I like this little story; I was saying almost exactly the same thing yesterday -- I want to make a company that makes money and I'll let the exit strategy take care of itself.

Don:

"How many companies can afford to pay $1 billion dollars for any company, let alone one with no barriers to entry, no revenue stream, and copyright lawsuits hanging over its head."

Sheri's commentary, in part:

"I'd like to believe that making profits, paying taxes, creating a few jobs and satisfied customers, might be worth, maybe a little something."

I think the time is coming soon to take Rick's no-harm/no-foul 30 minute meeting. Soon.

Sigh, Canada, as adventurous as ever:

Venture capital sluggish locally

Venture capital activity in Ottawa showed some improvement in the second quarter, but has remained largely unchanged since the beginning of 2003, a new study says.

According to the quarterly venture capital report released yesterday by OCRI, there were four deals in the second quarter of 2006, for a total of $43.3 million.

"While venture capitalists appear to be investing at a cautious rate, they are maintaining their support of their portfolio companies," said Stephen Daze, executive director of OCRI's entrepreneurship centre. "In addition, we are starting to see an increase in the overall deal flow in the city and remain cautiously optimistic moving forward."

... and ...

Venture capital funding falls 80%

Despite an 80-per-cent decline in venture capital funding for Ottawa-area firms in the June quarter compared with the same period last year, the Ottawa Centre for Research and Innovation is expecting some improvement in coming months.

Four startups landed $43.3 million in the latest quarter, according to OCRI, a big drop from the $209 million of venture capital funding a year earlier when three big deals averaging $50 million each drove a healthy rebound for the full year.

...

OCRI said that many venture-capital-funded companies are now well funded, and thus follow-on investment is likely to remain light.

However, of the 39 startups that got venture capital financing in 2003 and 2004, only 15 have received additional funding. Nine other companies died, were bought or left town.

"Dead 2.0" writes:

With all the 2.0 hype, I think it’s unfair to unanimously declare all new Internet startups as 100% junk.  It can’t be much more than 95%. So I thought it would be an interesting diversion to switch the tone of my writing for a change.  Here are some tips I have for these would-be entrepreneurs to thrive and survive the next 24 months.

1. Have a revenue model, right now. 
2. Be a complete business, not just a feature. 
3. Affect real people, not just bloggers. 
4. Get a real, memorable name. 
5. If applicable, get unaffiliated with Web 2.0, because it is hype and will have a very negative backlash in a little while.  I don’t know when, but it’s coming. 
6. Find some friends who don’t drink the kool-aid and get their honest feedback. 
7. If you are revolutionary, make sure that a revolution is coming. 
8. If you are evolutionary, then there needs to be a big enough market to address with a “we’re a little better than them” vision. 
9. Fit your business into an existing food chain. 
10. 10. Do not expect to be Google and, just as importantly, do not expect them to buy you.
11. Ignore the hype and have fun.

Ed Sim writes an entry called "When to hire a VP of sales":

Hiring a VP of Sales is not a commitment to hire one guy, it is a commitment to bring on a team, one that will not be cheap.  Before you make this commitment, make sure you are ready.  As you can read from an earlier post, when you ramp your sales efforts is critical.

Do more with less and be careful of ramping up sales until you have a repeatable selling model.  In other words do not hire too many sales people and send them on a wild goose chase until you have built the right product, honed the value proposition, identified a few target markets with pain, and can easily replicate the sales process and model from some of your customer wins.

Many of the best companies I have seen have taken the bootstrapped approach where the founders of the company act as the initial sales team to close a few deals, to learn about the customer, and further refine the product.  Yes, this can only last so long as everyday out of the office or with customers means another day not developing the product.  That being said, rather than hire a VP of Sales first, I would encourage you to focus on generating leads and hiring a sales rep or two to follow up on them.  This way you can take a smaller step to refine your sales model and product before going big.  Remember don't hire a VP of Sales to only have them hunting for dodo birds.

We're pretty confident of our software. Our next steps all involve selling it.

Rick Segal has an interesting story about trying to get honest feedback from people:

For the first group of people, I said basically this:

While working on my electronics research, I came across an interesting way to make sure popcorn gets done right as I hate burnt popcorn… Insert above story… what do you think? I need some honest feedback.

I divided this story telling into people I knew and ones I’d never met before.  What was interesting (and probably not surprising) is that when I claimed this idea as my own, the worst feedback I got was “a bit narrow of a solution, don’t you think”.  Virtually everybody wanted to come up with ideas on getting the microwave oven and popcorn folks to sell or include my pop-rite device. Most struggled and wanted to change the subject, only one person said “kinda goofy” and I knew them.

For the next group of people, I went with this version:

So, I have a guy pitching me the following. He is a electronics wiz… Insert above story… what do you think? I need some honest feedback to pass on.

Same thing. Divided this up into people I knew and didn’t know.  The feedback was brutal. Ranging from wow must be a smart electronics guy to get that to work inside a microwave all the way to, did all the stupid people have a convention in Toronto?

Same idea, same basic pitch, same request.  The difference being that I set up an environment where it wasn’t personal and the feedback could flow without the perceived or real fear of offending me. It didn’t matter if these were friends or people I had never met before.

The lesson for you is simple but often overlooked.  Most people will not trash you or your ideas no matter how hard you press for honest feedback.  It is really tough to get. Running around and getting “trusted” people saying, cool or that’s awesome may not be useful.