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Andrei in the office

lordandrei

Andrei's Universe

One man's journey from infinity to nothingness


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Andrei in the office
lordandrei

Situation Update... Please read

This will be a fairly long post, and I understand that most people tend to scan through long posts. I do invite you to try to find the time to read the post in its entirety, none the less.

As many of you may be aware, I left work in April to pursue the Great American Dream. Start a business. Today a stream of news left me in a bit of a position and now I will share all that I can.


As the Jim Croce song goes, "I've got a Dream."

As I was coming to the end of my time with my last company, a product was beginning to manifest in my head. It was the result of technologies I had learned about in most of the jobs I'd ever held. It was almost like each area I worked in was a piece of a puzzle that was beginning to form into a solid whole. When I left work, I didn't have this idea figured out. It was something buzzing at the back of my brain. Our plan was to move to the Seattle area, see what came to fruition, and if nothing presented itself, I'd go back to work for "The Man."

Right after I left work I attended a developers conference. I got to see all the new technologies there were being built into the Mac OS. I saw one that caught my eye. It wasn't quite that last missing piece of the puzzle in my head. But it was the motivation to cause my subconscious and my conscious to start having a discussion. In my head I saw two entirely different technologies. The technologies not only hadn't ever played well together, I think that was a result of the fact that no one had ever really thought to introduce them to each other.

I thought to myself, "Oh come on... People haven't ever thought to put A+B?." Now granted... people had thought of something similar... About 10-15 years ago. But the technologies were in their infancy. In truth one wasn't even that far, one was still a few rungs down the evolutionary chart. But now... now it was possible. The computers could handle the workload, and the interest was obviously there in the field. Actually there was a lot of money being pushed into several of the technologies I was looking at and no one had thought to corral it the way I was imagining.

I called (okay, iChatAV'ed) jnanacandra I babbled for about 10 minutes about this idea. It all just made too much sense. It was blatantly obvious that this would work. All I'd need was about 6 programmers and about a year of development. Ah. Right. But there it was. An idea so cool that the few people we talked to (and had sign NDAs) all (well all but one) lit up and encouraged us. We were moving to Seattle with a hot idea and a passion to set the software industry ablaze. How could it be wrong?

The state business license was a walk in the park. The move went off... well, with hitches, but we got moved and situated. I even qualified for Unemployment having walked off the job with 0 notice because things were that bad there. So, savings, a small income flow, and a potential contract to do some research. I was working on code. Proofs of concept. Granted... the truth was... quite simply... we needed money. When it comes down to it... I don't know how much of the actual code I will ever write on this. Oh, I could probably write the entire thing on my own. (In about 2-3 years) But that's not gonna pay the bills in the short term.

So work on the code slowed down as I tried to figure out how to bring in funds. Which nest eggs could be salvaged. Then as we were getting down to our panic time... we figured out what we needed to get to the next level. We got a wonderful investor to agree to a micro loan. The micro loan was enough to keep us floating for 3 more months and pay some needed business expenses (Payment for someone willing to write a business plan, transition to LLC, set up bank accts), and would even support itself over the next quarter.

Well, that was until today. Unfortunately, our micro loan will now be delayed. As it stands, we've run through the bulk of our support structure. And bulk means about 99%. The way the morning played out is as such. I checked out accts to see where our finances were. (ugh, not good at all). I checked to see if the I'd gotten status on the loan. And it just had come in. Definitely delayed. I took about a minute to sit there in cold panic. Then I turned to the wife to tell her what the situation exactly was. We were crossing a danger line.

So, with vanishing finances, zero assets, and tarnished credit; I walked to the two local corporate banks. (Okay, I drove 3 blocks). I put all my cards on the table. I fully expected zero help from them. I did get some references to work with. I will investigate them tomorrow. But as it stands, right now. I need to figure out how I'm going to meet any bills until this situation changes.

So, what am I doing?

Well, to be honest... I'm panicking. But that's okay. Because above all, I'm not giving up hope and I'm sure as hell not giving up on my dream. Before going onto this paragraph I took a small break. I wanted to reference a post that I made about 3 years ago in reflection of the success of my insane 10 year plan. I found the post and got hung up on some words that I wrote as my 10 year successful self looked back on my 10 year younger self who was near the depths.

I look at him... I realize that memory and reality are two very different things. He's smaller than I remember. It makes me oddly self conscious about my weight. He asks how our family is doing. This gives me several unexpected twinges. I know he's trying to care about the answer...but hasn't let go of the anger yet. I'm not prepared to tell him that our father has just passed within the last month. I can only say, "Exactly as we expected."

Despite the hardships he's going through I can see a light in his eye. Ready to make his mark on the world (though he has no idea how) I'm reminded of an ex-gf who commented about that light that I had and how over time it seemed to dim a little. It's something I think about from time to time and pray is not truly lost. He doesn't ask a lot of questions. I realize and possibly for the first time realize how passive he really is and how much potential for submission he will unintentionally realize. I want to grab him by the shoulders. I want to warn him. Tell him not to be afraid of who he is or what he can accomplish. I hear the voices in my past saying it to me...and the times I ignored them. Why would the same words coming from me...even earlier on...make any difference?


I've changed a lot in the last 20 years of my life. And I'm at that point where this will be the 20th anniversary of my graduation from High School. This means that the year I graduated, some people who are today legal adults weren't born yet. But in many ways I haven't changed. I am a work in progress with stuff I need to learn and accept about myself and things I need to change.

One of the hardest things I've encountered is knowing how to ask people for money. Banks, organizations, people.

As previously explained... My life changed when I was 11 years old, when my father suffered a massive stroke. My father began to do 2 separate things that would effect the way I dealt with situations as I was and have been growing up... 1) He never conveyed the reality of our situation to us, to anyone else, or even to himself. 2) He began to live off his relatives.

For about fifteen years straight there was a special job opportunity he was waiting on. It was going to make everything right with the world. But then again, there wasn't really anything wrong with the world. We were moving almost once a year (that I'd later discover was due to evictions). He was getting driven places (because his license was revoked when he was caught driving a car with lapsed registration and insurance). Better to give the semblance of normalcy that admit that there were problems. Up until about 3-4 years ago, I was trained in, "Find the good answer rather than the honest answer." And I'd had my share of hiding the truth.

Interestingly it was when I realized that one person I dated preferred that I hide the truth rather than admit it openly that those wall finally broke. I learned that communication, honesty, and reality were really the only thing one could ever really base their life in. Wonderfully, after that realization, it would be less than a year before I found myself happily involved and engaged. But it took me a long time to really see it for what it was and what was necessary to make the change in myself.

Then there was the living off the relatives. To give the appearance of "No, no... everything is fine." My father had managed to open a gaping hole into most of my relatives' personal worth. I am given the impression that he managed to bleed dry the accounts of both grandmothers and fairly close to both great aunts. The knowledge of which is what prompted me to put him into a homeless shelter and cut him off from his supply chain. Aren't I a great kid.

So. The idea of surviving, prospering, existing at the hand out of others, is really quite the anathema to me.

So... here is my situation. Tonight, I'm going to try to figure out how to value a company that has nothing but hardware, software, and a good idea. I'm going to figure out how much I've put into it and how much I think it's worth. Tomorrow I'm going to start selling ownership in the company. Anyone who is interested will hear exactly what we're working on. You can buy as much of the company as you want up to the % available. We're going to do it completely legitimately. And once the company makes more... the value will increase.

What will the money be going for? I'll be quite honest. It will be to initially pay our expenses until we get more through other loans. It will continue to allow us to develop the project. It'll give you a vote in what we are doing. We will also be contracting in people to do work specifically to advance where we are. Personally, we're enthusiastic that you will see return on this investment. But it is a risk. Such is a business investment.

In the meantime, unless everyone decides to buy a portion of the company in the next week and we get all the money we need to hire developers and start full development, I will be going back to work full time to help pay our living and R&D expenses. Several friends at well-known companies have offered to circulate my resume. If that offer still stands, I'll officially take you up on that now. Even at 'that' company. As always, I've always had a dream of being an Engineer at Apple. Someday maybe. (Though I hoped it would be by building up a proof of concept of my project and getting bought by them for a couple of millions)

I only have two requests for any company that might hire me.
1) I will commute for work; Even if this means flying down and living there part time. I like my new home in Snohomish and would like to stay there. I am fully capable of telecommuting very well.
2) I will continue to work on my project in my time. Much like a pre-nup, it is mine coming in and unless you're willing to buy the idea from me, you don't automatically get it from me because I work for you. And unless it's signed under NDA and non-competitive agreement, I'm not even going to tell you about it.

So, where are we? Well, right where we were when I sat down at the computer at 2 PM to start writing this. I need to research how to valuate a company in my state. How to offer shares of said company and how to process any moneys that come in. I'm also more than willing to give larger shares to people willing to contribute business knowledge or software assistance.

All contributions for now will go through Paypal. My Paypal address for this is: apoloproductions@mac.com (remember, only one L in apolo).

Anything that comes in early will be valued at the opening share value that will be published on the web site.

It's a long road. It's a scary one right now. But I really believe that we're going to succeed at this. Even if this turns out to be one of our darkest moments.


In short:
1) We are looking for investors.. Now. The business needs support.
2) I am going to reenter the corporate engineering world, and you could be the person who gets the signing bonus.

Thanks


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I don't have any money: I am where you are, save that the (should have been expected) delay in dealing with commercial real estate has eaten me to my "do something" line and hence I am hunting for work to tide me over until one of the buildings comes through.

However: my background is very similar to yours, save that my dad and I talked up until the end and he lived with his new wife. You have enormous cojones, and I wish I could reward you for them with a ton of cash.

That doesn't help. However, this might. Call the local Chamber of Commerce or Small Business Administration and ask for a volunteer for help in valuing the company. That's one of the things they do.

Thanks for the support

I really do appreciate the support and kind words. I'm in line to deal with the chamber of commerce this week as well as a trip down to the local SBA. One thing I am looking for is really word of mouth. If you can pass the information on to anyone you know in the business world. That would help alot too.

I might be able to invest something. I gotta be honest with you though, I'm going to want to see the idea first, so I can know how much to invest. I will sign a ND/NC.

I might want to bring my father in on this too.

I will be more than happy to discuss the idea with you. Either via email/im or on a trip down to Portland. (It's not that far)

Thanks!

Re: I sent the NDA out.

Got 'em. I'll get back to you tonight.

Valuating infant micro-businesses (10 or fewer employees)

There are no firm formulas for finding the value of a business as small as yours. So much of it really depends on the intangibles that make the NASDAQ plummet if Dubya sneezes in public.

This is roughly how I valuate businesses. Feel free to ask me to clarify some of these areas as I don't think I explained all of them well (if any).

First I estimate the base value of the company and then pull multipliers out of my ass based on a number of these intangibles.

The base value includes:
PROF: estimated total gross profit of next 24 months, assuming no new sources of revenue.
ASS: physical assets
IDEAS: Gross profit from new sources of revenue during next 24 months
FEAS: feasibility of IDEAS--93% confident? 69%?

BASE = PROF + ASS + IDEAS * FEAS * FEAS
(FEAS are squared as a slight decrease in feasibility makes a much larger decrease in value)

Now take the base and factor in the multipliers

multipliers
--figure out how strong you are in these areas on a scale of 1 (poor) to 5 (excellent) with 3 being average:
--find the product of each of these and your base value.
--Divide by 3 so that the "average" strength ends up being a factor of 1.
MARK: stability and current/expected trend for your company's market/industry--Fortunately this area is pretty good based on the research you have done so far.
EMP: the experience and financial stability of Principal Employees (those with significant interest in helping the company succeed)--Your development experience is pretty good, but how good is your Marketing? Tech Support? You will need a lot of financial backing. The Small Business Admin looks very closely at this area if you apply for backing on a Small Business Loan.
CONN: how good is your network of business partners and contacts? Do you have a lot of _good_ contacts in this and related industries? Just as having contacts is good for getting a job, it also really helps for building partnerships with other companies.


Oh, one clarification: that "divide by 3" step is done for each of the three multipliers.

Oh, some other stuff you and any potential investors should really know about:

Executive Summary: An LLC with more than a few shareholders equals much nastiness.

Details:
Disadvantages of being an LLC
-from the IRS's point of view, the total assests of the LLC are personally owned by each shareholder (in proportion to his/her share). Thus, as the company earns money, every shareholder must pay personal income tax on those profits, even if 100% of the profits are reinvested into the company; thus they pay even if the shareholders don't see a penny. As the company's profits grow, the IRS will require the shareholders to pre-pay some of these taxes.
-Doing accounting for an LLC when there are more than four shareholders becomes a nightmare; largely due to the effects of the previous item.

-The way to solve this is to incorporate into a Subchapter S Corporation (25 shareholders maximum). The shareholders only pay income tax on shareholder disbursements (which may be none), and wages earned as an employee (which is often none). The corporation does have to pay its own taxes, but in a manner that is easier to calculate, and doesn't directly involve each shareholder.
-Unfortunately, incorporating involves much more paperwork than LLCs do and about $1250 in legal fees. That being said, both of my companies are S-Corps.

-If you choose to keep full ownership of the company, you are probably better off staying an LLC as long as you be sure to set aside money for the personal taxes you will owe.

I'm obviously going to be trying to digest the other posts you made...

I'm not married to the idea of keeping full ownership of this project. I'd be happy to sell partial ownership of it. I'm even comfortable with establishing it and selling it.

So, it looks like S-Corp may be the direction we need to go.

Wow, this is awesome. I am so impressed with you, doing your Will.

I personally don't have funds to invest, since I am still battling with the insurance company. But I will ask around and see if I can interest anyone. Either way, I think it's great that you are doing this and I'm rootin for you!


Is the best thing I can ask for.

I spoke to a friend about this last night. Both he and I would be interested in hearing your pitch. The problem I am having is a lack of knowledge of how much fund raising money would be enough to help. Are we talking 3, 4 or 5 digits?

3 digits keep us from worrying about day to day
4 digits keep us from eviction while I reenter the workforce and turn this into my night only research project.
5 digits is where our delayed loan fell.
Low 5 digits means we can continue to work on this 24/7 and pay some legal expenses to more develop the infrastructure.
High 5 digits is operating capital at full speed for the next 3-4 months

If you email me at: apoloproductions@mac.com
I will send you the NDA (and NDA password)

Then we can set up time do give you the full pitch of what we have.

Thanks very much for the interest!

The only thing that I can currently offer is a cheers! and a Right on! As you continue to walk your way to your dreams.
May You find all that you need and want to manifest your Will!
blu

Send me your resume, and I will submit it at my company (which you can look at here: http://sogeti.com/).

If hired you would be an FTE of Sogeti (salary, benefits and so on) but would work as a consultant here and there. Consulting would probably be a good option for you as it sounds like you'll want to move on fairly soon.

It's mostly a Microsoft world up here, but there are a few other things happening. I'll split the hiring bonus with you. :-)

Hey, do you know C#.net? Cause we have an almost unlimited need for C# devs.

Piqued my interest

We're not in the position to offer financial assistance. However, I may be able to offer some software engineering assistance. I would also be willing to review your resume if you would like (I was laid off in 2002 and got professional outplacement counseling as a result).

I am willing to sign an NDA and based on what on hear, I can tell you if it is something in which I have suitable expertise to help you architect/design/code.

I also have some spare Unix hardware lying around (15+ Sun Sparc 20's and a few Ultra2's, a couple of HP boxes and one IBM RS6K). These could be either physically relocated or simply remotely accessed for your development / source repository needs.

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