From 5f0c360a2e2a14f41740f22f6a5e4a8c8abfe398 Mon Sep 17 00:00:00 2001
From: jester <admin@zerolaghub.com>
Date: Wed, 17 Dec 2025 01:01:29 +0000
Subject: [PATCH] Add risks and constraints document

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+# Risks & Constraints
+
+## AWS Non-Compete Constraint
+
+### Current Situation
+**Non-compete with AWS exists** - specific timeline and details need clarification.
+
+### Strategic Implications
+
+**What This Rules Out:**
+- ❌ Building services that directly compete with AWS IoT Core, SiteWise, Greengrass
+- ❌ Marketing as "AWS alternative" or "AWS replacement"
+- ❌ Offering managed services that replace AWS products
+- ❌ Using AWS infrastructure for customer workloads
+
+**What This ALLOWS:**
+- ✅ Consulting and integration services (helping customers USE AWS better)
+- ✅ Working with companies who DON'T use AWS (non-customers)
+- ✅ Edge-first architecture (complementary, not competitive)
+- ✅ Building on Azure, GCP, or on-premise infrastructure
+- ✅ Targeting niches AWS doesn't address well (data sovereignty, SMB market)
+
+### Compliance Strategy
+
+**Positioning:**
+- "Edge-first industrial IoT partner" (NOT "cloud platform")
+- "OT/IT integration specialist" (NOT "AWS competitor")
+- "Data sovereignty and on-premise solutions" (DIFFERENT from cloud-first)
+
+**Customer Targeting:**
+- Focus on companies with data sovereignty concerns
+- Target AWS non-users (plenty in manufacturing)
+- Position as "on-ramp to cloud" not "cloud replacement"
+- Offer to integrate WITH AWS if customer wants (complementary)
+
+**Messaging to Avoid:**
+- "Cheaper than AWS"
+- "AWS alternative"
+- "Replace your AWS IoT infrastructure"
+- Any direct competitive language
+
+**Safe Messaging:**
+- "Edge-first architecture for data sovereignty"
+- "Works on-premise, integrates with cloud if desired"
+- "We bridge OT to IT, including AWS when appropriate"
+
+### Timeline Considerations
+
+**Questions to Clarify:**
+1. What is the exact non-compete expiration date?
+2. Does consulting/integration violate the non-compete?
+3. Are edge-first/on-premise solutions acceptable?
+4. Can we help customers connect to AWS (integration)?
+
+**Strategic Options Based on Timeline:**
+
+**If expires in <12 months:**
+- Focus heavily on consulting (safe)
+- Build network and customer base
+- Plan platform launch post-expiration
+- Use consulting to fund infrastructure
+
+**If expires in 12-24 months:**
+- Start with consulting (safe)
+- Build edge-first platform (likely safe if positioned correctly)
+- Avoid any AWS competitive language
+- Launch premium features post-expiration
+
+**If expires in 24+ months:**
+- Edge-first platform is likely fine (different market)
+- Focus on data sovereignty/on-premise customers
+- Explicitly avoid AWS competitive positioning
+- Build moat before non-compete expires
+
+---
+
+## Market Risks
+
+### Risk 1: Customer Acquisition Difficulty
+
+**Risk**: Can't find customers willing to pay.
+
+**Probability**: Low-Medium  
+**Impact**: High (no revenue)
+
+**Mitigation:**
+- Start with personal network (13 years of contacts)
+- Pilot pricing ($10k) reduces barrier to entry
+- Multiple outreach channels (LinkedIn, ISA, referrals)
+- Consulting model allows flexible pricing
+- Can work part-time while employed (no income pressure)
+
+**Contingency:**
+- Extend pilot period (90 → 120 days)
+- Lower pilot pricing ($5k-8k)
+- Expand geographic reach (remote work)
+- Partner with system integrators (referrals)
+
+---
+
+### Risk 2: Project Scope Creep
+
+**Risk**: Projects take 2-3x longer than estimated, burning time and profit.
+
+**Probability**: Medium  
+**Impact**: Medium (reduced hourly rate, delayed other projects)
+
+**Mitigation:**
+- Fixed scope in contract (specific deliverables)
+- "Out of scope" clause for additional work
+- Charge extra for scope changes
+- Start small (40-80 hour projects)
+- Time tracking to identify issues early
+
+**Contingency:**
+- Renegotiate scope mid-project
+- Charge T&M for additional work
+- Learn from experience, improve scoping
+
+---
+
+### Risk 3: Platform Technical Failures
+
+**Risk**: Multi-tenant platform has stability issues, data loss, or downtime.
+
+**Probability**: Medium (new platform)  
+**Impact**: High (customer churn, reputation damage)
+
+**Mitigation:**
+- Start with 2-3 pilot customers (test thoroughly)
+- Automated backups (daily + offsite)
+- Monitoring and alerting (proactive)
+- Gradual rollout (don't scale too fast)
+- 99.5% uptime SLA (reasonable, achievable)
+
+**Contingency:**
+- 24-hour support commitment
+- Free month of service for outages >4 hours
+- Backup to customer premises (if needed)
+- Migrate to more stable infrastructure if needed
+
+---
+
+### Risk 4: Competition from Established Players
+
+**Risk**: Siemens, Rockwell, or others target SMB market with aggressive pricing.
+
+**Probability**: Low-Medium  
+**Impact**: Medium (harder to compete)
+
+**Mitigation:**
+- Focus on speed (weeks vs months)
+- Stay nimble (can pivot faster)
+- Personal service (vs enterprise bureaucracy)
+- Edge-first positioning (different than cloud)
+- Build relationships (sticky customers)
+
+**Contingency:**
+- Differentiate further (AI features sooner)
+- Partner with them (reseller/referral)
+- Go deeper in vertical (specialize)
+- Geographic focus (local presence wins)
+
+---
+
+### Risk 5: Customer Churn
+
+**Risk**: Customers leave after 6-12 months.
+
+**Probability**: Medium  
+**Impact**: Medium (recurring revenue loss)
+
+**Mitigation:**
+- Deliver value (measurable ROI)
+- Excellent support (fast response)
+- Continuous improvement (new features)
+- Annual contracts (reduce churn)
+- Regular check-ins (relationship building)
+
+**Contingency:**
+- Exit interviews (learn why)
+- Win-back campaigns
+- Improve product/service
+- Target higher LTV customers
+
+---
+
+## Operational Risks
+
+### Risk 6: Solo Founder Burnout
+
+**Risk**: Working full-time + building venture leads to burnout.
+
+**Probability**: Medium-High  
+**Impact**: High (health, business failure)
+
+**Mitigation:**
+- Set boundaries (nights/weekends only, initially)
+- Phase 1 is part-time friendly (consulting)
+- Automate early (reduce manual work)
+- Hire contractor at $15k/month MRR
+- Plan exit from full-time job at $30k MRR
+
+**Contingency:**
+- Take breaks (1 week off per quarter)
+- Reduce scope (focus on high-value activities)
+- Hire sooner (even at lower MRR)
+- Consider part-time job (vs full-time)
+
+---
+
+### Risk 7: Technical Debt Accumulation
+
+**Risk**: Moving fast creates messy code/infrastructure that's hard to maintain.
+
+**Probability**: High (expected in bootstrap)  
+**Impact**: Medium (slower future development)
+
+**Mitigation:**
+- Document as you go (runbooks, architecture)
+- Refactor periodically (quarterly)
+- Use proven technologies (not bleeding edge)
+- Leverage existing expertise (LXC from ZLH)
+- Plan for refactoring in roadmap
+
+**Contingency:**
+- Allocate 20% time for tech debt
+- Hire contractor to clean up (when cashflow allows)
+- Pause new features to refactor
+
+---
+
+### Risk 8: Regulatory/Compliance Issues
+
+**Risk**: GDPR, HIPAA, or industry-specific compliance requirements.
+
+**Probability**: Low-Medium  
+**Impact**: High (fines, lawsuits)
+
+**Mitigation:**
+- Avoid regulated industries initially (healthcare, finance)
+- Data sovereignty approach helps with GDPR
+- Consult lawyer before regulated customers
+- Insurance (E&O, cyber liability)
+- Contracts with limitation of liability
+
+**Contingency:**
+- Hire compliance consultant
+- Obtain necessary certifications (ISO 27001)
+- Partner with compliant platform (pass-through)
+
+---
+
+## Financial Risks
+
+### Risk 9: Insufficient Capital
+
+**Risk**: Run out of money before reaching profitability.
+
+**Probability**: Low (bootstrap model)  
+**Impact**: High (business failure)
+
+**Mitigation:**
+- Start with only $500
+- Consulting generates cash quickly
+- Customer-funded platform development
+- Work part-time while employed
+- 3-month cash runway target
+
+**Contingency:**
+- Take on more consulting projects
+- Slow platform development
+- Personal loan ($5k-10k if needed)
+- Stay at full-time job longer
+
+---
+
+### Risk 10: Pricing Too Low
+
+**Risk**: Price too low to be profitable or attract wrong customers.
+
+**Probability**: Medium  
+**Impact**: Medium (low margins, wrong market)
+
+**Mitigation:**
+- Research competitive pricing
+- Start higher, discount selectively
+- Value-based pricing (not cost-plus)
+- Regular price reviews (quarterly)
+- Test pricing with pilots
+
+**Contingency:**
+- Raise prices for new customers
+- Grandfather existing customers (temporarily)
+- Add premium features (justify higher prices)
+
+---
+
+### Risk 11: Payment Collection Issues
+
+**Risk**: Customers don't pay on time or at all.
+
+**Probability**: Low-Medium  
+**Impact**: Medium (cash flow issues)
+
+**Mitigation:**
+- 50% deposit on all projects
+- Credit card on file for recurring
+- Net 15 payment terms (not net 30)
+- Automated payment reminders
+- Pause service for non-payment (after grace period)
+
+**Contingency:**
+- Collections agency (last resort)
+- Legal action (if >$10k)
+- Write off as bad debt (<$5k)
+- Tighten credit requirements
+
+---
+
+## People Risks
+
+### Risk 12: Can't Find Good Contractors
+
+**Risk**: Hire contractor who doesn't work out.
+
+**Probability**: Medium  
+**Impact**: Medium (wasted money, customer issues)
+
+**Mitigation:**
+- Start with part-time contractor (10-20 hours/week)
+- Trial period (30-60 days)
+- Clear expectations and metrics
+- Start with simple tasks (customer support)
+- Use Upwork/Fiverr initially (lower commitment)
+
+**Contingency:**
+- Fire quickly (if not working)
+- Try multiple contractors (find good fit)
+- Do work yourself temporarily
+- Adjust expectations (good > perfect)
+
+---
+
+### Risk 13: Key Person Dependency
+
+**Risk**: Business depends entirely on founder's knowledge/relationships.
+
+**Probability**: High (solo founder)  
+**Impact**: High (business can't run without you)
+
+**Mitigation:**
+- Document everything (runbooks, processes)
+- Train contractors early
+- Standard operating procedures
+- Automated systems (reduce manual work)
+- Build team (hire full-time employees)
+
+**Contingency:**
+- If health/emergency: Pause new sales, maintain existing
+- Contractor can handle day-to-day
+- Sell business (if necessary)
+
+---
+
+## Strategic Risks
+
+### Risk 14: Wrong Market Segment
+
+**Risk**: Targeting SMB manufacturers isn't viable; need enterprise.
+
+**Probability**: Low  
+**Impact**: High (pivot required)
+
+**Mitigation:**
+- Validate with Phase 1 consulting
+- Multiple customer conversations (discovery)
+- Test pricing with pilots
+- Be willing to pivot
+
+**Contingency:**
+- Pivot to enterprise (need capital)
+- Pivot to different vertical (food/bev to automotive)
+- Pivot to pure consulting (no platform)
+- Partner with enterprise vendor (reseller)
+
+---
+
+### Risk 15: Technology Becomes Obsolete
+
+**Risk**: LXC, MQTT, InfluxDB become outdated; need to rebuild.
+
+**Probability**: Low (these are mature)  
+**Impact**: Medium (need to refactor)
+
+**Mitigation:**
+- Use proven, mature technologies
+- Standard protocols (MQTT, OPC UA)
+- Containerized (easy to migrate)
+- Monitor technology trends
+- Plan for evolution (not revolution)
+
+**Contingency:**
+- Gradual migration (not big bang)
+- Containers make it easier
+- Customer data is portable
+
+---
+
+## Mitigation Summary
+
+### High-Priority Mitigations (Do First)
+
+1. **Clarify AWS non-compete** (impacts entire strategy)
+2. **Start with consulting** (fast cash, low risk)
+3. **Document processes** (reduce key person risk)
+4. **50% deposits** (payment risk)
+5. **Start small** (pilot customers, test thoroughly)
+
+### Medium-Priority Mitigations (Do After Launch)
+
+6. Automated backups and monitoring
+7. Contractor hiring process
+8. Regular price reviews
+9. Customer success program
+10. Technical debt allocation
+
+### Low-Priority Mitigations (Do When Scaling)
+
+11. Compliance certifications
+12. Insurance (E&O, cyber)
+13. Multi-server redundancy
+14. Advanced automation
+
+---
+
+## Risk Acceptance
+
+### Risks We Accept
+
+**Solo founder limitations**: Building slowly, hiring when cashflow allows  
+**Technical debt**: Will refactor periodically, not trying to be perfect  
+**Market uncertainty**: Willing to pivot if needed  
+**Competition**: Can't compete on everything; focus on differentiation  
+
+**Why**: These risks are inherent to bootstrapping and acceptable given the low capital requirements and fast validation approach.
+
+---
+
+## Decision Points
+
+### Go/No-Go Criteria
+
+**End of Phase 1 (Month 3):**
+- [ ] Generated $20k+ revenue (consulting)
+- [ ] 2+ completed projects
+- [ ] 5+ warm prospects for Phase 2
+- **Decision**: Proceed to Phase 2 or continue consulting only
+
+**End of Phase 2 (Month 9):**
+- [ ] $10k+ MRR achieved
+- [ ] 5+ monitoring customers
+- [ ] <10% churn rate
+- [ ] Platform stable (99%+ uptime)
+- **Decision**: Proceed to Phase 3 or stay at Phase 2
+
+**End of Phase 3 (Month 18):**
+- [ ] $30k+ MRR achieved
+- [ ] 3+ premium customers
+- [ ] Contractor hired and productive
+- **Decision**: Continue scaling or consider exit options
+
+---
+
+## Insurance & Legal Protection
+
+### Recommended Insurance (When Revenue Hits $100k)
+
+**Errors & Omissions (E&O):**
+- Coverage: $1M-2M
+- Protects: Professional mistakes, bad advice
+- Cost: $1k-3k/year
+
+**Cyber Liability:**
+- Coverage: $1M
+- Protects: Data breaches, cyber attacks
+- Cost: $1k-2k/year
+
+**General Liability:**
+- Coverage: $1M
+- Protects: General business operations
+- Cost: $500-1k/year
+
+**Total**: $2.5k-6k/year (affordable at scale)
+
+### Contract Protection
+
+**Always Include:**
+- Scope of work (specific deliverables)
+- Payment terms (50% deposit, net 15)
+- Limitation of liability (cap at project value)
+- Warranty disclaimer (no guarantees)
+- Indemnification (customer indemnifies us)
+- Termination clause (either party can exit)
+
+**Lawyer Review**: Have lawyer review standard contract ($500-1k one-time)
+
+---
+
+## Contingency Plans
+
+### Worst Case Scenarios
+
+**Scenario 1: Can't find any customers**
+- **Response**: Extend timeline, lower prices, expand geography, pivot to pure consulting
+
+**Scenario 2: Platform fails catastrophically**
+- **Response**: Restore from backups, migrate to new server, refund customers, rebuild trust
+
+**Scenario 3: AWS non-compete violation alleged**
+- **Response**: Consult lawyer immediately, potentially pivot positioning or pause business
+
+**Scenario 4: Major competitor enters SMB market**
+- **Response**: Differentiate faster (AI features), go deeper in vertical, partner with them
+
+**Scenario 5: Personal emergency (health, family)**
+- **Response**: Contractor handles day-to-day, pause new sales, maintain existing customers
+
+---
+
+## Monitoring & Review
+
+### Risk Review Cadence
+
+**Monthly**: Financial risks (cash flow, collections)  
+**Quarterly**: Operational risks (churn, technical debt)  
+**Annually**: Strategic risks (market, competition)
+
+### Key Risk Indicators (KRIs)
+
+**Financial:**
+- Cash runway <90 days
+- Collections >30 days overdue
+- Churn rate >15%
+
+**Operational:**
+- Platform uptime <99%
+- Response time >24 hours
+- Customer satisfaction <4/5
+
+**Strategic:**
+- Customer acquisition cost increasing
+- LTV decreasing
+- New competitor launches
+
+**Action**: If any KRI triggered, immediately review and adjust.
+
+---
+
+*Last Updated: December 2025*