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4440	10200	Welcome back to the Career Hacking Village. Many of us think, do I really want to go
10200	16700	work for somebody else? Do I want to, you know, report into an employer? Maybe I really want to
16700	22700	start off on my own. So we're very happy that one of our own, who has done a phenomenal job
22700	28660	starting his own company, wanted to share with us sort of the back end of what it's all about.
28660	33060	So Bryson, share with us what it is about starting your own company.
33060	38720	Welcome to Entrepreneurial Adventures, Starting Your Own Company. Kathleen, I'm going to correct
38720	44080	you on one thing you said, done a phenomenal job. All I can say is I've been doing this for
44080	49480	eight years, and I've started three different companies. I gave a keynote at a college a few
49480	54820	years ago, and we were talking about entrepreneurialism. And somebody asked me,
54820	58320	well, what's the metric of success? Like, how do you know you're successful? And I was like,
58320	62160	I have no idea how to measure that. Every day that we get to continue to make payroll,
62160	67160	and the company stays alive, is how I see success. So I don't know if it's been phenomenal,
67160	73800	but I do appreciate the opportunity to continue to pursue the ideas and the passion with all of
73800	80200	the great folks that I work with, and the fact that our companies have done so much for the community.
81240	89700	All right, so I got a tweet that I wanted to include from Mark, and it was a great quote.
89700	95500	An entrepreneur is someone who will jump off of a cliff and assemble an airplane on the way down.
95500	99360	I guess the definition of success here is you don't crash.
100700	109540	So who am I? I'm the guy who dresses up like a unicorn. So I founded Grimm eight years ago.
109780	119680	While serving a large client, they gave the initial spark for the idea that became Scythe,
119680	124620	and that's now my full-time job. I co-founded the non-profit, the ICS Village,
124620	129840	and I'm a senior fellow at the R Street Institute, as well as the National Security Institute for
129840	134120	National Security and Cybersecurity. So I have experience with a non-profit,
134380	142980	a services company, and a product company. All right, this is me. I am not a lawyer.
145200	153840	This is not legal advice. I'm not even one of the best entrepreneurs out there.
156260	162940	I just want to really highlight this one. So besides my two dogs, that golden couch there
162940	168020	is where I sat on day one, eight years ago, when I started Grimm and went, okay,
168020	175080	so I've done the big adventure. Now what? That's where it all began. So starting with,
175080	182400	why do you want to do this to yourself? Asterix, the reason we have so many people here on the
182400	191300	screen is that it takes more than you to start a company. Your friends, your family, all of them
191300	195720	are going to be a part of this journey for better or worse. And so when you're thinking about that
195720	202760	question of why do I want to start this company, you need to think through why do we want to start
202760	212660	this? The startup curve. When you actually finally take that leap, it's the honeymoon period. It's
213300	218520	jumping into the great unknown. And it is so great. And it is wonderful for as long as it
218520	225840	lasts. In my experience, it took about three to six months before that reality sets in.
225840	231020	And then you're down in the, okay, what have I really gotten myself into?
231980	239660	For the first two to three years of a company, you will find yourself every single month being
239660	245400	confronted with some insurmountable challenge, some existential threat to your ability
246240	252660	to continue to go. And you'll make your way through it. And at some point, you'll hit that
252660	259700	point where things start to click. Things start to work. Those crises don't keep happening.
259700	265020	And at some point, then people start to know who you are.
265260	270520	And they start to come to you for that solution. And it takes off.
271520	279640	So to be an entrepreneur, I believe requires only two primary skills. Passion,
279640	287360	intolerance for bullshit. You don't need to be the smartest. Look at me. What you do need
287360	294680	is a passion for an idea that each day that you're not doing that idea, it hurts you.
294680	302340	There's an itch that this idea needs to get out there into the world. And when you're in charge,
302340	309320	you are in charge. You are the CEO and you're the janitor. Nobody else is going to clean up.
309320	314940	Nobody else is going to pick up everything. The buck literally stops with you. And so that
314940	321240	tolerance for bullshit is you need that patience and the wherewithal that each day you're getting
321240	325300	up, you're going at it and you're doing whatever needs to be done, which are going to be some
325300	331460	really glamorous things on the high points and some not so glamorous administrative, HR,
332340	338240	state registration, all of the litany of things that need to be done because nobody else is there
338240	344920	to do them. That's your job. So you don't need to be the smartest. You do need to have some
344920	351440	that you believe in. Do not do this for the money because that's one of the big jokes is
351440	354540	starting your own company is one of the fastest ways to lose money.
356060	361260	So what is the idea? The ideation phase. All right. First of all, if you've got an idea,
361760	368300	talk to people. Then talk to some more people. Have them introduce you to even more people and
368300	375600	talk to those people. And by talking, I mean, listen. So a lot of folks get so afraid to share
375600	380120	their idea. They're like, hey, I don't want somebody else to steal my idea. Personally,
380120	383840	if somebody else can do what I'm doing better than me, I am happy for them to do it because
383840	389460	I shouldn't be doing it. But people are afraid. People are scared that if I give somebody something,
389460	395120	they're going to take it away from me. You have to kind of get out of that because you're going
395120	401180	to find that if your idea is really that good, most people can't execute it. There's a great
401180	406840	phrase, and I think it's usually attributed to Ben Franklin, even though he probably didn't say it,
406840	415060	which is that genius is 99% perspiration and 1% inspiration. Great ideas are a dime a dozen.
415140	420640	The execution, the follow through, the day in, the day out of doing that makes the difference.
420640	425920	And then, again, you, the entrepreneur, it's your network. It's who you talk to. It's them
425920	430920	being willing to help you. And I can speak from personal experience. When I first started my own
430920	437720	company, I came out of a very small closeted world in the intelligence community. I didn't have
437720	444360	really a lot of contacts in the civilian world. And it took me a while to figure out how important
444360	450600	that was. And as I started building those relationships, by asking and asking for help,
450600	459160	people want to help you. Let them. The best technology doesn't win. So, the idea here is
459160	463660	that we're looking for this concept of a value proposition. By talking to lots of folks,
463660	469520	we figure out how to explain our idea, how to shape the idea, and more importantly,
469520	475020	why would someone buy this idea? That's the value proposition. It's a very short,
475020	483220	this is what we do that makes us money. And then, the expression of that idea that comes into code,
483220	488520	into practice, that is the minimum level of features that somebody would buy it,
488520	496400	is the minimum viable product. So, products versus services. This is important because
496400	501520	we need to understand the economic model of what's underpinning our idea. If we're a services
501520	507020	organization, we're going to grow organically. We're going to have people, one hour of a person's
507020	515320	effort equals one hour of pay. Products have the allure of one hour of effort is worth whatever
515320	521300	somebody's willing to pay for that. That multiple is why you see those kinds of acquisitions that
521300	526040	seem very exciting, where people pay a lot of money for a product. You don't get those same
526040	535040	multiples on services because people don't scale. When I started Grimm, I had folks in the private
535040	539100	equity and VC community coming to me and they would be like, well, what's your business model?
539100	544700	And I would explain, well, we hire the best team of hackers. And I emphasize that the team because
544700	549300	hacking really is a team sport these days. You can't just have the single prima donna who can
549300	552300	make everything happen. It needs to be the best team. And they're like, all right, well, that
552300	557460	sounds great. How are you going to grow that? I was like, well, as much as we can continue to
557460	563840	find the best team that we can fit that with. They're like, well, that doesn't scale. No,
563840	569700	it doesn't. Unless you're going to give up on that idea and try to figure out some other way of
570600	575660	commodity people, which is really the pyramid of I have some expensive people and then I just hire
575660	580440	lots of cheap labor. And even then, you're still scaling by person and the money that they're
580440	590060	making is still one hour of work for one hour of pay. So you want to do this. First thing,
590060	596020	incorporate. You need to establish a legal structure. So the different kinds of structures
596020	601560	are limited liability corporation and S corporation or C corporation. To start with,
601560	605980	the simplest one is a limited liability corporation, which is just providing you
605980	612540	the legal protections so that you as an individual have legal protection and coverage
613100	620700	for doing work. Check the name availability. The IRS and states have the ability for you to look
620700	628040	up the names that already exist. There are also ways that you can use names that don't necessarily
628040	636780	have collision. Like I used an acronym to start Grimm, SMFS, to keep this PG rated. I will not
636780	641520	share what that stands for, but use your imagination. And then we use Grimm as the
641520	646260	doing business ad. So that's the trade name that actually ties to our logo and what we're doing,
646260	651820	just like Scythe. With the IRS then, you need to go and register for an employee identification
651820	656160	number. So you go to the IRS website, you request an employee identification number,
656160	661020	they come back to you. That's basically the social security number for you. Why does the
661020	665980	IRS want it? Because they want their taxes. They want you to pay them money. When you make money,
665980	673620	they want it. Then at the state level, you need to create a local registration for each state
673620	677260	that you're doing business in. If you have an employee in that state, you have to register in
677260	682180	that state. If you sell in that state, you'll have to register in that state. I'm not going
682180	688940	to go into a lot of the details, but the clever states to register in are one of the most well
688940	698260	known, which is Delaware, and they are the the paragon for the ease of use and simple business
698260	702460	friendly laws. A couple of others that are variations of that that are also well known
702460	709760	are Nevada and Wyoming. As always, I'm not a lawyer. So make your own choice. And then a lot
709760	714160	of places, you also need to register down at the county government. While you're doing this,
714160	719240	I also recommend that you register with the U.S. government for procurement purposes.
719420	722480	So this is not the U.S. government. This is not the side of the U.S. government that wants to
722480	727140	take money. This is the side of the U.S. government that helps you get money. And so the two ways to
727140	733740	do that are with the SAM system. I believe that's just sam.gov. Register for a CAGE code, and then
733740	738400	Dun & Bradstreet will give you the same thing. Register and you'll get a DUNS number. They're
738400	744460	free. It doesn't cost anything. It's actually fairly easy to do. And that just sets you up in
744460	747980	place that if you ever need to do any kind of that stuff, and there are a lot of commercial
747980	752960	companies that also will sometimes request a CAGE or a DUNS number, you're already set up and you
752960	759140	don't have to worry about it again. So starting with your best friend forever. This is, of course,
759240	766640	a common challenge. Business never goes as planned. And you can destroy a lot of relationships and
766640	772320	friendships by doing that. So starting with, be clear on what are the roles, what are the
772320	778240	expectations. One common mistake that a lot of people make is they immediately set the percentages
778790	784840	of equity at the start. You don't necessarily have to do that. So, for example, you might decide,
784840	790300	hey, we're going to start this business. And after the end of the year, we're going to look and see
790300	794880	what's happened. And then maybe that's when we'll assign what the equity percentages should be.
794880	800380	And the advantage for doing that is that you can actually make it fair. Maybe somebody started off
800380	806080	and then, for whatever reason, decided to go do something else. You're not now still tied to that
806080	811440	person with them owning a percentage of the company because it's not even a financial question.
811440	816560	It can also be a question of control. Equity decides who gets to make the decisions in the
816560	821560	company. So what if things change? What does success look like? That's something where
822100	827800	that question where I got asked at the college keynote, what does your success look like? And I
827800	833220	was just like, well, I keep going. I don't have some measure of success for what I'm doing for
833220	838660	any of these companies other than particularly with Scythe. I just have a particular idea that
838660	843960	I think really can help the industry. And I want to see that get out there. Now, that's not to say
843960	850740	that money is not important. Money is the lifeblood of a company, especially if you have employees.
852180	857640	You don't put food on the plate with ideas. You put food on the plate with money. And so making
857640	862760	sure that with your friend, you both have those ideas of expectations. Who does what? What's the
862760	866860	compensation going to be? And then what are you trying to accomplish? And what does that success
866860	874580	look like? To raise or not to raise? That is the question. So let's start with the easy one.
875220	882160	Starting a services company, probably not. You're growing by people. As you make more money,
882160	887620	you hire more people and you grow organically. Very little reason and very few investors that
887620	891720	will invest in a services company. As with everything, there are no absolutes, but just
891720	897940	as a general rule, probably not a good idea. Products, you probably are going to look to
897940	904000	raise at some point because there's going to be some element of speed to market to expertise.
904000	912160	So my own personal example, I had a consultancy, Grimm. Grimm generates a good amount of cash.
912160	919060	We use that money to invest in incubating the idea of Scythe for a couple of years and doing R&D with
919060	926000	the Fortune 50 client that we were working with. And then I realized, okay, I want to take this
926000	932200	software to market. I know absolutely nothing about commercial software and how to go to market.
932200	936380	And so it wasn't the money that was important to me for the investors, but it was finding the
936380	942760	right investors who could help provide me that expertise and experience so that I didn't learn
942760	948040	some costly lessons that might kill the idea and successfully bring it together. So you're not just
948040	952400	looking at it from a money perspective. You're also looking at it, what do they bring to the table?
954630	965350	I wanted to call out, Haroon Mir had a great video on bootstrapping ego and really looking at that
965350	970450	perspective again, where we talked earlier on the BFF slide about control with equity. You're
970450	975850	constantly in this balance because as you bring other people in, and of course they bring and buy
975850	981130	their money in, what they're buying is part of the company. That equity in that company represents
981130	986610	control. And so there's this balance of how much control do I want to give up for other folks,
986610	991730	balancing that with the potential that that capital can be used to really grow us.
991730	995730	So I highly recommend checking out this video by Haroon to go in more detail.
995930	1000010	So the types of investors, all investors are not created equal.
1000510	1006190	So the venture capital types are, there's funds and there's private equity. So these are the big
1006190	1010990	institutions. And the biggest thing that I would say is if you are looking at raising,
1010990	1016410	it takes some time to start to learn what the different types are. And particularly at the
1016410	1023130	seed round, there are not a lot of investors who actually invest small amounts at that level,
1023130	1026850	because it's a different time commitment for them. It's a different amount of risk.
1026850	1032750	And they typically have very large funds where them writing a $500,000 check is almost a waste
1032750	1036570	of time for them because they need to write really big checks to get the funds that are
1036570	1043350	sitting there out. Save yourself the time and ask upfront what they do. What kinds of check
1043350	1047550	sizes do they write? What rounds do they typically come in? Because you're going to find that there
1047550	1053430	are a lot of later stage investors who want to chew up your time early and they're not going
1053430	1061070	to give you money. Angels are smaller investors. They typically are writing check sizes of 25k to
1061070	1068690	$100,000, sometimes more, sometimes less. That's just a range. These are typically folks who have
1068690	1076810	been successful. Typically they were entrepreneurs. They want to continue to keep their hand in
1076810	1082170	supporting other entrepreneurs in the industry. They're going to be very friendly and supportive.
1082590	1087070	There's always friends and family. Friends and family are a good way to get started.
1088290	1093630	Then there's this other sort of side concept called incubators, where what they'll do is
1093630	1100370	it's typically a program that provides you office space. Pre-COVID, office space used to be a thing.
1100390	1104350	Now that it's not a thing anymore, I don't know what incubators do other than perhaps they connect
1104350	1112350	you to online seminars where they'll introduce you to different executives that might be in
1112350	1116990	an industry that's a potential buyer. They'll introduce you to other VCs and investors and
1116990	1122270	introduce you to other entrepreneurs. And then finally again, the government has a small business
1122270	1130490	innovation fund called SIPR. The link is here. And different elements of government will put out
1130490	1137810	different proposals. So if your technology or your idea matches one of those potential areas
1137810	1145590	of interest, this is free money. They don't take equity with this. It comes in phases.
1145590	1152010	Phase one is typically I think like $150,000 to $150,000. Excuse me, phase two can be $150,000 to
1152010	1157670	$250,000. And then phase three, where they're trying to help push and scale into the government
1157670	1164310	as well as commercialization, you're looking at a good half a million, $750,000.
1164710	1168470	And so again, that's like free money. So just something worth considering.
1169830	1174310	All right, so you've decided after all this thinking, you've got this idea, you're passionate,
1174310	1179590	you want to do it, you've fleshed it out, so you're going to raise. You need a pitch deck.
1179610	1188510	There are five core elements to the pitch deck. One page, what's the problem? One page,
1188510	1193750	how does your solution help with it? You could use a few more pages after that, but if you can't
1193750	1200830	condense in one slide how your solution works, you probably don't have it refined yet. Proof,
1200830	1205370	do you have beta customers? Do you have examples? Tell me what you've got other than,
1205370	1209070	that sounds like the greatest thing since sliced bread, that tells me that somebody else
1209070	1215930	thinks about this. This is how investors are trying to fit. Is this just a great idea in
1215930	1221330	somebody's, you know, in the proverbial engineer's garage? Or is this something that other people are
1221330	1228170	going to believe in? Funding, how much do you want? This took me a while to get around that.
1228170	1233330	I'm supposed to actually say how much money I want to actually do this. I just got so carried
1233330	1238710	up in the selling, I forgot I needed to actually say how much money do I want from you? And then,
1238710	1244410	what am I going to do with that? And then your vision, what does that look like? The schedule,
1244410	1249290	the milestones, when will we get to a minimum viable product? What does that look like?
1249290	1255510	Now, a lot of people get caught up on this part because investors might ask for, hey,
1255510	1260390	tell me the potential addressable market, which we'll talk about shortly. They might say, hey,
1260390	1265730	how am I supposed to know how much money we're making in two years? They're not looking for you
1265730	1271910	to tell them a correct number. What they are looking for is your thinking. How did you get
1271910	1276310	there? Does that make sense? Is it logical? So they're really just trying to get a better
1276310	1282850	understanding of going inside your head. At the end of this presentation, I have numerous lists
1282850	1288230	of wisdom from different entrepreneurs. This part includes Rangoola as well, and a link to
1288230	1293250	more details on how to put together your pitch deck. And again, don't be afraid to share your
1293250	1298170	pitch deck. I've had numerous folks send me examples of their pitch decks. I have shared my
1298170	1303450	pitch deck, which I have spent two years refining through different versions as I've continued to
1303450	1309450	learn what the hell I've built and what the hell our team has built. And I don't know if that one
1309450	1314110	ever goes away, if you ever figure out exactly what you built in completion. Maybe once you're
1314990	1318170	Apple, you have figured that out. And even then, it seems like they're still coming up with new
1318170	1325750	things. So the process. All right. So first, caveat. Everything Cishet white male founders
1325750	1332450	tell you probably will not work if you're not in that group. I am a Cishet white male founder.
1332450	1340790	So the point here, and my good friend Katie provided this quote here, is the raise process
1340790	1347410	is a very insular community. I can speak to one bias that I personally experienced, which is the
1347410	1353590	West Coast bias. A lot of VCs, a large portion of the money, are on the West Coast. Now, that has
1353590	1358170	been shifting, and there have been numerous centers of additional innovation and investment outside
1358170	1365330	of it, but it is the main draw. And numerous West Coast investors that I talked to, the first
1365330	1369070	question they would ask me, because I'm on the East Coast, is, so when are you moving to the
1369070	1374630	Valley? I'm like, well, I'm not moving to the Valley. I'm going to stay on the East Coast.
1374630	1380650	And that was a non-starter. Then there's a challenge which we see in InfoSec and IT in
1380650	1386690	general, which is the tech bros. The, hey, I'm a tech, you know, I'm a guy, and there's an inherent
1386690	1392850	bias about anybody who doesn't fit the certain way that they look. And then, of course, the
1392850	1398250	challenge here is because the community is so insular with the investments, it is based on
1398250	1403010	relationships, but you're stuck in this chicken and this egg of how do you build those relationships?
1403190	1409090	And so this is an area where, again, having built that network can help you crack it, but Katie
1409090	1415010	sums it up really well. This is a very insular community, and you're going to hear a lot of
1415010	1420730	advice from the Ted style talks of like, well, this is how you do it. And a lot of it won't apply
1420730	1430470	because that privilege doesn't automatically just confer. So capital. All right. Taking capital,
1430470	1436950	getting an investment is like getting married. You could have the prenuptial, which is a convertible
1436950	1442390	note or straight equity. So there's really two different ways of doing this. One,
1442390	1449130	convertible note is almost like a loan under set circumstances that once a round is finalized at
1449130	1455270	some point in the future, the money that they invested converts into that equity in that future.
1455590	1460030	And then, of course, there's just the straight equity, which is I'm buying this amount.
1460410	1467430	I'm giving this amount. I get this amount. I think it is an apt metaphor to talk about this
1467430	1472850	like marriage. Whoever you're jumping into bed with as a part of your company, they're going to
1472850	1479810	be there for a long time. And if it goes poorly, it's going to be very, very messy. So think very
1479810	1485010	carefully. Do not get caught up so much in the money assigned to a name and really think through
1485010	1491210	who and why you want to work with the various folks that you're bringing into your idea.
1493210	1497770	Some of these folks who are the major investors are probably going to want to have formal
1497770	1504590	influence through your board. And there's really two formal roles there. One is a director,
1504590	1510850	which means that they get a formal vote as a part of board assigned to the amount of their control,
1510850	1515570	which we've talked about. And then observers, where they don't have a formal vote, but they
1515570	1520510	are allowed to be and to talk at the board meetings. And then there could be other kinds
1520510	1526190	of folks on the board, like some people bring in independents, some people bring in folks that
1526190	1531410	represent that are independent, that represent different potential customer types for the
1531410	1541830	industry. But that board is going to be the captaincy that provides the advice for execution.
1541830	1547130	So this is probably the biggest thing that I've seen a lot of founders and CEOs struggle with,
1547130	1556130	is in most places, you do not work for the board. The board works for and with you. They're there
1556130	1560810	at the end of the day. They have their meeting, they say their things. It's the CEO who's
1560810	1566630	responsible for going and executing that and making sure that that actually happens. And yes,
1566630	1571510	they're accountable to the board, but don't get lost in the fact that the board is there to help
1571510	1584810	you, not just tell you what to do. So addressable market. Addressable market is
1585930	1590690	really, really, really, really, really, really, really hard to do. Like I said, it's more around
1590690	1598330	the thinking. The best way to do an addressable market buildup is saying, okay, I think there are
1598330	1602790	these kinds of customers. So I have a blue unicorn or red unicorn and a purple unicorn
1602790	1608090	who represent different kinds of customers. And they're willing to pay roughly this amount,
1608090	1611030	or this amount and this amount. And I think there's this many of them.
1611050	1615290	This is the preferred way to try to build up an addressable market as opposed to
1617910	1622410	vulnerability management. It's a $4 billion market. I think I can get 10% of it. Therefore,
1622410	1631050	my addressable market is $400 million. And that's not going to cut it. They want to see
1631050	1635410	you understanding, hey, I think that I can charge this kind of customer this amount. And I think
1635410	1639050	there are this many of them, this many of them, and this many of them. And then put that together.
1639050	1644110	And now you can show all of your thinking. Like I said, they're not looking for the correct answer
1644110	1649950	because they don't know. This isn't a test. You're not being graded. It's really how believable is it
1649950	1656430	and does it make sense? Is that something that somebody could see playing out as you execute?
1657330	1663930	That's how you get your overall addressable market. So, economics. A person does not cost
1664290	1669570	a person. Most people think of what a person costs, or in this case, a unicorn. I love my
1669570	1675290	unicorn references. And it's not just the salary that makes up what a person costs.
1675290	1681270	Whoop, going the wrong way. So, hourly salary is the base cost. And then on top of that,
1681270	1686910	you have multiple elements. Fringe, general administration, and overhead.
1687250	1695390	So, fringe is benefits. Health insurance, holidays, paid time off. What are the different
1695390	1702690	kinds of benefits that are 401k match that are offered to an employee? Then you have the back
1702690	1707870	office element. So, there's two elements of back office. General and administration is like
1707870	1714470	headquarters. What does it cost to administer the overall company? Overhead are specific project
1714470	1719210	costs. So, in a product company, you're probably not going to have specific project costs,
1719210	1724990	but in a consultant company or a services-based consultant company, you might have specific client
1724990	1731070	costs that you need to have. And those roll up, and that gives you this multiple. So, on average,
1731070	1735950	you're going to see a multiple of an employee costing anywhere from about 1.3 times their
1735950	1744170	salary up to the low to mid 2. So, up to about 2.5 for a very high-end expensive company.
1746570	1753010	Hiring. Hey, you know people, right? And that's typically where you start is in the very beginning
1753010	1756870	when you're looking for those first hires, you're probably going to be looking at friends in your
1756870	1763630	network. One of the challenges that come with hiring and when a company is small is the mistake
1763630	1770410	that folks make around rank. Chances are the person that you hire to be in charge of sales
1770410	1778070	or engineering or business partnership, they're probably not going to be the same person that's
1778070	1784590	in that role if you do become very successful. The difference between running a company in sales for
1785530	1791810	a company that's small and 10 people, that job changes when it's 500 people. Their ability to
1791810	1796910	grow with that becomes challenging and that rank can make it difficult for them to grow into that.
1796910	1801910	So, that's something where in the very beginning try to punt that as much as possible. The real
1801910	1806910	big part on this of course is incentive. What are the different kinds of incentives that I can offer
1806910	1813310	for this? I remember when I first started Grimm and we were three people and I was looking to
1813310	1818850	hire engineers and one of them was just like, well, how much of the company I'm getting?
1818850	1823970	I was like, I mean, we've been in business now for a year and a half or a year, whatever it was,
1824570	1829530	and you're not bringing anything to the table. You have a salary and all of the benefits,
1829530	1833210	you put no blood, sweat, and tears in this, and fundamentally you're not going to help
1833210	1841310	grow the company. Equity really wants to be tied to like serious growth. Now, what I've done is,
1841310	1846470	so I want everybody to feel like they're a part of it, is hey, maybe you're not getting like
1846470	1852110	significant equity, but we are going to align everybody by giving out, all employees are going
1852110	1858730	to have options in the company, which ties to equity. So what an option is, is a way to be a
1858730	1864410	non-taxable event. Again, not an accountant, not a lawyer, but the phrasing here is important
1864410	1870030	because if I give you direct equity, which is worth something of value, that's a taxable event
1870030	1875830	immediately. If I give you options, which are essentially saying, hey, today's price for what
1875830	1882210	we're valuing this at, the company's going to grow, you get to benefit off of that delta,
1882210	1887470	that's what an option does for you. So that as the company grows in value, you have an option to
1887470	1892570	take advantage of that growth. And then finally, of course, is the bonus, which you want to make
1892570	1896890	sure is clear on that. Keeping in mind, particularly as a young company, bonuses can be very
1896890	1901870	challenging because you need that cash in the beginning to grow because cash is king.
1903190	1910410	Cash is king or queen. Cash is royalty. We're going to be correct. So we talked about benefits.
1911270	1915070	One thing that I'll throw out there to help make your life easier, I'm not necessarily
1915070	1920430	advocating for it, I've never used them, is the PEO, the Professional Employer Organization.
1920430	1925130	So there are companies out there that what they do is effectively you and your employees
1925130	1933750	become an employee of their company. And you benefit from the scale of all of those employees
1933750	1938830	to provide savings back that you're paying for. So they provide all of the benefits and the health
1938830	1946230	insurance and the 401k, they'll do the HR stuff, and you pay for that, but it costs you less than
1946230	1953490	it would to go and get it on your own, is the theory. So just another option on how to do
1953490	1960690	otherwise, like we talked about earlier with tolerance for bullshit, you will have to go and
1960690	1965830	learn all of this yourself. I personally went and I learned more about health insurance than I ever
1965830	1971230	thought I would know in my entire life. And that's the way it goes if that's what you want to do.
1971710	1979230	Back office, other considerations for back office, support for contracts. Most folks are not experts
1979230	1984370	in reading through terms and conditions. You are going to get lots of terms and conditions because
1984370	1993090	any customer is going to have a formal element there. Legal, you need to get counsel. We talked
1993090	1998770	before, I'm not a lawyer. This is not legal advice. You will want counsel to help with some
1998770	2003310	of these elements. As you grow, human resources will become more important because in the very
2003310	2008490	beginning, everything's very simple. You don't really even need policies probably. At some point,
2008490	2013510	I promise you, somebody will do something dumb. You will get to that scale. That's where you really
2013510	2019970	need to preempt those with having human resources and policy to get ahead of that. Payroll, people
2019970	2025150	need to be paid regularly. You cannot screw that up. Somebody should be doing your payroll.
2026210	2031430	Accounting, accounting is critical because this is the system of record. If money is the lifeblood
2031430	2036030	of the company, accounting is what tracks where all that money is going and keeps you out of hot
2036030	2041610	water when the IRS comes knocking and saying, hey, we think you paid this amount. You owe us this much.
2041830	2047290	And then finally, business insurance. You are going to need to have various kinds of business
2047290	2053150	insurance, anything from general liability to errors and omissions if you're doing professional
2053150	2061370	consulting, different kinds of property insurance. What I would recommend is that first contract that
2061370	2067150	you get from a customer is going to stipulate exactly what amounts of insurance you need to
2067150	2072370	have. You will have enough time between getting that first copy and having to sign it and execute
2072370	2078690	it to go and get insurance from somebody specifically to those amounts. So just me providing
2078690	2087370	like a little cheat there. They'll tell you what to get. Go get it when you need to get it. You
2087370	2095270	actual office itself. So now that COVID completely is a thing and nobody knows what an office is
2095270	2104670	anymore, the remote work from home element is much more common. Really pay attention to the culture
2104670	2111150	and the scale to do that. In the old days, getting space was something a lot of people rushed out to
2111150	2114590	go do. Like I need a place to hang my shingle because I don't feel like a real business until
2114590	2120110	I do that. I think that the pandemic has helped make that easier where folks don't feel
2120630	2125970	obligated to do that anymore. But it is a consideration if you want. And of course, we
2125970	2130910	talked about incubators as an option, but there's also dedicated, of course, now shared workspaces
2131750	2135410	depending on what you want to do. And then on top of that, of course, is where
2135410	2141250	do you want to put your equipment? What are you doing for storage? And tracking different assets.
2142150	2149830	Intellectual property. So intellectual property is how you formalize what's valuable inside your
2149830	2156650	company. Most obvious that everybody knows about are patents. A patent is where you go and with a
2156650	2166310	lawyer file for disclosing what the idea is. And there's different kinds of patents. I won't go
2166310	2172210	into the details there. And then there's this concept of trade secrets, which are, hey, I'm
2172210	2178170	doing something that's proprietary to me. And by not disclosing it, it's essentially my own IP.
2178170	2182730	Not as well protected, though, as a patent where you formally identify that. And then two other
2182730	2189390	elements, which are trademarks and copyright. Trademarks are I have a particular image,
2189950	2197850	like the Scythe logo is trademarked. So that somebody can't come and work off of that.
2197850	2204670	And then a copyright is anything, any written work that you publish is yours. Somebody can't
2204670	2208690	take it and just do whatever with it, claim it as their own.
2210610	2213650	Talk to a lawyer. They're usually not this good looking.
2215930	2221590	How to get clients. So, we are running out of time. So, I'm going to try to speed through these.
2224750	2231150	Go to market is this concept of once I've built an idea, how do I take it and scale that across
2231150	2235070	being able to sell it? Acquisition, though, is where we're just looking at, like, how do we go
2235070	2240530	and get those clients? And again, this is where your network comes in handy. They will introduce
2240530	2244570	you to potential clients. They will introduce you to prospects who are like, hey, yeah, I'm
2244570	2250330	willing to try that out. One of the most interesting things I didn't really understand until I became a
2250330	2254690	software vendor, because everybody picks on the vendors, right? Oh, vendors are like this and
2254690	2258910	vendors are like that. At least they have good swag. And I love the free booze at the parties.
2258910	2263030	Like, that's all vendors good for. Is there a lot of folks who understand, particularly in
2263030	2271670	the InfoSec community, we in InfoSec don't really solve problems, right? We solve pieces of it,
2271670	2276670	which clients then build out to a defense in depth measure. And there are a lot of clients
2276670	2282670	who understand that they need to invest or they want to invest in being early adopters on what's
2282670	2287650	the next technology, because they believe that can help make everything better for everybody else.
2287650	2292890	We talked about contracts. The tissue paper of contracts is what's called the non-disclosure
2292890	2298170	agreement. This should be a very simple document. The good news is when you're starting out,
2298170	2302810	most of your clients already have all this paperwork for you. And so you can just follow
2302810	2308150	along with that. The contract for the work itself, being very explicit with expectations,
2309730	2313850	the period of performance, and then of course, how and when do you get paid?
2314350	2320750	One of the things that was the hardest part around doing a business is I thought that
2320750	2325490	getting the work was the hard part. Doing the work was easy because we're an expert,
2325490	2332310	we know what we're doing. I didn't realize the hardest part is getting paid. Clients do not pay
2332310	2339570	on time. Clients, you have to chase them. You have to focus on getting paid. A lot harder than it
2339570	2348190	sounds. In conclusion, every month, you will face a random existential crisis that no amount
2348190	2354270	of planning can prepare you for. You'll get past it. You will survive. And at some point,
2354270	2360450	it's not happening. And you're not alone in doing it. I wanted to throw out some resources here.
2360450	2364610	There's a Security Founders Slack. There's a Future Founders channel for those who are
2364610	2371430	interested in getting started but aren't quite there. Some recommendations that I have that for
2371430	2375820	ones that have done well for me, Gusto providing all the payroll and benefits administration.
2376270	2382070	Pilot is easy and cheap accounting. The challenge there is it doesn't handle a lot of complexity.
2382250	2387890	They only show up monthly. I liked Brex because that was a credit card that I could find that
2387890	2394990	was not tied to my personal credit. Since then, additional credit cards have come out that
2395570	2399990	also do this. So, I'll just throw out a handout. I think Stripe also does that now and I think
2399990	2405370	there's two others. And then, any entrepreneur that you know will be happy to help as best as
2405370	2410790	possible. I like to think of being an entrepreneur as like joining an exclusive club where the only
2410790	2414470	requirement is the desire to join because every member will help you.
2418510	2424630	And then, I have numerous entrepreneurs here who have provided their advice. So,
2424630	2430550	all of that will be available in the slides. And I'm ready to take questions, I think.
2431230	2439590	And questions will be in Discord and other venues when we share them with the community. Bryson,
2439590	2445710	this is great. Absolutely wonderful. We might not be able to get to the remainder slides
2445710	2451430	in the YouTube recordings. Yeah, I don't expect that. I'm just going to make sure that the slides
2451430	2456430	are shared so that everybody can go through them on their own. So, where should people
2456430	2462910	find those slides? I will post that in Discord when I figure it out next week when this airs.
2463030	2468570	Sounds great. I just want to make sure we have a solution provided before we do it.
2469850	2476430	Well, great. That was just absolutely wonderful. I thought that you were very methodical about
2476430	2480950	laying it out because there are so many people, as we know in the community, have a really great
2480950	2486450	idea and they want to charge out and do it and don't understand that infrastructure and passion
2486450	2493130	and your tolerance for bullshit are really key things that need to happen. Bryson, I know you're
2493130	2497590	really busy. Thanks for all you do for the community and thanks for being part of DEF CON.
2497590	2500230	Take care. Thanks for having me.