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Five Lessons Entrepreneurs Can Learn From Craig Barrett

2009-06-08T04:20:19Z

Craig Barrett, Intel’s former chairman and CEO, has offered up some great rules that helped guide his business life. In a profile for The Wall Street Journal, Michael Malone talked to the recently retired Barrett about his work ethics, business philosophies, and working with Intel legends like co-founders Gordon Moore and Bob Noyce and former CEO Andy Grove. If you are an entrepreneur, you might just find “Barrett’s Rules” to be invaluable.

Invest in hard times. Intel invested heavily in capacity, and when it came out of the downturn, it was able to meet the pent-up demand faster than others.
Consensus is mostly good. Except when it is not. “There’s a time to let everyone twist the knobs and a time to make a decision,” Barrett says.
Follow the business, not Wall Street. No arguments about that, though in the case of start-ups, his advice is not to follow the pundits, media and others who are not your customer. “The job of the CEO is not to reward the short-term speculator of your stock, but to do a good job long-term for your shareholders, employees and customers,” he says. Look what happened to the old AT&T, which paid too much attention to Wall Street.
When something works, don’t reinvent it, reproduce it. McDonald’s fries, anyone?
Good competitors matter. “It’s like athletes: To be a great company you need great competitors…It’s what keeps you alive and keeps you honest,” Barrett says.

You should really read the full article, though it seems to be behind the WSJ paid-wall. (Photo courtesy of Intel Corp.)

Looking to Hire an Engineer? 3 Reasons to Forgo the Phone Screening

2009-04-26T15:37:01Z

If Sergey Brin applied for an engineering position at Google today, would he pass the requisite phone screening? Don’t be so sure: While he might look good on paper, he’d probably have to brush up on his Python programming skills first. Even if he passed, would it tell his potential employer anything useful about the value he could bring to the company?

Most engineers are familiar with the initial phone interview: a short, technical interview prepared by the prospective employer, and used to verify that the programmer meets the minimum technical qualifications of the job. Lots of employers think these screenings are a quick way to weed out bad engineers, but personally, I refuse to do them. Here are three reasons those looking to hire the best engineers should reconsider the “phone screen” interview altogether and jump right to a full-length phone or in-person interview:

1. Recruiters and other non-technical people typically don’t understand the questions they ask, and that leads to a one-way conversation. In addition, questions are often stated incorrectly, or without the originally intended context and as such suffer from lost-in-translation syndrome. Correctly evaluating a candidate over the phone takes longer than a typical “screening” interview, and should be done by equally tech-savvy individuals on the employer’s side.

2. From the perspective of an engineer, if an employer asks a lot of trivial coding or algorithm questions, it usually means the job they’re hiring for isn’t going to be that interesting (activate the big-company-coding-job radar). Phone interviewers do occasionally ask deeper questions, but given the limited time of a screening interview, and the inability of a candidate to present code or design diagrams, they are often forced to ask trivial ones.

3. Intelligence assessments can be a good indicator of talent, but don’t waste time asking them to solve puzzles pulled off the Internet: Look at SAT or GRE scores, school transcripts, or some other substantial proof of intelligence (or lack thereof). This kind of background on a candidate can usually be found without the need for a phone interview.

Only good engineers can accurately measure the skills of other good engineers, and it takes a lot of probing in an in-person, back-and-forth conversation to get there. A meaningful engineering interview has to be conducted in person, with multiple engineers, and over the course of several hours (if not an entire day). It’s worth the effort.

Evan Paull is a software engineer and a startup consultant.

Disney’s Iger Shows Up The Street

2009-04-06T04:54:11Z

Walt Disney used to say, “We don’t make movies to make money, we make money to make more movies.” It’s good to see that ethos is still alive and well at Walt Disney Co.. When a bunch of Wall Street analysts and toy retailers expressed doubts about the financial potential of Disney’s new Pixar movie, Up, CEO Robert A. Iger told The New York Times:

We seek to make great films first. If a great film gives birth to a franchise, we are the first company to leverage such success. A check-the-boxes approach to creativity is more likely to result in blandness and failure.

Well said. It is easy to fall prey to a “check the boxes” approach and veer away from the core beliefs and values of your company. If that happens, you’re left with forgettable products that lack vision.

Jeff Bezos vs. Bailout CEOs

2009-03-29T17:27:01Z

Jeff Bezos, chief executive officer and founder of Amazon, is a proponent of a Japanese philosophy called kaizen — which loosely translated means continuous improvement. As part of this belief, he has been working alongside folks at his company’s distribution centers in Lexington, Ky., perhaps to find out what else can he do to make Amazon better. This news was widely covered in blogs. What caught my eye was the comments in response to Saul Hansell’s piece in The New York Times blog.

Some of them pointed out the difference between Bezos and Bailout CEOs, who are good at offering excuses. Or others, like Auto Industry executives, who are often compared to lazy, brainless lumps. As someone points out, the bailout money is going to companies that are big, not necessarily the best. The best companies wouldn’t need to be bailed out because they would be good at what they do. Part of running a good company is knowing how each little part works and recognizing the importance of every person who contributes to the effort. Bezos clearly gets that. The bailout CEOs don’t.

Photo courtesy of Etech via Flickr

6 Tips for Taking an Enterprise Company to the Masses

2009-03-30T13:49:57Z

Ed Mallen, President and CEO, TimeDriver

One of the key sales criteria in the enterprise application space -– and one of the greatest development challenges -– is the ability to scale. At TimeTrade Systems we have met that challenge, creating a successful business selling SaaS-based applications that enable very large organizations and businesses to schedule and manage millions of appointments.

So, when we saw an opportunity to leverage our technology and deep scheduling knowledge to help individual web workers, it was a no-brainer. From a development standpoint, we’d already solved the scalability problem, and we felt designing a web-based personal appointment scheduler should be easy – and tailor-made for viral distribution. Through the process of designing, supporting and marketing TimeDriver, a Web-enabled personal scheduling solution, we’ve learned some interesting lessons. Here are our recommendations for any company looking at similar opportunities for growth.

Focus, focus, focus. Carving out a separate development team was the best way to initially develop the product. Trying to leverage our enterprise developers on a “part-time” basis for the web 2.0 product would have meant that both products suffered.
Balance ease of use with true business value. We had an imperative to create an easy-to-use solution that would also empower individuals to personalize their appointment invitations. In addition, we needed to ensure that users knew that the solution was not a toy and would help them better manage and drive their consulting or small businesses. Describing a range of use cases proved tremendously useful in helping users understand ways to apply TimeDriver.
Be prepared to face the challenge of changing the norm. We were asking end users to adopt a new way to book appointments. To drive rapid acceptance, we made the product available on free trial. Even though we see our new approach as easier, there’s always resistance to adopting a new way to perform an old task. We found that providing live support encouraged the early adopters –- which included a broad mixture of recruiters, HR professionals, lifestyle coaches, faith-based groups, insurance agents and sales people — to make TimeDriver their business appointment scheduler.
Listen to feedback from end users. Web 2.0 end-users are very vocal and very passionate, eager to share their feedback and experiences. We’ve leveraged their feedback when considering new features and applied them to our enterprise product, as well. There are no bounds to end-user creativity and ingenuity, and being prepared to listen will help direct new capabilities and leverage new sales opportunities.
It always takes longer than you think. We leveraged Web 2.0 technologies for development, and some delays in the process were simply out of our hands. For example, we chose the Dojo toolkit to ease the development of cross platform, JavaScript/Ajax-based applications. As Dojo is Open Source, we ended up waiting for releases to support certain functionality. Be prepared to allow for extra time in your development cycle, especially if leveraging open source tools.
Pick a “no turning back” deadline. Software is never perfect and every development team has a natural tendency to want to continue to “tweak.” We decided to launch TimeDriver at DEMO ‘08, so we had to be ready for prime time by then. This strategy had dual benefits. Not only did it provide a definitive date to development, but the developers also received very public recognition for their efforts.

Ed Mallen is the President and CEO of TimeTrade Systems, 25-year software industry veteran, surfer for many decades and an avid cyclist and runner.

Tech Startups Don’t Need the Valley Unless They Need VC

2009-03-16T02:02:35Z

At South by Southwest Interactive today, panelists from the Bay Area; Madison, Wisc.; Beijing; and Austin, Texas, debated the value of building your startup in the Valley, and the corrupting influence of venture capital on technology startups. The panel came to the conclusion that, if you want to build big and build fast, then you need to go to the Valley. However, few companies need to build big and fast.

The panel didn’t break any new ground with its discussion on the Bay Area’s proximity to capital, abundant talent and reverence of startup culture. However, cracks are beginning to show, as startups need less venture capital, California’s economy worsens and as the reverence of a startup culture that celebrates the go-big-or-go-home way of creating a startup fades.

The Bay Area startup ethos that calls for millions in venture funding and a giant business built in three to five years may be on the wane as the venture world faces its own tectonic shifts (see video below). “The model of tech getting used to VCs throwing crazy amounts of money at them is just crazy,” says Mike Maples, Sr., an angel investor who formerly worked at Microsoft and has funded several businesses.

Panelist Penelope Trunk, founder of the Brazen Careerist, who started her company in Madison, Wisc., called the VC model shallow and limiting for an entrepreneur. She pointed out that the traditional startup culture embraced by Silicon Valley comes at a personal cost that makes it hard for women and those with families to become entrepreneurs, and she championed building a business that generates sales and grows organically.

Panelist Kaiser Kuo, a business consultant in China, echoed the call to bootstrap, saying, “VCs should be the funding source of last resort.”

I walked away thinking the big debate for entrepreneurs is less about where you start a company, than an effort to reclaim the word “startup” for entrepreneurs who bootstrap their technology business — in or outside of the Valley. Many of these companies get less PR (they can’t always afford it), but they will likely become increasingly relevant as the downturn forces a realignment of the venture industry and forces entrepreneurs to build a startup that can make it as a business from day one.

Where In The World Is Innovation

2009-03-03T14:55:23Z

This Innovation Heat Map crafted by McKinsey and the World Economic Forum maps innovation across the planet. Clearly Silicon Valley is in a class of its own and perhaps that is why others want to imitate its success. Paul Graham recently offered up a recipe to replicate Silicon Valley, but even with that I am not sure anyone can pull it off. Why? Because, there are so many intangibles that cannot be quantified and replicated outside of Silicon Valley.

Nowhere else on the planet you will find a grown man who is crazy enough to fund a web site that essentially shows cat videos and expects his investment to pay off big time. YouTube, anyone!? Nowhere but in Silicon Valley is it OK to fail. More importantly, nowhere on the planet can you actually find a place to think as “freely” as Silicon Valley. I speak from personal experience, and you might disagree. I think Silicon Valley is un-replicable.

Web Infrastructure And a Startup Funding Manifesto

2009-01-12T03:16:39Z

Two-thousand eight will be remembered as a watershed year for many reasons, but two are of special interest to the startup community: the meltdown in the financial markets and the emergence of cloud computing. Tighter capital means investors will be more cautious, and startups can expect lower valuations. However, the growth of cloud computing provides a possible opportunity for both investors and startups: cheap and easy experimentation.

To many in the IT industry, especially those considering starting companies, the motives of venture capitalists can seem confusing at best and devious at worst.. But like any other industry, VC has its own business model. While startup founders often think about investments simply in terms of percentage returns, VCs tend to think in terms of absolute return. Getting back $10 million on a $1 million investment is a huge percentage ROI, but getting $50 million from investing $10 million is a larger absolute return. The rational behavior of VCs thus seems irrational to others.

VCs, then, are doing two things: betting and experimenting. The bets are on the entrepreneurs creating the companies and, to a lesser extent, the ideas they have. The experiments are used to identify and explore new markets. Bets are pure risk and risk management in which the goal is to maximize upside while minimizing downside. Experiments, are about discovery, and discovery means exploring many blind alleys before finding success. Scientists run tens or hundreds of experiments that fail for every one that succeeds in revealing something new. The same is true for startups: if you are not failing, you are not innovating.

The U.S. Bureau of Labor Statistics reports that the IT industry had the lowest 2- and 4-year survival rate of any industry during the ’90s (63 percent and 38 percent). Why? The companies, like investors, must balance risk and experimentation. Many companies start with one idea, only to discard it and try several others before arriving at the idea on which they succeed. Google is the most visible example of this, having launched its advertising platform years after starting their (non-monetized) search business. Many companies run out of money before discovering their successful offering.

The need for experimentation and scarcity of resources makes it essential that both VCs and startups be able to run their experiments as cheaply and efficiently as possible.

In the past, building a web-based startup required purchasing servers, colocation and bandwidth, and hiring the operations people to take care of load balancers, routers, disk storage, etc. This is a lot of expense and often companies either under provisioned or, more likely, bought too much equipment in anticipation of demand that never materialized. Most of this equipment later could be found on eBay, which, while good for people purchasing expensive equipment for pennies on the dollar, wasn’t the revenue building plan the investors had in mind. Such capital expenditure is clearly not conducive to rapid, frequent experimentation.

With the launch of services like Amazon Web Services, Google App Engine and Force.com, however, capital costs of infrastructure are zero, having been converted to operational costs that directly reflect actual demand. For those with applications that can work within the constraints, AppEngine and Force.com will automatically scale them on demand. The more sophisticated applications, designed from the start for horizontal scale, are better suited to the set of infrastructure primitives that make up AWS.

All of these platforms are infrastructure, but they are more than that for startups and investors: they are tools for risk reduction and experimentation. They are engines of innovation. In the new world these services create, startups using them have an enormous advantage over their competitors in their ability to experiment and adjust, and investors can get much less risk and much more exploration done with the same capital. Anyone building their own infrastructure will be seen as already failing. What many see as simply a mechanism to reduce costs is, in reality, something much more powerful. Fast, frequent failure is the most reliable path to success.

If your business plan relies on building infrastructure, it’s time you revisited it. If you don’t, your investors will.

Benjamin Black is an infrastructure troublemaker, currently at Joyent, who has blazed a trail of game-changing technology, leaving behind angry execs at Microsoft, Amazon, and Internap. Vijay Gill builds networks and infrastructure.

Survival is Competitive Differentiation

2008-12-05T22:01:15Z

We’ve read a few articles lately claiming that survival is not a strategy. The arguments in Anand Rajaraman’s article on GigaOM last month are sound, and if we understand them correctly include not prolonging a business that will never likely “win” or be healthy or have an exit resulting in wealth creation for the shareholders. It’s hard, or more appropriately put, impossible to argue with that logic. A quick death of a company that would otherwise die is a good thing for shareholders and employees.

That said, we think it is very hard in these times to look into a crystal ball and figure out if your company will survive beyond the current economic downturn. If you were growing aggressively before the downturn and are either moving sideways or down slightly, then there is a good chance that you can continue to grow once the economy turns around. If you have such a company (rapid growth followed by flat to down coincident with the economic downturn), then investing your capital in additional growth might be suicidal.

Surviving the economic downturn is a requirement for you to grow after the economic downturn. Capital, including both debt and equity, is not likely to be easy to come by for some time and even if you can get it, it will come at a premium (debt) or discount (equity) to what you would like to have in a more nurturing economic environment. As such, creating a “healthy” business defined by positive cash flow is paramount to survival. Being able to live off what you kill and grow for the coming months will ensure that you have a chance to thrive in the next economic boom. Moreover, you may exit the downturn with fewer competitors and a better opportunity for the “home run.”

Here are our recommendations on what you can do NOW to survive and thrive.

Cash is king. This was always true, even when the laws of business seemed to be turned on their head and capital flowed freely after a 5-minute presentation that included the words “software as a service.” Get to cash flow positive and stay there. Forget about the income statement — if you are spending less than you are making, then that’s all that matters today.
Justify your organization. Even if you are cash flow positive, you should be looking during these times to make sure that you are cutting every piece of non-performing fat from your organization . Keep the folks you need to do the work that is contributing to profitability and remove your underperformers. Interview for superior performers so that you can hire them into positions when the market turns around.
Eliminate debt. If you are highly leveraged and you have the money to do so, use every penny that you can muster to eliminate debt. Amazingly enough, it may be cheaper to buy your debt back and retire it if the debt is trading below the issuing value. For instance, if your debt is trading at 50 percent of the original value upon issuance and you can retire it upon purchase then every dollar you spend on purchasing debt nets you twice the benefit of paying the debt down. Even if you can’t retire it, you’ll get a portion of every dollar back that you spend on buying down your debt. Either way, use this time to make your balance sheet healthy.
Justify your projects. Don’t continue to throw money into projects that have extremely long payback horizons. If you are going to continue major project spend, then spend that money on items with nearer term profitability targets. As we have said before, success is a function of focusing on the right market opportunities, building the right product for that market opportunity, and building that product the right way. If you are on a sinking ship, is it better to spend your time finding a lifeboat or would you rather be balancing your checkbook?
Fix your product. The guiding words for your product roadmap should be focus and simplify. Focus your product features on ones that make connections. Depending on your services, these might be: helping customers connect with the information (like search engines or technical blogs), connecting with other customers (think eBay, Etsy, or Craigslist), or connecting customers with products (Amazon). The takeaway is that the part of your service that makes the connection is the valuable part. Simpler applications that are well built beat complex, full-featured applications that are buggy and confusing to the user. Learn to say “no” to projects, and clean up the application.

Marty Abbott and Michael Fisher are partners with AKF Partners.

5 Tips For Vetting a Business Partner — Online

2008-11-24T15:38:32Z

Finding the right business partner is probably the most important business decision you can make. Do it wrong and life is miserable. Do it right and the whole is greater than the sum of its parts. In my first technology startup, I found a great partner while getting my MBA. He handled the technology, and I handled the business (fundraising, hiring, board and investor management, etc.). It worked out well — so well that we ended up getting married and now have two kids (human ventures)! We’re 7 years into marriage, so we’ll see how that turns out.

I’ve been going at it mostly alone in my current business, Babble Soft, with sideline help from my husband. And, although I’d made progress, it was tough and tiring. I didn’t have someone I could bounce around ideas with. I needed a partner. I found my first business partner in business school, so how would I find a partner working from my home office? How could I find someone who shared the same vision I did: to help new parents navigate the world of parenting in a digital age? I ended up finding her — where else? — online.

Once upon a time, I met Connie Reece, Austin’s social-media maven. She set me up with my first blog and began introducing me to people, including Wendy Piersall, who runs Sparkplugging. Wendy and I got along famously, and she invited me to join a Blog Mastermind group of extremely talented folks like Char Polanosky, Jill Koenig, Edward Mills, Easton Ellsworth, Dawud Miracle, and David Bullock. After one of our calls, Edward sent out links to articles he wrote on Sparkplugging about the experiences of a company called Pick Nick’s Brain, a baby sleep consulting site run by a woman named Nicole Johnson.

After reading his posts, I reached out to Nicole, and we started a dialogue. PickNick’s Brain was a perfect complement to our baby sleep offerings; she has two little boys; and, more importantly, she had the drive and passion to make a difference in the world of parenting. I’ve never hired an employee sight unseen, let alone a full-fledged partner. But a Skype video call (so we could make eye contact), several voice calls, tweets and emails later, it was official. She took a leap of faith and joined me, and I can already feel the difference in productivity and energy.

Nicole is smarter than me in technology development — my head had hurt daily trying to manage it. She received her undergraduate Computer Science degree from UC Berkeley and her MBA from Ohio State. I now have someone I trust handling the technology, so I can do the things I’m much better at doing and like to do. I’m anticipating that this partnership will work out just as great as my first business partnership — without the marriage part!

Since picking a virtual partner sight unseen can be a daunting task, here are some things I’ve learned about evaluating a potential partner:

They must be smarter than you are in their respective area of expertise. Heck, they can even be just plain smarter than you and increase your perceived braininess! Michael Dell hired smart people, and the people that Bill Gates brought on were pretty darn smart, too.
They must communicate well. Observe their communication and conflict resolution style. The last thing you want is to beg someone to communicate with you when things don’t go as planned. If they don’t live in the same city, you can’t show up on their front door!
Spend time getting to know them. Watch them and see how they behave online and with other people. If you watch someone online (e.g., read their blog, tweets, comments) for a couple of months, you can make a reasonable assessment of their personality and reputation.
Check each others’ references. You don’t want something to surprise either one of you. References usually say great things, but knowing what questions to ask and what to listen for gives you 80 percent of the information you need.
Take care of necessary paperwork. Getting a lawyer involved is a necessary evil. Agreements should be in place to protect both of you. If you assessed item No. 2 above correctly, then agreements can always be amicably adjusted to reflect new information.

Bringing on a virtual partner can be a daunting task. You are taking a risk by giving up part of your company to someone you have never met. But taking the chance to bring on the right partner can make all the difference in the world!

Aruni Gunasegaram is a serial entrepreneur and Founder/CEO of Babble Soft. She blogs at entrepreMusings. She has two kids and runs Operations for the Austin Technology Incubator during the day. You can follow her on Twitter @aruni.

When You’re Going Through Hell, Keep On Going

2008-11-23T21:51:01Z

With all the doom and gloom of the past few months and all signs pointing to hard times ahead, I’ve been thinking back to earlier in the decade, during the dotcom bust. I was at Live365, the Internet radio network, and we had burned through millions of dollars with no appreciable revenues nor a business model. Our CEO/founder had left, and I found myself promoted to the management team well short of my 30th birthday and with no management experience to speak of. Our investors, having lost faith in the prior management team, had the Company on a very tight leash. So tight that we depended on a wire transfer every two weeks to meet payroll and other obligations.

At one point, our ISP shut us off, and we had no Internet access at the office. I had to get an employee to drive a check over so that they would turn us back on. Even worse, our site went down when the people we bought bandwidth from got shut off themselves. It wasn’t our fault, but we were still down, and the worst part was that we didn’t have enough cash to migrate to another bandwidth provider. I’ll never forget one of our employees offering to make the Company a personal loan. I couldn’t accept it because I wasn’t sure if we’d be able to pay him back.

Amazingly, our users didn’t give up on us. They set up alternate forums to discuss what was going on, sent pizza to our offices and, most importantly, gave us moral support. I won’t go through the litany of hardship we faced but, suffice to say we almost went under a few times. We were able to survive through sheer will, the dedication of our employees and users and a lot of luck. There were so many lessons learned, but, in particular:

1. Be as transparent with your employees and other stakeholders as you can be. At one point, we had to tell everyone in the company that coming to work was optional and that the next payroll was in doubt because of our cash issues. Even though it was bad news, they appreciated the transparency. In hindsight, I would have been much more communicative than I had been.

2. Cultivate a trusted adviser or mentor outside of the workplace. I think people should do this anyway but it helped me a great deal to have someone I could talk to about the issues I was facing and dispassionately help me evaluate the scenarios and available options.

3. Remember whom you work for and where your fiduciary duties lie. Yes, you ultimately work for yourself. But, as a founder or management team member, you may have fiduciary duties to shareholders, both common and preferred, to employees, creditors and customers. Their interests can diverge even in the best of times and especially so when things start going pear-shaped. I made some painful decisions that ruined a friendship but were for the ultimate good of the company and satisfied my fiduciary and ethical obligations — and, to reiterate No. 2 above, I’m glad I had a trusted adviser to help me make sense of things during such an emotionally fraught period.

4. Accelerate non-advertising revenue models. This is a more practical recommendation. Even if your usage and advertising metrics are growing nicely, now is the time to accelerate development of non ad-based models and prioritize the other revenue streams more highly. Your investors and poptential investors and acquirers will appreciate this. Not only that but they are likely to discount your ad-based revenues anyway, so any momentum you can show outside of ads will bolster your story.

5. What doesn’t kill you will only make you stronger. Easy to say, hard to live through. But just keep telling yourself this when things really, really suck.

6. Pray! Seriously, luck plays a big role. Do whatever you can to make your own luck.

While it’s going to be a bumpy road ahead that will involve a lot of pain for many people, I think it actually will be better this time around: The Internet, the web and mobile are real media with real users, real revenues and real business models. Add to that the fact that it’s orders of magnitude cheaper to develop and go-to-market than it was then, and I don’t think the downturn in our general field will be as drastic as it was back in the day.

Raghav “Rags” Gupta is VP of International Partnerships at Brightcove, where he has worked since 2005. His blog can be found at www.ragsgupta.com.

Modern Networking Tools: Swapping Bits, Not Biz Cards

2008-11-21T20:32:59Z

With the recession in full swing, industries across the charts have been laying off hundreds of employees — making the job market increasingly competitive. So what’s a freshly unemployed tech professional to do? Hit the streets and start networking. As the hordes of job-seekers descend upon trade shows, conferences and meetups around the country, a few mobile startups could be poised to profit from their misery: digital business card services. The last few months have seen the launch of a number of services, delivered via mobile technologies from iPhone apps to text messages, that aim to do away with the business card. Previously, companies may have pitched their product as a “green” alternative to dead-tree info swapping, but in today’s market, the dynamic nature of the digital business card could prove to be a more powerful selling point — at least for a startup that can dispatch updated, social media-connected personal data securely across the range of mobile devices.

The iPhone has been a key driver of the market for digital business cards, at least in terms of visibility. Gabe Zichermann, CEO of rmbrME, says his company, which had previously offered an SMS solution with about 1,000 users, had 10,000 users (and even more downloads) of its beamME application in the first 10 days it was available on the App Store. Other apps include Nameo, Handshake, FriendBook and iCard. Most of the services work roughly the same way: Bring two iPhone users together, pull up the app, and a simple touch command sends information between their devices.

However, Nameo, Handshake and iCard are limited to contacts with an iPhone. But what about those of us without iPhones? Dub, which was launched in beta in June of this year, is another option for the BlackBerry set, and as of this week, its service is also available for Android phones (currently that’s just the T-Mobile G1). (The company says service for the iPhone and Windows Mobile are due out in December.) Perhaps Dub’s biggest claim to fame is that it offers integration with common business services. Data can be beamed to a Salesforce.com contact management system, as well as to mobile devices, and Dub users will soon be able to sign into the service using their LinkedIn login and password.

But even Dub, which allows for limited cross-platform sharing, requires that both users have a smartphone and install the app. For on-the-go information sharing, the “Do you use this app?” conversation can add an extra layer of awkwardness and time. For universal sharing, users might be better off with an SMS service from players such as Dropcard, TextID and rmbrME. Even iPhone app-addicts have an option: While most iPhone apps rely on Wi-Fi networks and geolocation, rmbrME’s iPhone app, beamME, allows users to send personal data from their iPhone to any phone, whether it has a data connection or just a simple voice connection.

I’m still slogging along with a Nokia 2610, so I’m partial to technology that doesn’t leave me (with my pesky insistence on multiday battery life) out in the cold. I’ve found services like rmbrME and Dropcard to be simple to use, and I could easily send my data to smartphone-carrying folks via shortcode. Better yet, people could send info to me, without even knowing that I still carry a Stone Age-era device.

While there hasn’t been much venture investment in the space just yet, Zichermann says rmbrME has raised just shy of $1 million in angel investment, and DubMeNow has reportedly raised $1.1 million in angel funding. DreamIt Ventures provided seed funding for Dropcard. But the startup founders are optimistic: Zichermann says VCs are exactly the kind of social, tech-savvy users that “get” services like rmbrME, which should make it easier to raise funding when the time is right.

Also promising in this market: None of the services is dependent on advertising revenue. Most of the services use a “freemium” model, and several are working to add enterprise-level functionality. DubMeNow’s BlackBerry-focused, Salesforce.com-integrating app seems aimed squarely at the business-to-business marketplace. Zichermann says rmbrME also has its eye on premium services aimed at the enterprise market, such as offering a branded, customized look and feel for user cards.

You probably can’t throw away your business cards just yet. But if you’re in the market for a new job, sign up for an SMS service and head out to the trade shows.

Image courtesy of rmbrME

This article also appeared on Businessweek.com.

5 Things to Do for Your Career in an Economic Downturn

2008-11-21T04:54:05Z

Economic downturns are hard for everyone, at both work and at home. Week after week there are requests for managers to further reduce budgets, lay off more people and cut projects that were previously classified as “necessary to sustain normal business operations.” These pressures forge managers made of diamond, and those who perform well in both boom and bust are destined for greatness. The very best managers get out ahead of downturns and take action early to minimize shareholder losses and, ideally, create shareholder value.

Here are six simple questions to determine if you are one of these managers.

Do you treat economic hardships in your business as a time to relax, or do you look to improve your skills?
Do you constantly push back when new budget cuts come along, or are you offering up cost savings ahead of requests from higher level executives?
Do you complain that you are too short handed to accomplish your mission, or do you spend time developing tools, systems and metrics that help you determine how to get more done with less people?
Are your top performers worried about losing their jobs, or do you spend time nurturing them and growing them to be even more successful in their positions?
Do you complain that you need all of your folks, or are you constantly weeding your team of underperformers without replacing them when times are rough?
Do you treat hiring freezes as interview freezes, or are you constantly looking to find bigger and better talent so that you can move quickly when it’s time to hire again?

These questions help illustrate some of the steps we believe define exemplary leaders and managers in tough economic times. Put more directly, we think that the following are some of the five things that great managers and leaders do during economic downturns that help prove they are “the best of the best”:

1. Upgrading skills. This can be anything from getting an additional degree in your area of expertise, to getting a degree in a field adjacent to yours (technologists getting an MBA or marketing folks deepening their technology), to taking continuing education courses or just taking some time to become current with your job through professional reading. The best leaders and managers see being “the best” as a journey rather than a destination. We cover this in more detail in “To Get Better You Must Practice.”

2. Make More with Less. Stop talking about being the best and prove it. Put the systems in place that allow you to measure how much shareholder value you create with every dollar you spend on headcount or systems. Show how you can do more next year with the same budget or — better yet — more with less money. If you aren’t doing this as a standard operating procedure, start doing it while the economy is struggling, and you will absolutely be seen as being one of the best.

3. Mind Your Flowers. Whether you are making difficult headcount cuts or not — but especially if you are — you need to take care of the folks who are creating the most shareholder value within your organization. Exit the economic downturn with your best people on your side — not the folks with the longest tenure but the folks who create the most value.

4. Weed Your Garden. The best managers during great times are always looking to remove underperformers from their teams and upgrade them with superior performers. The best managers during economic hard times are ahead of the headcount cuts with a list of the folks who should be removed from their team for poor performance. Don’t ask if other organizations are getting their fair share of cuts; focus on what’s right for the shareholder and get it done ahead of the request!

5. Get Ready for Spring Planting. It may not seem like it today, but things will turn around; if not for your current employer then for your next employer. You need to have that list of great talent with whom you’ve been interviewing ready so that you can quickly augment your existing team as the need arises, or build your next team if your current employer doesn’t survive the downturn. Leadership is as much about people as anything else, and great leaders focus on building great teams.

Marty Abbott and Michael Fisher are partners with AKF Partners.

4 Steps to Making Strategic Decisions in Today’s Market

2008-11-16T17:17:56Z

David Selinger

Anticipating that a financial crisis like the one we’re currently experiencing wasn’t far away, I’ve run my company, richrelevance, on a zero-fat budget, raising small rounds of capital to ensure our team built the discipline to operate with small budgets. Yet, anticipation of the downturn does not make me immune to the shift. External risks in every business have changed. None of us will go through the next 18 months without significant impact.

But many entrepreneurs who saw the now-famous “Sequoia deck” unfortunately took its conclusions to be a tenet of truth and acted on it — perhaps too hastily. The folks at Sequoia are smart, but they aren’t necessarily smarter than you or me at running our businesses. This is the crux of the issue: While this market shift is, in fact, a 5- or 6-sigma event, what we do with that information is still within our domain.

Reacting blindly to a situation is wrong — being reactive is bad for your business. There’s a process to responding to urgent situations, much like triage in a hospital, and by understanding, analyzing, acting and repeating we can surmount these challenges. Now is a unique time when you can deepen customer relationships by advising them, seeking input, sharing ideas, etc. Below are four steps to responding the current economic situation without being reactive.

1. Identify and Understand
Acting on bad information is worse than not acting at all. My gut reaction to this shift was, “I’m sure glad we build enterprise software and that I’m not a social network,” but this thought is wrong and fraught with (incorrect) assumptions. While not all social networks will survive, their inherent value has not disappeared. And, while the innate value of the applications we’re building has not deteriorated, the amount (and way) we are paid for these services may change.

To protect our businesses, we need to keep a close eye on market dynamics. Talk to customers, partners, and vendors. Find out what they’re thinking and seek their input — this is a unique time to establish new dialogues and chart the course for deeper, more beneficial relationships.

Read. Gather data. Then, go sleep on it.

2. Analyze Risks
The biggest assumption from the Sequoia presentation is that the downturn is so large that it will affect us all equally and uniformly. This is patently false. As entrepreneurs, we believe the opportunity in our market is so great that it outweighs the risk. Sit at a whiteboard with your management team and consider the new risks in the equation. Break these down into two groups: risks I can control (internal) and risks I can’t control (externalities). Much like a triage leader, identify the severity and urgency of each risk in how it affects the bottom line, how much capital you have on hand and how much you can absorb long term. The key is to be honest with yourself.

3. Act
First, stop any bleeding. If your burn rate outpaces revenue, cut — dramatically. If you have contracts that put you underwater, address those. Next, address internal risks. For example, if you finish X product line you may increase revenue with existing customers. Yet if X product requires long-term R&D and there’s not enough cash to get you there, put the project on the chopping block. Finally, proactively shore your business up against externalities — i.e., “What happens if my customers don’t pay on time?” Keep in mind: The stakes are higher than ever. Use your advantage as a startup to do more things better and faster than the competition.

4. Close The Loop
You’re not done. Iterate. Constantly communicate with your team about how you’re executing against goals. Stay engaged with customers. Re-engage the whiteboard regularly.

None of these principles are new. This is how we should be running business regardless of the economy. The climate may have changed, but the rules of good business are still the same. Failure is still not an option. Freaking out is not either.

7 Ways to Talk Your Way To the Top in a Down Market

2008-11-15T21:56:03Z

Abigail Johnson

Over the last few weeks, we have all heard admonitions to startups (and all companies) to tighten their belts, be realistic about their businesses and hunker down for the long term. This is certainly good advice (in this market, and probably most of the time). But a few other things should also be stressed: He who wins in a down market wins. Some people will cede ground. Be prepared, tactically and strategically, to grab it. Because major changes are happening in the market today, truly transformative companies will be able to gain a significant foothold.

In any market, but especially in a tough market like this one, communicating aggressively is key. You want to keep all of your constituencies informed about what’s happening and how you are progressing. I know that you are probably wondering how you can both extend your runway and maintain or even increase your communications. This is not an easy formula, and every company needs to treat the question differently. However, here are a few guidelines:

1.) Be clear and articulate about your differentiation and benefits — in the near term and the long term;
This means focus on quality not quantity. Spend time figuring out your messages and reinforce them in every medium. Press on the competition; help people understand why you are better.

2.) Focus on leadership. If you can be a thought leader, you will define your market rather than following others into the market. If you can be a product leader, that’s even better.

3) Speak often to your key markets and influencers.

4) Find real reasons to talk with your constituencies. Provide information about your company, its status, and products. Educate about the market about issues and opportunities.

5) Be specific and real. Help your customers and their influencers understand how you are better and the benefits you bring. Avoid hype — we rarely believe in hype or gimmicks, and they tend to backfire. Instead, be direct and clear and say things like they really are. In a market like this, trust is very important. Give very specific examples of how you are better and bring benefits: use customers, examples, cases — not just theory.

6) Use the transparency of communications today to make sure a well-crafted set of messages gets to all of your audiences. We are blessed to live in an age where communicating is very easy. Virtually anyone can read/see whatever you communicate. This means that you need to be consistent through all communications; your web site, press releases, trade shows, company presentations, and internal communications should all reinforce the same core positioning.

7) Don’t stop talking! In case you didn’t get the point, find a way to keep communicating with your audiences.

Abigail Johnson is president of Roeder-Johnson Corp., a public relations and strategic communications firm in the Silicon Valley. Having helped launched nearly 100 companies, Johnson has more than 20 years of experience providing executive counsel to technology and consumer companies on communications issues.

8 Ways to Hack Your Office Lease for Cash

2008-11-03T01:20:09Z

I’ve read a lot here about how to hack a funding term sheet, or how to navigate the confusing terms and conditions in the legal contracts startup founders must sign. But what about rent? It’s probably one of your biggest operating costs, and in the current spirit of cost-cutting, there are several ways to squeeze cash out of your commercial real estate agreement, too. I started Rofo to help entrepreneurs do this, but I’ve shared my top “lease agreement hacks” here. They will save you plenty of headaches and money — and possibly even help you generate new revenue streams for your startup.1. Don’t pay for space you can’t use. All square feet are not created equal. Have the landlord pay for a “space plan” to determine your “load factor.” (Also sometimes referred to as a “loss factor.”) This is the ratio between the non-usable and usable square feet that your rent will cover. Examples of non-usable square feet would be building common areas, such as corridors, or a lobby. Typically, office space load factors are in the range of 20 percent to 30 percent, meaning for 1,000 square feet of usable office space, you might pay for 1,200 square feet. Landlords like high load factors because they pad the bottom line. In a market like this, however, they need to secure tenants, so you have more leverage than normal. Negotiate the load factor down to at least 15 percent.

2. Beware of free rent. Structure the rent so that you phase into the space. Pay for half the space during the first six months of the lease, the full space at seven months. If you get “three months free,” be sure the landlord has not extended your lease term on the back end, to 39 months from 36, a common tactic.

3. Avoid standard improvement allowances. If the rental rate being offered includes a standard improvement allowance and you do not want or need to make improvements, then amortize this allowance out of your rent.

4. Cap operating expenses. In most office buildings, operating expenses are included in your rent. They increase yearly, but you can put a cap on operating expense increases. A 5 percent cap is reasonable. It protects you from spikes in utility costs or increased property taxes if the building is reassessed. Also, retain the right to audit operating expenses.

5. Negotiate your renewal option in advance. Landlords like to include a commitment to renew up to one year before your lease is up. This forces you to address your real estate needs long before you’re ready. Negotiate the renewal down to six months by agreeing to a renewal rate equal to fair market value. Renewal rates are re-negotiated at re-signing anyway. The important thing is to move back the option deadline.

6. Negotiate holdover rent penalty in advance. Holdover rent occurs after your lease term has expired and, for whatever reason, you’re unable to vacate the space on time (usually when your pending move is delayed). Landlords will want double rent as a holdover. Negotiate this down to 125 percent of current rent.

7. Consider a buildout. If a landlord offers an allowance to build out a space to your specs, take the time to get a construction bid. Make the landlord pay for the estimate. Be sure the allowance can be used for architects, construction management, your moving expenses and data wiring. Most landlords draw the line at furniture and fixtures, but ask for it.

8. Demand right to sublease. Get it in the term sheet that you can sublease your space to anyone you wish for any amount of rent, subject to an approved use. Also, be certain that the landlord cannot impose any fees to your sublease. A common fee to avoid is a “document review fee” to cover the landlord’s attorney bill. Also, insist that the landlord turnaround sublease approvals quickly, within three to five business days. The last thing you want is to lose a subtenant to administrative delays.

Alan Bernier is Co-Founder and CEO of www.Rofo.com, a real estate resource for startups.