectures frequently. From among those applicants,
Ryan picks about twenty to come to Roaring Lion. He's looking
for companies that have a hot new technology but lack the
management skills and the financing to bring it to market.
"You're not talking about the cream of the crop of Silicon
Valley," Ryan says. "These are companies that would have
trouble getting funding."
. . .
Some of the lessons are painful for recruits. In some cases,
Ryan has to instruct his trainees in the dangers of violating
the rules of business etiquette. Two years ago, Creditland
founders Tony Wilbert and Henrik Johansson flew out to the
ranch from San Francisco, so thrilled to have won a slot in
boot camp that Tony bought brand-new army fatigues for the
occasion. But they forgot to set their watches ahead an hour to
local time. The next morning, they didn't show up on time for
their first meeting with Ryan. Incensed, Ryan marched into the
log cabin where they were lounging and shouted, "Where are you,
you morons?" He followed that query with a string of familiar
four-letter words.
. . .
And what about Rohit Khare, the chastened founder of KnowNow?
First, some pre-camp background. Khare conjured up his idea, a
next-generation version of "push technology," while working
toward his Ph.D. in computer science at the University of
California, Irvine. (Push technology allows information to be
delivered to computers via the Internet.) He promptly took a
leave of absence from school to market his technology. Khare's
software will track certain Websites -- say, one in which game
schedules are posted for Little League -- and notify users of
changes by e-mail, page, cell or instant message. Khare had
come to boot camp full of arrogance. But in his first meeting
with Ryan, one of the first questions made clear the danger
facing his little company: How much money was left in the bank
account? At the current burn rate, Khare answered, one week.
Khare had planned to hit up some venture capitalists for funds.
But Ryan cautioned against that, saying the business plan was
too immature to take on the road. Timing is everything, he
said. For quick cash, he advised appealing to the bank of last
resort: Mom.
Next, Ryan tore apart the business model. Khare's plan was to
woo companies' Webmasters, the techies who handle production
tasks at Websites. Ryan shot that proposal full of holes. "My
gut works in conjunction with my brain, and it is telling me, I
don't think so,'" Ryan says. "The Webmaster is low on the totem
pole, and he's not controlling a fundamental budget." He
suggests that Khare sell to vice presidents, who actually have
funds at their disposal. They have "large buckets of money,"
Ryan says.
Some of the advice doesn't go down well with Khare. On a hike
through the woods with his chief technology officer, Adam
Rifkin, the young entrepreneur agonizes over the tough
decisions he has to make. And wonders if he's wasting his time
away from the office. "I can't say I'm happy about standing
here by the river when I have next month's payroll to worry
about," Khare gripes. Near-death experiences are getting to be
a monthly ritual at KnowNow, and he knows the company can't
continue on that path. But Ryan's bootstrap model doesn't have
a lot of appeal for him. He fears losing ground to other,
faster competitors if he opts for slow, steady growth. "We
have momentum," Khare says. Rifkin counters, "But how do you
determine if momentum is a snowball or a runaway train about to
crash?"
Such moments are typical and necessary in the life of a
start-up, says Ryan, especially when the founders are young and
inexperienced like Khare and Rifkin. "This is normal," he adds.
"We don't have a good answer. Right now, we're reviewing all
the bad answers."
Was it worth it, Rohit? Seems so. Two months later he's still
in business, having survived the crisis thanks in large part to
the advice he got from Ryan. He left boot camp with a new sense
of mission and quickly laid off three employees, reducing the
monthly burn rate from $75,000 to $60,000. He convinced his
angel investors to toss in another $500,000, rescuing the
company from the brink of insolvency. And he's planning to open
an office in Silicon Valley to chase down the corporate
customers Ryan recommended he target. Ryan's take? "Basically
they were running around with technology and no way to make
money. I suspect I'll get a call saying everything you said was
true."
--
<kragen@pobox.com> Kragen Sitaker <http://www.pobox.com/~kragen/>
Perilous to all of us are the devices of an art deeper than we ourselves
possess.
-- Gandalf the Grey [J.R.R. Tolkien, "Lord of the Rings"]
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