HOW TO START YOUR OWN VIRTUAL CORPORATION: 
RIDING THE INFORMATION HIGHWAY!   
c 1994 Michael C. Daconta

I. Why Virtual Corporations?
	Virtual Corporations will create the next great wave of entrepreneurialism in the United States.  Why? A Virtual Corporation is a phenomena caused by the convergence of three great trends in the United States: the information highway, telecommuting and the electronic cottage.  What is a Virtual Corporation?  The definition of "Virtual" is existing in effect but not in reality.  That is the result of a Virtual Corporation - the "effects" or "results" of a real corporation without the high overhead and cost of a regular corporation.  A Virtual Corporation is a network of creative people connected via online services, bulletin boards and the internet, who band together to produce commercial products.  There is no such thing as a leaner or more efficient form of organization.  Virtual Corporations will have the lowest overhead and the highest implementation of total quality management in any industry in which they compete!

II. The idea or desire.
	For every movement, there must be a force behind the action which propels it (gets the ball rolling).  What is the impetus to start a Virtual Corporation?  Do you have what it takes?

	a. A good idea.  Many people have ideas but do not know how to implement them.  A Virtual Corporation aids the proliferation of good ideas in two ways:
		(1) By bringing together the talents of a large diverse group of people, the synergy in talent and thought often spawns new ideas.
		(2) By having a large diversity in skill levels, the senior, more experienced people can train the less experienced people.  However, the less experienced people add the benefit of looking at things with a fresh perspective.

	Even if you don't have a novel idea yourself, being a part of a Virtual Corporation is more likely to increase your own creativity by the mere fact of being surrounded and associated with creative people.
  
	b. Drive.  By this, I don't mean "drive a car."  I mean the strength to move past the bumpy roads.  The determination to learn what you need to learn and push a project through to completion.  If you want to start a Virtual Corporation or even join a Virtual Corporation you must have ambition and a drive to be better!  This is the true fabric of a Virtual Corporation!  This electronic age moves fast and in a Virtual Corporation you will be running with thoroughbreds!  Every athlete and runner knows that if you want to improve your performance you run with people faster than yourself!  This is the opportunity afforded you in a Virtual Corporation!

III. Hardware and Software Requirements.
	Just like any other manufacturer, a Virtual Corporation uses tools and equipment to build its products.  Although Virtual Corporations are not restricted to only producing information-age products, they are most suited to this task.  This paper will only cover information-age products (software, books, technical papers, etc.); however, see Section 12, "Where to go next?", for more information.
	a. Hardware.  The hardware requirements are dictated by the ability to connect to online services, bulletin boards, or the internet.  For this you need a minimum of a personal computer and a modem.

	b. Software. The software requirements are dictated by the ability to build commercial products.  This depends on the products that you want to create.  The tools will range from compilers, gui builders to word processors and databases.

	c. Common tools. It is the nature of a virtual corporation that most members will have different hardware and software setups.  This is fixed by sticking to standards (like in programming you set a standard of using an ANSI C compiler).  Also, you use the shareware and public domain markets to distribute common tools (like a .GIF viewer) for a reasonable cost.

	d. Sharing.  The need for common tools as stated above can be eased by dispersing the work based upon the hardware and software tools a Virtual worker has available.  By sharing the workload among the people who have the tools and by Virtual workers helping each other out (by say converting a file to a different format), most compatibility problems can be worked around.

IV. Forming a team.
	It has been proved in business more times than large companies would like to admit:  a small "skunk works" type team of 5 or 6 dedicated people will outperform the large, cast of hundreds every time!  Here again we see where the flexibility of Virtual Corporations prove their effectiveness.  A Virtual Corporation is the flattest organization possible.  Every employee is an owner of the corporation and directly contributes to its success or failure.  Also, using online forums, a large democratic consensus on important issues of voting members is easy to convene.  How do you find people to join a Virtual Team?  How do you recruit?

	a. Searching for skill sets.  Every project has its requirements.  To fulfill requirements often takes expertise in particular areas.  Finding the right expertise to fit the requirement has become much easier by way of Online forums and Internet news groups that pigeonhole different interests and expertise.

	b. Knowing your forums.  In order to find the expertise you need you either have to "cruise the forum and newsgroup topics" to find a match.  Better yet is to know them and go right there.  See section 12 to find out how to get a complete list (in The Complete Reference).

	c. Secret or open?  If your idea is so fantastic that you don't want to post public messages on a forum to recruit people.  You may have to post a "teaser" message that attracts peoples interest and the have them email you for more detail.

	d. Posting your messages.  Don't be afraid to post public messages to recruit people or even promote your Virtual Corporations products.  The online services and the internet are so attractive because they are open forums that lack strict rules on discussion and interchange.  If the federal government or online services start trying to restrict the discussions or charge too high of prices, creativity and entrepreneurialism will suffer.  I believe that will not happen.  People already advertize many products through the message boards - authors advertise their latest book, companies advertise their latest products.  In fact Compuserve, AOL and all the Online services (as well as the internet) encourage this activity in support of free market principles and ideas.  Competition is a good thing.

V. Creating an identity.
	An identity for your Virtual Corporation is very important.  It might not seem as important as the work you do but you will find it is the glue that binds your team.  People want to feel a part of something and a strong identity goes a long way towards this goal.  What Apple or Microsoft employee won't buy the company teeshirts, jackets, etc. to proudly display?

	a. A Logo.  Your logo or symbol will become your trademark.  Your stamp that you have been here and your product is of a high quality.  It is wise to pick your name and symbol wisely and have something that most of your members agree on.

	b. The paperwork.  An identity goes far beyond just a logo.  You need the usual office items to post your logo on: letterhead, brochures, envelopes, etc.  All this may also have a unique look and feel that enhances your virtual corporations identity.

	c. Electronic distribution.  Although some paper is necessary, a Virtual Corporation should strive to reduce paper use as often as possible.  The Virtual Corporation should strive to produce the majority of its products in electronic form and distribute through electronic means.  With the proliferation and the extension of the information highway, this will get easier.  Also, the environmentalists and your children will appreciate you saving the trees.

	d. Merchandising your identity.  An identity does not only build team cohesion and Esprit de Corps, it also provides opportunities for merchandising as your products become widely known and successful.  Who hasn't seen the latest wave of Coca Cola, Hanna Barbara, or Marvel Comics merchandise.  People like to identify with successful companies. Period.

VI. Beginning Operations.
	Now that we have covered allot of the "why you should start a virtual corporation", let's discuss the "how".  

	a. Dividing the work. Each member of a Virtual Team wants to contribute to the product.  This means you must think about dividing the work equitably, so that the entire team can share in the victory of launching that product.  Each team member should be able to say - "I helped build that!"

	b. Tracking progress. All projects of sufficient complexity must be planned out and flow according to a schedule.  You must set goals.  The goals must be attainable and verifiable.  Once goals are set for each team member, you must track their progress.  Lots of encouragement is needed to help members meet their goals.  In fact, MORE encouragement than a regular corporation because their is no one to one face time available.  Also, you will find yourself in a mentor role to junior members who not only need support but training too.

	c. The email loop.  Email is the oil of the Virtual Corporation that keeps all the gears lubricated!  This analogy is very important because the email must flow or the engine stops.  The quality and quantity of communication will directly correlate to the success or failure of your Virtual Corporation.

	d. Online conferences. Email communication normally follows a question and answer type format.  There is a need for a longer, more open discussion where the whole team gets to air opinions, ideas and problems.  The online conferences of America Online and Compuserve serve this purpose well.

VII. Handling Problems.
	A Virtual Corporation does not escape problems (no endeavor does).  In fact, along with the normal problems associated with creating products, a Virtual corporation is saddled with problems unique to its nature.

	a. Non-performers.  What do you do with people who cannot produce as advertised?  Here a Virtual Corporation greatly differs from a regular corporation.  In a regular corporation the person would get a pink slip; however, in a virtual corporation the person can just be moved to a lower position until they are ready or able to perform.  There are many strategies on how to effectively implement this.

	b. Boredom.  What do you do if a person is bored with the task you assigned them?  It may be a necessary task that has to be done and we cannot always just do the things we like.  This will most likely have to be handled on an individual basis depending on the personality of the individual.  Is the person mature enough to do the assignment anyway and push through the tedious task?  Is their any ways you can make the assignment more interesting?

	c. Training/diverse skill sets.  In a Virtual Corporation you will be amazed at the diversity of people that our part of your organization.  People from every part of the country, every racial, religious and social group.  But most importantly, people of greatly varying degrees of skill and talent.  It is the diverse degrees of skill and creativity that will pose the greatest challenge.  One method to counter this is creative teaming: team strong with weak.  That way the strong can teach and train his team member.

	d. Slipping schedules.  The nature of a Virtual Corporation is that until projects complete and the money starts to flow - most members will be professionals who our members in their spare time.  With the pace of things quickening every day, their will come a time when a member cannot finish their task because of competing commitments (like a big project in work that they have to finish or they get fired!)  You have to balance your understanding of that persons situation with the morale of the team.  Can that person or you find a replacement so they can "cool out on the bench?"  Can other team members take up the slack without getting frustrated?  Can you, as the leader of the team, take up the slack?  In the end, the team leader must be prepared to fill in and tighten up the loose ends.  As you will see later, this will call for some heros and champions.  This very situation happened to me in Virtual Magic, where I had to move in and fill in for a team member.  I can tell you it worked out well in the end.

	e. Out of human touch.  I think the lack of shaking hands, slapping on the back, encouraging, shouting, yelling, laughing and crying - in other words, the human touchy-feely part that makes bonding with people a joy is the greatest problem that faces virtual corporations.  Words are a wonderful tool and can be moving, but they cannot replace the silent nod of a head, or a warm smile of appreciation, or the stern rebuke of a glare.  Words on a video screen are a pale substitute.  How can a team be a real team without such camaraderie?  The answer is twofold:
	(1) You MUST plan and budget for face-to-face meetings.  After a project is complete, you must partition off some earnings to hold some type of convention and get together so that your virtual friends can meet, share experiences and celebrate.  I hold this as income priority NUMBER ONE!  Hey, if you can't have fun with the people you work with - what are you working for?  I repeat again that this must be a goal.
	(2) The information superhighway, video-teleconferencing, and Virtual Reality are working fast and furious to make our electronic contacts more real and meaningful.  I believe this technology will come through for us.

VII. Making Money
	In order for a Virtual Corporation, like any corporation, to stay in business it most make money.  However, unlike regular corporations, the virtual corporation has extremely low overhead which means it does not have to continually put out best-sellers or chart-toppers to survive.  A word of caution on this: although making money is a universal desire, if you are ONLY in it for the money you should stop reading.  I see the primary motivation for joining a virtual corporation is to create.  In fact, there is nothing wrong with a non-profit virtual corporation.  Lastly, a good virtual corporation makes room for people who are not interested in the money at all just the creation.  You must be prepared to take in, nurture, and work with people who just want to be in a creative atmosphere with no pressure and no schedules.  Here we see the flexibility of a Virtual Corporation shine through again!

	a. Employees? Are the people who join your Virtual Corporation employees?  That question is up to you.  The question does not really need to be answered until money begins to flow from the products you have created.  Once that occurs, this question must be answered.  Let me say that they do not have to be employees, you could structure it like a publisher that pays royalties or an association that has members.  There are many different forms you can take.

	b. Dividing the pot. How you distribute monies will be as important as making the money.  You must strive to be equitable and balance the amount of contribution with the amount of reward.  At the same time, some of the money must solely go to the corporation at large for marketing, new equipment and supplies.  Another issue that you must resolve is how to handle late-comers to a team?  You cannot give them the same amount of compensation as someone who was with the project from the beginning.  You must create formulas for this before a project begins and make sure that all members of the team know the ground rules.

	c. Marketing.  Marketing your companies products is just as important as developing them. How you market your product is based upon how strong and unique the product is.  Does the product fill a niche?  Is the product far superior to those out on the market?  As you can see, before you decide where to market your product you first conduct a market survey.  You conduct this survey by both researching what is already out on the market and by receiving customer feedback on the strength and weaknesses of your product.  Once you have an understanding of your products strengths and weaknesses and the current state of the market you begin selling your product to targeted customers.  The methods for marketing are straight forward and have been used by thousands of mail order and software companies.
	(a) the online services.
	(b) magazine advertising
	(c) card decks
	(d) word of mouth.
See The Complete Reference (Section XII) for more information on marketing names and phone numbers.

	d. Outlets. What are the outlets for your product?  For software, this depends on whether you release it as a shareware product or as a commercial product.  Let's first talk shareware: most online services support shareware libraries.  Their are also many shareware magazines and bulletin boards.  As for commercial, I would first recommend going to the mailorder firms like macwharehouse or microwharehouse.  To sell to them however, you must have a fully developed, shrink-wrapped package and a stock of inventory.  See The Complete Reference (Section XII) for more information on outlets and names and phone numbers.

VIII. Legal questions.
	If you rolled your eyes when you saw this section - I feel the same way.  However, a few ounces of prevention will be worth a pound of cure.

	a. Health benefits.  With the health care issue being the current rage, if you chose to make your team members employees in your virtual corporation, you will be responsible for health benefits.  This is a real good reason NOT to make the members of your virtual corporation employees.  I believe the best path to take in this issue is to model your virtual corporation after Mary Kay or Amway.  The participants our self-employed in their own business.  That makes health care their responsibility.  Also, until your Virtual Corporation grows beyond your ability to manage it in your spare time - the majority of participants (like yourself) will have a full-time day job.  Once your corporation grows large, then you can change the rules.

	b. Bylaws.  In any endeavor where money is concerned, their will be questions on the equity of distribution.  You should have bylaws (or regulations) that spell out your policies clearly to each new member.  These bylaws will help prevent arguments, hurt feelings, and possible legal action.  You may want to have your bylaws drafted by a lawyer.  This brings us to the next topic: incorporation.

	c. Incorporation.  Incorporation creates a separate, "fictitious" legal person that conducts business on behalf of a group.  Think of a corporation as your "business" being that you have created and control (sort of like a business robot).  You should not incorporate immediately upon forming your virtual corporation.  You should wait until:
		(1) You have a good strong identity
		(2) Your team is intact and functioning well
		(3) You are a month away from launching your first product.  Or, immediately after launching your first product.

	You may think: "Why should I wait so long to incorporate?  Why not right away?  Won't incorporating make it all more official and legal-like?"  My answer is simple:  don't waste the money until you know you are serious and capable of launching a product.  Many novice entrepreneurs (I've made this mistake myself) want to run right out and create the "right image" for being in the business world!  You think, "Hey, if I am going to compete with the big guys, I have to LOOK important!"  So you run out and blow good money on incorporation, business cards, letterhead, envelopes, etc.  I'm not saying that all this stuff isn't important.  It is, but only at the right time.  First concentrate on the majors; like managing your team and building products - let the "image" come last.

	Ok, now let's assume you have controlled your desire to "play big business" long enough so that you have just launched some software and have checks showing up in your mailbox.  Congratulations!  Now is the time to think about incorporating. Yes, money changes everything.  You need to incorporate for the following reasons:
		(1) protect your identity.  A corporation is an official legal identity.  You don't want someone else stealing your name.
		(2) formalize your bylaws.  Have a professional help you.
		(3) protect your personal assets.  Until you are as big as Microsoft, you need to protect your personal assets from lawsuits.  Incorporation can be a shield.  That brings us to our next topic.

	d. Lawsuits.  I am not going to even try to think about how you could be sued.  In our lawsuit-happy country, it does not take much.  Let's say your software eats someone's computer for lunch and they had their whole life on their system.  They will be pissed and call their lawyer.  It has become a knee-jerk reaction in our country.  The above discussion on bylaws and incorporation should protect you.  I will let your lawyer offer more advice; however, before I leave this topic - don't let the threat of a lawsuit stop you. If you do let it stop you then you might as well not walk out of your house because there is always something out there to be afraid of.  Courage does not mean you are not afraid.  Courage is acting in the face of fear!  Like I tell all my students: listen to the NIKE commercial - just do it.

	e. Copyrights, patents and such.  You should not worry about copyrights or patents until you have a product that is so unique that it needs protecting.  If you have an idea that fits this bill, The Complete Reference (Section XII) goes into this in detail.

IX. Multiple products.
	Why am I talking about multiple products before you have even created your first?  The reason is one of philosophy.  I hope to dissuade you from thinking that one product, or one book, or one anything is going to be the silver bullet that makes all of your dreams come true.  It is not impossible, but you should never plan for it to happen that way.  So think many products, play the law of averages.  If you have one product - all your eggs are in one basket.  Diversify your portfolio and you have a better chance of success. 

	a. Splitting the team.  This may be tough to do, but after you have launched your first product, some of your team must remain to improve and maintain that product.  Good service and support is essential to customer satisfaction.  But you cannot have all of your team do maintenance.  Therefore you must split your team and move your most aggressive people on to a new project.

	b. Time management.  This topic is related to time management and customer satisfaction.  The time you need to manage is yours and the customers you first must satisfy is your team members.  All I am saying is that you must watch your span of control and don't let your commitments to your team fail because you have too much to do.  Their are many techniques, books and articles on how to squeeze more minutes out of the day.  Read them.  Time is the great equalizer because everybody is allotted the same amount.  How you use your time will set you apart from the crowd.

X. Growth
	Everybody wants growth and it is never guaranteed.  Here is some quick thoughts on this for when you get there.  Before you shake your head and say "I'll worry about that later."  Remember that you have a powerful trend on your side: the growth of the information highway.  People are excited about the info highway and it is reflected in a service like America Online that grows from 300,000 members to 600,000 members in 4 months.  This is an international trend - catch it now and you may be able to ride the wave! 

	a. A core team.  As your company grows you will be faced with the challenge of keeping it "virtual" but at the same time having to manage a large organization.  This will call for compromise and possibly the establishing of a headquarters.  How this is done while retaining your "Virtual" flavor is a challenge that you must face head on.  Just do not forget all the advantages a virtual corporation has over a regular corporation.

	b. Project managers and heros.  Although an individual is important, most great things are pulled off by small groups.  The way to expand your company and stay successful is to continually create small groups.  For each small group to be successful it must be led by a champion (the project manager).  As you build products, you will find these champions naturally rise to the top.  They are like bright lights that cannot stop their radiance.  Once you spot them, nurture them.

	c. Video, communication and the info highway.  Not only will the information highway be an impetus to growth for your virtual corporation, it will spawn products and services that make you more efficient in running your corporation.  Their are powerful forces (from the vice president to huge transnational corporations like MCI and the media conglomerates) who want to lay "the last mile of fiber."  It will happen and I predict sooner than you might think.  I think we will see widespread desktop video before the year 2000.  This explosion in information, access and communication will make our current tools seem primitive.  A virtual corporation may possibly be the only corporation flexible enough and diverse enough to spot the trends and succeed in that environment.


XI. A Virtual Corporation in Action.

	a. Virtual Magic.  Virtual Magic is a virtual corporation that I started on America Online.  Virtual Magic began - like most things - in a simple fashion.  After teaching an online programming course for America Online, I asked students if they were interested in exploring Virtual Corporations with me.  Seven immediately signed up and we have learned allot.  We are engaged in the creation of two products: EZDB and Moneyflow.  EZDB has been launched already with a major upgrade to be released by month's end.  All Virtual Magic's products will be cross-platform and coded to the highest standards; however, launching products is just the byproduct of a bunch of great programmers, artists and engineers learning from each other and having fun!

	c. Where to get more info on VM?  Virtual Magic is growing and incorporating.  I encourage you to join us on this exciting adventure.  To receive a brochure on the different membership levels, send email with your address to vmagic@aol.com.  On AOL, send email to "vmagic".

XII. Where to go next?

	a. Starting a Virtual Corporation: The Complete Reference. If you have decided that virtual corporations are the wave of the future and want more detailed information on every step along the way, you can order the above 60 page report.  Send a $10 check or money order to VIRTUAL MAGIC, 1600 Buena Drive, Sierra Vista, AZ 85635.

	b. The Virtual Magic Newsletter.  If you are interested in following this trend as it happens, subscribe to the Virtual Magic newsletter!  You will receive this newsletter each month. Each newsletter is jam-packed with current events in the VC community, tips, tricks, and product reviews.  The cost is $25.00 for a year's subscription.  Send a check or money order to VIRTUAL MAGIC, 1600 Buena Drive, Sierra Vista, AZ 85635.

	c.  Free Online Seminars.  Virtual Magic has scheduled an Online Seminar every quarter (4 times a year) to introduce people to Virtual Corporations and discuss the major events, implementation topics and issues.  Send email to vmagic@aol.com for place and times.

XIII. ABOUT THE AUTHOR.
	My name is Michael Daconta and I have been developing Software - for other people - for over 10 years.  I am also the author of C Pointers and Dynamic Memory Management and C++ Pointers and Dynamic Memory Management (soon to be complete) published by John Wiley and Sons, Inc. Recently, I have developed the shareware programs EZDB and EZDOC.  Now, as the founder and president of Virtual Magic, I have decided to stop developing software for others and create an international organization of creative people like yourself that have the drive and determination to bring software products directly to market!  I hope you are interested in joining me in this endeavor!