Smartups: Lessons from Rob Ryan's Entrepreneur America Boot Camp for Start-Ups

ROB RYAN With a new preface
Copyright Date: 2001
Edition: 1
Published by: Cornell University Press
Pages: 240
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  • Book Info
    Book Description:

    Building successful start-ups was never quite as easy as it seemed, and the changing economic climate has raised the stakes, reduced the margin of error. New entrepreneurs can't stumble into wealth on the power of half-formed ideas, or turn dreams into reality without doing a lot of homework. It's time to get smart. This book teaches would-be entrepreneurs the skills they need to get through the venture capital process with companies that will survive to grow and succeed.

    Rob Ryan, a pioneer in the high-tech industry, founded Ascend Communications in 1989, and throughout the nineties provided firms with the infrastructure they needed to keep up with the rapid growth of the Internet. At the beginning of 1999, Ascend was sold to Lucent for $25 billion. Since retiring from Ascend and starting Entrepreneur America, Ryan has helped launch a string of successful companies, including Virtmed, RightNow, and Virtual Ink. All provide electronic solutions to real-world problems, meet existing-rather than manufactured-needs, and save their customers time and money.

    In Smartups, Ryan focuses on methods he's developed over the years for building a sustainable business that makes money. He emphasizes the importance of testing ideas on customers and making sure that a product offers something new and important. Recognizing a team's key competencies is crucial, Ryan says. He also finds it necessary to take certain steps at the correct stages of a company's inception. Smartups will show you how to turn your idea into a real product, take it to investors, and get your start-up started right.

    eISBN: 978-0-8014-5988-7
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-x)
  2. Table of Contents
    (pp. xi-xii)
  3. Foreword
    (pp. xii-xvi)
    David J. BenDaniel

    In 1989 Rob Ryan founded Ascend Communication With three engineers. Rob served as CEO of Ascend taking it Public, Friday the thirteenth, May 1994, at $13.00 per Share. Under Rob’s leadership, Ascend had become leading manufacturer of Point of Presence boxes (POOPS) for Internet providers. Rob describes Ascends business as “selling the picks and shovels for the Internet gold rush.”

    In 1995, the last year Rob served as CEO of Ascend, the stock was acknowledged as the best performer of the year on all of Wall Street, returning a whopping 721%.¹ If you had invested in Ascend two months After...

  4. Preface to the Cornell Paperbacks Edition
    (pp. xvii-xx)
  5. Acknowledgements
    (pp. xxi-xxiv)
  6. Introduction
    (pp. 1-12)

    It was a gray winter day in the Bitterroot Range of western Montana, but high in the Big Sky Gregg Favalora was weaving his way to Entrepreneur America, a "boot camp" for start-ups. Gregg didn't know what to expect. He had heard from other MIT business competition students, Entrepreneur America veterans, that it could be rough on the ego.

    Gregg's dream was to build a three-dimensional display for the PC, one that could do modeling, handle design, or just show killer 3-D entertainment. It had been his dream ever since he was in high school, and Gregg just couldn't shake...

  7. 1 Which Wanna-be Are Yoy?
    (pp. 13-34)

    One hot summer day a few years ago, Steve Hau and his start-up team arrived at my room in the Four Seasons hotel in Boston. Steve wore that hungry, desperate look that says “I need money now.”

    After Little introduction, Steve began his laptop presentation as I leaned back in my chair. Steve outlined the vision that he had dropped out of a Harvard Ph.D. program to pursue: “Clinicians don't really have access to information. For example, doctors are still using index cards to capture inpatient billing charges, i.e., the hospital’s most precious financial information! A week or two later,...

  8. 2 Do the Dogs Like the Dog Food?
    (pp. 35-58)

    About two years ago I sat in my Boston hotel room, watching a laptop demo from yet another start-up team. I hear over a hundred pitches a year; 1 can tell pretty quickly whether someone’s driving a hot rod or a lemon.

    These guys, Netcracker, had a potential hot rod, but their marketing plan was a lemon. What they had was a network simulation package that ran on a PC. The data base stored information on types of network equipment from various vendors. In the simulation, a user could select a sample equipment from the database to build a model,...

  9. 3 The Sunflower Model
    (pp. 59-80)

    In early 1998 I invited Evan Thornley to Entrepreneur America. Evan, a former Reader’s Digest magazine executive, was running a small Web “portal” company called LookSmart. He was smart, experienced, and ambitious, but LookSmarťs search engine Web site wasn’t really on the map. In fact, Reader’s Digest, which had been funding LookSmart, had lost confidence and pulled the plug. Dwarfed by companies like Yahoo!, Evan’s company was pulling in revenues of only $120,000 a year in advertising. The start-up was just barely staying alive.

    “You’re focusing on the wrong product,” I told Evan bluntly. “You’re never going to make a...

  10. 4 The Keys to the Gold Mine
    (pp. 81-102)

    One morning I got a call from Alex Smith, founder of a start-up I had been working with. His company, Vellis, creates skills and knowledge distribution systems for companies in the automotive industry—basically they do business-to-business “e-learning,” or on-line training. Alex had received a term sheet from Sterling Capital, a Chicago-based VC firm. The problem was that Sterling had stalled out. Although they had sent Vellis a funding proposal thirty days earlier, they decided to back out. Vellis was losing momentum.

    Vellis had done its homework really well. They had a strong team that made it to the Guts...

  11. 5 Peeing in the Wells
    (pp. 103-142)

    Last winter, in the middle of Montana’s first snowstorm, an old friend of mine from Boston came out to see me at the ranch. It was actually a professional visit, and he brought a few other people with him—the rest of his management team. My friend, Dick, wanted my advice about his start-up, called Everfile. The company had developed Web-based document-sharing technology, and it looked good. But as they talked to me about the business, I got frustrated.

    “Listen, you've already screwed up,” I told him. “It's so bad that I don't even know if I can help you.”...

  12. 6 Sucking the Air out of the Room
    (pp. 143-156)

    Several years ago two competing start-ups independently came up with the same product idea. One of them was Ascend, the other was Company X (run by a guy ľll call Bill), about six months ahead of me in product development. At a trade show we ran into each other and started chatting.

    We stood next to Bill's hotshot display area, eyeing a clump of khaki-and-blue-shirt guys huddled by a computer monitor.

    “See those people over by your chief engineer?” I said to Bill. "They work for me, and they're probably pumping him for information."

    Bill smiled at me. "Oh, that's...

  13. 7 So You’ve Got the Money, Now What?
    (pp. 157-196)

    Imagine depositing your first big VC check. Millions of dollars at last! What will you do with it? Buy a car? Lease an office building? If you're like my successful startups, you'll probably write yourself your first paycheck. And it won't be big, either.

    Virtmed’s founders worked for six months without seeing a penny. When they won their first round of capital, they finally started paying themselves a whopping $60,000 salary. Same for the founders of Actuality. Salary tends to be a big event for my entrepreneurs because most haven't seen income in a long time. They've been bootstrapping their...

  14. Epilogue: Companies That Make It
    (pp. 197-204)

    When a company comes out to Entrepreneur America and really impresses me, I get involved in helping it through the chaotic early stages. Typically the start-ups I see ask me to sit on their boards. But between running my ranch and the Entrepreneur America program, I just don't have time to sign up with everyone. I only sit on the boards of the ones I think I can really help. Currently that’s fifteen companies.

    As you've probably learned from reading the book, what I do with the start-ups is not so different from what venture capitalists do (except for investing...

  15. Index
    (pp. 205-215)