 Hi, my name is Jazz Ozery from the Department of State's Office of Science and Technology Cooperation. Welcome to our Guru Guru series today on the start-up checklist. Our entrepreneurship expert is David Rose, founder and CEO of Gust. Gust operates the world's largest online platform and community for entrepreneurs and early-stage investors. David will be sharing insights from his recently published best-selling book, The Start-up Checklist, 25 Steps Through a Scalable High Growth Business. David has been described by the magazine Crane's New York Business as the father of angel investing in New York. He is an Inc. 500 CEO, a serial entrepreneur, an author, and a keynote speaker who is founded and funded over 100 pioneering companies. He is the managing director of Rose Tech Ventures, founder and chairman emeritus of New York Angels, and founding track chair for finance and entrepreneurship at Singularity University, the Google NASA-sponsored postgraduate program for exponential technologies. If you'd like to join us at any time during the conversation, please use the chat roll box on the right-hand side of your screen and go to JustGuru on our Twitter site. David, thanks so much for being with us this morning. It's a pleasure to have you. It's my pleasure. So I figured I would start this morning by talking a little bit about the book that I've just published that you mentioned. It's called The Start-up Checklist and it's all about how to start a business that's designed to be a large business. Now, all businesses by definition start small. You're one person, you start a company, but there's a difference between a business that starts small and stays small, the typical small business, and a business that starts small and is designed to grow very big. We often call those a startup or a high growth startup. And so this book is designed to tell you how the things you need to keep in mind to start a business that ultimately will be really big. And so in order to do that, we first have to take a quick look at the things that differentiate a small business from a startup. And so in America, the typical, our typical small business is a lemonade stand where a child will take some lemons and sugar and water and stand out in front of their house and sell lemonade to passers-by. So that's about as small a business as you can get. But that's a very different business from the kind of businesses that you read about in the blogs or that go public or businesses like Uber and Airbnb and Apple and Google and Facebook. And so what is it that sets the first kind of business apart from the second kind of business? And so let's think of the differences. First of all, if you're starting a lemonade stand or a one person business, that's really great. Nothing wrong with that at all. The vast majority businesses in America are those kinds of very small businesses. But if you're starting a business, this is going to be potentially a very large business, you often might have a co-founder. So it wouldn't necessarily be just you, but it'd be you and a co-founder. Also, because you're going to be doing many things, larger things, you might have employees instead of just you operating or selling lemonade. And then if this is going to be a really large, growing, potentially enormous business, those employees who you hire aren't going to be want to pay not just in salary, but they're going to want to often receive equity apart ownership in the company so they can be incentivized and sharing the rewards of doing that. You will likely have investors, you might have investors if you're lucky, who will provide additional capital that will help your business to grow large fast. That means you're thinking big. Investors are only looking to invest in businesses that potentially can get very, very big. And if you're starting a big company, you have to think big from the very beginning. And that means thinking global. I'm here in New York today. We have people around the world on this call. Every business today has the potential to be global. And increasingly, that means mobile. As you probably know, Google now ranks search returns on their site for sites that are mobile higher than sites that are not. And so many people around the world are now first looking at things through mobile, through their phones. Your business is going to be growing. You're looking not to create a static business, a business that will get to a certain size and stop. If you're going to be a really high growth startup, you want to have a business that's going to keep getting bigger and bigger and bigger. And therefore, your focus as the entrepreneur, as the founder, has to be not on a job for yourself as the president or CEO of the company, but rather on the company itself because you are building an entity. You're building a company that can get very, very big and that ultimately that's where the value will be. And because of that, that means you need to think from the very beginning about what your exit is going to be. It doesn't mean you have to try and sell the business from day one. It does mean that you have to think about who might ultimately either want to buy the business or whether you're going to go public and be listed on a public stock exchange because that's where ultimately the value is realized from these startup businesses. So if you have all of these things that are the differences between the small business and the startup, what does that mean in terms of the way you actually start the company? So let's go through and take a look at a few of these. So first of all, it means that instead of working by yourself, just under the name of a company, you actually have to create an entity, a corporation. Every country has some form of limited liability corporate entity, which separates the business from you. And that corporation will have shares of stock, which means you can sell shares of stock, sell part of the company to investors, you can give part of the company to your employees, and so on and so forth. There will likely be different types of stock in the company. Your lawyer will help you set this up. You as the founder get one type of stock. Investors purchase a different type of stock that often has protective provisions involved. You will have an option plan. A stock option plan gives your employees the right to buy some shares of stock, but instead of giving your employees all their stock at once when they join, that wouldn't make a lot of sense because they might just take the stock and then leave the company. Instead, a stock option plan lets your employees earn that stock over time, typically in the US over four years or so, while they're working for the company. Next, as the company is growing, the relationship between you and your employees has to be set out in detail. You would typically, for a large company or a company that's going to be large, having agreements that cover things like non-disclosure, keeping your confidential information private, non-compete so you can't have your employees walk across the street and compete with you the next day. Things like that and laying out the options and their salary and the hours and so on and so forth. The cap table or capitalization table shows who owns exactly how much of the shares of your company and what their rights are, who gets paid out first and second and so on and so forth. As you get to be a more complicated company with more investors and employees and partners and co-founders, all of whom have owned different parts of the company, it's very important to keep that in mind and keep that straight so you know when the company exits who will benefit. As a global company growing big, you're going to be on the internet, some way, somehow, buying, selling, finding your customer's marketing over there. That means that as you're a global company, you're going to be having payments, all the payments are going to come in by credit card or debit card electronically, you're going to pay things electronically. This is no longer a cash economy. For a growing business, it's an electronic economy. You've got to keep track of your numbers. You can't just put cash in the drawer. You'll typically have an accounting program often online these days that will let you track all the money coming into, going out of your business, so you can understand what the profits are. You will likely require at some point in this process an attorney, a lawyer, to help you get everything set up. You don't need to spend a fortune on lawyers. They don't need to be there all the way through spending lots and lots of money. But because this is going to be a big company, things you do up front can ultimately have a very big effect on what happens down the road. So you want to have the best advice you can get. As an international company, you're going to be growing. You may be located in one place. I'm here in New York City, but my company actually has offices in Sao Paulo, Brazil, in Granada, Spain, and London, England. You may or may not have offices around the world, but you will likely have customers around the world, perhaps even employees in other places. So you're going to be thinking internationally. And then as we discussed, you have to separate the job of you as the CEO or president of the company from the company itself. And so that means when you're looking at the ownership of the company and the control of the board of directors, those are things where you have to differentiate between you as a person and you as your role in the company. And then finally, everything you do has to be tracked absolutely cleanly all the time because when anybody is going to invest in your company or possibly buy it, they're going to go back and check every single decision and document that you did to make sure that everything was actually done accurately, appropriately, and legally the first time. So that's a quick overview of the things that we discussed in the book. This is actually the table of contents for the book, which goes through 25 different steps, 25 different chapters about all the specific things that you need to do if you're going to start a company that's going to start small and get big. David, I'd actually like to start by going into your own unique background and your first impressions about the startup world. How did you become interested in entrepreneurship and in the angel investing generally? I am fortunate enough to, A, have been grown up in New York and the United States, which is a very entrepreneurial culture. But even beyond that, I had a role model and my father is an entrepreneur. And his father and uncle were entrepreneurs. So I am a third generation entrepreneur and saw that it could be done. And so having a role model is really useful. But then I also have internally, I'm an entrepreneur spirit. So I started companies, I started starting companies when I was about 10 years old. My first company was Rose Productions, which produced headshots and programs and brochures for my brother, who was a magician. He would do children's parties, magic shows for children's parties. So I did all of his brochures and programs and of course charged him for that. And then I started companies when I was in high school and college, graduate school. So I've started half a dozen companies as an entrepreneur. One company that I started in the 1990s got very, very big. It was in the wireless internet space. We had 125 people and we raised a lot of venture capital. And then along came the dot com crash in 2000 and that wasn't fun. So that company all of a sudden went from very, very big to very, very small and then eventually nonexistent. And so at that point, I semi retired from the entrepreneurial world and became an angel investor and started investing in other startup companies. And so then having done that for a number of years to the point that I've now invested in well over a hundred other companies. I finally, about 10 years ago, went back into the entrepreneurial side seeing that there was a need for a new platform to bring together all these startup entrepreneurs and these startup investors. And so that's when I created gust. So I've been running gust now for 12 years. There's my current entrepreneurial operation. So I am both an investor and an entrepreneur. I'm proud of being both. Well, David, we can clearly see that you've had a lot of steps to success on your way to being an angel investor and having founded and funded these hundred pioneering companies. But what we do also know is that entrepreneurs learn a lot from their failures as well as their successes. Could you perhaps give us a example of a mistake you might have made as a young entrepreneur and then how you were covered from that mistake? There are probably two things that it took me many years to learn. I am a very active entrepreneur, but I'm also sort of dense and sometimes lessons have to be beaten into your head a bunch of times. And the first one is to not take things personally. We're all human beings. We all react to people personally. If somebody doesn't invest in you or doesn't buy your product, the human nature inclination is to think that, oh, it's because they don't like you or they're nasty or they hate you or they don't like your hair color or skin color or whatever or the fact that I talk too fast. But in reality, it's just business. So you really have to sort of divorce the emotion from this. You want to maintain total integrity at all times, but you divorce the emotion and the personality. If somebody doesn't invest in you, it's not because they hate you. It's not because they're evil. It's just because for whatever reason, your needs for money don't match their needs for funding. So don't take things personally, number one. And then number two, also took me two or three or four or five business to figure this one out, is that cash is king. So cash is the life, what a business. You're trying to ultimately make money. To make money, it takes money. So you're going to have to invest, whether it's employees or products or whatever. And so if you don't have money, it's lubricating your business, the business just can't operate. And so therefore, whether the money comes from bootstrapping, from your savings, from loans, from investors, cash ultimately is king. So always watch your cash. Don't spend more cash before you have it. Don't scale up before you need to do it, because if you run out of cash, the business stops. Whereas if you have cash, even if things aren't working, you can pivot and then try and do something else with that cash. So cash is king, always pay attention to your cash. We have another online question. What are your recommendations for businesses and regions where resources and infrastructure is minimal? Smaller markets potentially have less access to investors and they also have less access to the talent pool, potentially individuals that make up your team. What do you do in situations like these? Well, there are two things. First of all, there is the local economy. I would posit that entrepreneurship is not something that is special to the United States or Western Europe. I think entrepreneurship in the entrepreneurial gene, as it were, people who are ready to be entrepreneurs, are effectively spread around the world. So you can be an entrepreneur anywhere. There is no respecter of geographic borders. And that means that in every single area, there are markets, there are people to do things. So first of all, if you have the ability to be an entrepreneur and to create a company, you can create a company even in the most inhospitable of environments. And then once you get traction, once you get going, you can then expand from your initial beachhead to neighboring regions, neighboring areas and internationally. And that brings us to the second piece, which is that the world has changed so drastically over the last decade or two with the internet. So now, whether you are talking about starting in Finland, whether you're talking about starting in Silicon Valley or in Asia, anywhere you are, you can start a company today and draw on resources of people and employees and partners around the world and produce something that can then be consumed in multiple languages around the world, virtually on the internet. So I would suggest on the one hand, both looking actively in your local area to find people to work with you, to find co-founders and to get your business started there and then keep your eyes open for larger opportunities. International financing today is still on its very earliest stages. There are not a whole lot of investors, certainly individual angel investors, who invest internationally. But it's beginning to change. You're beginning to see it. And I think, you know, five years from now, 10 years from now, it'll be much more common to have no respect for borders, so you'll have people investing anywhere around the world into any kind of company. But for now, start small and keep your eye on the big ball. Great. And that actually leads to a different question, David. You had mentioned teams and I was wondering when you're discussing who you want to be part of your team and you're saying that we're in a globalized network, so you can really look for people across borders. There may be language differences. There may be a better resource, say, in one country than in another country. How do you find the right mentors in these areas? Because you really do need mentors to be able to get your business started. A mentor is a word that is often misused. A real mentor is somebody who works with a protege over a long period of time and serves as their guide and their teacher throughout a whole career. And finding a real mentor is actually very, very rare. Most people anywhere in the world, even in the US, never have any mentor at all. And so the idea that you have to have a mentor day one, that's a check off thing to do, that's incorrect because if you spend your entire time looking for a mentor, it's like looking for love, the harder you look, the harder it is to get it. So crew mentor relationships build naturally. If you are open to seeing what's out there, to helping other people, you will likely find that over time mentors will develop. But that being said, what people are really looking for are advisors. And that's a different kettle of fish. So first of all, in terms of advisors, there are a lot of people who write and produce advice, what I call mass mentoring. So things like my book, for example, so anybody can read my book and get the book. It's available in the hardcover and audio and digital download, as opposed to talking to me personally, which I would love to do for everybody. But that's why I'm doing events like this, which again, I consider scaled mentoring. So rather than try and find a mentor day one, although you definitely want to keep your eyes open, if somebody in your industry or your area or a more experienced entrepreneur offers the help, that's great. But take advantage, first of all, of all the scaled mentoring that's out there, the books and the blogs and the videos and the web sessions like this. These are all great kind of tools that you should do, and they're easily available. Well, yes. And it's really important, as you said, to clarify what the terms that we're using are, because as you said, a lot of times people use the term mentor and use the term advisor, but don't understand how you defined it as a relationship versus, like you said, doing a program like this and giving advice, but you can't really get the one to one and spend a lot of time. So thank you, David. I also, we had a question, a comment coming rather where they said, if the student is ready, the teacher will appear. Absolutely. My father taught me that when I was about five or six years old, and that has been one of my mantras ever since. When the student is ready, the guru appears, and when you are ready to receive information from a mentor, when you really understand that mentoring and a protege, that's a two-way relationship, and the mentor needs to get something back from the protege, the feeling that comes from helping somebody, then often you will find a mentor. Absolutely. And so I think this is a natural tie-in to saying, if asking for a mentor is not necessarily the right question you should be asking, what other questions should entrepreneurs be asking as they embark into their journey? Well, the first thing to do is what not to ask, and the things that are not to ask are things that you can find out on your own. I am often amazed to find that people are asking questions about the simplest things, and if they took two and a half seconds, they would realize that the answers are all right in front of them in books and blogs and webcasts and all these kinds of things. So you have to put something in before you get something out. You have to do some work. Nobody is going to hand you a company on a silver platter. Nobody is going to make your, is out there to make your life easy. That's not the way the world works. So you have to put things in and you have to start. And the first way is do the reading, do the research, and don't go if you actually have the chance to talk to somebody who might be an experienced advisor or potentially a mentor. Don't ask them stupid things that you could have found out on your own. Ask them the tougher questions, the questions about them, personally, the kind of advice questions that are not generic advice that you can find on your own. Yes, I think a lot of investors probably appreciate the preparation because you only have so much time and they want to use that time effectively and wisely. So thank you, David. We now have another question from a viewing group in Bermuda, B-E-D-C. And the question is, what do you say to entrepreneurs who want support, both advice and financial support, but don't want their idea to be stolen? And I think this might go back to what you touched upon with employee agreements, but could you expand the idea maybe a bit further? Well, yes and no. Actually, this is one of the most frequent questions you get from, we get as investors, from entrepreneurs, which is how can I share information with investors to get them to fund my idea, but not have them steal my idea? And the answer is that's not the way the world works. And I'll tell you why, because ideas by themselves, which entrepreneurs often think is the most important thing, really aren't. There are many, many, many ideas out there and a great idea, no matter how spectacularly wonderful, doesn't by itself do anything for you. It is the execution of that idea that is most important. Number one, number two, investors are not in the business of stealing ideas, right? If they were to be entrepreneurs to start a company, they would start a company. And there are so many ideas out there, investors don't need to steal ideas. Let me give you an example. Right now on Gus, we have about half a million companies who have profiles on Gus, who are looking for investors in the part of the Gus community. Half a million. Do you think that there are half a million different business ideas out there? No, there are not. Do we think that there are 50,000 different business ideas out there? No, there are not. Do we think that there are 5,000 different ideas out there? Maybe, but I probably don't think so. 500, that's more like it. So what that means is that there are between 1,000 and 10,000 people today already doing exactly what you are doing, who are looking for investors at the same time. So it's not a question of secret ideas. It's all a question of execution. And entrepreneurs should not at all, at all be concerned about protecting the ideas. Now, if you have a secret formula or something that hasn't been patented yet, a trade secret, that's a different kind of thing. You don't need to tell everybody your deepest, darkest secrets day one. But in terms of business ideas, share it widely to everybody. Great. And David, I actually, I think that's a perfect segue into your area of expertise, which is angel investing. We had a question from Turkey, which asks, how much time should you put into a presentation when you go to an angel investor? What is the angel investor looking for? And what is the most effective way for an entrepreneur to communicate their idea to that investor? Good question. And that's actually all stuff that I covered in my book. If you want the details of information in my first book, this is my second book, my first book was called Angel Investing, the Gus Guide to Making Money and Having Fun Investing in Startups. And that was designed for angel investors telling them what to look for. So if you're an entrepreneur who is interested in what the angels are actually looking for, you can get that sort of a secret book, which is their secret playbook, which by the way, has been translated into Turkish and Chinese, and much other languages as well. But that being said, there are two questions here. One, how much time should you put into your presentation, which I'll interpret as how much time should you spend making your presentation? And then how much time should you spend giving the presentation? How long should it be? And the answer is in terms of making your presentation a lot, a lot, a lot of time. If you think about it, if you need cash just for you to grow your business and the investor is the one opportunity to get that cash, then this is the most important thing in your business life, right? You had better spend as much time as it takes to do a really, really solid presentation. I would point for some suggestions to a, I did a TED talk about this several years ago, which has been seen about a million times so far. You can just go online either on TED.com or on YouTube and search for David S. Rose Pitch of BC, and you'll get about a 12-minute video on how to create a presentation for an angel investor or a VC. But essentially what the investors are looking for is they want to understand the idea, first of all, they want to understand the market, that the market itself is big and growing. They want to understand what the pain is in the market. Why do people need what you're doing and then how do you solve that pain? What's your product? What's your solution? And then how does that solution of yours actually make money? What's your business model? And then who are the customers that you're going to sell this to? How do you find those customers and others? How do you get to market when your customers are looking at your solution and other solutions? Why are you better or different? What's your secret sauce? And then when you put all this together, do you have the team to execute and deliver on this? And those are the kind of things in general that investors are looking for in a presentation. And the actual form of a pitch to an angel or VC, you should plan about 15 minutes 20 minutes maximum. After that, they'll ask questions and you can do demonstrations, but the actual core pitch you should spend as long as it takes days or weeks or months to do it and the actual delivery 15 to 20 minutes. In the delivery of a pitch, David, because you had mentioned that we had viewers from around the globe, Asia, Africa, Latin America, everywhere in between. Is there a difference in the type of pitch that one of these individuals would give to someone in their country versus somebody in the US giving a pitch to a US investor? The answer is I haven't done too much pitching internationally myself, but I would say yes. And that has to do with cultural differences. Angel investors in the United States, for example, are now those of us who are serious about angel investing and are semi-professional, see lots and lots and lots of pitches. So I probably see a thousand or more pitches every year. And so on the one hand, we're tuned for just those specific things and we can get to the cut to the chase very quickly, whereas in places where you're dealing with somebody who might be a first-time angel investor who hasn't had the experience of seeing lots of pitches, you might need to take it a little more slowly and walk through it. But one of the thing that's really important is that your present, the most important thing about a presentation is that it have a logical flow because you're teaching somebody about your business and the market from when you start your presentation. And so if it's logical, they should be able to follow you all the way through your presentation. And then in certain cultures, you need to be a little more formal than you do in other cultures. The whole startup culture is increasingly informal. So I mean, I'm wearing a jacket today, which I've worn a jacket. I wore a tie when I was six years old. And so it's for people like me, getting informal is a little trickier. But in some cultures, you're still very much a jacket and tie or business suit kind of culture. So you have to adopt it for your particular region. But the most important thing is to logically and clearly take somebody through the entire process so they can understand what you're doing. Expanding on that idea a little bit, we have a viewer in Moscow who would like to know what advice you would give for foreign entrepreneurs who want to start businesses in the US. So our previous question, David, was foreign entrepreneurs pitching to foreign entrepreneurs in their country or US entrepreneurs pitching to US investors. But now we're combining the two and saying if you have a foreign entrepreneur coming to New York, for example, or to Silicon Valley, how does that dynamic change? So first of all, as I mentioned, international cross border investing is still in its earliest stages. 20 years ago, it would have been incomprehensible. Nobody would have invested outside of their home country. What we're seeing now is economic borders and entrepreneurship borders are dropping pretty rapidly. So I mean, I have personally invested in companies in Peru and in Finland and in Spain. And so it's happening. But again, it's very much the exception rather than the rule. So since most investors are investing locally and since there are many opportunities for investors to invest, if you're coming from Russia, for example, to look for money in the US, you're competing against every American business that is looking for money also from those same investors. So the first thing is today in 2016, most investors are not going to write a check to a company that is located and operates in another country. There are some venture capital funds that are set up to do that, but they're not all that common. So the first place to look is within your country. There are active angel groups in Russia. As a matter of fact, dust is the official platform for the National Federation of Angel Investment Groups in Russia and we're localized into Russian. So you should start by going to Russia, start by going to August in Russian, put up your profile and look for investors there. That being said, if your company has scaled and is successful in your home economy and is now looking to expand in the US, that's a little different story. So if you're doing that, the expectation from American investors would be that you will have an office here. You might even move the headquarters of the company here to the US, in which case you then be a US company with an international heritage, which is fine and we'd be investing in a US company or you'd have a major presence in office here. Investors typically like to be able to meet the CEO, visit the offices of the company and that's difficult if you're outside of your local country. Great and thank you to Moscow for sending us that question. Now let's move to a different area of the world. We have a viewer from Iraq from Basra who asks if you have any advice for startups in a specific sector. So in this case, for example, this individual has a farming business and in our just tech eye competition every year, we often have individual sectors and agriculture is one where we have a lot of finance, sorry, we have a lot of finalists who are coming up with really innovative startups to address agricultural problems in their country. In terms of scalability, what steps do you need to take for this sort of sector versus say if you're using an app or an online ICT startup? So actually agriculture, what we know as known as ag tech here in the US, new companies, new startups and technology supporting agriculture is actually a very versioning area. So the whole field of agriculture and food tech is exploding. I'm actually a mentor for an accelerator program called FoodX here in New York, which is all about food and agriculture related startups. So the trick for a business in any sector, if it's going to be looking for investment and looking to grow is it needs to be scalable. So that is if your business is being a farmer and you are planting crops yourself and harvesting crops yourself, you are effectively limited to what you can do. That's not a scalable business. On the other hand, if you are developing a technology to support agriculture, for example, some type of new fertilization for seeds or processing equipment or the things that improve the overall process that can be applied to many different farms and many different producers around the world, that's an inherently scalable business. And so again, there's a great book called Crossing the Chasm, C-H-A-S-M by Jeffrey Moore, which is all about how do you get over the initial hump from a good idea and your first early adopters to the mainstream people who will purchase your product? And the answer is you have to cross that chasm, cross that big divide by getting some customers somewhere to start doing it. And then you branch out from them. So if you have a new process, for example, that works with one type of crop, after you get that market established and going, then you can expand to a different type of crop, or you can expand to people who do that crop in a different country. And so establish your beachhead and expand from there. Our viewers, I know we're mentioning a lot of resources that are helpful to look at in your preparation. And on our website at the end of the program, www.gistnetwork.org, we'll try and post the books that are being mentioned and also naturally have David's presentation. So if you're taking notes, we'll also have that available as well. So going back to Bermuda, we have an individual named Kalina who asks, if you are starting a business as a small business, is it better off to be bootstrapping or should you look for loans and investors? Bootstrapping, bootstrapping, absolutely. So if there is any way at all that you can bootstrap a business, that's what you should do for all kinds of reasons. First of all, it's faster. You can do it right now. It's not instead of waiting for an investor, which might take years, months or forever or never to get there. Number two, you will have more control. The minute you take investors, you are giving up a piece of your company, ownership of the good things that come from it and part of the control of your company. And so by bootstrapping and doing it yourself, you retain control and ownership of your company. And then number three, bootstrapping. To bootstrap means you have to be really tight in your plan and you really have to be tight with your cash. And that makes for a better company. So if you can possibly bootstrap a business, then you absolutely should do that and only go looking for investors after you've actually demonstrated some traction. And that's another big problem. Many people say, oh, I have an idea, so I need an investor. But that doesn't work. Investors do not invest in ideas. Let me repeat that. It's a very, if there's one thing that you're going to get out of this podcast, investors do not invest in ideas. They invest in companies that have traction, that have shown that somebody has taken this idea and executed on it because investment is all about execution. Remember a little while ago, I said that we had half a million companies on Gus looking for funding. So there are all these ideas and all these people with ideas out there, but the ones that get investments are the ones that have already shown that they can do something and get something done somehow, some way by bootstrapping on their own. And those are the kind of companies that investors want to invest in. Viewer took what you had just said about demonstrating the success of your startup by asking what benchmarks can you hit to know that you are being successful? The best benchmark that investors look for is traction. And traction means that you have, if you are driving a car and the wheels are spinning, if you're on ice, the wheels will spin, spin, spin, spin, spin, and not go anywhere. But if you're on asphalt or pavement, they spin it, they get traction and the car moves. And so when we say traction in the business for looking at startups, that means, first of all, have you found some type of what we call product market fit? In other words, have you found that you are creating a product or a service that fits what the market needs and that somebody is willing to pay for? And the best way to demonstrate that is by having somebody actually buy your product. And so what investors look for is some type of traction that shows the business that you have started can now keep going. And if you're taking our investment that money in, that that money is going to now do bigger, faster, better things, but you've already got the car started. You already have some kind of traction. And so it depends on the different type of business. It can be paying sales. It can be a viral distribution. It can be wonderful reviews and happy customers. The goal is some kind of traction that shows that you have hit that product market that are very close to it and that somebody is going to be willing to pay for what you're selling. In terms of product market fit, there's a viewer from Armenia who asks if there is a method to compare and evaluate different ideas that they might have if they may have two or three similar ideas, but one might be better than the other. If there's an actual way to compare and contrast that is effective for them to go forward with the right idea. It'd be great to say there is some secret website or process that you could put six ideas into and have the winner pop out. Unfortunately, it doesn't work that way. That's what entrepreneurship is all about. There's a great book called The Lean Startup by Eric Ries, which discusses the whole question of how do you find that product market fit? How do you keep your startup very, very lean and bootstrap? I discussed this in chapter three, I think, of the book, but you can get Eric's book and it goes into much more detail. And also a book by Steve Blank called The Startup Owners Checklist, Startup Owners Manual. And in fact, in the first appendix of my book, The Startup Checklist, I have a reading list of a couple of dozen other wonderful books about starting up. But the essence of The Lean Startup methodology is you start something, take the best, what you think is the best idea or the most promising idea of the ones you have and put it out there, do something. Do the leanest, tightest, what we call an MVP, minimum viable product, which is not the product you ultimately want to ship. It's not the full flower of what you're doing. It's the smallest, teeniest starting point that might actually be a benefit to somebody and put that out there and then see what happens and then measure that and then tweak and adjust the process or the product or the service and put it out there again and see if you get more people buying and paying more money or getting more product. And you keep a whole sort of hypothesis and you test the hypotheses and then you continually tweak your processes you go through. So the answer is pick the best one you have a shot at, go do it and see what happens. We know that one of our viewers has a little bit of trepidation about the whole process because you've been very clear, David, about certain steps you need to take looking at stock, looking at the employee agreement, looking for attorneys. And the viewer is concerned that he just doesn't have enough knowledge. So is there any advice you could give to someone about what seems like a daunting task but to know that perhaps failure is not a bad thing? What would you tell that viewer? Sure. First advice, read the book. Which is why I actually wrote the book, to put all that stuff down on paper. That being said, remember that the reason I wrote this book particularly was these are the the technical things that you need to do to to create a startup that's going to get very big. Now in reality virtually every single thing in that book can be done later. It just costs more and it's more expensive. If you start out doing it right it makes life a lot easier because you can do it easier, faster, cheaper from the beginning. But ultimately the most important thing about a company is to start. And so do not let the fact that I've given you 25 different complex things get in the way of starting. If you have to read the book then forget it, throw it away and just get something started. The biggest problem that people have when they're thinking about it but are prepidacious or scared about starting is they're what we call entrepreneurs. People who want to be an entrepreneur but never actually get themselves together to start. They might read all the books and go to all the meetups and talk to all the people and sit there spouting off on websites and commenting on blogs doing everything in business except actually starting a business. And that's a real problem. So my first suggestion would be if it's not all that complicated, number one, the book is a guide for you and there are plenty whether there are 92,000 books on Amazon about how to start a company. But the most important, most important thing, forget the books is just start the company, do something. And if you have to you can do all that stuff I mentioned in the book after you get the company started. But read the book first so you have an idea as to where you're going. Thank you David and to our viewer I hope that that gives you a little bit of reassurance that as long as you take some action and as long as you start you're on the right path. So we're unfortunately running low on time so I'm going to give you one more question David and this is from Bermuda, B-E-D-C asking what is the difference between an accelerator and an incubator and is it better to be in one or to just continue with your journey? Sure. So historically if you were an entrepreneur starting up a company you were all by yourself and you were starting up and you were seeing something other people didn't see and you were creating it in a vacuum. Over the last 10 or 15 years there have been a whole it's a whole ecosystem of supporters who are out there to help you start your business whether it is webcasts like this whether it is books like the one I've written or whether it is people on the ground successful entrepreneurs and advisors who can help you get going. So the first of these were places called incubators and an incubator like an incubator on a farm for chickens or in a hospital for babies is designed to provide a nice warm comfortable nutrient rich place in which you can start a tiny little fledgling business and get bigger. So incubators are typically offices they're shared offices where you can find an inexpensive place to rent where you can find some equipment some advisors who are available for the legal or accounting or other kinds of business things. You typically will pay rent to be part of an accelerator although some accelerators are part of universities or other not-for-profit organizations and it might be less rent or even free if you are a part of that university. On the other hand an accelerator is a new type of thing. It started about seven or eight years ago. The term was invented by a guy named Paul Graham who started something called Y Combinator which was the first accelerator program. It proved to be remarkably successful and there are now hundreds of them around the world as a matter of fact just actually a couple weeks ago put out a report on all the world's major accelerators which you can download for free and so an accelerator is typically a short intensive three-month usually period highly selected where startup teams that are in their very very earliest stages typically more than an idea but less than product market fit apply to join this program. They're accepted and acceptance rates are typically very low often two, three, four, five percent to this program and during that three months they are given intense real mentoring and advice and hands-on support often legal and accounting and other kind of support. They're often brought together in a co-working space or shared working space for that three months. They'll work with other companies in that cohort and they'll learn from each other and then at the end they will be presented to investors and and potential venture capitalists and angel investors so the goal is to take a really great team and accelerate it to product market fit and to getting funding so they're both kind of they both be very very good you want to make sure you're in a good one so check references from all of them if you have a chance to be in a top tier or good accelerator program by all means look at that because they often come with funding as well at least to stipend to fund you during the process of the accelerator so an incubator is typically a location that you go and spend as much time as you need there an accelerator is typically a three month or so program you apply to to help jumpstart your company. Thank you for that distinction and thanks to Bermuda for sending the question. So David now I have the privilege as the moderator to ask you our final question which is what is the one takeaway you would leave for our viewers today? It's probably something we mentioned a few minutes ago which is that if you are thinking about starting a business start absolutely that's the most important thing you know you'll read the book and I'll tell you that you want to have a plan you want to turn you do a business model canvas to figure out if your idea is worthy of doing those are all great things but if there's one takeaway if you think you might want to start a business start it and that's the most important thing and you'll very quickly figure out having started it whether this is the craziest most insane thing you've ever done in which case it'll run away and won't start it again in which case you know you shouldn't be an entrepreneur or else you will find that it is challenging and exciting and crazy making and you are cut out to be an entrepreneur because there is absolutely no respecter of time or anything else one of my favorite entrepreneurs in the whole world my mentor and role model the guy named Norman Lear who is now 93 years old going 94 my father is 86 and is still working as an entrepreneur there's no respecter of age but you can get to 93 years old and not start a business by just talking about it forget the talking get out there and start your business David that is truly an inspiring way for us to end you've given us practical advice you've given us the strategic thinking about how to get started you've given us resources which again will be on our website and also knowing that we have support I think entrepreneurs a lot of times feel like they're alone but you've told us about this great resource gust which I encourage all of you to look at and we just really thank you for your time David this has been a wonderful presentation it's been my pleasure being here go out and start a business and to our viewers thank you for participating as always and again we invite you to find David's book the 25 steps to a scalable high growth business and we're going to close today my name is Jazz Ozery and as always I encourage you to think innovate and improve our world