“What can I expect out of a good venture capitalist?’

The answer to this is: five hours per month of mindshare during which he opens doors for you with prospective customers and partners and interviews candidates for high-level positions at your company.”

Some more great advice from Guy Kawasaki. I don’t agree with all the advice. I’ve just listed those that I agree with.

“First, remember that less is more. Imagine that the elevator in which you’re pitching is in a ten-story building–not the TransAmerica Tower. I’ve never heard of a company not getting funded because its plan was too short. Believe me, if a potential investor is interested, he or she will ask for more information if it’s necessary.

Second, make your numbers reasonable. If you’ve only invested $1,000 so far, and your business consists of one part-time employee, it’s a little unreasonable to seek $6 million in capital.

Third, make your idea important–different, unique, clever, innovative, etc. The first question I ask myself when I read many plans is, ‘Where have these people been? Don’t they realize they will be the Nth (where N > 10) company that does this?’ If you are in the same business as Yahoo, Amazon.com, Inktomi or Microsoft, you had better have a very simple way to powerfully differentiate your company.

Fourth, eschew hyperbole. ‘Revolutionary,’ ‘billions,’ ‘patented,’ ‘first mover,’ ‘next generation,’ ‘unique’ and ‘innovative’ have little impact in the 21st century. Good investors (the kind you want for your company) are going to seriously review your business model, technology and people before they write you a check, so communicate the value of your proposition without overstating it.

Fifth, lose the “Chinese math.” Chinese math is the argument that goes like this: If just 1% of the people in China bought a Macintosh, Apple would be the largest computer company in the world. Many plans cite a study that “proves” that a market will be $20 billion by 2003 and state that all the company needs to do to be profitable is to get 1% of the market.

There are problems with Chinese math: 1) There’s never been a consulting study that didn’t predict a multibillion-dollar market size. (Do you think consulting firms can sell studies that predict small or down markets?) 2) Getting 1% of a market is easier said than done. 3) If you say that you need to get only1%, does this mean you’re conceding the 99% to others? 4) You label yourself a bozo because only bozos would try this line of reasoning on sophisticated investors.

Sixth, pay attention to appearances. Use plain old ASCII text, or we’ll see a bunch of weird characters. Don’t use ALL CAPS–let your text make your case and not vice versa. And take out extraneous carriage returns so that your text doesn’t look like this.

Seventh, don’t send your plan as a file attachment. For one thing, lots of people are afraid to read a file attachment because of the viruses they sometimes carry. That, of course, assumes the recipient got the file attachment at all–which is a bad assumption–and that the person has Word, PowerPoint or Acrobat to read it.

Eighth, list the members of your team in the “Personnel” section from the most important to the least important person. Usually, this means the chief executive, vice president of engineering and vice president of marketing are right up front. Lots of companies start off by listing the two secretaries, a part-time accounting person and external advisers first.

Ninth, if you have a truly great technology that is truly revolutionary (to not coin a word), demonstrate an ability to deliver this technology. Venture capitalists are big believers in leapfrogging, curve-jumping technology, but someone on your team has to have a convincing background.

It’s a real bummer when we see a plan for “wireless Internet access at T3 speeds” and then see that the founders list consists of people who worked for a pet supply store, investment bank and used bookstore. A solid team will have key members who have legitimate technical experience and smarts–e.g., worked for Cisco or have a Ph.D. in electrical engineering from MIT (and a B.Tech from IIT ”

I have passed through the thorny path of convincing venture capitalists to invest in my company. I’ve waited outside their offices for hours, made cold calls and solicited business cards in conferences. Here is some great advice from Guy Kawasaki. Some excerpts from Forbes.com: Does An Entrepreneur Need An M.B.A.?

“Can you succeed with a good team and hard work even if your initial idea is not a winner?

Sure. Most initial ideas are not winners anyway. You have to be flexible: Sometimes you start with a great idea and a lousy team. Then you get rid of the team. Other times you start with a lousy idea and a great team. Then you get rid of the idea. Great companies often make radical changes in direction as the times change. Nokia (nyse: NOK – news – people ), for example, started in forest products”

Its been a long day today. I worked on the job for more than 12 hours. Then commuted back home from Richmond to Washington DC, a distance of more than 120 miles in a very rainy night. I’m expecting that tomorrow morning will have a freshness in it that is typical of post-rainy spring mornings. The typical jog from 6:00 AM onwards should be exciting.

It was a busy Monday today. The day started early at 5:00 AM. I worked till 6:30 AM. Then had a nice jog around the Greenbelt lake near my house. After a quick hot bath, I left for work at 7:30 AM, carpooling and navigating the traffic in Interstate-95/495 around Washington DC. Evening was colder than what I expected but the evening jog, again around the lake at about 7:30 coupled with some exercise was very invigorating.

I will be travelling to Richmond early tomorrow morning at 5:30 AM. I will be back on Wednesday evening.

Its been a calm weekend for me. Finished some pending work, though not all. First real spring weekend with blooming flowers and mild winds. Went for a lengthy jog both on Saturday and on Sunday. Looking forward to a hectic week…..

I was an entrepreneur once, and couldn’t help but see the truth in the following from a book I am re-reading today (I last read it some years ago). I had always believed that an entrepreneur is never a blind risk-taker but rather a “calculated” risk-taker. Some excerpts from Amar Bhide’s, “The Origin and Evolution of New Businesses” …..

“Most successful entrepreneurs start without a proprietary idea, without exceptional training and qualifications, and without significant amounts of capital. And they start their businesses in uncertain market niches.

Most are started by someone who is working for another business, who sees a small niche opportunity — one in which the company he or she is working for is already taking advantage of, or one in which a supplier or customer is involved. And the person jumps in with very little preparation and analysis but with direct firsthand knowledge of the profitability of that opportunity — and pretty much does what somebody else is already doing, but does it better and faster. These entrepreneurs don’t have anything that differentiates their business from other businesses in terms of technology or in terms of a concept. They just work harder, hustle for customers, and know that the opportunity may not last for more than six or eight months. But they expect to make a reasonable return on those six to eight months. And along the way they’ll figure out something else that will keep the business going.

I think we have to distinguish between risk taking and a tolerance for ambiguity. Going to Las Vegas and taking a bet on a roulette wheel requires a lot of risk taking, in the sense you must be prepared to lose what you put up. But a tolerance for ambiguity, which is a characteristic of successful start-up entrepreneurs, is a willingness to jump into things when it’s hard to even imagine what the possible set of outcomes will be. It means going ahead in the absence of information and in the absence of having much capital and in the absence of having a novel idea. In fact, just by looking at the amount of capital that people put on the table, you can see that those entrepreneurs don’t have a lot of financial risk, and because most of them are young, their opportunity costs are not that great.

Most founders of promising companies do not start out as innovators or risk bearers”.