Plaxo’s New Calendar

Tonight, my friends at Plaxo announced the acquisition of HipCal, an on-line calendar. I think this makes a huge amount of sense for Plaxo and it’s great to see them continue to do well. While I’m very flattered that I’m quoted in the blog post, I do feel the need to correct one error. The quote should be:
“Whenever you have more than zero funded companies in the calendar space, you know you are in the bubble.”
A simple off-by-one error, nothing more. 🙂

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Y! Combinator

Last Thursday, I attended the final dinner for Y! Combinator’s Winter Founders Program. When I first heard about Y! Combinator, it was one of those ideas that just seemed forehead-slappingly obvious. Good ideas often do, in retrospect. Anyways, I had a chance to talk with several of the entrepreneurs, and every one was smart and full of energy. Talk about a great atmosphere. I’d like to thank Paul, Jessica and Trevor for the invite; I had a great time.

It’s a Great Time to Be An Entrepreneur

Echoing many of the things I’ve been saying, Joe Kraus has a great piece on how cheap it is to start a web company. I can provide a couple of additional data points. I started ONElist with $5K. That lasted from January 1998 to June 1998 (it was cheap even back then to launch a start-up). I then raised $50K from a friend and that carried us through the rest of 1998, at which point we had 1M users and raised VC. I started Bloglines with $50K. That lasted the first year.
You don’t pay salaries at these levels of funding. Everyone works for stock. The main costs end up being hardware and hosting (and possibly development if you outsource some stuff to eLance or another service). I took different approaches to hardware with ONElist and Bloglines. WIth ONElist, I rented machines from Digital Nation. With Bloglines, I purchased the machines and hosted them at a local co-lo. The advantages of renting machines are that you have a lower up front cost and you don’t need as much sysadmin experience, because they will handle a bunch of the work for you. The advantages of purchasing are that it’s cheaper in the long term and you’re not limited in your hardware selection. Now that I have experience with both approaches, in general I’d probably go with renting. Renting saves a lot of effort (configuring and racking machines is work), and costs less in the beginning. This lets you get your start-up out the door more quickly and cheaply. And that’s a good thing.

Stealth Start-Ups Suck

There’s been a small rash (ouch, you should see a doctor about that…rimshot) of press coverage about the new stealth web start-up 24 Hour Laundry. Who knows what they do, but whatever it is, they’re doing it wrong. Here’s the thing, stealth mode for a web start-up is the kiss of death.

Stealth mode is when a company is operating in secret for some length of time before launching their product or service. In many industries, creating a new product or service takes significant time and effort. During this time, being in stealth mode may make a lot of sense. But creating a new web service is not rocket science and does not take a lot of time or money. My rule of thumb is that it should take no more than 3 months to go from conception to launch of a new web service. And that’s being generous. I’m speaking from experience here. I developed the first version of ONElist over a period of 3 months, and that was while working a full-time job. I developed the first version of Bloglines in 3 months. By myself. It can be done. And I suck at it! Just ask all the engineers who have had to deal with my code.

Why go fast? Many reasons:

  • First mover advantage is important.
  • There is no such thing as a unique idea. I guarantee that someone else has already thought of your wonderful web service, and is probably way ahead of you. Get over yourself.
  • It forces you to focus on the key functionality of the site.
  • Being perfect at launch is an impossible (and unnecessary and even probably detrimental) goal, so don’t bother trying to achieve it. Ship early, ship often.
  • The sooner you get something out there, the sooner you’ll start getting feedback from users.

Why is first mover advantage important? You get to define the space. Any future competition will be compared to you, which gives you continuous mindshare. Your service will become synonymous with the functionality you provide. Now, there are caveats to this. Neither ONElist nor Bloglines were exactly first in their respective fields. But the competition had not gained critical mass and the core functionality of each competitor didn’t work well.

Some people think that they need to stay in stealth mode as long as possible to protect their exciting new idea. I hate to break the news to you, but unless you’re Einstein or Gallileo, your idea probably isn’t new. I have this theory. The success of a web service is inversely proportional to the secrecy that surrounded its development. There are exceptions of course. But I also think this can be applied to other things. Segway, anyone?

Web services have many advantages over shipping software. You can continuously update the service, fix bugs and add new features. There are no long development cycles. Embracing this is a key to success. The first version (or several versions, probably) of any service you create is most likely going to suck. And that’s ok. Your service won’t scale to handle a lot of traffic. It will be missing a huge amount of functionality. It’ll probably look bad. And it’ll have bugs. All of this was true for both ONElist and Bloglines, but they both ended up reasonably ok. Because you can continuously update the service, you can deal with these issues.

One of the many great things about running a web service are the users. A passionate user is one of your greatest assets. And I would argue that the only thing of real value a web service has is its users. They act as advertising for you, telling all their friends about your service. They are the best source of new feature ideas. And they are the best Q.A. testers you can get. Most importantly, they’re the gauge that tells you whether your service is actually useful or not (ie. is it worth losing years of your life continuing to develop and run it). By getting your service launched as quickly as possible, you’ll get exposure to this wonderful resource sooner. By listening to your users as you add features and improve the service (because, remember, it won’t be perfect at launch), your users feel like they are a part of the process. They start to have a sense of ownership of the service. Which reinforces their passion. And with the constant updates and fixes to your service, you’re continually giving your users reasons to talk about you. Users are the one thing that your competition cannot copy and develop internally. Technology can be copied. Users have to be earned. One thing to remember, however, is that you need to be responsive to customer support, because that’s one of the key ways to cultivate passionate users.

I’ll end this rant now. I don’t mean to single out 24 Hour Laundry, they’re probably nice people. But they were the ones that reminded me of this. I could also rant on how you only need a couple of people to create a web service and that starting one doesn’t require a lot of money (and oftentimes raising a lot of money actually screws things up). But I’ll save those for another day.

Giving Up

I haven’t posted in awhile because I’ve been busy. Busy is good. As we continue to build out the team at Bloglines, I was reminded of something that first occured to me during ONElist’s early days about starting a company.
As an employee climbing the corporate ladder at a company, it’s all about getting more. More responsibility, more control, a larger salary, a bigger title. However, the exact opposite is true when you start a company. A big part of starting and building a company is about giving up. A founder is in a weird position. When you first start a company, everything is yours. You own all the stock, you make all the decisions. This point of creation is the only time this will be the case, however. Forever after, the founder must give up more and more control to other people and more and more ownership to employees, investors, etc. The founder must do this for the company to be successful, but at the same time this is the opposite of what many people are used to doing.
Anyways, it’s just one more thing to consider when deciding whether to start a company. I’ve found that hiring and working with exceptional people and wanting to see them succeed makes the process much easier. Besides, running a company can be a lot of work, especially for us lazy folks. We need all the help we can get!