Setting and Hitting Early Milestones

To read the Green Pants Chronicles from the beginning, click here.

Act 2: Launch

If you remember back a few posts, I’d rationalized in my mind that I wasn’t going to die, destitute and alone, if the Windsor Circle thing didn’t work out, and that the worst that could happen was that I’d go back and get another job. Part of that calculus was naming incremental steps that would prove that we were on the right track, and to provide opportunities along the way to stop the process if we didn’t have the basics down.

Egregiously Comparing Ourselves to Astronauts

Miss Baker, Unwitting Spider Monkey Astronaut

Think of it like the Gemini and Apollo missions to get into space and land a man on the moon. First we had to get a rocket to fly into space and come back. Then we needed to stick some living thing in the rocket, and hope that we could get poor Miss Baker back alive. Then we needed to put a human in the rocket and hope to get him home alive, and then get to the moon, and then land on the moon, etc, etc. Each successive step reduces risk and frames the knowledge required to get to the next step.

Windsor Circle’s First Milestones

For Windsor Circle, I remember our risk milestones in those early days as being something akin to:

  1. Get a Team to Commit by February 28
  2. Build a Working Prototype by April 30
  3. Sell it to Someone by June 30
  4. Sell it to 50 Someones by Decemeber 31
  5. Raise venture capital by December 31

If we didn’t make it anywhere along the way, we would stop and recalibrate or exit.

The Bruce Boehm Rule

This is chronologically out of order, but one of the most important lessons of the journey was something that local angel investor Bruce Boehm taught us (paraphrased):

At any given moment, ask yourself what the biggest risk to creating enterprise value is, and what the least resource intensive way is to prove that you can solve for that risk.

This doesn’t mean not to invest resources heavily when needed. It just means that for each given risk, fire a few bullets to see if you’re on target before firing the cannon. This came up over and over again in our journey, and not just at the beginning stages.

Generally, I think we did this well. We had a corporate value of taking calculated risks and learning from failures, so when we failed this maxim, it was either because of a lack of creativity or energy.

A Caveat: It’s Your Job to Take Calculated Risks.

One caveat, however. An entrepreneur’s job has a lot to do with taking calculated risks and being decisive. We had moments as a team where we were too diligent. Clearly, your risk increases when you move too quickly, but I think at times we found ourselves seeking too much data. For example, we could have made the market segmentation decision faster and moved more quickly to our pivot based on early observations, but we were digging too deeply for data to justify the moves. So, be careful about wrapping yourself up in “testing” and “gathering data.” If you know, you know, and it’s your job to be decisive and take calculated risks.

The First Thing I Ever Sold

To read the Green Pants Chronicles from the beginning, click here.

Act: Backstory

People often wonder if entrepreneurial leanings are nature or nurture. Are some folks just born “that way?” I don’t know. I’ve certainly met a lot of folks that had a creative project or side hustle that just wouldn’t stop growing. I’ve also discovered a lot of people that seem wired in a way that lends itself to entrepreneurship. I’m probably in the latter camp, and for me, it started early.

Denny and the 100 ABCs

I was in 5th grade at Hillandale Elementary School in Durham. My penchant for taking on too many projects was already showing. I was in the chorus. And played the recorder… poorly. And played YMCA sports. And I was writing articles for the school newspaper (which is funny to think that we had one in 5th grade… I’m sure the content was lacking and even more sure that no one read that thing). Oh, and I was a student. There was that.

At any rate, as all classes do, we had a few knuckleheads that were always getting into some sort of trouble. Mr. Wolfe’s standard punishment was to assign 100 ABCs, due the next day. It occurred to me, watching Denny quickly approaching 1,000 ABCs, that he probably wasn’t super keen on writing ABCs, and that I had a lot of spare time in the afternoons after school. I was a latchkey kid for awhile after the divorce (more on that later, maybe) and like most kids I’d sit and watch cartoons while eating Doritos until Mom got home. And I was fidgety, in a way that often led to rather constant sketching or doodling.

So, that afternoon, while watching Barney’s Army, I wrote 100 ABCs. Not because I was in trouble, but because I thought it’d be of value to Denny. The next day when we got into school, I asked Denny if he’d remembered to do his ABCs, and as a dark cloud of panic swept across his face, I said, “I’ll sell you mine for a quarter.”

Denny then stuffed me into a locker and took my ABCs. Hard life lesson.

I’m kidding. He dug a quarter out of his knapsack and procured a fine set of expertly crafted ABCs, with authentic Dorito stains painstakingly placed in the margins.

Without knowing it, I’d taken my first entrepreneurial leap. I’d found a need in the marketplace. I discovered that people were willing to trade financial value to fill that need. I discovered that I could use available resources (my time and labor) to create solutions, and that I had to find the courage to promote it to the marketplace (asking Denny if he needed them). I had to ascribe a value to it (pricing… which I got wrong… he would have paid more).

This played out over and over again as I went through my early life. I sold candy to kids in Mrs. Neely’s 6th grade (although my competitor John Jacobs was a dominant Amazon to my struggling Sears). I started mowing lawns in 8th grade, and quickly learned that the skill of asking neighbors on either side of my current customers was a lucrative asset. As I progressed through highschool, I ended up with 20-30 lawns and a leaf raking business in the fall, endeavors which provided a value in the marketplace, created employment (I paid other students who came out with me), and ultimately, put a fair amount of money in my pocket.

The Need for Self Sufficiency

As an aside, I was deeply, deeply proud of having my own money. I was becoming aware that there were others with more money than my family had. Other students had sweeter rides, for example, but very few students had procured their own vehicle with their own money. When I got in my Datsun B210 (the color of which my brother accurately described as “diarrhea brown”), didn’t have air conditioning or power anything and was propelled by a two-stroke weed eater engine… when I got into that car, I felt pride. It was mine. I paid for it. I was not dependent on someone else for my outcomes or my stuff. That pronounced drive (that need? that hunger?) has stayed with me all these years. It has both helped and hindered me in my progression through life and career, but it has been a powerful and central gravitational force.

And it all started with 100 ABCs in 5th grade.

Lawyers and Legal Mumbo Jumbo

To read the Green Pants Chronicles from the beginning, click here.

Act 2: Launch

From the very beginning, we wanted our professional services partners to be more than just knowledgeable experts who would transact with us. We wanted team members.

The Road Trip Test

I’ve long believed that you should follow your gut… it’s usually right. When it comes to people, an easy way to get your gut thinking about a long term relationship with a person is to ask “would I enjoy doing a road trip with this person?” If your immediate reaction is “yeah, that’d be fun. I’d enjoy finding some mischief to get into with this person,” then you’ve probably passed the first test. On the other hand, if the prospect of grinding through long hours of eating up highway with this person makes you shudder, you should stop right now. Your gut is right.

Picking the Right Lawyer for Windsor Circle

I started with the obvious and started asking people in my entrepreneurial circles about the lawyers they knew. It became clear that the attorneys who were really focused on Entrepreneurship had launch kits that got the basics nailed down, and deferred payment until later (typically after the first fundraising event).

We met several attorneys that would have done well for us, but Neil Bagchi of Bagchi Law had a unique and scrappy determination that attracted us to him. A road trip with Neil would be fun (something that I should actually test now that I’m on the other side of the entire experience… Neil, you in?!).

Launch Package. One Price. Deferred Payment.

If I remember correctly, the startup package had a small fixed amount associated with it, and that the rest could be deferred to later.

It included:

  • Incorporation and Charter
  • Employment Agreements (including Invention Agreements, Non-Competes, etc)
  • NDAs
  • Basic Cap Chart and docs

It’s not that one couldn’t find form letters for all of this stuff online (you can, and the reason the startup laywers can do this on the cheap is because they are using all templated stuff and just modifying it for you).

That said, I found it immensely helpful to have Neil available for questions and coaching about why certain things were the way they were. It also ensured that all of the docs tied together as they are interrelated and connected…. Changing something in one doc can ripple into others, and those connections aren’t always apparent to first timers.

Incorporation: Delaware C-Corp

One of the biggest decisions we made early was to go ahead and incorporate as a Delaware C Corp. Let’s break it down quickly.

You want to incorporate because it provides you personal protection from legal and financial issues arising from the business. If the company goes bankrupt, the buck stops with the company. If the company is sued, the organization is the target, not you personally (unless you’ve done something untoward personally). On a cheerier note, if a company wants to buy the value you’ve created, they can’t very well buy YOU, but they can certainly buy all of the shares of a corporation.

The next consideration is what kind of corporation you want to be. There are a ton of resources out there that have already documented the kinds of corporations that exist (LLC, S-Corp, and C-Corp are the most common), so I’m going to let you Google it instead of rehashing it here.

I will state that we chose to become a Delaware C-Corp for one main reason. We wanted to swing for the fences and try to build a really big company, quickly. We knew we would be fundraising, so we wanted to be ready for that.

Neil guided us to consider that future state of fundraising, and that when that happened, it was most likely that we’d need to be a C-Corp (as it is best suited to taking on investment, managing shareholders, etc). Delaware is known for having a well-defined and straightforward corporation statutes and low corporate tax rates. Over half of Fortune 500 companies are incorporated there for this reason.

So, while it was slightly more expensive and time consuming, we decided to incorporate as a Delaware C-Corp right out of the gates as a matter of signalling. When the time came for fundraising, we assumed that this would show that we came ready to play and knew the ropes… that a fundraising event wouldn’t be impeded by a switch in corporation type.