If you've been sitting on a startup idea for some time, take a tip from Erik Klein: "The correct amount of money for any entrepreneur to take is zero dollars."
Klein, a partner and seasoned investor with business incubator Lemnos Lab, was a panel moderator at the Maker Conference in New York City on Thursday. He insisted that all entrepreneurs (manufacturers, especially) should be funding their own startups themselves.
Affectionately called "MakerCon," the annual event is an opportunity for founders, educators, students, and tinkerers to gather at the New York Hall of Science and talk shop. Speakers and attendees brainstormed ways to marry technology with government policy, and bring things like 3D printed assistive services to disabled army veterans.
Speaking in conversation with Lisa Fetterman (Nomiku CEO), Dan Shapiro (Glowforge CEO), and John Dimatos (Kickstarter's design and tech outreach leader), Klein offered some of his best tips to startups.
"Entrepreneurs have to be economists," he warned. "Building greater links between the local community, government, and the maker movement is going to be critical."
The shared goal amongst everyone in the room was to leverage technology in a way that made a global difference. In order to get there, panelists emphasized the importance of starting small.
Here are 4 expert tips for getting your passion project off the ground today:
1. Make mistakes (a lot of them) on somebody else's dime.
Shapiro's latest product, a 3D laser printer that cuts materials such as wood, foam, cardboard, glass, and your basic plastics, will be a boon to small-scale manufacturers on platforms like Etsy, Tictail or Shopify.
This morning, he launched a 30-day pre-order campaign for the new Glowforge 3D printer (retail price: $1,995). His Seattle, Wash.-based company has raised $9 million in funding.
You could call Shapiro a small business veteran, but he admits to having made many mistakes in the past. Prior to launching Glowforge, Shapiro founded Sparkbuy, Inc., before selling it to Google in 2011.
The good news: He didn't have to pay for most of them.
When he first got the idea to launch a startup, he decided to become an employee at one first-- and "it was a disaster," as he recounts. "The company was a mess. We all made tons of mistakes...but they weren't on my credit card." That burden was on the founder's shoulders.
He calls the experience the best education he ever received.
Think you have a great idea for a business? Incubate it while getting a feel for what running a company might actually be like.
2. Research previous crowd-funding campaigns.
Ditamos has worked with hundreds of makers and business owners. The trick to getting your idea funded, he advises, is to take a peek under the hood at how others have pivoted over the course of their campaigns.
"Within the tech category, there are thousands of campaigns," Ditamos said. "If you just look at one and study it in depth, you start to see the trajectory of what it was like when it launched, and what it felt like by the end."
Even if you think your business is linear, odds are, you're going to make substantial shifts. It's far better to study those now, rather than backtrack later on.
3. Get involved.
Fetterman wasn't afraid to get down and dirty during the early stages of her company.
Her product, Nomiku, is an immersion circulator that's used primarily for sous-vide cooking, where food items are sealed in a plastic bag and soaked in hot water for a longer period of time. Fetterman attests that early buyers received a Nomiku that she physically crafted herself.
Shapiro also started small, by phoning up manufacturers in the local Seattle area.
"I called a 100-year old printing firm and said, 'Tell me what parts are easy," he recalls. That firm primarily made checkbooks and ledgers, and the operators suggested that cardboard and rounded rectangles were easiest to manufacture. So that's exactly where Shapiro started.
Focusing or your Net Promoter Score (NPS), should also be a priority. An NPS essentially tells you how satisfied your customers are with your product.
"It helps you get the pulse of your customers, and is probably also a leading economic indicator," said Klein.
4. Don't take VC money.
We know, it sounds contradictory. How are you supposed to get a business off the ground without any third party support?
Fetterman says that she was rejected by every venture capitalist she met with. "I got laughed out of VC board rooms," she recalls.
In the end, it was a blessing in disguise. Feeling more motivated than ever, Fetterman used Twitter to find out which sous-vide chefs would potentially need her product, and then she sold her product the old-fashioned way: Door-to-door.
"I kept the rapport, and built this huge community."
When she finally went live with Nomiku on Kickstarter, Fetterman didn't need the notoriety or the funding goals of a bully investor. She got right down to the fun part and began making her products for people who really wanted them.