Revised edition of: Engineering your start-up / Michael L. Baird. 1st ed. 1992.

Includes bibliographical references (pages 425-428) and index.

Part 1 The Genesis 1 -- 1 Start-Up Opportunities for High-Tech Entrepreneurs 3 -- The Lure of Freedom 6 -- The Professional Engineer 6 -- The Recent College Graduate 6 -- From Technology to Product to Marketing 8 -- Is It Time to Create Your Own Job? 8 -- Issues to Consider 9 -- Small Business: Not Synonymous with Start-Up 10 -- The Definition of a Start-Up 12 -- Taking Risks 13 -- 2 The Technology-Oriented Professional as Company Founder 15 -- Founder's Roles and Responsibilities 15 -- Officers 16 -- Title Inflation 18 -- Frivolous Titles 19 -- Founder Career Paths 19 -- Entrepreneur's Profile 20 -- The Nonengineer Founder 21 -- 3 Life in Your Start-Up 25 -- Success and Failure: Statistics 25 -- Vacation and Time Off 28 -- Working Hours 30 -- Divorce 31 -- Holding Your Business Together 31 -- Personal Planning Process 32 -- Leadership and Business Basics 32 -- Allocation of Effort 33 -- Part 2 Getting Down to Business 37 -- 4 Market- vs. Technology-Focused Approach to Growing a Business 39 -- Delivering Benefits to Customers 39 -- Technology and Markets 39 -- Rapid Time to Market 45 -- 5 When High-Growth Business Is Desirable and Necessary 51 -- Why Grow? 51 -- The Self-Employed 52 -- Investors Expect Rapid Growth 52 -- Grow a Commanding Position in a Defensible Market Segment 52 -- "Rule of X" Competitors 53 -- Attract Customers in Expanding Markets 55 -- Develop a Product Family 55 -- Achieve Critical Mass and Economy of Scale 56 -- Speed Is Not a Substitute for Strategy 57 -- Diversify to Diminish Business Risks 57 -- Create Career Opportunities 58 -- Create Future Start-Up Opportunities 58 -- Create Market Value, Attract Investments, and Cash Out 58 -- 6 Start-Up Financing Terminology and Stages 59 -- Part 3 Elements of a Successful Start-Up 77 -- 7 Create your Management Team and Board of Directors 79 -- The Entrepreneurial Team 87 -- Board of Directors 88 -- Advisory Board 93 -- Mentors 94 -- Personnel Policies 94 -- Signed Agreements 95 -- 8 Evaluate Markets and Target Customers 103 -- Traditional Business Model 103 -- Customers and Markets 104 -- 9 Define Your Product or Service 115 -- Choosing the Right Product 116 -- Finding Good Product Ideas 116 -- Marketing and Competitive Analysis Considerations 118 -- Exceptional Product Attributes 125 -- Producing Your Product 126 -- 10 Write Your Business Plan 137 -- Form vs. Content 137 -- Types of Business Plans 137 -- Find a Team and Write a Plan, or Write a Plan and Find a Team? 139 -- When to Write the Plan 139 -- How Long Should It Take to Write Your Plan? 140 -- How Long Should a Plan Be? 141 -- Essential Tools 142 -- Good Business Planning 142 -- Business Plan Basics 143 -- The Executive Summary 143 -- Plan Emphasis 144 -- Business Plan Outline 145 -- Venture Capitalists' Typical Business Plan Contents 146 -- A Business Plan Checklist 148 -- Adding or Highlighting Sections 151 -- Classic Problems 152 -- Use Standard Ratios 152 -- Looking Like an Amateur 155 -- Understanding Financial Statements and Projections 155 -- Working Backward 155 -- Get Good Data 156 -- Do Not Ignore Your Own Data 156 -- The Three Most Important Financial Statements 156 -- Balance Sheet 157 -- Income Statement 158 -- Cash Flow Statement 161 -- Break-Even Analysis 162 -- Investors' Hurdle Rate of Return on Investment 164 -- Exit Strategy 169 -- Private Placement Memorandum 170 -- Due Diligence File 170 -- 11 Funding Issues 187 -- Investment Criteria 187 -- Cheap Start-Ups Are Finished 188 -- Looking for Seed Cash 188 -- How Much Money? 189 -- Seed, Start-Up, and Subsequent Funding Rounds 190 -- Milestone Funding 191 -- The Nightmare: Running Out of Money 191 -- Where to Get Money 191 -- Shopping vs. Selling Your Business Plan 200 -- 12 The Term Sheet -- A Practical Overview 217 -- Definition of Term Sheet 218 -- Dilution and Antidilution 219 -- Key Provisions of Term Sheet 221 -- Dilution Is the Number One Business Issue 247 -- A Sample Term Sheet 247 -- Part 4 Making It Pay 267 -- 13 Remuneration Practices for Your Start-Up 269 -- Salaries 269 -- Headhunters 273 -- Equity Ownership: Stock and Stock Options 275 -- Form of Equity Incentive Vehicles -- an Umbrella Plan 275 -- Other Compensation 276 -- Employment Contracts 276 -- 14 Stock Ownership 281 -- Risk-Reward Scale 282 -- Ownership Interest over Time 284 -- How Many Shares Should You Grant? 284 -- Common and Preferred Stock 286 -- Authorized and Outstanding Shares 288 -- Acquiring Stock 289 -- Founders' Stock 289 -- Restricted Stock Grants 291 -- Future Tax Liability on Restricted Shares 292 -- Section 83(b) Election 293 -- Transferable Shares and Vesting 294 -- When and How Often to Grant Stock 296 -- The Alantec Litigation 297 -- 15 Stock Options 303 -- Stock Option Grants vs. Stock Grants 303 -- When to Grant Stock Options 304 -- How Often to Grant Stock Options 305 -- On How Many Shares Do You Grant Options? 305 -- Stock Options as Part of a Total Package 308 -- Two Kinds of Stock Options 308 -- Option Vesting and Exercise Schedules 310 -- Exercising Options -- an Interesting Twist 311 -- The Future of Stock Options 312 -- Administrative Details 312 -- A Comparison of Tax and Accounting Effects on ISOs and NQSOs 313 -- Alternative Minimum Tax -- the ISO Trap 315 -- The "Wash-Sale" Trap 316 -- Helping Your Employees Understand Stock Options 316 -- 16 Other Equity and Wealth-Building Vehicles 319 -- Unrelated Stock Purchase 320 -- Tax-Free Exchange of Intellectual Property for Stock 322 -- Investment Through the Provision of Real Property 322 -- Warrants 323 -- SARs and Phantom Stock Plans 324 -- Employee Stock Purchase Plans (ESPPs) 325 -- Employee Stock Ownership Plans (ESOPs) 326 -- Section 401(k) Plans 326 -- 17 Valuing Your Equity Position 329 -- Valuations at Different Points in Time 330 -- Valuation Benchmarks from VentureOne Study 332 -- Factors that Venture Investors Consider 332 -- A Secret: Venture Capitalists Don't Really Use Valuation Models -- at Least Not for the First Round 333 -- Peer Group Comparisons 336 -- More Commonly Used Valuation Methodology 336 -- Capitalization Formation Road Map from AVI Capital Management 339 -- Valuation as a Black Art 342 -- The Effect of Founders' Cash on Company Valuation 342 -- The Importance of Negotiation in the Valuation Process 343 -- 18 Other Compensation and Start-Up Employment Considerations 351 -- Entrepreneurs Need Insurance 351 -- Do Some Planning Regarding Fringe Benefits 352 -- Use the Internet 353 -- Outsourcing Your Benefits Work 353 -- Life Insurance 354 -- Key-Person Life Insurance 355 -- Health Insurance 355 -- Disability Insurance 357 -- Asset Protection Maneuvers 357 -- Retirement Plans 358 -- Section 125 Cafeteria Plan 361 -- Employment Contract 361 -- Emotional Distress Compensation 362 -- Golden Handcuffs -- When and How to Stay 363 -- Golden Parachutes -- When and How to Leave 363 -- Part 5 Doing It 365 -- 19 Protecting Your Intellectual Property 367 -- Copyrights 368 -- Patents 370 -- Trade Secrets 374 -- Trademarks 376 -- 20 The Legal Form of Your Start-Up 381 -- Corporation 382 -- Partnership 384 -- Limited Liability Company (LLC) 385 -- Sole Proprietorship 386 -- Miscellaneous Legal and Business Matters 387 -- Work with a First-Class Lawyer 387 -- 21 Making the Start-Up Decision 389 -- How Commited Are You? 389 -- Leaving a Current Employer 390 -- Stay Fit 397 -- What if Your Start-Up Fails? 397 -- 22 Some Final Comments 405 -- Appendix A.1 Some Colorful Definitions 409 -- A Foreign Language Test 413 -- Appendix A.2 Resources Available to Start-Up Entrepreneurs 415 -- Entrepreneur and Mentoring Organizations 415 -- Organizations for Women 416 -- Professional Services Organizations 417 -- The Small Business Administration 419 -- Venture Financing 420 -- Human Resources and Equity Compensation 421.

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