Life as a Startup #2 – 7 Steps to Establishing Your Startup

Founding a startup company has easily been the most terrifying, stressful, exhausting, most incredible experience of my life. In October 2013, I made the decision to leave my job and pursue my dream of becoming an entrepreneur, launching an education software startup. I have learned a lot on my journey so far, made a ton of mistakes, met some incredible people, and hurdled countless obstacles. Ever wonder what it’s like to start a company? Join me on the highs and (many, many) lows in the Life as a Startup.


The Hidden Hassles When Launching A Startup

One thing that I rarely seem to hear in discussions about launching a startup is the crazy legal process involved. Having no traditional business background or degree, most of this stuff was completely foreign to me when I set out to launch my company. Luckily, we have the Internet to turn to for our questions, but doing searches on how to launch a company only left me with deeper, more complex questions. Should I register as an LLC or a Corporation? How do I report this on my taxes? Do I need to get copyrights/trademarks/patents? Once you have your great idea and you’re ready to get started, where do you go next?

The short answer is, you’re most likely going legal advice. There are online resources like Legal Zoom that will save you some money once you’re ready to establish your company, but it’s definitely worth the time and possible money to get some personal mentoring on what options are best for you. I was fortunate enough to stumble upon the S.C.O.R.E. organization, which provides free mentors that have significant business experience. While the two mentors I met with didn’t have direct involvement with the education technology field, they were able to school me in some basic business knowledge and referred me to a lawyer in the area that worked with startups. Since I was referred by S.C.O.R.E., I received a reduced fee, and was advised to set up an LLC. I also highly recommend talking to an accountant as well, as mine was able to explain how an LLC would affect my taxes.

I am in no way a legal authority on these matters, but from my experience, here are the 7 steps you’ll have to take to establish your startup:

  1. You have your idea, and it’s awesome! You may not have all of the details worked out just yet, but you should start to develop your business plan. This doesn’t have to be something that is super official at this point. Start by writing down the basics – What is the story behind this product? What problem does it seek to address? Who is the target user for this product? How does it solve the problem and how will people’s lives ultimately be better by using your product? Starting to write these answers down now will help you fill out legal documents and create a formal business plan once it’s time to pitch your idea and talk to potential investors.
  2. Come up with a name for your startup. I hopelessly lack creativity when it comes to thinking of names for ideas and products. What I have found is most useful is to gather together anyone working with you on the idea, and possibly a couple of other close friends/colleagues that you trust (3-6 people should be fine). Order up a pizza and spend a couple hours discussing the questions above and try to capture the essence of the idea in the name. Use a white board and write down everything you come up with. There are no bad ideas at this point! Try mashing together a couple of words if you need to, and come up with your top few choices.
  3. Google the hell out of the name. The more unique idea, the better, but most importantly, make sure no one else is using that name. You want your idea to come to the top of searches once you have your site set up. Also, be sure to search domain names (at the very least, both .com and .org should be available), the copyright database, the trademark database, and social media sites to make sure your name isn’t taken. Check to see what has a similar name to your idea as well. (It may be a good idea to run the name by some potential future users to get their impressions as well. I’ll cover customer validation techniques in a future post.) Once you’ve cleared your name past all of these, you’re good to go!
  4. Establish your startup!! Whether it is an LLC, Corporation, or another option, you’ll need register your company with the proper State/Federal agencies. Again, I would seek some legal advice to figure out what is best for you and for assistance in filling out all of the paperwork. Alternatively, use a service like Legal Zoom to streamline the process.
  5. If you’re going to be hiring employees, you’ll need an Employer Identification Number (EIN) and insurance. So far, I have brought on my programmers and graphic artists as consultants, so this hasn’t been necessary for me (Make sure you get invoiced for their work for your tax records!). Either way, it is worth seeking legal help with drawing up a contract template for work that anyone will be doing for you to protect you and your idea.
  6. If you’re starting the company with other people, establish how much equity in the company each founder will own. This can be a tricky conversation, especially if you’re starting a company with friends, but trust me, this should be established early. Equity share can change over time, but consider how much time, money, and resources each person is contributing in this process. This should be drawn up in a legal document as well. I’ve heard stories of how not having this conversation early enough can lead to some heated battles down the road.
  7. Buy the domain names, file for copyrights and trademarks, and register social media accounts for your startup.

 

And there you have it! You have just established your very own startup! Woohoo!! It will take a bit of work and planning, some meetings, and a little money (should be under $2,000, give or take) to get you started. The knowledge on this list took me weeks, if not months, to figure out, so hopefully this will save you a good chunk of time. Once I got through this process, Stellar Learning Innovations was created, and ClassXP, the name of the software we had started creating, was copyrighted and trademarked.

 

Lessons Learned

Research and take advantage of free and reduced cost resources aimed to help startups.

This may seem like a really obvious thing to point out, but from my experience, it’s surprisingly difficult to actually locate these resources, at least it was for me here in Connecticut. I’ve found that Connecticut is a vacuum for talent and resources, which tend to move towards New York City and Boston, but it’s worth the time and effort involved to locate what’s available. S.C.O.R.E. was a fantastic resource to get me some basic business advice, and it was all for free. Since then, I found other organizations, like the State funded Connecticut Innovations and CTNEXT, that also provide free counseling and advice to startups. States want startups to continue to be established and grown locally, so I’m sure there are similar organizations in other states that can help you as well. Through some networking, I have even found some lawyers that do pro bono work with startups. In the long run, spending the time to locate these resources will save money, expand your knowledge and grow your network.

 

Did I miss something on my list? Have your own startup story or advice to share? Feel free to send your comments and thoughts to me directly at robbiestells@gmail.com.

 

Life as a Startup #1 – The Birth of an Idea

Founding a startup company has easily been the most terrifying, stressful, exhausting, most incredible experience of my life. In October 2013, I made the decision to leave my job and pursue my dream of becoming an entrepreneur, launching an education software startup. I have learned a lot on my journey so far, made a ton of mistakes, met some incredible people, and hurdled countless obstacles. Ever wonder what it’s like to start a company? Join me on the highs and (many, many) lows in the Life as a Startup.


A Little Context

If you asked me 5 years ago where I thought I would end up today, aspiring entrepreneur and founder of a tech startup would not have even crossed my mind.

I had largely flown under the radar for most of my life – an average student, introverted, not particularly charismatic – the type of person you meet and forget (Except for the fact I had pretty long, blonde dreads. People tended to remember those). I was finishing up an undergraduate degree in sociology at my home state university and had no real direction as far as job prospects. I had a long interest in urban education, and for the next couple of years, ended up working in schools and various education programs tutoring students and working with them after school.

One of the ways I was able to connect with my kids was through games. I’m a pretty big gamer – everything from FIFA, Skyrim, and StartCraft to Dungeons & Dragons, Magic the Gathering, and Warhammer. I started pulling in ideas from games to help motivate my students. It started with giving students the plot to a childhood favorite of mine – ToeJam and Earl – and having them write creative stories. I drew pictures of the two alien pals and played the soundtrack to the game as they wrote, and I got some of the best work out of my students that day. I would give students points when they got right answers and create friendly competitions during my tutoring sessions. And they loved it! Even a year later, when I went back to visit my students, they still brought up those characters and the games we played.

In my opinion, this is how a lot of the more genuine startups get launched – they are people who are involved with their field, experience a specific problem (in my case, motivating students), and come up with a creative solution. The startup is then born to create a working product to share with others (and possibly profit), and will ultimately help out other people experiencing that same problem. I began to build on this concept of infusing games into learning and motivation. It was about this time that Jane McGonigal and Gabe Zimmerman began making a name for themselves on the TED talk scene with the concept of “gamification”. I started pouring over the research and articles that were emerging on the topic, and refined the idea I was working on. Eventually, the concept for ClassXP was born.

ClassXP was designed to integrate video game mechanics, such as points, leveling up, badges, and achievements, into traditional classroom grading. Every time a student handed in an assignment, project, or test, they would receive experience points (XP) and work towards Leveling Up, much like you would in a video game. I created spreadsheets of the concept and how it would look in a live classroom, including the algorithms involved. I sketched out mockups of how the app would look, and took my ideas to the Games, Learning, and Society conference out in Wisconsin that summer, which got really positive feedback on the idea (I would later learn that this process of getting user feedback is called “customer validation”, and is arguably the most important part of the startup process. I’ll touch more on this concept, and what I should have done better, in a future post).

I was pumped! But then I ran into my first obstacle…Now that I have this great idea, how do I get it made?

 

Starting Up

When you read about startups, it seems like they go from an idea some friends randomly come up with in a bar one night to a multi-million dollar company the next morning.

Let me be very clear here – Starting a tech company is a long, stressful, meticulous process. But that shouldn’t deter you.

Five years ago, I had no intention of ever creating a company. I had no background in business. In fact, I was more focused on non-profit work, and had launched a non-profit program that promoted education through soccer in West Africa. But after coming up with the idea for ClassXP and receiving some positive feedback, I decided to try and get it created. At that point, I had no experience with computer programming, an issue that I feel is common with many people trying startups. How many times have you come up with an idea for an app only to have the initial excitement of the idea fizzle out once you realize that there’s no way you’d be able to make it yourself? So, not having any close friends with that knowledge, I turned to the only real network I had at the time – Facebook.

Facebook Post

The post I used to find a programmer.

A friend of mine in the Netherlands responded that her boyfriend was a programmer, and had even programmed some games and apps previously, so I got in touch. We corresponded over the next few months as he finished up a project, and I solidified my idea further. It’s worth pointing out again that I had no technical abilities at this point, so all I could judge his skills by were his girlfriend’s recommendation, a previous project he worked on, and his college degree in computer science. He seemed cool enough at the time though – we had a mutual interest in games and even played some League of Legends together (even though I’m awful at the game) – so I trusted that he knew what he was doing. Around November 2012, we got started on the development of ClassXP.

As I continue writing this series, I will incorporate a specific lesson about each step of the process of starting a company. I hope that by sharing these experiences, other entrepreneurs will be able to avoid some of the issues that slowed me down. Coming up on Life as a Startup #2 – Lessons learned from the hidden hassles of starting a company.