Elana Fine, managing director of the Dingman Center for Entrepreneurship at the University of Maryland’s Robert H. Smith School of Business, took questions online last week with her guest Rami Essaid, chief executive and co-founder of Distil Networks, a company that makes products to block Internet “bots” that sow spam or steal data. Here are excerpts from that chat:

First customers

Q.:Rami, How did get your first paying customer?

Rami Essaid: Our first paying customers were also our first unpaid beta customers. One of the most important things we did early on was talk to potential customers, pitch them on the idea and get buy-in on our concept. As we developed the product, we continued to engage with those potential customers to make sure we are building something they would buy. What that led to is a natural progression from market research to adviser to unpaid trial to paying customer.


Q.:Rami, what is the hardest thing about owning a business?

Rami Essaid: The thing that keeps me up at night is making sure I don’t let anyone down. Ultimately, as the CEO, my decisions shape the future of the company and I worry about making a mistake. There are people who are counting on me to lead the company to profitability as part of their investment portfolio and another dozen that rely on me for their livelihood. Several of my employees are also close friends. I don’t want to let anyone down.

Competing with the BIG guys

Q.:Why is it that the big companies do not develop a service like yours? They have resources and an installed base of customers.

Rami Essaid: Some big companies might eventually work on what we are doing too, but big companies move slowly. Often having a lot of resources and customers can be just as much of a hindrance as it can be a benefit. The big guys can’t take the risks a start-up can and often cannot change direction as quickly. This gives us a unique advantage to build and iterate faster than they can and establish ourselves as the market leaders in the space.

Elana Fine: Security is also an area where larger players have historically acquired technology rather than develop on their own, for many of the reasons Rami mentioned above. Some of the biggest players such as Symantec have grown by acquiring a lot of companies (good news for Distil!). Shareholders might be happier to see acquisitions than high R&D costs.


Q.:What are your opinions of [start-up] accelerators? Do they help, hurt or do little to nothing?

Elana Fine: I’m interested to hear Rami’s thoughts on this. I’m going to say they can actually do all three — and it really depends on the accelerator and more importantly the entrepreneur. Accelerators do take equity in companies early on, which can hurt companies later as they raise more money, leaving founders getting squeezed early. For first-time entrepreneurs, they provide extremely valuable advice and extensive networks. Enterpreneurs just need to be clear what they want out of an accelerator and spend their time wisely.

Rami Essaid: I can’t speak highly enough of our experience being a part of the Techstars accelerator program. The mentorship they provided helped us compress a year’s worth of business and product development down to a few months. The program was an amazing jump-start to our company. To this day, we still leverage the Techstars network for introductions, connections and advice.

That said, I cannot blindly endorse all accelerators unanimously. A friend, Aziz Gilani, along with the Kauffman Fellows, did a study on 200 accelerator programs and they found that only a few actually add value to the companies they were supporting.

Beyond the nationally recognized few, you really have to take each accelerator on a case-by-case basis.

Protecting your idea

Q.:How do you connect with potential customers or prove a concept without either starting the biz or giving away your ideas (presuming it’s a service, not a product)? What constitutes “proof”?

Elana Fine: That is always tricky and a lot of entrepreneurs do worry about others stealing ideas, although it doesn’t happen as much as you think. Typically people have ideas in markets where they have some experience and existing connections. If you can’t immediately come up with a list of 10 potential customers that you could eventually sell to, then you are going to have a hard time when you actually have a product ready. For a service, proof is actually delivering on what you offer. If you have a new methodology for dog walking, offer to walk someone’s dog for free to test it out and get feedback on what worked and what didn’t.

Rami Essaid: First of all, the concept of “giving your idea away” needs to go away. If your idea can easily be implemented or copied, then chances are this idea is more of a feature and less of a stand-alone solution. Since you mention this as a service, have you identified who would buy this service? What types of companies are those? Who in those companies would buy it? Answer those questions and then go find local companies and people that fit those descriptions. Connect on Linked­In or call them and simply ask for their advice. You’ll be amazed how many people are willing to talk to someone that is asking for help if they aren’t trying to sell them something.