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Thresholds

4/30/2003 3:40 PM
R.G.	Thresholds In starting your own business, you face a number of thresholds. I'm going to list a few that come to my mind, and I'd invite anyone else to chime in. The business model I have in my head is that someone builds a few gadgets, loves the result, and then decides to sell a few. People love them and so they sell some more, maybe hit ebay, then think "Hey - I could just make them up in batches and start my own business... yeah... that's it... make a pot full of money, ... " The idea is to discuss how to recognize the threshold, whether it's a real or an imaginary one, and some ways to cross or avoid crossing it. Thresholds ====================== - the first time you sell a gadget - when you decide it's a viable business - the first time you order parts for a batch of gadgets - when you open a bank account for the business (alternatively, when you start accounting processes for the business separate from your own check book) - when you start worrying about liability - when you have to hire an accountant - when you have to hire a person (or figure out a usable alternative that lets you NOT hire) - when the business work has eaten up ALL of your "spare" time - when you face going full time and quitting your day job - when you take out a loan for (parts? tooling? completed units?) These are just a few, I'm sure.

4/30/2003 3:40 PM

R.G.

Thresholds

In starting your own business, you face a number of thresholds.

I'm going to list a few that come to my mind, and I'd invite anyone else to chime in.

The business model I have in my head is that someone builds a few gadgets, loves the result, and then decides to sell a few. People love them and so they sell some more, maybe hit ebay, then think "Hey - I could just make them up in batches and start my own business... yeah... that's it... make a pot full of money, ... "

The idea is to discuss how to recognize the threshold, whether it's a real or an imaginary one, and some ways to cross or avoid crossing it.

Thresholds
======================
- the first time you sell a gadget
- when you decide it's a viable business
- the first time you order parts for a batch of gadgets
- when you open a bank account for the business (alternatively, when you start accounting processes for the business separate from your own check book)
- when you start worrying about liability
- when you have to hire an accountant
- when you have to hire a person (or figure out a usable alternative that lets you NOT hire)
- when the business work has eaten up ALL of your "spare" time
- when you face going full time and quitting your day job
- when you take out a loan for (parts? tooling? completed units?)

These are just a few, I'm sure.

5/2/2003 7:51 PM
stephen conner	Re: Thresholds (long) Gee, that's a tricky question. I've had some experience with this kind of stuff and I hope this story may be of use to you. When I was at university I took a final year class that was all about marketing and commercialising inventions. It got me all fired up and before I knew it me and a friend had gone into business together. The deal was, I would invent something cool, he would finance me to develop it, we'd sell the idea, and split the loot. Getting the idea was easy enough. A friend asked me to fix his DJ mixer, the crossfader had worn out. I got hold of a new crossfader and in 2 weeks he had worn that one out too. What the world needed was a fader that would never wear out or go crackly. Within a month I had the first prototype made from parts of an old CD drive. We built it into a neat looking casing and took it down to a big trade fair in Manchester, to pimp the idea round some companies that made mixers. The bosses looked interested but only because we appeared to be young, naive, and easily scammed. I was twenty at the time. By this point we had spent about $75. Meanwhile I was doing patent searches and sure enough it seemed to be a brand new idea. To cut costs, I wrote the patent application myself. It probably sucked, but the important thing was to get priority, it could be redone properly later. Next I built a real 2-channel mixer around the thing. My "business associate" knew some guys at a Glasgow record label and he was able to have some well-known local DJs try it out and write a letter saying that it rocked. We went round manufacturers again with this. Eventually we got some interest from an American company N*****. I did a retrofit to one of their mixers to prove that it could be done. Then there was a hell of a lot of haggling over the contract. I had to hire a lawyer for this (cost $1000) In the end we were offered $16000 up front for the (incomplete) patent rights, another $16000 if the patent turned out OK, and yet another $16000 if they managed to sell shitloads of mixers. The patent application failed. The mixer went on the market and sank without a trace. Counting the money we spent, me and my friend got $7000 each for a year and a half of part-time work. We could have made more flipping burgers in McDonalds. We crossed all of R.G.s thresholds at one time or another, except for the day job (I stayed on at university to do a PhD and nobody cared if I disappeared for weeks on end) the accountant and the loan. I still have the car and studio equipment that I bought with that money. It was tremendous fun and I would do it all again tomorrow. Steve C.

5/2/2003 7:51 PM

stephen conner

Re: Thresholds (long)

Gee, that's a tricky question. I've had some experience with this kind of stuff and I hope this story may be of use to you.

When I was at university I took a final year class that was all about marketing and commercialising inventions. It got me all fired up and before I knew it me and a friend had gone into business together. The deal was, I would invent something cool, he would finance me to develop it, we'd sell the idea, and split the loot.

Getting the idea was easy enough. A friend asked me to fix his DJ mixer, the crossfader had worn out. I got hold of a new crossfader and in 2 weeks he had worn that one out too. What the world needed was a fader that would never wear out or go crackly.

Within a month I had the first prototype made from parts of an old CD drive. We built it into a neat looking casing and took it down to a big trade fair in Manchester, to pimp the idea round some companies that made mixers. The bosses looked interested but only because we appeared to be young, naive, and easily scammed. I was twenty at the time.

By this point we had spent about $75. Meanwhile I was doing patent searches and sure enough it seemed to be a brand new idea. To cut costs, I wrote the patent application myself. It probably sucked, but the important thing was to get priority, it could be redone properly later.

Next I built a real 2-channel mixer around the thing. My "business associate" knew some guys at a Glasgow record label and he was able to have some well-known local DJs try it out and write a letter saying that it rocked. We went round manufacturers again with this.

Eventually we got some interest from an American company N*****. I did a retrofit to one of their mixers to prove that it could be done. Then there was a hell of a lot of haggling over the contract. I had to hire a lawyer for this (cost $1000) In the end we were offered $16000 up front for the (incomplete) patent rights, another $16000 if the patent turned out OK, and yet another $16000 if they managed to sell shitloads of mixers. The patent application failed. The mixer went on the market and sank without a trace.

Counting the money we spent, me and my friend got $7000 each for a year and a half of part-time work. We could have made more flipping burgers in McDonalds.

We crossed all of R.G.s thresholds at one time or another, except for the day job (I stayed on at university to do a PhD and nobody cared if I disappeared for weeks on end) the accountant and the loan.

I still have the car and studio equipment that I bought with that money. It was tremendous fun and I would do it all again tomorrow.

Steve C.

5/8/2003 6:28 PM
Gus	stephen Your post is interesting. Two people have asked me about improving crossfaders for DJ work etc in the last 1/2 year. I was told that alot of DJ wear the cross fader out fast. Maybe a retrofit kit could be a way for you to make some more money.

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