Money vs. Time

Now that we are building out our next proof-of-concept, we are starting to obtain a completely different perspective on money. Whereas we were looking at giving up 33% of the company to get started 2 months ago, in another two months we will actually obtain more money and yet only have to give up less than 20% of the company.

At the same time, we are faced with a 4 month delay on a project that will take a total of 6 months to build out to the point where it can be sold. So this appears to be a negative but I am not sure how negative it really is.

OK there is the whole "end of year" thing - you know where companies tend to spend most of their budget at the end of the year. That said, the economy is still recovering and it might not be until next year that Big Checks are written. In fact, our current timing places us in the second quarter of 2010 and that might end up being perfect.

On the flip side, we are missing out on the holiday season and who knows how that might affect us in the end. It is interesting to ponder as I had a friend ask me if the savings in equity was worth the time delay - I simply do not know.

Not that we had a choice in the matter ...

Hourly vs. Monthly

While we are building our proof-of-concept - and if anybody knows how to go from 32-bit images to 8-bit images please LET ME KNOW!!! - I will post some things on non-VC-related items. Today is all about hourly vs. monthly payments.

In the hourly corner, I have clients that blissfully pay me rather large hourly rates, completely screw up what they want and then pay me even more money to fix their mistakes. Based on these clients, the hourly game is a good thing.

On the other hand, I can get many more clients to sign up for a monthly retainer based on the number of hours they think they need from me - and this is what takes me to the next level. In the hourly game, I am limited to about 240 hours per month (60 hours per week) and at, let's say for this example, $250 per hour, that comes out to $60,000 per month. Good money but not the end game.

When I book monthly contracts I ask people how much work they want from me and then how many hours they feel this work will take. Now I have a great capacity to work significantly faster than most people so this type of negotiation really works in my favor. I then give about a 20% discount off of my hourly rate and then sign people up to 6- to 12-month contracts. Back in July, I had 5 such contracts each paying an average of $20K per month - MUCH better money!

Of course I gave all of those contracts up to build my new company because, in the end, even the monthly contract game has a low ceiling. While $100K sounds awesome per month, it fluctuates wildly and I have yet to break $600K for a year. To put that in perspective, most lawyers I know consistently make $800K to over $1M with much less experience in their field than I have in mine.

However, even starting up a single company is not really the end game - rather starting a company that generates companies is the final goal. To that end, I do have yet another patented invention that, once built, will automatically generated 12 spin-off companies (at least) without further effort on my part. While this is a good start, I am constantly noodling for better company-generating concepts as this, to me, is the ultimate money-generating solution.

Month 4, Day 7

While this is my first blog entry, it comes in the midst of my adventure is startup land (sorry, I was too busy being pummeled to actually blog). I thought I knew alot about starting up a company going into this but I soon realized how much of a neophyte I really am - despite my numerous years of startup experience working for other people.

I hope people read my blog and learn from my mistakes...so many mistakes...and I hope to continue blogging as that means I have somehow overcome the odds. For this entry, here is an overview:

Back in March of this year, I came up with a brand spanking new method for automatically moving a mobile application from one device to all other devices. Got an iPhone App? I can place that app on Blackberry, Nokia, Palm, Google, etc... devices in an automated manner all without ever needing your source code. Kind of cool, huh?

I started working with a good friend of mine, who is a DEEP technologist, and we soon took my initial idea and turned it into a patent and a proof-of-concept. By June I (thought) was ready to meet investors, get some money to build this thing out in 6 months and chaaaaannnnngggee the wooorrrllldddd

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Yeah, right.

I will write more about my fiascoes in subsequent entries...