Category: Startups

  • Everyone has a plan until they get hit

    “Everyone has a plan until they get hit.”

    ~Mike Tyson.

    Studying French for 1.5 months and then arriving in France thinking I’m a badass knowing how to sling a few sentences together was a notion rudely trussed, cooked, carved up and served back to me on a giant silver platter called humility by a certain French checkout girl yesterday at Decathlon.

    I’d already been to the Bordeaux Apple Store (which is awesome), Animal’s World for pet supplies (also awesome), Orange and Ikea and flattered by people taking my money into thinking that I’m doing OK. Standing at the back of the line at Decathlon at the end of the day a checkout girl hurls a handful of words at me and waits while the entire line turns around and stares at me. I completely froze and couldn’t utter a word of french. I leaned over and in squeaky english said “I don’t speak french” and wanted to die. She gesticulated wildly at the line next to me and I walked over there and she stopped gesticulating. I still have no idea what she said.

    I started today screwing up my first verb “parlez” instead of “je parle” after I was sure I’d at least get that right. Learning French and actually speaking it is like going from boxerobics to Mike Tyson swinging at your head.

  • France Notes Day #1

    I’ve moved to South Western France for a year (The Bordeaux region) and will be keeping a few concise notes on my experience getting here and living here. Mostly bullet form and you’re welcome to ask me anything in the comments.

    • French embassy in San Francisco is great for visas but make sure you have absolutely all paperwork presented exactly as they ask for it. It took us roughly 4 weeks after our appointment to get a long stay visa granted.
    • Getting pets into europe means you need to get a USDA certified rabies vaccination certificate for all of them. It cost us over $1000 to get all this done. We got domestic health certs too even though we didn’t strictly need them.
    • The folks at Delta or on the US side didn’t ask for any of the pet certs.
    • We transported the two cats in the cabin under the seats in front of us, although putting them under my legs turned out to be more comfy.
    • We used this pet carrier for the cats after much research – size large. it’s 12 X 12 by 18, the largest delta takes, and it changes shape so you can smoosh it into place. Here’s a product link.
    • Joey travelled in a medium sized crate in the hold. I used ice as usual in his water bowl so it wouldn’t spill during loading. Two absorbent pads, one for pets in the base, his cushions, then adult incontenence pads on top of his mattress.
    • None of the pets used the loo on the 10 hour flight from SLC to CDG in Paris.
    • On the French side customs didn’t even take a second look at us as we walked into the customs hall with 3 pets. I walked up to the desk. Got completely ignored, so walked onto french soil with my 3 pets and $1000 of documentation not being examined at all.
    • Both the Delta, Salt Lake City TSA folks, French Delta and French airline and security staff were really amazing about letting us watch our dog board and deplane, and just being really friendly and helpful.
    • We hired a van and drove down to Blaye, a small town outside Bordeaux where we’re spending the next year. Eurocar was unbelievably slow and it’s not because we’re special, they have a reputation with just about anyone who has rented a car at CDG in Paris.
    • The GPS in the van caused more trouble than it helped – next time I’ll just use the blue signs.
    • French cars are unbelievably fuel efficient, this was a large diesel van and the 5 hour drive from Paris to Bordeaux only used half a tank of gas. Americans take note.
    • As far as I can tell there are no photo speed cameras on the A10, they manually pull you over, but I’ll let you know in a few weeks as the tickets arrive.
    • As usual the French roll up the sidewalks at 9pm, and small towns are dead off-season after 7pm, so absolutely nothing was open when we rolled into Blaye at around 8pm.

    I was in Blaye for 3 weeks about 2 months ago and knew no French. It was really frustrating in the sense that I wasn’t able to really communicate with all the people I met. And in a small town where everyone is really friendly, it’s doubly frustrating.

    So I threw myself into learning French starting about 1.5 months ago. I’m using Michel Thomas beginner, advanced and language builder tapes. He’s a former Nazi prisoner of war, then turned interrogator of Nazi guards, then language tutor to Hollywood stars. Towards the end of his life (he died in 2005) he put his lessons on CD’s which are truly amazing for learning a language, particularly French. I’ve worked through all the basic and intermediate material he created and am working on advanced verb forms, grammar etc. Arriving in France this time around and being able to have a basic conversation in my peasant French is an amazing experience.

    Here’s an amazon link to a few of his products. There seem to be 10 CD sets that I don’t recognize, but just get the beginner audio program which is at least 8 CD’s. I’ve used the 8 CD beginner/intermediate program and I’m halfway through the 4 CD advanced program. I intend to do the language builder at some point, but I’m building up my vocab on my own time.

    If you have doubts about how amazing this program is, check out the BBC documentary on YouTube titled “Michel Thomas, language master”. Here is:

    We need to visit the OFII in the next week or so to register as residents. I’ll keep taking notes that will hopefully help someone else who decides to spend some time here. I’ll also be writing an entry on working remotely including french bandwidth, cell networks, etc.

     

  • The value of Time

    From Lawrence of Arabia. Probably the finest film ever made.

    Sherif Ali: There is the railway. And that is the desert. From here until we reach the other side, no water but what we carry with us. For the camels, no water at all. If the camels die, we die. And in twenty days they will start to die.
    T.E. Lawrence: There’s no time to waste, then, is there?

  • The whining is reaching a crescendo

    Exec summary: There is a “burnout” meme that is gaining momentum in the valley. Scroll down for a not-insignificant collection of HN burnout posts. Startup employees choose startups for less job security and harder work because there’s the promise of a future reward. If the risk/reward/security/life balance doesn’t work for you then the Valley is filled with a rainbow of other options. Working very hard is not fun, but sometimes it’s necessary. These days we have the luxury of choosing whether or not we want to work hard.

    Preamble: Before you unleash on me what was unleashed on Arrington, know that I don’t invest in startups and I have no vested interest in Silicon Valley employees working harder.

    Full post:

    One of the early Netscapers wrote a scathing post responding to Michael Arrington’s claim that Silicon Valley startups are whining too much. While I disagree with much that Mike Arrington does and says, I do think he has a point.

    The debate raging on hacker news claims that “VC’s” are making “employees” work crazy hours to enrich themselves. It leaves founders and early employees who own large chunks of stock completely out of the picture. In most early stage startups, the people working 80 hour weeks actually own the company. So suggesting that they are being exploited is absurd. In fact, even after a Series A round of investment, the founders often still own more than 50% of the company’s stock.

    If you’re an employee in a startup, you have chosen a job with very little security, presumably because you are hoping for a large payday. If you don’t want to work long hours with high risk for the chance of a large reward, then you should choose a job that provides you with the work/life/risk/compensation balance that you want. If you’re in a startup and you didn’t make the conscious decision to work very hard for a company that could go bankrupt at any moment, then you weren’t thinking when you took the job. If you did make the conscious decision, then it’s because you wanted the chance of a large reward. In other words, you have a high appetite for risk and hard work and you’re greedy, and that’s OK.

    In case you feel you’re alone working long hours, medical residents work extremely long hours that were capped only recently to 80 hours a week after a class action lawsuit. And they don’t get stock. They’re simply hoping to earn a doctors salary.

    Arrington does not have the monopoly on imploring his countrymen to work harder and whine less. Christine Lagarde, the current head of the IMF implored her countrymen in 2007 when she was French finance minister to “think less and work harder”. She caught hell from a culture that works 9 to 5 with a 2 hour lunch break when almost the entire country shuts down.  Of course she was asking them to increase working hours from 35 to 40 hours a week.

    My advice to you is this: Working very hard is not fun, it doesn’t make you feel good and it is bad for your health. But sometimes in life it’s necessary. In our lifetimes with no world war raging, surrounded by prosperity, good health and free access to education and information, a little extra work won’t kill you. If you still feel like a victim and you’re in the Bay area, go take a tour of the USS Pampanito – a World War 2 submarine – and find out what “hard work” really means. [Make sure you check out the awesome KitchenAid mixer in the galley. I’m hatching a mission impossible plan to steal it.]

    The burnout meme has been gaining momentum in the last 4 months. These are a handful of burnout related HN posts that made it to the front page with their date and their front-page rank. One absurd post caught my eye that tries to parlay a passing comment by Linus Torvalds into proof that he too has had a burnout.

    2011-10-04 09:40:01 Am I burnt out? Or just not suited for this job? – 4
    2011-11-21 11:30:01 Ask HN: How do you know if you’re burnt out or just being lazy? – 3
    2011-09-24 03:20:01 Burnout Prevention and Recovery (the MIT stance) – 8
    2011-11-29 05:50:01 Burnouts, VC Cons And Slave Labor: A Marxian Drama – 5
    2011-07-11 23:00:01 Hire me: a story of developer burnout and how I want to turn it around – 2
    2011-09-01 15:20:02 How I got a burnout – 1
    2011-09-01 08:50:01 Linus Torvalds and Others on Community Burnout – 3
    2011-09-02 08:50:01 Part 2: How I dealt with a burnout – 2
    2011-09-01 16:50:01 Startups: Live longer, don’t burnout – 16

    And here’s some stuff that did not make it to the home page:

    2011-07-08 17:50:01 Ask HN: Dealing with Burnout
    2011-07-15 20:30:01 The burnt-out generation
    2011-07-28 01:20:01 6 Ways to Battle Stress & Burn-Out On the Go
    2011-08-02 00:20:01 Burned out on programming?
    2011-09-01 23:30:01 Ask HN: Going Through a Crisis/Burnout – Advice
    2011-09-02 20:20:01 Burnout, Crunch, and the Games You Play
    2011-09-05 09:30:01 How a burnout changed my life
    2011-09-07 02:40:01 Fatigue and burnout: drop-outs, deprived, or the vanguard?
    2011-09-22 03:50:01 Solyndra’s burnout burdens other solar upstarts
    2011-10-21 16:00:02 Ask HN: Finding the perfect job for the burned-out developer
    2011-11-14 19:10:01 Why Millennial Women Are Burning Out At Work By 30
    2011-11-17 15:20:01 Burnout
    2011-11-23 02:40:01 CEOs: Burning bright or burning out?

     

     

     

  • Most vendors lie, but not all

    I’ve been running a small software company for a while now and we are fastidious about reducing costs on hardware and software and getting the maximum bang for buck out of what we buy. Lets put it this way, Hell for a Dell server is spending eternity in our data center. We work them at 80% load until they simply drop dead and then we switch out the dead components and keep pushing them.

    During my roughly 20 year career in IT, Ops and software engineering there is one thing that has been universal and consistent. IT vendors lie through their teeth about ROI and how their product will save you money or make you more money.

    • Buy our OS because it’s “enterprise” and “best of breed”. No thanks I’ll use Linux which is free and better.
    • Buy our database “solution” because it’s a new paradigm in “scaleability”. No thanks I’ll use MySQL because it’s better and it’s free and you know this which is why you bought them.
    • Use our translation service. Why translate once for a fixed low price when we can use it as an excuse to move your I18N pages into the cloud and charge you per page served. [Two companies have now pitched this exact service to me]
    • Why pay $12.99 for an SSL certificate when you can pay $1,499 for an EV SSL certificate that will quadruple your conversions.
    • Why buy 20 servers for $50k and lease your own rack for $3k per month when you could be in our “mission critical” cloudified data center spending $20K per month for the same thing.
    • Why use Nginx free for load balancing when you can get this dedicated hardware balancer hardware for $40K that can barely keep up.
    It goes on, and on, and on. I am so easy to sell. If you can make me more money or save me money, I’m interested. But few salespeople who pitch me have a product that can do that for real. The only possible explanation is that true innovation, the kind that helps deliver more value or improve efficiency, is rare.
    Companies that do deliver commercial products with real value or improved efficiency that I use:
    • Dell servers
    • *my hosting provider who shall remain nameless for security reasons* Email me if you’re interested.
    • Websitepulse for server monitoring. Super reliable and cost efficient.
    • Linode for small virtual servers for dev and little projects.
    • Apple for iMac workstations, iPad2, iPhone and their macbook and macbook pro – we have all of these and besides being pretty, we use every one of them every day.
    • Authorize.net for payment processing
    • Chase Bank. Their business banking is superb and if you’re a disciplined credit card user who has a history of not paying a cent in interest, get the Chase Saphire Preferred card – it’s Visa Signature so it has concierge and it has the best rewards in the biz. But beware if you aren’t highly organized because the interest can ratchet up to 29.99%. We’re considering ditching Amex rewards cards (biz and personal) for these. American Express you can contact me if you want to know why.
    • Intuit products including Quickbooks and Mint. Spectacular for biz and personal financial management.
    Post in the comments if you have a favorite vendor that has really come through for you.

     

  • Can you build a Big Business on Apple's App Store?

    A good friend refers to the Apple App Store as the California Lottery. So I thought I’d do some rough numbers on how feasible it is to build a big software business creating apps for iPad and iPhone and selling them in Apple’s App Store.

    The Apple App Store will still own three quarters of mobile app revenue by the end of 2011. It’s the place to be if you want to develop paid mobile applications.

    According to Apple, they had paid out developers $2.5 billion since the creation of the app store until July this year. I’m including this as a sanity check on my numbers below.

    According to this article, the combined revenue of all app stores will be $3.8B in 2011, with Apple owning 75% market share. That’s $2.85B total revenue for the app store in 2011 with 30% going to developers so total payout to devs will be approximately $1.995B for 2011 (which roughly gels with the total all time payout number above).

    The app store just passed 500,000 approved apps in May 2011. (Edit: fixed a typo. Apps, not developers)

    In May of this year:

    • $3.64 was the average price for paid apps.
    • There were 244,720 paid apps.
    • There were 85,569 unique developers.
    If those paid apps split Apple’s projected 2011 revenue to developers of $1.995B between them, they each earn $8152.17 per year. There will be more paid apps by the end of 2011 than there were in May, so the same calculation for 2010 revenue to developers gives us: $2.1 total sector revenue X 75% apple’s market share X 70% developer share gives us $1.1025B / 244,720 paid apps = $4505 per app in 2010.
    I’ve calculated both 2010 and 2011 revenue per app because the only data I have on total paid apps is from May.
    So total revenue per app now is roughly between $4K and $8K per year based on my back of the envelope calculations.
    While app store revenue is increasing, so is the number of developers in the app store, exponentially:
    Lets say you create a startup producing Apple App Store apps. You manage to completely dominate the app store in 2011 and capture 1% of the total 2011 app store revenue of around $2 billion that Apple will pay out to developers.  That’s $20 million in annual revenue. Remember, you’ve just owned 85,560 other unique developers and a quarter million other paid apps, which is not impossible.
    To put this in perspective, here is the 2010 annual revenue from a collection of well known software companies, leaving out the eye watering revenue from companies like Oracle, Microsoft, Apple, Google and the like.
    Sources:

    Food for thought.

  • The avg age of an entrepreneur is 40 and only 11% to 16% are venture backed

    Vivek Whadwa, director of the Center for Entrepreneurship and Research Commercialization at Duke has written about some interesting research his team has done in the Washington Post.

    They found the average age for an entrepreneur is 40 and there are twice as many entrepreneurs over 50 than under 25.

    They also found that entrepreneurs with a college degree tend to grow bigger companies than those who dropped out.

    But most controversial, Vivek and his team found that the VC industry tends to overstate their role and that most successful companies are not venture backed:

     

    The National Venture Capital Association touts its members’ impact on the U.S. economy, saying they created 12 million jobs and generated $3 trillion in revenue in 2010 (equivalent to 21 percent of the nation’s GDP), and claiming credit for eight out of 10software-industry jobs.

    But these numbers do not isolate venture capital’s real role. They include all the revenue generated in 2010 by any company that a venture capitalist ever invested in, at any stage of its existence. Venture capitalists could buy stock in a company before its initial public offering and then claim credit for its success in perpetuity.

    Less than 5 percent of venture capital goes to early-stage companies — those taking the risk of developing innovative products. Our analysis of more than 500 companies in high-growth industries revealed that not even 11 percent of these companies took venture capital at any stage of their existence. The Kauffman Foundation ran a similar analysis of companies on the Inc. magazine 500 list and found that only 16 percent of them raised venture capital.

    The reality is that venture capital follows innovation. Such investors seek out companies that already have working products and proven business models. Venture capital doesn’t stimulate innovation; it wants in once it looks like a good bet.

     

  • I'm selling a 6 month old viral business in a hot space.

    In January this year I started researching keywords with high search volume and high earnings per click. I wrote a tool that extracts data from Google AdWords Tool and Traffic Estimator. I built intelligence into it that spotted high earning keywords, retrieved more suggestions and recursed in that fashion.

    I then looked at at the resulting high earning keywords and analyzed the search results for each keyword or phrase. What I was interested in was finding a space where the earning potential was high, the search volume was high but the top ranking website or websites were of poor quality and innovation had stopped.

    I found it in the Nutrition and Weight Loss space. The top ranking site is low quality and is owned by a media empire, meaning they’ve stopped innovating. Paydirt!

    I grabbed a huge pile of government nutrition data and developed a large nutrition website. I employed someone to add a high quality meta-data to the site that made it more useful and attractive.

    To make the site truly competitive, I added a viral model that tied into SEO. The viral hook is not a “Facebook Like” button or other gimmick. It’s a full blown application that other websites install, providing the site with valuable backlinks and increased marketing and distribution.

    I launched the site in late January. Three months later it had enough credibility with the search engines to start getting traffic and the SE traffic took a nice jump.

    Thankfully the site survived the Panda Google update and has continued to grow. In the last week it’s taken another healthy jump in traffic.

    Here are the current stats:

    • The site currently gets over 700 visits a day from a vertical audience interested purely in nutrition.
    • Over 500 visits per day are from search engines.
    • SEO traffic is rising.
    • 50% of traffic is North America i.e. USA and Canada.
    • Hosting costs are $20 per month on Linode and costs will remain low because the site is well engineered and optimized.
    • Yahoo Site Explorer lists the site as having 5,377 backlinks from external sites.
    • Site currently has 350,000 pages of content indexed by Google with more crawled daily.
    • Site has over 7,000 photos that were hand added by my staff.
    • It has several features in the space it’s in that are unique and useful.
    • It provides a needed and genuinely useful public service that is unique in the nutrition space.
    • The site is barely 6 months old so it has a ton of growth potential.
    While this site will continue to grow with very little incremental work from my side, I’d like to see the project taken over by someone firmly in the Nutrition space. Someone who can complement the great online distribution the site has with a bricks and mortar nutrition business.
    I’m selling the site for $29,000 which includes handover and some of my time to get you set up. I’m looking for the right buyer that can take it to the next level and get a great long term ROI. If you’re interested contact me at mmaunder at gmail dot com.
    Here’s the traffic going back to April.

  • The US City with the Fastest Internet is…

    According to Pando Networks, Seattle has the fastest average Internet speed in the country with an average speed of 1,017KBps. Compared to San Francisco and Austin who have 912KBps and 911KBps respectively
     

     

  • Why startups are attracting so much investment

    There has been plenty of speculation during the last 2 years that we’re in a tech investment bubble. It seems every blogger is trying to “call it”.

    It hasn’t burst yet and if AirBnB’s $112 million round of funding announced today is anything to go by, it ain’t going to burst any time soon.

    Lets pretend the US dollar is going to continue to fall in value. You have an appetite for some risk and you’re watching your dollar denominated wealth dwindle away.

    You could invest in bonds, but we all know that’s not very chic right now since even sovereign debt defaults.

    You could buy currency, but just when you thought the Euro was safe, turns out half the Eurozone is in crisis and the charter doesn’t even have a clause for a member state defaulting. It “just wan’t supposed to happen”.

    You could buy gold, but that looks like one hell of a bubble waiting to burst. [Although my prediction is that it will keep rising until early next year]

    Hey what about Treasury Bonds. Well we already had that conversation about August 2nd earlier today, so forget that.

    What about commercial or private real-estate. History has shown that has always been a safe investment …if you exclude recent history.

    All this makes the US software sector look extremely attractive. Even *gasp*, startups!

    Software companies make more money if the dollar falls. For example Google’s Q2 2011 international revenue made up 54% of the total and is increasing. If the dollar falls, expect Google to bring back the free food and tea trolley.

    Software is not as affected by rising interest rates (which are coming) as, for example, companies that need to borrow big to finance land, oil rigs, multi-year construction projects, etc.

    The software labor force is completely dynamic. Software developers can work remotely and many companies (like WordPress) have entirely distributed teams. So if India or China gets expensive, we’ll just move it back on-shore. But more importantly, because software labor can be based anywhere it is a much more efficient market than running a US based law firm for example.

    The target market is also dynamic and can quickly be switched from one country to another. Unlike brick and mortar businesses, switching from selling in the UK to China simply requires a team of translators and to stop spending ad money and resources on the country in question and divert is somewhere else. No physical stores to shut down, no plant to move, no warehouse to dispose of.

    And of course once you’ve written the software, the ongoing cost of running a software company is not much at all. Sure you need to keep innovating, but if the company stops writing software tomorrow the revenue keeps flowing.

    The US has a track record of being the best at software. It’s rare to see a viable foreign competitor for the likes of Google, Facebook, Microsoft, Oracle, CA technologies, IBM, Accenture etc. I’m not discrediting awesome companies like SAP, but they are rare.

    Companies like AirBnB, Facebook and Groupon represent a new breed of software company that is more efficient, nimble and profitable. They don’t require a on-the-ground sales team like IBM, Microsoft and Symantec. The team can be based anywhere, their server resources are distributed across the globe and all their revenue and costs are completely dynamic and distributed and can adapt continually to the rapidly changing environment.

    In the current investment and risk environment, software startups are, understandably, just about the sexiest thing since, well, this: