How to Be the Anti-Web 2.0 Startup
I’ve always been interested in new things happening on the Internet; however, it wasn’t until early 2006 that I grew interested in the companies behind the services I used, such as Odeo and Digg. I started listening to tech-based podcasts (TWiT, Diggnation) and venture-based podcasts (VentureVoice, The Cubicle Escape Pod). Since then, I have immersed myself into the Web 2.0 world, soaking in information about the tech startup culture. Over the past year, I have learned that there are some things about the Web 2.0 tech startup culture I would shun with my startup. Just for kicks, I decided to come up with a list on how to be the anti-Web 2.0 startup.
Don’t Use Misspelled Words in Your Company’s Domain
Yes, I realize that there is a shortage of .com domain names and that entrepreneurs have resorted to creative means to name their companies. I admit that I’ve had trouble trying to purchase a domain that wasn’t taken; however, that doesn’t mean that you have to use misspelled words in your domain. This trend was cool for about five minutes when sites like Digg and Flickr used misspelled words but not anymore. On a similar note, I have also grown tired of seeing “creative” domains that are not actual words and are hard to pronounce. I’m not against being creative by any means, but some names I’ve seen for startups are horrible and barely pronounceable names you have to sound out like you’re in kindergarten using “Hooked on Phonics.” You can be creative with your domain/company name yet keep it in the realm of normalcy.
Avoid the “Valley”
Silicon Valley, especially the San Francisco area, is the grand central station for Web 2.0 startups. Even well known sites/services such as MySpace and Wikimedia (the foundation behind Wikipedia) are opening San Francisco offices. I have discovered that there is a tremendous amount of talented developers in the valley, but employee turnover rate is pretty high with Google, Facebook, and Microsoft snapping up star talent in addition to some leaving companies/startups to launch their own startups. Salaries are a lot more competitive and expensive based on the location, and when you have Google to compete with (in terms of throwing money at engineers), the “coolness factor” of a tech startup might be your only draw when recruiting talent. That being said, you shouldn’t launch your startup in the valley. Believe it or not, you can be successful outside of the valley; just take a look at Last.fm and Feedburner. You’re also more likely to keep the talent you have since competition in the valley is pretty fierce, and employee loyalty can be low in the valley with the number of tech jobs or opportunities becoming available each day.
Don’t Attend Tech Conferences
Most conferences I’ve been to have been boring most of the time. You might have one or two speakers that are engaging, but otherwise, conferences are generic, bland, and mostly a waste of time. I have no doubt that the same holds true for tech conferences. People spend thousands of dollars for a conference spot such as DEMO or just to attend a conference, such as FOWA (Future of Web Apps) and Tim O’Reilly’s Web 2.0 Summit. Save your money and focus on your company. Most of the tech conferences offer video and/or podcasts of certain conversations and even live-blogging in some cases. You’ll get the coverage that matters without paying thousands of dollars. Besides, all of the action is in the lobby of these tech conferences anyway, so if you want to attend one, just do a lobbycon - the process of wandering around in the lobby for free and talking to VCs and tech insiders.
Be Conservative Spending Your Investment Funding
No, companies aren’t spending like it’s 1999 during the first tech bust; however, I have seen cases of unnecessary spending. Take PayPerPost, for instance. In one video posted on RockStartup, Ted Murphy is chiding a construction worker for standing in a $700 chair. In other videos, he’s taking his staff away on getaways for nothing more than lavish employee meetings at hotel/spas. PayPerPost staff members have no less than two PCs (an Apple desktop PC with a huge monitor and a MacBook Pro) at their desks that are worth more than the electronics most people have in their houses. One can say that he’s treating his staff well with the perks, which I can’t deny about Murphy. On the other hand, one can look at these perks as unnecessary spending. Burn rate is something you have to worry about when you have angel or VC funding. Spending money on overly lavish offices, expensive PCs, and employee perks when you aren’t making a profit or just starting to become profitable is not smart. These perks can result in giving away more of your company (%ownership) to raise another round of funding that may be unnecessary, depending on the business you’re in. The smart thing to do is to save your money for something more important to grow your business, such as hiring. While a nice workspace, employee perks, and PC equipment are great things to have, you have to ask yourself are they necessary things to have while you’re growing your business to profitability. There’s nothing wrong with buying Dell or HP PCs to get you through until you can afford the “nice to have” Apple PCs. There’s nothing wrong with throwing together a collection of second hand or inexpensive desks and chairs in a room (in a small office or apartment) until you absolutely have to move into a larger office building. I would rather pay my employees a decent salary than have all of these perks that could affect my ability to hire more people without giving away more of my ownership in the company.
Don’t Beg or Cry to be Featured in TechCrunch
Michael Arrington has a problem. According to Arrington, CEOs are showing up at his doorstep or trailing him around like obsessive puppies at conferences to plead their case to have their startup featured in TechCrunch. Amazingly, some CEOs have literally cried over the phone and/or in person over not being written about in TechCrunch, and Arrington actually caved after falling for those big manly crocodile tears. I don’t know if he’s exaggerating or not, but I do think there’s a grain of truth to his claims. What amazes me is…why do these CEOs care so much? To some people, what Michael Arrington thinks is very important because he is supposedly the authority on what’s going on in web startups. Okay…but according to who? For some reason, what he writes at TechCrunch can affect a startup’s ability to get funding, and my question is…why? I’m not knocking Arrington and have nothing against him, but I don’t understand why he is the god that many Web 2.0 CEOs worship. Forget what Arrington thinks or writes about your startup. Just focus on building a good service/product and a good company. And for God’s sake, don’t beg or cry to be in TechCrunch! He’s not a god. He’s just a man. If a potential investor gobbles up every morsel of what Arrington and his crew writes over at TechCrunch, then you don’t need that investor. There’s no way a blog should dictate your startup’s ability to get funding from an angel investor or VC; however, I do believe that some investors are drinking the TechCrunch Kool Aid. Just take a look at Mint.
Don’t be a “Superstar” Founder
There are a few superstar founders in Web 2.0 that geeks instantly recognize by name. A few of those superstar founders include Evan Williams (Blogger, Odeo, Twitter), Kevin Rose (Digg, Revision3, Pownce), Jason Calacanis (WebLogs, Mahalo), Shawn Fanning (Napster, Snocap) and Mark Zuckerberg (Facebook). While name recognition can be a good thing, you can have too much of a good thing. There are times when some superstar founders outshine the glow of their startups, or people may overlook when a product/service is a failure because of the name attached to the startup. For instance, Williams struck gold with Blogger and sold the company to Google. He then left to launch Odeo, and the investors followed his lead, hoping that his next venture would be as huge as Blogger. Unfortunately, Odeo starting gaining traction just as iTunes started competing in the podcasting space. As a result, Odeo is a service that never lived up to potential, which may be one of the reasons why the company was sold to Sonic Mountain. Williams, intelligently, focused his time and energy on Twitter. Then there’s Rose with the hugely popular Digg and “Tech TV on the web” in the form of Revision 3. Rose tried again for a third time by attaching his name and presence to Pownce; however, issues such as bugs in the Adobe AIR client, possible in-fighting over Pownce features being “stolen” for Digg, and lack of SMS have slowed down the site’s momentum in addition to competing in Twitter’s space. Still, Rose’s attachment to Pownce probably won’t stop some VCs from wanting to throw money at the startup. In my opinion, when the media focus of a startup moves away from the startup to the founder, that can be problematic. All right, I know some of you are saying that some of these guys can’t help some of the attention they get, but if Hollywood superstars can do it, Web 2.0 superstars can, too. Your startup is more important than being the superstar everyone wants to hang out with. You don’t want to end up like the CEO in the plastic pants, so stay undercover.