Archive for July, 2007

Facebook is taking a nap.
July 31, 2007

I’m actually a pretty big believer in the loco idea that Facebook has the opportunity to erode the market-share of the major web properties (Google, Yahoo, MSN) by virtue of their new open F8 platform.  Allowing developers the chance to get in front of your massive audience instead of having to build their own is a big deal.  This is sort of like a rock band having the choice of opening for Pearl Jam or promoting a show in their own backyard; easy decision.

That said, Facebook (of which I am not a member and don’t think I’ve ever seen) would do well to not go offline for a few hours at a time like they are right now.   Pearl Jam can’t rock out if the stage has no power.

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Rule #17 – Your little “Startup” adventure is probably going to ruin your life
July 25, 2007

Relax, Ferris. I’m not trying to rain on your little startup parade. This will all make sense shortly. But I’m being serious. People that are more positive and cheery then I would probably use a word like “change” instead of “ruin,” but that would be dishonest. And if anything, I’m going to be honest with you here.

Defined (essentially) as “an irrecoverable state of devastation and destruction”, ruin is most certainly on the horizon. You can not be totally prepared for it, but coming to grips with that fact that it is on the way will help you deal with it in a satisfactory way. Managing the devastation is a huge victory.

There are dozens of forms which the devastation may take. It could be cloaked in a shroud of “you’re going broke trying to fund this and it will take the rest of your life to get out of debt.” Perhaps the destruction will be a wave of “I’m married to my computer, not my wife.” Or, you could find yourself with an old fashioned case of “my friends and family are mad because they invested in this company a few years ago and they haven’t been repaid a dime.”

While it’s easy to think catastrophe’s like the ones I mention above are not going to fell you, you would be wrong. Sure, they may not be EXACTLY as I’ve detailed above, but your quest to start something from nothing will have consequences that you are not remotely prepared for – at least not yet. Starting a new business venture is exciting, challenging, rewarding, and fun. But it’s not all dancing unicorns and rainbows. Even if you find success – however you define it – it is near impossible that you will do so without suffering along the way. Working all nighters to code your application is not “suffering.” Getting fired from your job because your employer finds out about your venture – that is suffering.

So, what can you do about it? As William Hurt said in Body Heat, “when a person commits a murder, there are 50 things that can go wrong. If you can think of 15 of them, you’re a genius.” As you continue down this road, you need to keep a scratch-pad of everything associated with your business that could lead to ruin for you personally. No, I’m not talking about things like a meteor crashing on your house (there will be time for that later). I’m talking about things like…

  • My spouse could leave me because I become too consumed with my company
  • My family could disown me because I take their retirement money as capital and now they’re broke
  • I could end up bankrupt because I’m pouring every dime I have access to in to this venture
  • I could have a nervous breakdown and end up in the hospital when we lose our biggest customer
  • I could get fired from my day job, meaning my startup will have to be put on hold while I figure out how to earn a living
  • My life could become a different version of the same grind I’m desperately trying to escape

If you think I’m asking you to write up a list of horrific, worst-case scenarios, then you would be correct. And if you think this exercise is unimportant, then don’t come around here complaining when something terrible happens to you.

Now that you have your list in hand, you need to come to grips with the fact that you haven’t thought of everything, but you’re way ahead of the game to have thought of anything at all. Furthermore, there is a nugget of good news in all of this: by having these things on paper in front of you, dealing with them is a breeze. Seriously, all you need to do is recognize that the problem exists and take steps early on to prevent it from destroying your world. Let’s take the list from above…

  • My spouse could leave me because I become too consumed with my company
    • Talk to him/her about the commitment this is going to take; find ways to get them involved so they can understand what you are trying to accomplish; define what hours you will work, better yet, a time each day or each week where you will turn off the phone and computer and unplug from your venture. Stick to it.
  • My family could disown me because I take their retirement money as capital and now they’re broke
    • We’ll talk about raising money later, but one of the worst things you can do is take money from people that they can not afford to lose. While the temptation will be great to take every dollar possible from every source possible, the government wisey has restrictions in place to protect companies and investors alike. You should do the same; be honest with yourself about the money being offered, and be honest with the potential investor about the risks involved. If you can’t look the person in the eye and tell them, “There is a chance I will lose every penny you are about to give me”, then you are not being honest with them.
  • I could end up bankrupt because I’m pouring every dime I have access to in to this venture
    • Under no circumstances should you start a business on credit cards. Period. If your response is that credit cards are the only way in which you can fund the business, then you are not being creative enough or thinking very deeply. Do not use credit cards to fund your business.
    • Like the friends and family you are hoping to get investments from, do not put money in to your business that you can not afford to lose. I can not stress enough that for every “Kevin Rose took his last $5,000 and turned it in to Digg!” story on the internet, there are hundreds and hundreds of people who took that last $5,000 they had and turned it in to nothing. Just as you would probably never wager your rent money on a hand of blackjack in Las Vegas, don’t wager your savings on an idea that may or may not pan out.
  • I could have a nervous breakdown and end up in the hospital when we lose our biggest customer
    • This potential problem alone should have you lying awake making sure that your company isn’t too reliant on one person, one product, one company, or one customer. You have to diversify in some way. Don’t mis-read this and think I’m encouraging you to be scatterbrained or to try to do too many things at once. I most certainly am not. But all sales cycles are cyclical, and someone out there wants your best customer to become their best customer and they are working hard to make that a reality. All Eggs. One Basket. You know the drill.
  • I could get fired from my day job, meaning my startup will have to be put on hold while I figure out how to earn a living
    • Carefully research and understand what your current employers policies are with regard to other ventures. Most non-compete clauses aren’t worth the paper they are printed on, but a lot of companies require that anything you work on during company time and a company computer belongs to them, not you. I assure you that is a battle you do not want to fight.
    • If you feel like you’re on pretty good footing at work, consider talking to your employer about what you are working on outside of your day job. You’ll likely be surprised at how supportive they’ll be. I know a number of people who received an investment from their employer, took on their employer as their first customer, or both.
  • My life could become a different version of the same grind I’m desperately trying to escape
    • I’ve said this before, but if you aren’t sure why you are trying to start a company, then the other problems listed here will appear trivial in the long run. Make sure you know what it is that’s so great about what you’re trying to do or where you’re trying to go. I know a few folks who have launched successful companies and said, “I realize now that I only started this because I knew I could do it and the money would be good. But now I’m stuck doing this because the money is good when I really wish I’d started something else.”

There are slews of things that can go wrong in business with your business. As I said earlier, these problems usually start small and are very manageable if you pay attention. There are even more things that can go wrong in your personal life as a result of your business. These things usually start small but grow very quickly if you aren’t constantly paying attention to them. Friends, family, partners, cash, and credit-status are things you risk losing irreversibly and completely as a result of starting a business.

My advice is to start writing them down, and start solving them long before they appear on the horizon.

Rule #16b – There are no “Small” successes
July 13, 2007

Perfect timing:! I looked down at my Feedburner button thingamajig yesterday morning and I have a subscriber. Woo-nelly-hoo. Take that all you blogs with no audience!

Anyway, this coincides with the second half of the “There are no ‘Big’ problems post”, which I have cleverly titled “There are no ‘Small’ successes.”

When starting a new venture, it’s easy to think of the eventual success. It’s easy to dream big and see the big pot of gold at the end of the rainbow. But just as there are no “Big” problems that didn’t start as small problems, there is no full pot of gold waiting for you. What there IS, however, is an empty pot that you can fill with gold one coin at a time.

Believe it or not, the first “gold coin” you pick up from the very first customer is worth the exact same amount as the last coin you find. It might feel a little better or please you more since it was the “first” customer, but it’s worth exactly the same amount of money as the last dollar you ever earn (not factoring in inflation, of course). The first customer is worth every bit as much as the last. The first piece of good publicity is worth just as much as the last piece of good publicity. That said, the converse is also true: just because you’ve accumulated revenue, customers, good p.r., etc. doesn’t mean that what’s on the horizon is any less important or less valuable then it was the day you got started.

Invariably, a sense of apathy will set in wherein the things that seemed so important and vital at the start no longer carry the same sense of urgency. It happens in most every business in every industry. Being “good enough” within the status quo is a lot easier then trying to be “better” outside of it. Why fight for one more customer when you already have 1,000 customers? Why trim one more process out of the supply line when it’s already pretty efficient? Why shop around for vendors when you’re getting a pretty good deal from one already? Simply being “good enough” has a sneaky way of taking your company and your team from a focused, hungry, and dedicated bunch to a group of people satisfied with the results. I will tell you now: the day you find you are “satisfied” with how things are going at your company is the day they should fire you, even if you own the place, and replace you with someone wh understands that every single instance of success is vital to making your company the best it can be.

Early on, it’s easy to say “that would never happen to me, I’m too focused. My team is too focused!” But you and your team won’t be immune to a dangerous equation: “Time + Money = A General Devaluation of Both”. Google took over the search world by pushing to be better then Yahoo!, Alta Vista, Lycos, etc. They STAY at the top of the search world be keeping that passion alive. Same goes for Southwest Airlines, Coca-Cola, and the teenager down the street who started the summer mowing one lawn and now gets paid to mow twenty.

As you build your business and (hopefully) experience some success, try and remember what it was like when absolutely nothing had come from your hard work. Remember when there were no dollars and cents, no customers nor contacts nor clients, and no publicity. Remember back to when it was just you, an idea, and the belief in your soul that, yes, you could do this and along the way you’d be willing to do whatever it took to get the first customer and the first sale. If you can retain just a little of that feeling, I assure you that every “next” customer and “next” sale will feel as important as the first, which is a good thing, because it is.

Death of a Startup
July 11, 2007

This post qualifies as “pointing out the obvious” so I hardly expect it to seem noteworthy to you. That said, sometimes the obvious needs to be staring at you through your computer screen, so I’ve decided to spell it out.

The best way to kill your startup is to never launch it. Period. EVERYTHING else you might run in to can be managed, handled, and solved, if your product actually exists in the marketplace. The converse is also true; if your product is not in the market, any other problem or issue that exists will (on a long enough time line) kill your startup.

Getting launched and getting to market bring a slew of benefits, some that are measurable and others that are not. Getting launched and getting to market means you have the real ability to:

  • Generate revenue
  • Get customer feedback and act on it
  • Generate revenue
  • Build on your businesses brand
  • Generate revenue
  • Raise more funds to grow your business
  • Generate revenue
  • Identify new, previously unforeseen opportunities
  • Generate revenue

Not launching, not having a product on the shelves, not having a place where users can try out your software, not having a finished offering means you:

  • Are not generating revenue
  • Are not getting customer feedback, and if you are it’s either too minimal to matter or is based on the free use of an incomplete product, which means its worthless
  • Are not generating revenue
  • Can not build on your business brand since no one knows (or cares) that your brand exists in the first place
  • Are not generating revenue
  • Are running out of money since none is coming in but some is going out.
  • Are not generating revenue
  • Can not identify new opportunities because you haven’t even made headway in the initial opportunity.
  • Can not sell to Google or anyone else since no one buys companies that don’t exist.

Each of these problems, in their own time-frame, will kill your company. If it takes too long to start, you’ll run out of enthusiasm and energy until no one cares whether you launch or not anymore. You’ll run out of money so everyone has to go get another job or start another project to pay the bills, relegating this one to the back-burner. Your competition will continue signing up customers who could have been yours, if you’d only had your product out of hiding.

The excuses for not launching are near endless, and all of them are invalid. A few of my favorites…

  • “It isn’t perfect.” – If it’s any good, it will never be perfect. Products should change constantly or else you are neglecting your customers which impacts the bottom line.
  • “It isn’t finished” – If it’s any good, it will never be finished. If your product is supposed to have 100 features and you can’t launch because it isn’t done, go ahead and launch the 1 feature that sort of works and go from there. If your product has 1 feature and it doesn’t perfectly work yet, launch it anyway. You’d be surprised how efficient engineers can be when they are under the gun.
  • “We don’t have enough money to market it.” – If it’s any good, you won’t need money to market it. The best marketing in the history of the world is word of mouth, which is free. The most successful media company on earth (Google) doesn’t pay for market advertising. Have you ever seen an add for Digg? How about YouTube?
  • “We don’t want the competition to see our product if it isn’t ready because they’ll steal it.” – News flash: the competition has already dreamed up your product and has whiteboarded it to death. They are either already building it their way or have decided it isn’t worth the trouble. On the off chance they haven’t already thought of it, someone you’ve talked to has leaked it to them and they are thinking about it now. And on the slim slim hope that they are clueless about your existence, when you launch your product – perfect or not – they will react quickly and there is nothing you can do about it. Furthermore, for them to be your “competition” you have to be on the field competing. Until you launch, you are nothing more then one of many unimportant spectators.

Get launched. Even if it’s broken and held together by duct tape, get it out there. Get someone using it. Find someone to pay for it. Give them a refund if they’re mad and find out why, then improve it and re-launch. Proudly trumpet your real, active product and business for all the world to hear. Quit hiding in the closet waiting for the right time and the right place and the right bankroll and the right customer. Launching a startup is a lot like having a child; if you wait for the “perfect” time to get started, you’ll never get started because there is no perfect time or perfect situation.

Forget the countdown. Get launched.

Rule 16a – There are no “Big” Problems
July 10, 2007

When you are building a startup or trying to launch a business, it’s likely that you have considered some of the major risks and challenges you are likely to face.  The more of these potential roadblocks you can identify ahead of time, the better prepared you will be when you finally come up against some of them.  And you will most certainly come up against some of them.

That said, don’t sit around wringing your hands with worry that some large iceberg is lurking up ahead in the darkness, ready to put a hole in your hull and sink your ship.  As a matter of scientific fact, icebergs don’t form from water in the cold and become massive overnight.  It takes time for them to grow, slowly becoming larger and larger to the point that any vessel that comes near them can no longer break through the ice, instead needing to navigate around the iceberg entirely to  avoid damage.  Similarly, in the world of startups and new business, there are no large icebergs.  Every “Big” problem you may encounter started as something small and manageable.  In other words, be warned: delaying a resolution to the small problems will invariably give them time to become big problems.  And by then, it will be too late for you to do anything about it.

The fact is that if you have an ounce of common sense and a basic understanding of the market or environment in which your business is going to participate, then every already existing “big” problem that could ruin you on its own has already been negated.  Your basic knowledge of your product and your industry, combined with the fact that you have a brain, will keep you from getting anywhere near the already existing big issues that could destroy you.  You will essentially navigate around those issues and still find a path to your destination.  The bigger issue is all of the little problems that your common sense and smarts won’t save you from.  Even worse, these little problems can and will add up quickly and kill you if you ignore them.

Solving one problem is easy, solving 28 at the same time is near impossible.  Having bandwidth issues?  Call your hosting provider.  Having payroll trouble?  Rework the budget.  Having issues securing licensing agreements?  Try approaching it from a different angle.  Office sprinkler system went off, soaking all of your stuff?  Call the building owner and your insurance company.   Easily solvable problems.  All of this happening on the same Tuesday morning because you didn’t make those calls last week?  You’re in trouble.

The point is not to scare you in to thinking that a perfect storm of small problems is going to ruin your company in one swoop.  More realistically, they will come along and hide in plain sight.  Your charge is to solve these little problems as quickly and effectively a possible as soon as they are brought to your attention.  Little icebergs don’t become big icebergs overnight.  It takes time for them to grow.  Problems and challenges are the same way; deal with them while they are small, and they’ll never grow to be big.  But let them grow big, and you’ll be forced to send out an S.O.S. and watch from shore as your company sinks.

I will review your startup. Perhaps we will both learn something.
July 9, 2007

If anyone is working on a project and would like a little publicity (and I mean A LITTLE), send it along and I’d be happy to post about it here.  The difference between a “Techstbooks startup review” and a review found at one of the many fluff sites out there is that I promise to be honest and I promise to get your response to my honesty before publishing anything.

Here’s how it will work…

Post the URL of your startup in the comments.  WordPress’s nifty software will show me your email address so I can contact you at the appropriate time.  Don’t tell me what your company does (“We’re a cross between Digg and a Ham Sandwich!”) or anything else (“We have raised a billion dollars in Series W!”).  I don’t care.  If I can’t go to your site, signup, and use the service without the company’s Chieff Architecnologexecutifinancial Officer walking me through it, then chances are that my review will not be positive.

Once I’ve written up what I think of your site/app/whatever, I’ll email it to you and wait a couple of days for your reply.  I’ll then post my review and your unedited reply on the site.

 What you can expect…

I don’t know anything about server calls and DHTML and whatever else is popular with the kids these days.  I DO know quite a bit about design, function, and whether something is worth giving more then a quick glance.  I also represent the kind of user you’re probably trying to attract: frequent web-user who can’t build an app by himself.  I am not easily impressed, but maybe I’ll see something that you haven’t noticed that may help you in your quest to buy a big boat and live on the coast.

Have at it.

Quote of the Day – “Job” or “Business”
July 9, 2007

“A ‘job’ makes you money when you are working at it.  A ‘business’ makes you money when you are not.”

– A bunch of people

_______________________________

 So, are you building a business or creating a job?

Before you answer, let it be known that I’m not asking with the sort of snobbery I usually find associated with the quote above.  In almost every instance I’ve ever seen this written or heard it said, the implication was that “building a business” is a worthy goal while “creating a job” for yourself is somehow an inferior pursuit.  My interest in the answer is quite the opposite.

“Creating a job” for yourself is every bit the worthwhile activity of “building a business.”  Frankly, it’s the very FIRST measure of success in eventually building a business.  To behave as if only getting paid while you are working is a bad thing is ridiculous.  The irony is that most of the people I know who are intent on “building a business” because “creating a job” is beneath them end up sitting in a cubicle at someone else’s business, twidling away, wondering why they aren’t vacationing in the south of France with Steve Jobs while their “business” fills their bank account with cash.

Believe it or not, the first big step in “building a business” is “creating a job.”  There is simply no way to sidestep it.  Granted, some folks will think it’s an exception to have a web application that makes money without much oversight, or an affiliate sales site that generates revenue with very little day to day interaction.  True.  But getting your “business” to that level takes a very large amount of work and a very high level of energy.  Any person or television advertisement or banner ad that tells you that you can build a business without working your ass off (i.e. first “creating a job”) is obviously lying to you.

The fact is that whether you “create a job” for yourself and eventually, successfully “build a business”, you’re in for more work then you imagined.  That’s a big reason why a relatively small number of people even try to venture in to anything on their own.  If you want to sell wares on eBay or write a blog or build websites or manage AdSense campaigns as a “job” then there is absolutely, positively NOTHING wrong or ignoble about that.  I assure you that you’ll be much happier working 60 hours a week for yourself then 40 hours a week for someone else.

And if your aim is to “build a business” that can make money while your taking a nap on a Sunday, I have a simple suggestion you’d be wise to consider: get a job first.

Search vs. Discovery – Or “Why Mahalo is in trouble”
July 6, 2007

I am surprised at how little attention the gulf between “tech-savvy” folks and non-techies receives. I’m even more surprised at how little distinction is made between the two major functions of search engines: “search” and “discovery” and how they relate to who is really using computers, both now and in the future.

First, some clarification…

“Search” is when you are looking for something specific, a confirmation of information that you already know exists. “Search” is when you need to find out the population of Rhode Island or when you need directions to the Pizza Hut or want to know how to play Monopoly. “Search” is finding information of which you are aware. Outside of Google, Yahoo, MSN Live, etc., I happen to think Wikipedia is an excellent “Search” engine. In fact, I use it as often (or more) then I use Google.

“Discovery” is when you find something of which you were previously either unaware or uninterested in. The most basic form of discovery is simply reading the news. Yes, you know about many of the topics and people in the news, but (assuming the “story” is actually new) the information contained within the news is something of which you were previously unaware since no one can predict the future. Digging deeper, “discovery” is fostered by such sites as Digg, Reddit, StumbleUpon, and Sphere. Each of these sites displays content that helps you discover new things. New information, a new blog, a new application, new people, etc. The purpose of the sites is to help you find the pieces of the web that you aren’t likely to find on your own randomly entering phrases in to a “search” engine.

_____________________________________________________

So, what does this have to do with Mahalo? For those of you unfamiliar with Mahalo (www.mahalo.com), it is a widely talked about* search engine thingamajig wherein real people with real brains organize important content on the most searched keywords and the site displays that content accordingly. You type in “kittens” or “Paris Hilton” and you get a results page showing information deemed as relevant and essential based not on computer algorithms, but on the input of people. (*”widely talked about” = discussed by half a dozen well-read Valley bloggers)

Well, what’s the problem with Mahalo? Simple: Mahalo is a “search” engine on an internet that desperately craves “discovery” engines. What do I mean by “desperately craves?” It boils down to the first thing I mentioned in this post: the difference between techies and non-techies. A non-techie like my grandmother would get a great deal of use out of Mahalo. Granted, she can already use Wikipedia and Google to find things like “hamburger recipes” but that’s immaterial. A person who uses the internet only a few minutes a day relies almost exclusively on “search” engines when needing something online. They do not sit down at the computer for an hour looking for a cool new video site or bookmarking things. Similarly, they will either become more ingrained in internet usage, making them more “tech savvy” (as I’ll cover next) or they’ll remain in their current bubble of going to Google to find everything, oblivious that there are plenty of other sites out there.

On the flip side, more tech savvy users spend hours at a time online. MySpace pages, YouTube videos, etc. These users understand that the internet is an extremely large universe. These users are also the growing online population. They will spend both professional time and leisure time online, as will their children. As time passes and technology find more and more ways to improve the efficiency of society, the percentage of “tech savvy” individuals using computers will rise and the percentage of “non-techie” users will decline.

As these percentages change, the generation of people using “search” engines to find things will become increasingly tied to specific applications that not only offer the information they seek, but also to quantify that information. Networks like Yelp!, Google Maps applications, etc. will be the go-to point for information currently found in Google search. Stagnant information that answers the “who what where why” will come from specified sources that use widespread communities to qualify the information.

Yes, what I’m saying is that the destination “search engine” will go the way of the T-Rex in the not too distant future as networks of people become more intertwined with networks of information. In the event this “people-network-info-network” doesn’t suffice, firmly entrenched old standbys like Wikipedia and Google’s current search platform will still serve a purpose. That said, in less then a decade I think the concept of going to a site to help you get information from another site will cease to exist. Which means building a search engine that simply provides relevant information when people “Search” is akin to deciding 2004 was a great time to get in to the CD manufacturing business. There is a reason all the major players in search are diversifying their search offerings and site functionality.

Do I think Mahalo can exist? Sure. Do I think there product is catering to a user base that is fast in decline? Absolutely, without question. Factor in that not only are they are chasing an endangered species of computer user, but they are taking on some pretty big gorillas in the process in Google, Yahoo, and Wikipedia, and I think that Mahalo will have a hard time ever being more then a much-talked-about, little-used “search” destination.

Publicity – Mention on “A Startup A Day”
July 6, 2007

Kevin over at “A Startup A Day” was nice enough to read some of the posts here after I had stumbled upon his blog. As I write this entry, Kevin’s RSS tracker shows he has 9 readers, which is 9 more then we have here, so I certainly appreciate the publicity.

If startup brainstorming is your thing, check out his blog Here.

Quote of the Day
July 5, 2007

Owen Thomas from Valleywag had this to say…

“Insiders like to talk about how Google, now that it’s a big company, is getting “complicated.” I don’t think it’s that complicated: If Larry Page and Sergey Brin ever really solved the search problem, as they’ve been promising to do for a decade, they wouldn’t have a multibillion-dollar advertising business.”

If you need it explained, then I can’t help you.