A step into Virtual Reality

[Michael Raphael]

As always, when I start a new company I like to come back to the site that made everything happen.

A little background for those who don't know me and/or do know me and want an update.

I came on here in 2014 when I was trying to rapidly grow my web development company. Since then we've expanded into software development, app development, and digital marketing services. Everything is fairly successful for a "1" (2 other contract employees) man show. I have several clients, acquire news one every month, and it gives me the 6-figure lifestlye people want.

I then attempted to create a company featured around a baby product. Although it was profitable in the first quarter someone said something to me that changed my perspective. Why did I focus on this difficult product when I had a 15k/mos. business. He was right and I pivoted back to my main and grew it.

Well this past year I am cycling back to a new startup in Virtual Reality. I don't want to say what I am doing just yet, but it is very exciting and not another one of those B.S. "pretty dragon" applications.

My current obstacles are time and additional developers. Finding raw talent in this tech space is difficult since it is so new. I plan to launch my product in the next month if everything goes well. I am currently working on finishing the backend system that will run the software and finalizing some tweeks on the software itself. We made massive breakthrough this past week.

I am currently in a position where I was offered exclusive distribution from a company for a specific industry/market. I am debating whether I take the offer or grow the business organically. Would like some advice.

Option 1: The offer will be for a certain duration (i.e. 3-5 years) and we will keep a % of profit (I presume a scaling system that decreases every year until a fixed rate i.e. 30% Yr 1, 20% Yr 2, 10% Yr 3+) as well as a major sum of capital (in the M) After this period the company will be able to purchase the rights to use our software exclusively in this market at a discounted rate or continue another lease. I believe the % they pay us will incentivize them to purchase us out fully if the software deems successful.

Option 2: Put 110% effort into generating 100k revenue in the next 2-3 months and then grow a sales team to push more revenue. Organically grow the business. My biggest concern is time. The more time we waste the more likely we lose market share to new competitors.

 

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[AdamMaxum]

Can't offer any advice, but I look forward to hearing more!

 

[sparechange]

Lesson No4: OWNERSHIP is everything when Creating Wealth. Never give away equity to Staff or Investors as the more you have the Richer you become…

from the great felix dennis, he has amassed a self made fortune of about half a billion or around that mark, he always preached 100% equity in something, i think he would say option 2.

 

[V8Bill]

Never give away equity to Staff or Investors

Do investors exist that don't want equity in exchange? What would they get if not equity? I've made a lot more by sharing equity than anything else I've tried to do alone. In at least one case I'd have never even have got off the ground had I not given 2/3 of my company to someone else who had the skills and influence that were essential to make the business a growing concern. I personally don't really care how much anyone else makes as long as I get what I want. In fact the more they make the more I make. Alone my return might be (say) $100k per year but with partners I gave away 2/3 and made way more than 100k so for me partnering up and sharing rewards makes a lot of sense. I guess it depends on what you're doing but when you have no money equity is a very valuable thing you can share to get help and everyone wins.

I might have to grab Felix's book to see what he means by "never" and "always".

 

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[ZF Lee]

Do investors exist that don't want equity in exchange? What would they get if not equity? I've made a lot more by sharing equity than anything else I've tried to do alone. In at least one case I'd have never even have got off the ground had I not given 2/3 of my company to someone else who had the skills and influence that were essential to make the business a growing concern. I personally don't really care how much anyone else makes as long as I get what I want. In fact the more they make the more I make. Alone my return might be (say) $100k per year but with partners I gave away 2/3 and made way more than 100k so for me partnering up and sharing rewards makes a lot of sense. I guess it depends on what you're doing but when you have no money equity is a very valuable thing you can share to get help and everyone wins.

I might have to grab Felix's book to see what he means by "never" and "always".

I think Felix meant 'don't give too much to lose control'.
Yes, if you let them have too much until you have no influence or power until it breaks the Commandment of Control, it's a no go.
That might be important if you are the main founder rather than a partner...and you have to direct strengths and efforts to one common purpose or vision.
For your case, yes, it's about mutual agreement..good for you. Most prefer a controlling stack, understanding the harsh and thieving nature of most business deals.
I think investors are a must not just because of their cash, but because of their networks or skillsets. Money is one thing...if you have some sales, that is not a problem. Fastlaners leverage well on OPS (other people's skills). Although I don't deal with investors, I watched a lot of Shark Tank and the more successful deals were not really related to the money although it was important, but the type of Shark (investor) with the right network, channel and skillset.

For example, @Likwid24 hooked up with Lori Greiner who had her connections with QVC..and he did well. The combination was a deadly one. Most of the time I hardly looked at the money although it was important...I looked at which Shark had the tools to help out.

 

[MJ DeMarco]

I'd love to give an opinion but lack information. Therefore I'll go with boilerplated defaults: I prefer to retain all ownership, if not, control.

Good luck on your new project, definitely a growing field with addictive qualities.

 

[Michael Raphael]

So option 1 is not as attractive as I intended. They offered a significantly less amount, they want to give higher % but to me that is useless. So I believe I am going towards route 2. I've already made 3 new contacts that are going to offer more money in the long-term than option 1 offered.

I agree, keep as much control/equity as possible. But I see short-term gains far superior. Again this was exclusivity for one niche for a DURATION and I saw it as a "funding" opportunity to fund growth in every other sector I'd apply this to.

I am trying to negotiate terms with new companies that are more alongside short-term gains. I know it may seem futile, but I see this as a way to fund further growth in other sectors.

As per the type of investor. I 100% it's about the network an investor brings. The reason I am still bothered about option 1, is because they were industry leaders. One of the biggest names in the industry. With their partnership I would cornerstone the market.

Will share more updates, just a busy Sunday

 

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[Michael Raphael]

Chicken or the Egg Phenomenon
June 23, 2017

So I've ran into a slight issue. The technology (without getting into to much specificity) I am working on requires two major parties. I find it very easy to get the sales, in fact yesterday I was able to close a $2,000 beta user that would be a significant partner once beta-tests proved successful. Easily $10,000+ monthly client. My issues is getting the other side of the equation. Trying to find solutions there, but it takes time. Primarily because my technology is not 100% ready.

I am having difficulties with my development team. Just had a guy quit who couldnt actually perform properly. It was a freelancer, but the good news is all the work he did up until now was free. He felt guilty taking on the project. The shitty part is I still need it done and need to find someone.

So in a massive dilemma, I can get sales easily cause the product is valuable but it's hard to finalize contracts (take the money) until I can give a proper demo. I can't give a proper demo because the development is in a hault currently. I am actually looking to vietnam/india to look for a python developer.

DOES ANYONE HERE KNOW A PYTHON DEVELOPER IN INDIA/VIETNAM? (oh, I also need a front-end developer)

Sorry all caps, but I am quasi-desperate for a quality worker. I've done some work in these countries before and it comes out great if you give proper instructions. I am not worried about that because I have it spelled out word-for-word. My only concern is time.

I am slightly bothered about this issue, because in truth my partner was supposed to take care of the technology and I was supposed to manage business. It seems I am taking both matters into hand. I own more than 50% of the business and I knew it was for this reason, but still a bit upsetting.

My biggest slight with this business is I feel I am making $10,000, $15,000, $20,000 etc. in my other business month-after-month that I need to pour into this one to get started and I am dreading it. I really like bootstrapping so putting in even 1k bothers me. I rather get someone 2% equity to build it or give equity. And yes, I've done this successfully in the past. Just finding difficulties this time around.

Anyways, another week has passed. I probably have $20,000 in sales for beta, I need a product, time to put 10k into this to finish it up. Then grow out the other side of the equation to make $20,000 turn into $100,000 after beta. It's worth it, I know, just difficult to take the pill.

 

[Michael Raphael]

July 11, 2017

Just wanted to post a minor update. This week I finally have my dream developer working on this project. I wanted to bring him on this a month ago but he was busy. He now isn't and I anticipate him to complete this project correctly in two weeks.

The first option I mentioned earlier post I have continued speaking with company except with new terms. No exclusive, required license fee paid annually + a % of all revenue brought into the system with scaling rates as each year passes (3 year term). Any other companies that want to use our software and white label, this company has right to first refusal (i.e. if someone offers me 200k to buy white label, Company A can buy out contract - give us 200k so we don't work with them). My goal is to incentivize them to just buy us out exclusively fully at my million-dollar value. I think in 2 years time this will be an obvious choice for them.

Anyways, my other job has kept me busy trying to close a few deals to bring in a very-very large profit and that will supplement any costs for this tenfold. I am about to hire a bunch of interns for my main company as I do every summer and hope to have 1-2 of them working on this project part time. This will help me increase sales without worrying so much about customer acquisition costs.

My next challenge is to hire a sales rep/consultant that has connections with a specific niche and just get as many users to use our product as possible (obviously).

If the product launched in two weeks, I anticipate we will make 10k - 30k in the following month. This will cover all salaries needed for future developers and sales people.

I am debating if I should still try to raise capital so I can grow this even faster.

Questions I have

1. How can I find a consultant (not just sales person but someone who can actually make connections based on prior relationships)
2. Should I raise capital?
3. Is my deal worthwhile or am I blindsided by something? (if you need more detail I can DM lmk)

 

[BrooklynHustle]

Lesson No4: OWNERSHIP is everything when Creating Wealth. Never give away equity to Staff or Investors as the more you have the Richer you become…

from the great felix dennis, he has amassed a self made fortune of about half a billion or around that mark, he always preached 100% equity in something, i think he would say option 2.

Loved his book "How To Get Rich". What a read!

 

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[Michael Raphael]

October 20, 2017

Been a while since I've posted. Primarily because of discouragement, business, and a slew of other B.S. that really isn't an excuse.

Ultimately I've had one terrible developer issue after the other. I dont know what it is about Python developers but they are all scum (so far). They never deliver, can't deliver, or just go AWOL. Not sure why. I pay exactly what they ask for! It's maddening.

I was looking to raise capital for this again, an angel group was off the walls about this project and then out of nowhere they went AWOL. Willing to write me a note for my ask (convertible debt) said it would take 2-3 weeks. Then nothing. Really surprising how people act. It really makes you think doesn't it.

Well, here I am. I brought on a sales representative to help push sales as that may be the best option for me to generate revenue and push growth organically versus trying to get assistance. Time to put on the gloves and get to work.

Will update with further development when necessary. The good news is, I made a massive accomplishment this year. I anticipate I will make my first $1m with my other businesses by next year (and with the success of this one hopefully). Here's to working hard and playing harder!

 

[Eskil]

Curious to hear an update on this as I'm also going into this space next year