Building the Java Startup

SAN FRANCISCO (06/28/2000) - In the "Java technology-based startups: Lessons learned" session, Gary York, president and CTO of Imageon Solutions, discussed just what it takes to start and build a successful Java-based business. As a technologist himself, Gary's insights are valuable for any developer who is thinking of taking the plunge and starting a business.

Experience

Gary opened his session with a hypothetical quote: "Why can't I build my own software empire, instead of helping someone else build theirs?" Experience has shown Gary that there is a fundamental flaw with that quote: The quote is selfish. Building a startup is not really about "I"; it's really about building a team. No matter who you are, you cannot do it all. Building a startup takes a lot of hard work, but also comes with a lot risk. There is a direct correlation between risk and reward. The greatest risk will result in the greatest reward.

But risk and hard work does not equate to a magical formula for success.

The school of hard knocks

Startups fail. Gary joined a startup named MontEagle Clinical Healthcare Solutions. The company possessed a great idea for integrated clinical information systems. But it lacked one key ingredient: money. In order to start the company, the team needed $10 million in venture capital. Just to become profitable, the company required $20 million of additional capital. So the company went out and tried to secure funding. Unfortunately, the search highlighted other key ingredients that the company needed in order to be successful, besides the need to acquire capital. Venture capitalists posed three questions to the company:

Does the management team have experience actually delivering clinical information systems?

Where is the product?

Do you have a beta customer?

The answers were: "No," "No, we haven't built it yet," and "No."

Needless to say, the company did not get the funding. It "crashed and burned."

Gary left the company and realized that he could fail just as well as the next person, so why not fail on his own?

Out of the ashes

Gary and his partners had extensive experience in object orientation, C++, CORBA, distributed systems, and Java technology. They had first-hand experience with Web-based medical, telecommunications, and imaging applications. Gary decided to bet on what he knew. He bet on Java. His new company had three initial goals:

To sell the expertise of its members

To become a company of technologic evangelists To ride the "Java wave" Gary saw early on that Java would become the "COBOL of the next millennium." It would enable the next generation of business apps.

So in 1997, Gary began ComFrame Software Corp., a company that provides Java technology consulting for the health-care industry. That company specializes in consulting for clinical and administrative applications. He took a conservative approach to growth. In fact, he only planned to grow as new work presented itself. He also chose to run a lean administration.

This time, the chosen partners had experience in the field. But what did he and his partners do to become and remain successful?

The bleeding edge

Gary and his partners wanted to be experts. To that end, they had to keep up with the flood. They went where Java went: first from Java 1.02 to 1.1 and finally to the Java 2 Platform. In order to stay current, they held weekly seminars where one person learned about the technology at hand and then taught the rest of the group. Early on, the group also decided that everyone needed to be Java-certified. Gary feels that certification shows potential customers that his team consists of experts who have gone that extra step to demonstrate their competency. Combined with the seminar training, Gary claims a 100 percent first-time test pass rate. Not many companies can claim this impressive record.

Finally, the company as a whole decided to apply what they learned to make the technology better.

Spin-off

Early on, York's team began working for the University of Alabama, Birmingham's medical center. While at the university, the team built and licensed technology for medical imaging applications. This technology allowed for the distributed viewing of CT, MR, and X-Ray images on the PC. The application was a Java-based application running on a CORBA-based platform. Because of this project, it became apparent that there was a need for enterprise-class, open-system applications for imaging. The old approach to imaging was not ready for enterprise-class solutions. Instead of solving a problem that was hospital-wide, these systems solved departmental problems. Once licensed, York spun this unit off into its own company. Two characteristics of what York did here are noteworthy. First, he did what he knew -- Java, CORBA, medical imaging. He then saw the opportunity to bring what he knew into a new realm: the enterprise.

Lessons learned

York came up with the top 10 lessons that he learned while building a startup.

In general, these lessons fall into four broad categories: "Getting Started"; "Building Products"; "Growing the Organization"; and "Having Fun."

Let's look at each lesson.

10. Creating financing

You need money to start any venture. Whether this is your own money, your friend's money, or your family's money, you need it and you need to find it.

York stresses the fact that you need to find creative ways to acquire financing. He has a few suggestions, but the most important is to find someone else to fund your development. You can do this by consulting your services.

Just be sure that you have rights to the final product! By getting someone else to finance your development, you get a whole lot more than just your product.

You also get a place where your product is used in real practice. If you can get your product deployed, it is much easier to secure venture capital.

You can also acquire financing through consulting. Use consultants to pay the day-to-day bills, but be sure to splinter off a small group for the development of your product. This way, your consultants finance the development of your product, and you won't need outside funding.

9. Find a partner

Finding a partner is of paramount importance. You need to find a customer who will develop the product with you. Finding such a customer solves two problems.

First it gives you a customer focus, and a pool of users. Second, you have a friendly, early adopter of your technology. Be prepared to make concessions to your partner in order to get started.

Finally, the quality of your Website counts for a lot. This first site is your proof of concept. If it doesn't work, you will have problems attracting future customers of venture capital.

8. Outsourcing

Don't be afraid to outsource. You cannot do everything. Outsource those functions that are not critical to your success. Such areas include legal counsel, accounting, payroll, system administration, and marketing. By outsourcing, you lower your own risk and avoid diluting your time and effort.

Instead, you are free to focus on your business needs.

York offered a warning: Choose your contractors carefully. Quality does count.

You don't want to cut corners, which will only hurt your business. Plus, the best often have the best contacts, and contacts drive new business.

7. Chart a new course

You need to know your market. But don't enter a market where your product is just a "me too" effort. You need to differentiate yourself. To that end, apply your experience and expertise to a new domain. Most important, learn from the mistakes of your competitors.

6. Hire the best

The best people build the best company. York suggests that you ask yourself, "Who is the best 'x' that you have ever worked with?" Hire that person and do not accept "no" as an answer. Be aggressive when you go after the best talent.

York has a simple message, "Your company is its people." Hire the best and you will have the best company. You will also have the best contacts. Use your employees' network to find new candidates. Acquiring candidates through contacts is much more efficient than hiring a recruiter. However, you must be prepared to go outside your circle. Don't let egos get in the way. If you find a better "x," hire that person too!

5. Design meets discipline

There can be no compromising on quality. Both your products and processes must be high quality. First impressions are critical. Quality goes a long way to assuring good first impressions.

Integrity sells. York warned not to make promises that you cannot keep and to be sure to keep the promises that you do make.

Be sure to keep your first customers reference-able. Customer references help you acquire new business.

4. Flexibility

The best-laid plans will sometimes change. Do not be surprised if you have to change your plans. However, York gave one strong warning: Do not compromise on the company's vision. Beware of custom development efforts. Custom efforts can very easily divert your product team and divide your focus. But as any rules go, there are exceptions. You do need to seize those opportunities that move your company forward.

3. Avoid death by 1000 hats

Again, York reminded us that you can't do everything. Hire or contract the people to do what you cannot or should not do. You should only focus on the places where you can contribute uniquely.

The next suggestion was unexpected. York suggests that you hire your own boss, even if you are the owner. If you haven't been a CEO before, hire one! Do not plan on learning on the job.

2. Catch the wave

You need to strive to get out in front with a new technology. For York, this technology was Java. It may be something else for your company.

1. Don't forget the passion

York stressed that you have to do something that you love. You will not be willing to do the hard work if you do not enjoy that work. You also need to be careful in your venture capital agreements. Do not give away more than 50 percent of your company. If you do give more away, chances are you will lose motivation.

Finally, you must share your vision. Passion will rub off onto your employees.

It is very important for your employees to share your vision. Only then will they put in the same effort that you put in!

The results

York's suggestions have resulted in two successful companies with promising futures. ComFrame Software has been profitable since year one. It has shown consistent growth and has an excellent reputation. Every customer is reference-able and the company has three offers to buy.

Imageon has three excellent products and is entering its second round of financing. The company has an excellent management team and has an outstanding list of customers and partners. The company is even a 2000 Smithsonian Innovation Laureate.

Conclusion

York closed with another quote, "A small group of dedicated people can accomplish anything." According to York, this quote, unlike the opening one, is right on the money. With a team of dedicated, experienced members you can accomplish anything.

About the author

Tony Sintes is a consultant specializing in electronic business currently on assignment for JavaWorld at JavaOne. Tony, a Sun-certified Java 1.1 programmer and Java 2 developer, has worked with Java since 1997.

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