ECONOMICS AND TRADE | Achieving growth through open markets
05 March 2009
Chronicles of a Startup
Triumphs and tribulations of an unusual business venture
David Adewumi is founder and chief storyteller of heekya.com, a startup technology company dubbed the “Wikipedia of stories.” He contributes to VentureBeat, a magazine on digital media. Previously, he developed products for Lomic Inc., an energy-related software firm, and worked for the U.S. Army. His alma mater is Pennsylvania State University.
March 5
A blog post titled “What to do if your startup is about to fail” recently drew my attention. It was written by Jason Calacanis, chief executive of search engine Mahalo.com and the founder of Weblogs Inc.
I’d like to share some of his observations.
“There are two types of entrepreneurs in this world: real ones and the folks who play entrepreneurs for some portion of their lives,” he wrote. “From a distance, most folks can’t tell who’s who. In up times, when the market is flush with cheap money and unexplained exits, everyone looks brilliant.”
We hope we are in the first category. Nevertheless, some have questions concerning Heekya — how does our company seemingly face no problems amidst these hard times?
Believe me, Heekya faces hard times as much as any other startup — it’s more difficult to raise funds, attract relevant talent, sell to potential customers and seek strategic partnerships. But the most important aspect of staying in business — not “failing” — is cash flow and profitability. Let’s go back to Calacanis:
“You need to figure out your runway immediately. This is really easy to calculate: you look at how much cash you burn every month and divide that into how much cash you have in the bank. Your accountant can do this for you, or you can simply look at your P&L [profit and loss] and bank statements.”
Heekya can survive hard times for a while because its expenses are minimal. None of the team is salaried or employed full time, so its costs are limited to server, storage and hosting fees, which are less than $100 a month. With little capital, Heekya has gone quite far. Still, we focus on tightening the ship against leaks.
While others are cutting expenses, we focus on keeping expenses minimal. We’re a remote team — working out of homes or shared offices — which keeps expenses light. We rely on open-source technologies, personal work machines and mobile phones. We think it’s worth making such sacrifices: It will keep us among the “real” entrepreneurs.
February 19
Are we really heading toward an economic depression?
For startups, where every month can be one of survival, the thought of an economic depression can be quite … depressing. The perfect storm of events may force (in some cases, already has) hard-working startups that otherwise have successful technologies, teams and markets into what blogger Techcrunch calls “the deadpool,” or the place startups go when they die.
The race for startups isn’t to gain 10 million users, but rather to get positive cash-flow and become profitable shortly thereafter.
While during the boom years of the post-2003 era companies regularly would raise mountains of cash for questionable products and applications, now the focus for technology entrepreneurs is on how to “monetize” their web and software applications. They try to do it either by selling directly to consumers or by turning toward revenue models, such as software-as-a-service agreements (known in industry lingo as SaaS), whereby monthly fees are charged for license/use of software.
Heekya faces the same struggles many other companies, individuals and organizations around the world face at this time. Yet our biggest cost is people, and our advantage is in a company and product that play well with “the double bottom line.”
The double bottom line, a term I first heard used by Ted Leonsis, a successful entrepreneur and sports-team owner, refers to a company that does well by doing good, that generates profit by creating socially minded products that increase the standard of living or happiness of users or by providing another “public” value.
Heekya — by adhering to the double bottom line — attracts talented developers who are more interested in seeing our product succeed than in pulling in bigger paychecks.
January 28
There’s a word every entrepreneur loves to loathe or loathes to love: diligence.
It could be described as conscientiousness in paying attention to a task. Business or due diligence is the process by which an investor, or potential partner, will painstakingly review every fiber of your business, looking for signs of irregularities, misplaced paperwork or incompetence. Major miscues may signal that your company is not fit to be invested in or partnered with.
Heekya is currently going through a diligence process. We are pleased to work with a top legal firm, which has helped guide us through every step of the way, as much as we are confident in our tediously collected but not trivial records — the certificate of incorporation, company bylaws, documents related to previously invested capital, and a capitalization table that shows ownership breakdown.
We also have done a great job preparing financial and head-count projections, so it is not difficult to procure all the relevant paperwork.
A potential investor or partner also might be interested in seeing your business plan, team biographies and résumés, as well as a strategic roadmap for the years ahead. We’ve taken care of all of those.
Execution is a key to success, and a key to execution is attention to detail and focus.
There’s nary a place we see more need for this than in diligence.
January 14
As [New York Times columnist] Thomas Friedman writes in his book The World Is Flat, what happens in Bangalore affects us here in the United States and what happens in the technology corridors of the United States affects others around the world. We are all affected by the recent economic travails.
Heekya too has been affected, both in its ability to raise capital and in its discussions with potential partners. Angel investors, who were great prospects for new ventures just several months ago, have seen in some cases a 40 percent decline in their net worth. Angels’ ability to invest in young startups like Heekya is hampered.
Partners interested in Heekya technology now must walk each potential deal through even more scrutiny as big and small companies alike seek to tighten loose screws on their ships and conserve cash.
But the beauty of building a technology company with great people, even in a tough economic environment (or perhaps I should say: especially in such an environment) is that we still hold onto our strongest assets — our loyal employees. (Considering that we use free open-source tools and platforms, they are our greatest expense.) As we move forward in the new year and look to add to our stable of great story tellers and technical minds, we look ahead with joy, not fear. Despite challenges, we still attract and retain great people. So Heekya is in position to reach its dream of allowing anybody, anywhere to share his or her story.
January 8
There’s been a debate throughout recent history about whether certain human traits are inborn or can be developed through teaching and social interactions.
With the advent of modern business, that discourse has extended to entrepreneurship.
Are people born entrepreneurs or are they taught to be such creatures?
A friend sent me email today saying, “I am becoming convinced that entrepreneurs are born and cannot be made. Not good if you teach entrepreneurship.”
I’m not sure I wholly agree. I think combined forces of nature and culture make an entrepreneur.
Is the habit of doing things that failures [people who tend to fail at things they do] avoid doing innate, or can it be developed?
Habits, of course, can be formed, and I believe the same is true with entrepreneurship. Entrepreneurship is more of a habit and a way of thinking than an actual characteristic that one is born with.
So even if some are born with a greater propensity to habitually take action, it doesn’t mean that others cannot acquire such entrepreneurial traits.
And if we can change, isn’t everything possible?
December 17, 2008
A reader complained that there isn’t much on the Heekya Web site. That’s true.
Our product is not fully developed yet. That’s why we call ourselves a startup. What we at Heekya want to do is fix storytelling online, which is broken. Heekya wants to be the “Wikipedia of stories,” a social storytelling platform that changes the way consumers create, discover and share stories. Free. Fun. Easy. 60 seconds.
You can preview our product at http://heekya.com/preview.php . What you see is what you get: drag and drop story editor; import all media (photo, video, text and audio) from third-party online social services. Users can grab and embed the heekya story widget across social networks (Facebook, MySpace, et. al.,) blogs (WordPress, Blogger, Twitter) personal Web sites and via e-mail and instant message.
We bet that the ability to re-mix and mash up themes, motifs, plots and similar stuff from other sources will allow users to create new stories or retell the existing ones from their own vantage point. Sharing and re-sharing stories will keep user engagement levels high, we hope, and attract more traffic.
That’s our story. What’s yours?
December 2
The best advice anyone will give you isn’t on what company to build, how to build it, whom first to hire, where to locate or how much money to secure before a launch. Rather, the best advice is about how to prepare for the long mental and physical journey ahead when you are about to start a new business.
If we get too high on our highs, then we will want to give up on the dark days — days during which we need to keep in mind that success is around the corner.
This is central to the vision I have for Heekya, my startup. My colleagues and I have to focus on executing our plans and ignoring the obstacles we face, day after day. By reminding ourselves why we started Heekya (because everyone has a story to tell) and by believing steadfastly in how our company can change the community or even the country (by unlocking the power of stories for the whole world), we have persevered on days when failure has seemed but a sneeze away.
