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June 29, 2005

It’s a great time to be an entrepreneur

There’s never been a better time to be an entrepreneur because it’s never been cheaper to be one. Here’s one example.

Excite.com took $3,000,000 to get from idea to launch. JotSpot took $100,000.

Why on earth is there a 30X difference? There’s probably a lot of reasons, but here are my top four. I’m interested in hearing about what other people think are factors as well.

Hardware is 100X cheaper
In the 10 years between Excite and JotSpot, hardware has literally become 100X cheaper. It’s two factors – Moore’s law and the rise of Linux as an operating system designed to run on generic hardware. Back in the Excite days, we had to buy proprietary Sun hardware and Sun hard drive arrays. Believe me, none of it was cheap.

Today, we buy generic Intel boxes provided by one of a million different suppliers.

Infrastructure software is free
Back in 1993 we had to buy and continue to pay for maintenance on everything we needed just to build our service -- operating systems, compilers, web servers, application servers, databases. You name it. If it was infrastructure, we paid for it. And, not only was it costly, the need to negotiate licenses took time and energy. I remember having a deadline at Excite that required me to buy a Sun compiler through their Japanese office because it was the only office open at the time (probably midnight) and we needed that compiler NOW.

Compare that to today. Free, open source infrastructure is the norm. Get it anytime and anywhere. At JotSpot, and startups everywhere you see Linux, Tomcat, Apache, MySQL, etc. No license cost, no maintenance.

Access to Global Labor Markets
Startups today have unprecedented access to global labor markets. Back in 1993, IBM had access to technical people in India, but little Excite.com did not. Today, with rent-a-coder, elance.com and just plain email, we have access to a world-wide talent pool of experts on a temporary or permanent basis.

SEM changes everything
Ten years ago to reach the market, we had to do expensive distribution deals. We advertised on television and radio and print. We spent a crap-load of money. There’s an old adage in television advertising “I know half my money is wasted. Trouble is, I don’t know what half”.  That was us.

It’s an obvious statement to say that search engine marketing changes everything. But the real revolution is the ability to affordably reach small markets. You can know what works and what doesn’t. And, search not only allows niche marketing, it’s global popularity allows mass marketing as well (if you can buy enough keywords).

So What?
It’s nice that it’s cheaper, but what does it mean to entrepreneuring?

More people can and will be entrepreneurs than ever before
A lot more people can raise $100,000 than raise $3,000,000.

Funding sources explode which enables more entrepreneurs
The sources of funding capable of writing $100,000 checks are a lot more plentiful than those capable of writing $3,000,000 checks. It’s a great time to be an angel investor because there are real possibilities of substantial company progress on so little money.

More bootstrapping to profitability
With costs so low, I think you’ll see many more companies raise angel money and take it all the way to profitability.

Higher valuations for VCs.
And, for those that do raise venture capital, I think it means better valuations because you can get far more mature on your $100,000 before you go for the bigger round.

All in all, it’s a great time to be an entrepreneur.

June 29, 2005 | Permalink | Comments (41) | TrackBack

June 23, 2005

Personal - Joining the EFF Board

Well, normally this isn't a forum for personal announcements, but I thought this one worth making an exception for.

I've joined the board of the Electronic Frontier Foundation (EFF).

For those of you not familiar with the EFF, they are a non-profit digital civil liberties group. Put simply, if you like the internet and the freedoms you currently enjoy to create content and new technologies without having to ask permission, this is a group you should know about and support.

I've been passionate about digital copyright reform for a long period of time and even started DigitalConsumer.org, which was a 50,000 member strong non-profit lobbying group in Washington to fight for consumer technology rights.

Now, I'm honored to be a part of an organization that is making a huge difference in this debate. Thanks for inviting me, EFF!

June 23, 2005 | Permalink | Comments (4) | TrackBack

June 21, 2005

Engineer Interview Triage?

A while ago (actually, any post I've done is now "a while ago...") I wrote about Sabermetrics for Startups. I wondered if there was data you could collect in an interview process that would allow you to more accurately determine if someone, particularly an engineer, would be successful in your company.

I don't think I have all the answers, but over the last few months, I've honed in on three questions that I believe have a correlation with three key skills.

I'm not talking about technical skills. There are a lot more people far better than me to judge whether or not someone is technically qualified as a great coder.

I am talking about the intangibles. In particular, I'm talking about three key intangibles -- communicating, tinkering and passion for coding.  In my experience, these things make a huge difference in someone being a great contributor to your startup.

So, here are the questions. They're simple and they aren't pass/fail. But, I think certain answers are more correlated with success.  So, pretend you're in the hot seat, bright lights, uncomfortable chair... you get the idea. Here goes

1. Do you have a blog?
It was Joel Spolsky who wrote a great piece about great engineers being defined not only by their h4x0r skillz, but by their ability to communicate. Here's what the man himself had to say

The difference between a tolerable programmer and a great programmer is not how many programming languages they know, and it's not whether they prefer Python or Java. It's whether they can communicate their ideas.By persuading other people, they get leverage. By writing clear comments and technical specs, they let other programmers understand their code, which means other programmers can use and work with their code instead of rewriting it. Absent this, their code is worthless.

If someone has a blog, you know that they are starting to make communications and writing part of a basic set of habits. You know they value those habits enough to make time for them. A public blog improves the odds that the person sitting across from you (who has great coding skills) can also effectively advocate their ideas both inside and outside the company.

2. What's your home page?
Great engineers make their own homepages. When they hit the "home" icon on their browsers, you're not likely to see My Yahoo or Amazon.  They're disatisfied with their other choices out there and they take matters into their own hands (usually just a large list of links of favorite places to go, laid out "just right"). My friend, Marc Hedlund put it this way, "Jedi Knights make their own lightsabers and great engineers make their own homepages." How true.

I think the trait indicated by making your own home pages is that the person is a "tinkerer". Tinkerers are great inside companies. They're curious. They're often not quite satisfied with the status quo and doing things the way others do. They're the ones that aren't often satisfied with the way your company is doing something. But, rather than complaining or asking, they go ahead and just fix the problem.

It's hard to know if the person sitting across from you is a tinkerer, but if they make their own home page, it's more likely that they are.

3. Do you contribute to an open source project?
One thing you're looking for in a great engineer is a person who is passionate about coding. Passionate doesn't mean all-consumed-and-working-24-7, but it does mean curious, deeply interested and committed. Besides the obvious benefits of being able to review someone's open source code for quality, design patters and architecture decisions, contributing to an open source project has a strong correlation to the person being passionate about code. They're less likely to just be about code-for-cash (not that there is anything wrong about that, it's just not usually right for a very small startup). That intangible, code-as-passion, can make a huge difference to a startup.

So, that's what I think. It's only been a few months of thought. If you've got other ideas, I'm all ears.

June 21, 2005 | Permalink | Comments (36) | TrackBack