Episode 03 : A start-up Company
|A: Hey I’ve got an idea for a new start-up. Would you be interested in investing?
B: That totally depends on what it is. What’s the idea?
A: I’m thinking of starting up an SEO company in India. I’ve been involved in this industry for several years and I know that even some American companies are still turning a profit with huge labor costs. We could do the same thing in India at a fraction of the cost because the labor there is much cheaper.
B: What about the talent level and language barriers?
A: The talent in India for IT is world class, and virtually all the highly educated people speak English quite well. That’s why there is so much of that kind of outsourcing to India going on right now. We’ve got to strike while the iron is hot.
A: I think we could do it with $5 000 000. And that’s a pretty conservative estimate. I’ve got 3 investors who have already signed on and I’m looking for one more. I’d like to split it equally so we’d each be in for $1 000 000.
B: Well you’ve peaked my curiosity. Let’s meet for coffee next week and discuss it further.
B: What kind of initial capital are we talking about? Do you have any potential angel investors?
Key vocabulary and phrases that are discussed in the podcast:
Labor costs: The amount of money it costs to hire workers. Labor costs are much lower in developing countries, which makes many businesses want to move to those countries to save money.
Fraction of the cost: A common phrase that means something is much cheaper than in some other place. You could say, “you can get a good massage in China for a fraction of the cost you could in any western country”. That means massages are much cheaper in China than in western countries.
World class: Means that the quality is as good as it is anywhere in the world. Very high quality.
Outsourcing: When a company decides to stop doing some part of its work and either let another company do that part of its work or hire cheaper workers in a different country to do instead. One example of outsourcing would be if an American clothing manufacturer decided to stop making its fabric in the US and instead open a factory in Vietnam to make the fabric.
Strike while the iron is hot: A common phrase that means you should take advantage of a good situation that might only be temporary. For example, if your restaurant business does really well in the summer than you should keep it open longer to make as much money as you can during that time when the money is the easiest to earn.
Initial capital: Capital is just the money that you need to put into some investment. Initial capital means the money that you use for a new business at the very beginning.
What kind of initial capital are we talking about: This is another way of asking, “how much initial capital do we need?”. Another example is if someone says, “my girlfriend is really hot”, someone else might ask, “how hot are we talking about?”. Then if she’s really hot you could say something like, “super model hot”.
Angel investors: The first investors into a new project or start-company. Anyone who invests at the very beginning. Angel investors are often wealthy people who invest in several start-up companies. These are quite risky investments but also have the potential to earn a lot of money.
Conservative estimate: It’s a safe estimate at a number. Here for example, he said $5000000 was a conservative estimate. That means that he might need less than that money, but $5000000 should definitely be enough money, even if a couple of things are more money than that.
Peaked my curiosity: It means I’m interested but I still need to find out more information.