The executive summary is for the start-up what the CV is for the job applicant.
The executive summary is the most important plan of the business plan:
1) two pages to sellyour idea to a potential investor.
2) 30 seconds to grab the investor's interest.
3) You need to be clear, simple and compelling.
I have read many articles and books about Executive Summary but the best one I have ever read is this post by Guy Kawasaki. You can even get it in pdf.
For those who don't know Guy, he is managing director of Garage Technology Ventures, a seed-stage and early-stage venture capital fund.
Here I will try to summarise his Executive Summary How-to:
Executive Summary
Objective: sell your idea to a potential investor
Length: "You should be able to do all this in six to eight paragraphs, possibly a few more if there is a particular point that needs emphasis. You should be able to make each point in just two or three simple, clear, specific sentences. This means your executive summary should be about two pages, maybe three."
Contents:
Component
Description
The grab
The most compelling statement of why you have a really big idea.
The problem
You need to make it clear that there is a big, important problem that you are going to solve
The solution
What is the solution to that problem?
The opportunity
Market segmentation, size, growth, dynamics and above all your target in this market
Your competitive advantage
What makes your different from your current or future competitor's?
The business model
How specifically are you going to generate revenues, and from whom? Why is your model leverageable and scalable?
The team
Why is your team uniquely qualified to win?
The promise ($$)
Your fundamental promise is that you are going to make them a win a lot of money. Show five years of revenues, expenses, losses/profits, cash and headcount.
The ask ($$)
The minimum amount of equity you need to reach the next major milestone. If you expect to be raising another round of financing later, make that clear, and state the expected amount
There is a grate number of examples who entrepreneurs who gave up studying to implement their dream. Just to name two of them: Bill Gates and Mark Zuckerberg (Facebook).
When I studied in Bilbao, there was somebody I know who left his studies to create a company. At that time, we all laughed (maybe especially me!)
He created several companies on the Internet sector (hosting, domains). He may not have been as successful as Mark Zuckerberg but he is much more successful than many of those who laughed at that time:
Once this entrepreneur and one of those who laughed (not me) met by chance in a seminar about entrepreneurship in the Euskalduna Conference Center in Bilbao: one of them was attending the seminar and the other one was working as a waiter for a few dollars an hour. Who is who?
The first lists contains 15 commandments and the second one contains 10 commandments more.
They are all very sensible but I have highlighted my favourite commandments
15 Start-up Commandments
1. Your idea isn't new. Pick an idea; at least 50 other people have thought of it. Get over your stunning brilliance and realize that execution matters more.
2. Stealth startups suck. You're not working on the Manhattan Project, Einstein. Get something out as quickly as possible and promote the hell out of it.
3. If you don't have scaling problems, you're not growing fast enough.
4. If you're successful, people will try to take advantage of you. Hope that you're in that position, and hope that you're smart enough to not fall for it.
5. People will tell you they know more than you do. If that's really the case, you shouldn't be doing your startup.
6. Your competition will inflate their numbers. Take any startup traffic number and slash it in half. At least.
7. Perfection is the enemy of good enough. Leonardo could paint the Mona Lisa only once. You, Bob Ross, can push a bug release every 5 minutes because you were at least smart enough to do a web app.
8. The size of your startup is not a reflection of your manhood. More employees does not make you more of a man (or woman as the case may be).
9. You don't need business development people. If you're successful, companies will come to you. The deals will still be distractions and not worth doing, but at least you're not spending any effort trying to get them.
10. You have to be wrong in the head to start a company. But we have all the fun.
11. Starting a company will teach you what it's like to be a manic depressive. They, at least, can take medication.
12. Your startup isn't succeeding? You have two options: go home with your tail between your legs or do something about it. What's it going to be?
13. If you don't pay attention to your competition, they will turn out to be geniuses and will crush you. If you do pay attention to them, they will turn out to be idiots and you will have wasted your time. Which would you prefer?
14. Startups are not a democracy. Want a democracy? Go run for class president, Bueller.
15. You're doing a web app, right? This isn't the 1980s. Your crummy, half-assed web app will still be more successful than your competitor's most polished software application.
10 More Startup Commandments
1. You will have at least one catastrophe every three months.
2. Outsource effectively, or be effectively outsourced.
3. Do you thrive on stress and ambiguity? You'd better.
4. The best way to get outside funding is to be successful already. Stupid but true. But you, cheapskate, don't need money, right?
5. People will think your idea sucks. They're even probably right. The only way to prove them wrong is to succeed.
6. A startup will require your complete attention and devotion. Thought your first love in High School was clingy? You can't take out a restraining order on your startup.
7. Being an entrepreneur requires a healthy amount of ignorance. Note I did not say stupidity.
8. Your software sucks. So what. Everyone else's does also, and re-architecting is the kiss of death for a startup. Startups are no place for architecture astronauts.
9. You do have a public API, right?
10. Abject Terror. Overwhelming Joy. Monstrous Greed. Embrace and harness these emotions you must.
When I left Spain in 2002, I really felt I that was doing the right thing and that, outside Spain, I would have much more opportunities than my fellow friends who stayed in Spain.
Spain has made a huge economic and social development since I left - quite an economical and social miracle. Some people say that in 6 months you can no longer recognize China any more because of the fast development. In my case, when I go back to Spain I cannot recognized it any more. It is so different from Spain I knew in 2002.
At the beginning when I left, I had a relative superiority complex towards Spaniards for several years. But little by little, I realized that those who stayed behind did not lose their time:
A friend of mine (from School) has just created a consulting company in the aeronautics sector. He was a very smart guy and I hope he will be successful.
Another friend of mine (from University) developed an radio simulation software and is providing consulting services to companies in Madrid. I also wish him luck.
These two stories just make me feel I cannot afford any more not trying it.
I would like to reproduce this article from Forbes
The Global Startup Erika Brown, 11.29.04
Tech entrepreneurs and venture capitalists are creating multinationals before they even make a nickel.
In late September 110 entrepreneurs and venture capitalists from 17 cities flew in for Jerusalem Venture Partners' annual meeting, at the Cafe Gray overlooking Manhattan's Central Park. Businesspeople from Amsterdam, Milan and Singapore sat across from folks from Tel Aviv, Tokyo and Zurich as they sipped coffee and listened to a lecture about the perils and opportunities of China's tech markets. Between presentations JVP founder Erel Margalit darted from table to table shaking hands, bowing and kissing cheeks, interrupting conversations held in Chinese, Hebrew and heavily accented English.
Such is the life of the modern venture capitalist. It used to be more parochial: enterprises in Silicon Valley or Boston launched with hometown money and nearby employees. After five years or so someone would think about sending a sales guy to London or Tokyo.
These days fledglings go global before they've even made their first sale. Three out of every four investments Margalit makes are multinational. JVP's latest project, Double Fusion, is building software that inserts 3-D ads into online videogames. Its technology and entrepreneurs are from Israel, its funding is from the U.S. and Jerusalem, and its chief executive is Indian. JVP's partners in Asia will take its executives on a tour of China, Korea and Japan later this year to meet with game developers and ad agencies.
VCs who once bragged about never driving more than half an hour to visit a portfolio company are jetting to Australia for optical engineers, Israel for security whizzes, India and Kazakhstan for brute software coding, South Korea for online gaming and Japan for graphics chips. For growth across the board China is the place to go. IT spending there is expected to hit $48 billion by 2008, a twofold increase, and grow three times as fast as in the U.S. Its mobile phone users are increasing at 25% a year. One of every three cell phones and eight of every ten DVD players in the world are made in China. Shanghai produces 40% of the world's semiconductors. India's communications minister has set a target of up to 250 million telephones by 2007, with what one VC estimates to be a $30 billion investment in the necessary infrastructure.
"VCs in Silicon Valley used to pride themselves on being local," says Margalit, who has $680 million under management. "That was well and good when the U.S. was the mecca for technology, but today the leading markets are China, Japan, Korea, Taiwan. Entrepreneurs need to talk to the people who are determining where the world is going, and they can't do that if everyone around the table is American."
A few venture and private equity firms such as WaldenVC, Worldview Technology Partners and Warburg Pincus have been investing in Asia for years--and Apax Partners has long straddled the Atlantic--but the jet-setting ranks are swelling. DCM-Doll Capital Management's David Chao boasts that 40% of his portfolio companies' revenue is derived outside the U.S.
Norwest Venture Partners' Promod Haque, who sits atop FORBES' Midas List of tech dealmakers, says he won't even consider investing in an entrepreneur unless that person has worked out an international strategy. In June Haque and his partners took executives from eight portfolio companies on a two-week business-building mission to his native India. One of Norwest's companies, Virtela Communications, initiated five new deals on that trip.
A global view is required just to keep pace with foreign firms quick to copy an idea. Yahoo faces serious competition by indigenous copycats in countries such as Korea. Ebay has been scrambling to buy up imitators in Korea and elsewhere. Along with other VCs, Benchmark Capital invested $13million in online networking outfit Friendster in 2003. William Gurley, a Benchmark general partner, now counts at least three Chinese imitators. "You can't plan U.S. success first and then go global ten years from now. They're all reading the tech business magazines and VentureWire. They know what you're building before you get there," he says.
Silicon Valley Bank, famed as a lender to young U.S. companies, opened offices in London and Bangalore in September. Next year SVB plans to move into China and Israel. The bank is going abroad to get an edge over its U.S. competition, but it isn't lending in Asia--its staff is there to make introductions for entrepreneurs to potential customers, investors and partners. "Venture capital is a global industry. We are going to see more cross-border companies being funded," says Ash Lilani, head of global sales and marketing at SVB, "and the earlier you get to know startups, the deeper the relationships."
Consultancies are seeing a nice boost as well. Kenneth DeWoskin, head of business development for PricewaterhouseCoopers Transaction Services in China, says demand for advice on how to do business in Asia has been so taxing that he has doubled the size of his corps to 6,000 in the last 24 months. He plans to add another 1,000 employees in China next year. "The first thing I tell entrepreneurs is, "Keep your bags packed at all times,'" says DeWoskin.
I am worried about risks involved in quitting my job and creating a start-up. According to ReadWriteWeb.com, GigaOM, Paul Graham and other blogs like New Florence New Rennaissance, there is only one best place to create a technology start-up. This place is shown on the picture and is called Silicon Valley.Graham goes one step further and says that not being in Silicon Valley is an error that can kill a start-up!.
Well.... I am not in Silicon Valley. I am here in Hong Kong and I must say that in 2008 and feel like staying in here in the Pearl River Delta (HK, Shenzhen, Guangzhou, Macau...).
From the very beginning, I thought of a global approach for this start-up. This global approach has three legs: Europe, China and US. We already have one leg in Europe, another in China. Now we need a leg in the Silicon Valley.
One of the most depressing feelings when you are brainstorming to find a suitable idea to create a Start-up is finding out that all your wonderful ideas have already been implemented by somebody else.
A good place to find out this is by usingSimpleSpark.
As you all know, Google, the indisputable winner in the Web search engine sector (and beyond), came, in fact, years after search engines were popular on the Internet. However Google won the race. Why? Maybe because their page just had what the user wanted: a field text and a button and nothing more. Or maybe because of something else.
History of Search Engines
This is why today I wanted to make some research about the history of web search engines since the beginnings to the web bubble. I am not including the new search engine initiatives in the web 2.0 era
1993:
MIT student Matthew Gray created World Wide Web Wanderer. It was initially used for counting Web servers to measure the size of the Web.
Martijn Koster created ALIWEB (Archie-Like Indexing of the Web). ALIWEB allowed users to submit their own pages to be indexed.
Excite was introduced by six Stanford University students. It used statistical analysis of word relationships to aid in the search process.
1994:
EINet Galaxy (Galaxy) was established in 1994 as part of the MCC Research Consortium at the University of Texas, in Austin. It was eventually purchased from the University and, after being transferred through several companies, is a separate corporation today.
Jerry Yang and David Filo created Yahoo. It started out as a listing of their favorite Web sites. What made it different was that each entry, in addition to the URL, also had a description of the page. Within a year the two received funding and Yahoo, the corporation, was created.
WebCrawler was introduced. It was the first full-text search engine on the Internet; the entire text of each page was indexed for the first time.
Lycos introduced relevance retrieval, prefix matching, and word proximity in 1994. It was a large search engine, indexing over 60 million documents in 1996; the largest of any search engine at the time. Like many of the other search engines, Lycos was created in a university atmosphere at Carnegie Mellon University by Dr. Michael Mauldin.
1995:
Infoseek went online in 1995.
Alta Vista also began in 1995. It was the first search engine to allow natural language inquires and advanced searching techniques. It also provides a multimedia search for photos, music, and videos.
"Almost all of the men profiled [in the book]– Bill Gates, Warren Buffett, Wayne Huizenga, and Sam Walton, to name a few – were not motivated by a desire to become wealthy; instead, they were motivated by the accumulation of wealth. Most, in fact, kept their modest lifestyles even after they passed the billion dollar mark. In short, they were fascinated and motivated by the process, not the result."
Furthermore the book argues that most billionaire profiles tie back in varying degrees to the following nine strategies:
I would like to share with you, this interesting article from Pamela Slim. The article explains the relation between the learning process of new things and the different stages you go through in a start-up.
" If you are transitioning from a "safe" corporate job to entrepreneur, chances are you are doing a lot of new things. It is amazing how much there is to learn when you start a business for the first time; from forming new work habits to web design to bookkeeping to product development to sales and marketing.
Based on your background, natural strengths and experience, you might find some tasks easier than others. Regardless of what you are learning, if it is new to you, you will go through a determined set of steps which us training and development wonks call the "conscious competence learning model."
Why should you care about an obscure model?
Because when you understand the natural stages your brain goes through to learn something new, you are more likely to relax, expect confusion and resistance, seek opportunities to practice and give yourself lots of time to learn [...].
So here is a breakdown of the stages of learning:
STAGE 1: UNCONSCIOUS INCOMPETENCE. You aren't aware of what you don't know. Otherwise known as blissful ignorance.
Example: If you are a full-time employee of a corporation and have never pondered becoming an entrepreneur, you have no real idea what is involved. The idea sounds dangerously romantic, and you spend hours in your cube, fantasizing about your carefree lifestyle.
What you need in this phase: A dose of reality.
STAGE 2: CONSCIOUS INCOMPETENCE You become painfully aware of what you don't know. This is the "hopeless klutz" phase.
Example: You get excited about the possibility of working for yourself, so you poke around on the web and buy a few books. You find out there are a million things to take into consideration and everyone has a different opinion about what will make your business a success. You don't feel like you have a handle on things, and it feels both uncomfortable and overwhelming.
What you need in this phase: Sound guidance, support and information from trusted experts.
STAGE 3: CONSCIOUS COMPETENCE You are able to do the task with focus and mental effort. Think of how you felt as a kid when you were able to ride your bike without your Mom or Dad's hand on the back of the seat, and you didn't wipe out.
Example: With careful planning, study and support, you are able to start your business. You develop your product or service and begin to sell it. You start to interact with customers and handle all aspects of running your business. You still need to use instruction manuals, get expert guidance and spend a lot of time preparing, but you are able to run your business with a decent level of comfort.
What you need in this phase: Practice, practice, practice. And feedback from a trusted source.
STAGE 4: UNCONSCIOUS COMPETENCE You do the task effortlessly without even thinking about it. [..]
Example: You are in business for a few years and work very hard. You perfect your products and services, understand your market and develop real expertise in your field. You learn from your mistakes. You handle all aspects of running your business without a lot of stress. People look at you as an expert and think "man, he must have been born doing that, since he does it so well."
What you need in this phase: Not much, as you are comfortable and "at home" with your new skills. Pretty soon, however, you will need to challenge yourself with something new or focus on improving your performance, since if you stay in the "unconscious competence" stage for too long you can get bored.
[...]
Over time, you will learn that you get stuck in stage 2 or 3 with certain tasks and it never gets better, no matter how much you practice. This is a good indication that a skill is not a natural strength, and it may be better to hire someone to do it for you."h
Most people say they"ll become entrepreneurs once they find a great business idea. But according to according to Ramit's that's a great myth because even the grandest ideas won't make your start-up successful. Success comes from a basic idea executed amazingly well.
Identify a broad, high-level goal - an industry, lifestyle or financial outcome
Identify things you like and dislike - be brutally honest
Identify opportunities that open up more doors in the right area
Avoid jobs/projects/opportunities that lead to dead ends
Take multiple steps to reach a goal
Eliminating choices
Chalk up now-I-know-I-don't-like-that category
Start doing
Finding the right people to talk to
Finding out what people actually need
May be lacking in style, but doesn't matter
Remember
The Myth of a great idea is a great way to think yourself into oblivion and failure
At our age
Nothing wrong with not knowing what we want to ultimately end up doing
Stop feeling guilty
But there's something ENTIRELY wrong with not actively trying to find out exactly what we want.
Trying, not waiting.
Experimenting, not "thinking about it"
Give it a shot.
Of course, this does not mean that we have to stop trying to find an idea for our start-up. We need to find an idea and we will continue discussing about it in globthink: the diary of our start-up
Oh yes, I want to believe. And after don Quixote's last post, which is in part writing down a conversation we had, I'm getting closer.
Beliefs are important, motivation stems from them. Sometimes it takes a just a few minutes of writing to realize what you already knew, in my case that I don't necessarily belong to corportate world and that for my peace of mind and general well-being I can't afford to stand still while so many things are going on. I want to take active part, have my say.
Oh my God!! Are those giants attacking us? lets kick their asses, mr Quixote.
As I explained before, I am an expatriate in Hong Kong (HK). I came here because I am involved on a project in Asia-Pacific. I spend most of the time on the top of a skyscrapper or sitting on a plane.
But my "leased time" in HK is not forever. It's only for 19 months. After this period of time, which finishes on January 31st 2008... will have to:
Possibility 1: go back to France with my company
Possibility 2: try to renegotiate to stay in Hong Kong (which is may be possible).
However if you look at this post, you will discover how you may feel in a cubicle or, like many other expatriates, in a plane, most of the time.
Some weeks ago, I went back to Paris for a seminar and I realized what I knew for long, that it is not time for me to go back to a normal European living.
So, January 31st 2008 could be an opportunity for me to tailor-make a "Possibility 3" for myself: to create an start-up. Right now I have some savings, I am motivated and, above all, I do not have any charge (no family). So even if after a year I don't succeed, I would have lost nothing.
It is very nice to be paid for a boring job and not to have to worry about. But... I cannot live without challenges:
So how could be "Possibility 3"?
First, I would need to quit my company to be able to work on my start-up. Writing a blog and having a full-time job may be compatible but creating a start-up while working 50 hours a week on something boring is more difficult. (I don not say this is impossible). For me quitting my current job after January 31st is a must if I want to have a decent try in the entrepreneurial world.
Then, I will have to quit my beautiful company-paid apartment in Wanchai (center of HK) move to a cheaper place:
maybe Shenzhen on Mainland China, just beside Hong Kong (30 % chances. Maybe only temporarily)
Furthermore, I may also have to renounce to my precious temporary HK ID Card.
And then I will start working at home in permanent connection via skype with "the man over there" (whom I know since secondary school) and work a lot in a prototype.
I have been living in Hong Kong for more than 1 year. Even though I can follow conversations in mandarin, my proficiency is not very good (in HK they speak Cantonese). I would be very please if I could find some time to improve my mandarin 2 or 3 hours a day. I hope it can be compatible.
My friend "The man over there" has recommended me this post by Guy Kawasaky, which is quite impresive. The video is a bit long but it is very worth watching.
This is the video of a panel organized by the Churchill Club and moderated by Guy Kawasaki. The members of the panel are 4 entrepreneurs who started from nothing and know are running successful business.
Just be reading one of the paragraphs of Guy's post, I loved it and motivated to listen the very long video
Markus Frind, the founder of PlentyOfFish.com [...]spends about two hours a day in his underwear managing a free dating website that gets twelve billion page views a year. He is the only employee, and he only has one server. And by the way, he makes $5-6 million/year with Google ads."
The first question one usually has when thinking about creating a start-up company is: which application are you going to develop?
And the answer is...... that we do not have any answer yet. This is why we are going to start writing this blog in order to keep track of our preliminary studies and ideas so that everybody can know what we are thinking of doing.
In fact, I was so surprised when I read Paul Graham's article about which people are reluctant or afraid to start a company. One of these reasons is not to have a clear idea for the start-up
"In a sense, it's not a problem if you don't have a good idea, because most startups change their idea anyway. In the average Y Combinator startup, I'd guess 70% of the idea is new at the end of the first three months. Sometimes it's 100%.
In fact, we're so sure the founders are more important than the initial idea that we're going to try something new this funding cycle. We're going to let people apply with no idea at all. If you want, you can answer the question on the application form that asks what you're going to do with "We have no idea." If you seem really good we'll accept you anyway. We're confident we can sit down with you and cook up some promising project."
Well, I do have some possible applications in mind and I am going to present them to you in this blog. I hope you can help me develop these ideas.
My idea about creating a start-up is that it has to be a global one. A global start-up is one that is targeting the whole world.
Being global or being local is a very complicate dilemma:
Should you focus on adapting your web2.0 application to local uses?
Or should you rather try to create general applications that can be used by anyone but maybe not in the most suitable way for everybody?
You probably have seen the HSBC (bank founded in Hong Kong in 1865) advertising campaign in your own country. HSBC claims itself as the world"s local bank. The topic of HSBC advertising campaign is that the same thing can be interpreted differently by people in different places. Thus it is of vital importance to have a local background, even tough you are a global player. In other words you cannot be global if you are not local.
I totally agree with HSBC in this. Furthermore, I would go a step further and say that the only management structure that allows you to be local and global at the same time is a decentralized approach. I learnt this in my current company, which is also a global and local player at the same time.
Most Internet start-ups begin local and become global some time later. However I know a clear exception: FON(company building a community of people making WiFi universal and free) by Martin Varsavsky has followed a multi-national approach from the very beginning. While the whole orchestra was directed by Martin in Madrid, different groups of entrepreneurs were working in America, Europe and Asia at the same time to achieve Fons goals in their respective countries.
My idea of global start-up is based in this model. We can define it in the following way:
I am thinking on a 3 region approach. A co-founder is necessary to coordinate work in each region:
Region
Co-founder
Software Development
Marketing
Start-up Financing
Asia
Identified
+++
+
+
Europe
Identified
++
+++
+++
USA
Not yet identified
+++
+++
In other words, I believe:
Asia should focus on software development due to the low labor cost. However marketing is also important (local people would be required for this). Start-up financing will have a minor role in Asia due to cultural differences and above the fact that venture capitalists are more rare here. I will be in charge of Asia because I have being living here for some time, can follow (simple) conversations in mandarin and I do not feel like quiting China. Asia will be a very difficult region.
Europe will have a central role. At the end of the day, my co-founder and me are Europeans. My co-founder will be in charge of this region. At the beginning of the project there will be an important focus on the development of a prototype. When the prototype is ready, the focus will be on looking for Capital and Marketing in different European countries.
In USA, our efforts will be focused, above all, on Start-up financing dealing with Venture Capitalists and on Marketing issues. By the moment we have not yet identified a co-founder in America and I hope we can have one soon. Working in USA is not necessary from day 1 of the start-up. Activities in US will start once the prototype is operational (several months later).
This is is still very preliminary. However I am aware of several problems in this geographical model:
Being of scattered may not be practical for team working
Important part of the budget will be expend in the cofounders' inter continental travels to participate in conferences or interviews with Venture Capitalists
According to this article by Paul Graham (one of the partners in Y-Combinator), "Start-ups prosper in some places and not others. Silicon Valley dominates, then Boston, then Seattle, Austin, Denver, and New York. After that there's not much. Even in New York the number of start-ups per capita is probably a 20th of what it is in Silicon Valley. In towns like Houston and Chicago and Detroit it's too small to measure." We do not really know where we are going to be based in US, but I am aware of the extremely importance of location... I hope this will not be one of those factors that will kill our project.
There is a grate number of examples who entrepreneurs who gave up studying to implement their dream. Just to name two of them: Bill Gates and 
15 Start-up Commandments
10 More Startup Commandments
When I left Spain in 2002, I really felt I that was doing the right thing and that, outside Spain, I would have much more opportunities than my fellow friends who stayed in Spain. 
The Global Startup
I am worried about risks involved in quitting my job and creating a start-up. According to 
One of the most depressing feelings when you are brainstorming to find a suitable idea to create a Start-up is finding out that all your wonderful ideas have already been implemented by somebody else.
" If you are transitioning from a "safe" corporate job to entrepreneur, chances are you are doing a lot of new things. It is amazing how much there is to learn when you start a business for the first time; from forming new work habits to web design to bookkeeping to product development to sales and marketing.
As you know, this blog is about discussing business ideas to create our start-up.
As I explained before, I am an expatriate in 
The first question one usually has when thinking about creating a start-up company is: which application are you going to develop?
