Burnout is one obvious danger of poor time management. But even more important is the risk that something important will fall through the cracks. If you fail to respond to a potential partner or prospect in a timely fashion because there’s too much on your plate, you could be blowing a make-or-break opportunity.

Time management is one of the top challenges for every entrepreneur I know. After years of experience working with entrepreneurs and business owners, I have learned a few tricks for getting more done in the 24 hours we all have.

1. Know thyself. Everyone has a natural rhythm - some of us are morning people and some don’t become fully awake until after noon. Pinpoint your “up” times and use them for the most crucial business tasks - like meetings with investors, brainstorming sessions or putting together proposals. Feel your energy flagging? Use that time for tasks that don’t require as much brainpower, like checking email, updating your calendar or organizing your files.

2. Prioritize. The first step is to recognize you can’t do everything you want to do. Then you need to figure out what’s most important and work on that first. What’s most important is likely to vary from day to day, but in general, focus on the activities that generate the most money or have the potential to do so. That may mean concentrating on developing game-changing features or product improvements instead of day-to-day tasks. It may also mean responding to leads from bigger prospects or proposals from larger investors before smaller ones - or completing projects for bigger or more established clients before slower-paying or newer ones.

3. Harness technology. Make sure the tech tools in your life work together to simplify and streamline time management. Use cloud solutions to store your data and synchronize files and calendars so you’re not entering appointments in multiple devices or finding yourself without crucial files. Use online project management tools to keep you on top of what your team is doing at a glance. Regularly weed out apps you aren’t using or tools that aren’t working - sometimes, we get so enamored by what technology can do for us that we stop recognizing when it’s getting in our way.

4. Identify time-wasters and find solutions. Keep a log of your activity for a week or so. You may be surprised how much time you’re using inefficiently. Are you typing the same response to emails over and over? Create a template or shortcut to save time. Maybe you spend hours sorting receipts for accounting. Try an app that lets you quickly scan them and trash the paper.

5. Delegate. It’s hard to let go of your “baby,” and even if you’re willing to, at this stage you probably don’t have enough staff to delegate a lot. But if you’re lucky enough to have some employees, independent contractors, or even friends and family who will donate some of their time, sit down and assess what you could possibly offload to others. You’d be surprised how getting some grunt work off your plate can free up your creativity and energy to truly grow your business.

6. Get offline. I’m not advocating abandoning your email or leaving your smartphone at home, but even tech entrepreneurs recognize that the onslaught of input has to be shut off every now and then. Set aside blocks of time to focus on important projects. You’ll be surprised what an hour or two a day can do for your business.

What time management tactics work for your startup? 

Image courtesy of Shutterstock.

Despite the huge dollar amounts controlled by the underbanked, most financial institutions want nothing to do with them - too much hassle and not enough profit potential.

Core Innovation Capital has decided to help. The Minnesota-based VC firm has raised $45 million in funds it plans to use to back startups that give low-income consumers somewhere to go for financial services other than the local check-cashing shop.

“We operate as a ‘double-bottom line’ fund,” explains Core Innovation managing partner Mike Harris. “We seek excellent financial returns and a positive social impact on the lives of the underbanked."

Emerging Middle Class

The market opportunity is real, Harris says, and so is the social need. “This is an important category to target. It’s the emerging middle class of the United States.”

There are more check-cashing outlets in the U.S. than there are McDonald’s and Starbucks combined. They target low-income people and charge very high fees. And in the eyes of many observers, they’re self-perpetuating: They grow their market as they serve it by making poor Americans even poorer.

“When someone who is underbanked goes to pay bills or cash a check, what happens to them? They have to pay a fee,” Harris says. “They don’t get air miles or cash rewards like you and me. They pay $2 to $15 in fees just to pay a bill. Or they pay 2% of their paycheck just to convert it to cash. Go to a payday lender and see what the interest rates are. It’s ridiculous. It’s a vicious cycle.”

Core Innovation has funded three startups so far:

SavvyMoney, a website with free tools where people who are in over their heads can start digging out of debt.

Plastyc, which offers prepaid, low-fee, FDIC-insured bank accounts in the cloud, accessible online or via smartphone.

L2C, a credit-scoring company that uses alternative data to identify responsible consumers who should get credit but don’t because they’re not on the banking radar.

“Companies we invest in help people go from a vicious cycle to a virtuous cycle - and still make money doing it,” Harris says. “These are tech-based companies, innovators that are providing real value to consumers and developing long-term relationships with customers.”

To find more companies like that, Harris and his Core Innovation partner, Arjan Schutte, have launched an annual competition, the Underbanked Innovators Challenge. This year’s four finalists are Helping Loans, Juntos Finanzas, TIO Networks and Sociogramics, a project of Match.com founder Gary Kremen that uses text messaging to bring personal finance tools to first-generation U.S. Latinos.

Putting their compensation where their mouth is, Harris and Schutte peg their pay as VCs to the social impact their investments make. They collect information from their portfolio companies and submit it to an independent audit committee, which then helps to determine the partners’ compensation.

Image courtesy of Shutterstock.

This certainly isn’t a new issue. Anyone who watches Mad Men will be reminded that facing personal problems at the office dates back at least 50 years (and probably really back as far as caveman hunting trips). Of course, back in the 1960s, it was perfectly acceptable to deal with them by opening a bottle of Scotch at 2 o'clock in the afternoon.

The specifics are a bit different today, but the overall consequences remain the same. In fact, every generation of workers seems to come with its own set of acceptable behaviors and attitudes, and those can affect your work environment in different ways.

In big companies, coping with these kinds of issues is the job of the HR department. But your business is likely too small to have an HR director. These days, many companies don’t consider filling that position until they have quite a few employees. (Gail Goodman, the CEO of Constant Contact, didn’t hire a specific HR director until the company had more than 150 employees!)

Generational Disconnects

For an expert point of view, we talked to Karen Kort, director of HR Practice Management at Microsoft. Kort works with employees of all ages and attests to the disconnects among different generations of workers. She cites a young college grad who didn’t understand she had to tell her (older) boss when she wasn’t coming into the office.

“She and her manager had far different views on this situation,” Kort says. “It took some serious discussion between the two of them to help her realize that she needed to be more aware of her commitments in her role and the expectations of her business if she wanted to be successful.”

Of course, it works both ways. The older manager learned that he needed to provide more flexibility and freedom to the Millennials on his team if he wanted to retain them. If Millennial workers don’t feel supported in pursuing their outside interests or dealing with their personal problems, they may leave for companies that will support them.

Social Media Makes it Worse

The proliferation of social media adds a whole new dimension to the problem. It’s all too easy for workplace problems to virally spread across social media platforms. Kort notes that Gen Y employees in particular often feel the need to share everything with their networks. “Companies need to make an intentional effort to educate employees on their policies around blogging, Tweeting, Facebook posts, etc.,” she says.

While you want your employees to help promote your brand via social media, you need to be aware that such activity also holds the risk of your employees accidentally breaching confidentiality; complaining about you, your company or clients on social media; or otherwise airing personal issues that may damage your business’s reputation. So, you need to clearly set guidelines for what is and is not acceptable, and make sure you codify your expectations.

The relatively low cost of starting a tech business today has made this choice more enticing than ever. If you need only $5,000 or $10,000 to get going, is it worth the risk to put it on your cards? “I’m seeing more people using credit cards for financing,” says David Worrell, founding partner of Rock Solid Finance, which helps business owners find solutions to their financing problems. “These days nobody’s got any collateral, so it’s a choice between cash and credit cards.”

Beware Revolving Credit Charges

When Bob Herman founded Tropolis Group in 2010, he decided to finance with credit cards so he could take advantage of a cash-back rewards program and use the bounty to buy supplies for the business. So far, Herman has put about $60,000 on his credit cards, using them mostly to finance software development.

To ensure he didn’t get in over his head, Herman says, “I only put monies on the credit cards for which I know I have corresponding payments due from customers. I then pay off the cards in full each month to avoid the high interest on revolving credit.”

It hasn’t all been smooth sailing. “At one point, we had a customer not paying their bills on time for which we had already placed funds on a card,” Herman says. After diligently following up for payment, eventually he got the customer to make most of the payments. “I did have to write off a portion of the receivables but was able to recover the following month using revenues from other projects.”

“I advise using revolving credit only if you will receive value from a cash-back or points program, and if you’re sure you can pay off the balances in full each month to avoid high interest charges,” says Herman. The strategy has paid off for Tropolis Group, which now includes AppTropolis, BagTropolis, IT Tropolis and ShipTropolis. Sales have doubled year-over-year since launch, and Herman expects them to double again in 2012.

Don’t Forget to Pay Off Your Cards

Vincent Turner, founder and CEO of Planwise, a startup that helps people better visualize the future financial impact of their life plans, learned the risks of financing with credit cards the hard way from a previous startup. Before getting venture funding, Turner had used a personal credit card to get the company going. When a group of investors bought out the original investors in 2010, he recalls, “they raised heaps of additional money, but were never prudent enough to pay off the $8,000 debt on my credit card.”

As the company began to flounder, Turner stepped back, not realizing the investors had never paid off his card - they were just servicing the debt. When the business went bust, responsibility for the card debt ended up back with Turner: “Now the bank is hounding me for full repayment.”

The experience shaped how Turner funded Planwise. “We never make any commitment to spend money unless it is fully funded,” vows Turner, who financed the startup himself and then secured angel investors. He does have a business credit card, but its credit limit is $5,000 and he uses it only for small purchases.

Both Turner and Herman are playing it smart, according to Worrell. “As a tool to help you grow or manage your finances, I think a credit card is even more essential than ever,” he says. But you need to be careful about how much you spend, and never charge more than you can afford to pay off.

Also important: “Always match the source of money with the use,” Worrell advises. “For example, use a credit card for short-term [needs] and pay it off in the short term.” You shouldn’t use credit cards to pay salaries or rent, but you could use them to buy supplies or finance a short-term project.

“I had this stupidly simple observation that maybe everyone else under 30 has already had,“ says Steve Blank. “And the big observation is that we talk about social networking and we talk about Facebook and Twitter but we never talk about the big picture. And the big picture is that these billion-dollar companies are doing nothing more than mediating basic human needs and putting them online.”

Blank is a true startup veteran. He’s the author of “Four Steps to the Epiphany” and “The Startup Owner’s Manual.” He’s been around Silicon Valley since it was mostly fruit orchards and has founded or worked with eight tech startups, four of which went public. He now teaches entrepreneurship at Berkeley, Stanford and Columbia. (He’s also been known to write for ReadWriteWeb, and we’ve quoted him before.) So even when he calls an idea simple, it’s worth paying attention to.

The Big Fundamental

If you’re creating a startup and you want it to go big, the first test to apply is: Does it address a fundamental human need? “Ask yourself, does this feel like something I would have done, or maybe better than I would have done, face-to-face or without a computer? Is it a basic human thing? That’s the filter. It can’t tell you how to write the next Twitter. But it is a very valuable test after you’ve come up with the idea and built the prototype.”

Think about it. Everything we used to do without computers, from chatting to sex to entertainment - things that people are hardwired to do - we used to do without computers. The very successful startups of past years have taken those human needs and made them easier to do with computers. And the hugely successful startups have gone a step further. They’ve identified human problems and turned them into needs.

“That’s how Apple approached the iPod and iPhone,” Blank says. “Jobs turned a problem - how to communicate and be entertained portably - into a need. Ask Nokia and RIM what the [heck] happened. They built the world’s best communication devices, but Jobs turned it into a need. That’s an experiment that every entrepreneur should run: What do you do yourself that is not yet done online? I think this idea of mediating basic human needs started even before the Internet. I think video games were the first example of this. And then porn.”

“But,” you say, “all of the good needs are taken.” Perhaps so. But there are ways to do Twitter or Facebook better. You just have to invent them. Or do what Jobs did - identify a problem and turn it into a need.

Is Accounts Payable a Basic Human Need?

Consider, for example, accounts payable. “If you’re a really great visionary, is there a way to turn accounts payable into a basic human need?” Blank asks. “Don’t laugh. Great visionaries have turned products and problems into basic human needs.”

It all starts with a stupidly simple question. “Can you predict that next billion-dollar idea with certainty? Maybe not,” Blank says. “But you can at least ask the question.”

The answer: Find yourself a mentor.

No "Yes Men"

Surrounding yourself with “yes men” is a stupid startup move. Instead, “all” you need to do is find someone who’s “been there, done that,” and is willing to tell you the truth. Don’t scoff. There’s true value having someone you can bounce ideas off of or who can offer a different perspective.

“Why wouldn’t you want to learn from the experience of others?” says Bob Godlasky, a mentor and counselor with SCORE OC in Santa Ana, Calif. SCORE, a nonprofit partner of the Small Business Administration, has more than 13,000 business experts and offers free mentoring and low-cost workshops nationwide. “There’s value in getting nonfamily, nonfriends' points of view. It’s amazing what we can’t see until someone with no particular bias reviews the same picture or the same data,” Godlasky adds.

Janet Crowther and Katie Covington, founders of For the Makers, a website for DIY design and crafts projects, met while designing jewelry for various fashion houses, including Kate Spade, Anthropologie and Marc Jacobs. As first-time entrepreneurs, they had tons of product and design experience, but had never worked in the tech field. “We went everywhere and asked questions of anyone that would listen,” says Covington about the startup of their social community website. “We set out looking for validation of our ideas, but over time found mentors who can help with more specific questions.”

Ask Questions

How do you find the right mentor for your business? “The only way to find mentors is to be out there, meeting people and asking questions,” Covington says. “We’ve met people at events, through friends, on Twitter and by following blogs. As long as you are respectful of time, mentors are almost always willing to help you and your company evolve. We look for mentors who believe in us, have experiences that are vastly differently from ours, and are always creating.”

Crowther and Covington were fortunate to find tech entrepreneur Cindy Gallop (pictured above), founder of the websites If We Ran The World and Make Love Not Porn. “Often the smartest, most interesting people all seem to know each other and are happy to make introductions,” Covington explains. “After talking with Cindy for 10 minutes, she was making parallels between For the Makers and a handful of other people she knew.” The companies don’t have a ton in common, “but both of our companies are about giving people tools to create something for themselves,” Covington says. “Mentors can use their experiences to frame your business in a unique way.”

And don’t worry about the relationship being too formal or structured. Gallop, like her mentees, is a busy entrepreneur. “Sadly, I cannot possibly mentor all the people who approach me asking me to be their mentor,” she says. “I mentor a small number of chosen startups on an ad hoc basis [for] sporadic, intensive hourlong discussions of a particular issue or consultation on a particular situation.”

Gallop’s advice for a great startup-mentor relationship: “Don’t just fall in love with someone’s reputation, perceived celebrity or name. Identify someone who could be directly relevant to what you want to do, or who is pursuing a similar vision. And someone who is likely to have the time and the inclination to help you.”

Slow and Steady Wins

And take it slow. “It’s like any other human relationship,” Gallop explains. “You need to have established a direct personal relationship and rapport with someone before you ask them to take the relationship to another level.”

The best mentor/mentee relationships are ones that are mutually beneficial. My mentee is a Jamaican entrepreneur who launched Study in Jamaica, a successful website that already ranks in the top 250 for traffic in her native county. I always get one or two takeaways from our monthly hourlong conversations. So if you’ve already hit phase two of the startup cycle, consider mentoring those just launching.

It could happen.

“The game has changed,” says Paul Kedrosky, a senior fellow at the Kauffman Foundation who’s focused on entrepreneurship, innovation and the future of risk capital. “It’s obvious to everyone in the industry that crowdfunding is no longer just a toy.”

For startups, it’s now a realistic option to traditional sources like first-tier VCs. And that could spell trouble for the guys on Sand Hill Road. “For the most part, VCs add very little value, so it’s not surprising that if you can get a high-liquidity, low-maintenance form of early-stage funding for your startup, that will pretty quickly push aside more traditional capital providers like bad VCs,” Kedrosky says.

Fred Wilson pointed out that if every American decided to allocate one percent of his or her liquid net worth to crowdfunding, that’d add up to $300 billion - 10 times the amount now sloshing around in the venture sector. And while the chance of that happening has been pooh-poohed by some observers, Kedrosky calls $300 billion “a credible number.”

Going Mainstream

Crowdfunding has yet to hit the mainstream, but it’s getting there. There are vehicles on the way that will help casual investors allocate a piece of their paycheck to startup ventures the same way they deduct now for a 401(k). “Then,” Kedrosky says, “this becomes a tsunami.”

But Kedrosky thinks it’d be “a disaster” if it happened. “It could end up destroying the marketplace. I love vandalism as much as the next punk, but I’m very leery of embracing the idea of even more money flowing into the venture industry. The problem fundamentally is subpar returns - and the reason for that is there’s already too much money in the industry.”

Back to Wilson’s point. What will happen if and when the crowdfunding fire hose gets turned to full blast? Will VCs be crowded out?

Some of them will.

If the market is made more liquid, bid-ask spreads will contract. Deals will be priced higher, returns will drop and the market will be an option for only the top players. Big-brand VC firms will survive but others will go the way of Palm - or be forced to become Series B and C investors.

Who Is This Good For?

So, more freewheeling crowdfunders and fewer meddlesome VCs. For startups, that might seem a positive trend.

Not so fast.

Crowdfunders are fickle. They may crawl all over you on a first date but not take your calls when it’s time for follow-on rounds. “Crowdfunding is great for the shiny new thing,” Kedrosky says. “But the acid test is, if you hit a speed wobble with your company, can you raise a subsequent round of funding? The early record on multiround financing is not good.”

VCs have noted this and tuned their pitches accordingly, telling startups that only they will be there in sickness and in health. “While VCs are not as good about sticking around in bad times as they claim they are,“ Kedrosky says, "they are still much better than crowdfunding seems to be.”

VCs - at least the good ones - won’t be going away. But Kedrovsky finds it entertaining to watch the industry confront the creative destruction that so many of its evangelists preach:

“The amusing part for me is that if you go back to orthodox disruptive-innovation thinking, which VCs love - the old Clay Christensen stuff - the hallmark of innovation is that incumbents dismiss it initially as a toy… Look how VCs have responded to crowdfunding. They call it a toy. They say, ‘Sure, it’s good for little lifestyle companies, but it’s not good for venture-type companies.’ It’s lovely how disruptive thinking has come back to bite them in the ass.”

Image courtesy of jan kranendonk / Shutterstock.com. 

Typically, the answer has been to award them significant chunks of the company in the form of stock and options. It’s not just greed. Sharing equity in your business early on can lead to complex problems as your company grows. Luckily, there are ways to motivate workers without giving away the store.

1. Show them you care. Tech entrepreneurs are notorious for their lack of social skills, so if you’ve got your head buried in your laptop all day, pull it out and spend some time with your team. Find out about the personal stuff. Ask what they like to do in their free time. (Not only will this help you better bond with your team, but it will also give you new ideas for how to motivate them.) Managing by walking around isn’t a quaint idea from the 1990s, and shouldn’t just be lip service.

2. Tailor your rewards. Not everyone is motivated by the same stuff. By finding out what your employees like to do, you can tailor how you reward them to match their interests. (And you lower the possibility of making an oafish mistake, like giving a recovering alcoholic a bottle of wine.) For example, if one of your guys is a surf nut, cut him slack to hit the waves early in the morning. If another employee loves baseball, tickets to the local team’s next game - and the afternoon off to attend it - could go a long way to keeping her revved up.

3. Give the gift of time. Employees at a growing tech startup don’t get much time off, so when you do hit some downtime, let your team take advantage of it. If everyone’s been crunching on a project all weekend, let them come in late on Monday. Finish a big job? Celebrate by sending everyone home early. Yes, they might be back working early the next morning, but they’ll be more refreshed.)

4. Get flexible. When you can, let your staff work from home, from Starbucks, from the beach or wherever. In the early stages of a startup, it does often help to all be in a room together, but when the project doesn’t call for that, be flexible. Even if you do need your entire team to work in one place, that place doesn’t have to be your company’s office. Sometimes you can get more out of people by changing the scenery. With Wi-Fi just about everywhere today, you may be able to work at your apartment’s pool, your favorite bar or a park.

5. Be understanding. If you’re going to make extraordinary demands of your team (and we all know you are), there will come a time when they crack. Learn to spot the signs that someone is about to go over the edge, and take steps to deal with the situation before it gets out of control. Whether a team member needs to vent, run out the door (literally) or just knock off for the day, let them do what they need to get back in the game.

6. Barter for stuff. Trade favors with other business owners you know to get perks for your team. For example, you might offer to update a spa’s website in return for them giving your team massages every Friday. Get creative.

7. Eat, drink and be merry. When all else fails, don’t underestimate the healing power of hanging out. No, it’s not free, but a little recreational togetherness is relatively cheap. Bring in pizza, have Friday keggers or head out for happy hour once in a while — on you. It’s an affordable investment in your employees’ sanity that will pay off in greater dedication and productivity. 

Image courtesy of Shutterstock.

Four of the top 10 spots go to companies that are heavily involved in Big Data: Cloudera, Palantir Technologies, Hortonworks and Splunk. Two others, Arista Networks and Nicira, are doing new things with networking and virtualization infrastructure. And then there are Box.net, Pinterest and Square, the mobile payment processor. Most of the companies are clustered in the Santa Clara area, with a few located in San Francisco.

LinkedIn did its analysis by tracking people "visiting profiles of employees looking for common connections, checking out LinkedIn Company Pages, and following companies using the LinkedIn Company Follow button." There aren't many surprises here; these are some of the hottest, best-known new companies in the Valley. If you're trying to hire engineers for your own startup, these companies are your competition. And of course, LinkedIn is looking to hire data scientists of its own. 

There are a lot of choices. The first major decision is geographical. Should you outsource locally, nationally or internationally?

My company, GrowBiz Media, has outsourced Web design and development, both internationally and locally. Believe me when I tell you each comes with its own set of pros and cons.

Here’s a quick overview:

Outsourcing Internationally

When most people think of outsourcing, they envision coders in Southeast Asia working into the wee hours of (our) night. Turns out that many factors can make global outsourcing more difficult and expensive than it appears to be at first glance.

Pros: Low cost is the primary reason most companies outsource overseas. The time difference can also be a plus: You can send your changes to your team at the end of your business day, and have the code ready when you wake up the next morning.

Cons: The old adage “you get what you pay for” often holds true. Managing people thousands of miles away is difficult at best, so when calculating costs, consider that you may need to pay someone to oversee your overseas contractors. Language or cultural barriers can add to the complexity, and different time zones can cause as many problems as they solve.

Outsourcing Nationally

Outsourcing IT within the U.S. is gaining steam. Often called rural sourcing or near-sourcing, the movement is driven partly by companies’ dissatisfaction with the quality of overseas workers and partly by a desire to bring jobs back to the U.S.

The International Association of Outsourcing Professionals named near-sourcing one of its top trends for 2012. In places like Georgia, North Carolina and Arkansas, skilled tech workers can be found for a fraction of what you’d pay in Silicon Valley or New York, according to Rural Sourcing Inc., which matches companies with workers in “second- and third-tier” cities nationwide.

Pros: Lack of cultural and language barriers make communicating with U.S. workers easier and more convenient. The time zone differential may be a slight benefit, depending on where your business and your contractors are located.

Cons: You’ll pay more for outsourcing within America than you would overseas, and if your outsourced team is across the country, meeting in person will still take time, effort and money. Be aware that some American contractors will subcontract some or all of your projects to overseas workers. This can be fine, particularly if they’re familiar with them and their work. But when this happened with one contractor we dealt with, the results were not positive.

Outsourcing Locally

After our negative experiences with outsourcing overseas, GrowBiz Media turned to a local Southern California business when it came time to rebuild our SmallBizDaily.com website.

Pros: Face time is the major advantage of working with a local company. While most of our communication still takes place by email and conference calls, when we undertake big projects or major changes, we can meet in person to brainstorm ideas and sketch out plans. Another advantage: If you do end up hiring full-time in the future, good contractors often turn into good employees.

Cons: By outsourcing to workers in your area, you’ll have to pay the going rate - which can wipe out most of the cost benefits. As with national contractors, some local firms may outsource all or part of your work overseas.

Key Questions

Since all three options come with pros and cons, how do you decide what’s best for your situation? Consider these issues:

Timeliness: Is this a rush project that simply can’t be late? If deadlines are essential, having the team accountable and close at hand could trump all other considerations.

Complexity: A simple project that doesn’t require much direction, has some “wiggle” time built into the schedule and has a bit of room for error may be most economically handled by an overseas team.

Personality: If you don’t have a problem with a more impersonal relationship with your team, overseas contractors could be fine for you. But if you’re a people person who needs face-to-face interaction, you may want to stick with local, or perhaps national, contractors.

Image courtesy of Shutterstock.

At a recent meeting in ReadWriteWeb’s San Francisco headquarters, new Go Daddy CEO Warren Adelman delighted in reeling off the company’s impressive numbers: almost $1.4 billion in sales, 53 million domains registered, 5 million websites hosted, and so on. Go Daddy is as big as the next eight competitors combined, Adleman said, and gets more than half of all new domain registrations.

But the company, which was bought by private equity firms for $2.25 billion last year has even bigger aspirations. “We don’t want to move away from that,” Adelman said, but “we think we can do more than serve that segment.”

Servers or Celebrities?

“People think we’re a bunch of guys down in Arizona” with domain names and Super Bowls ads, he said, but there are “sections of the site to address the needs of different communities… We have offerings for the tech community, for the developer community.”

Overcoming those perceptions among seasoned techies won’t be easy, though. Questions like “you’re still using Go Daddy?” are often posed to tech start ups. And really, it’s Go Daddy’s own fault.

No matter what its actual technology credentials, the company spent millions of dollars promoting Go Daddy Girls, not cloud infrastructure (4GH Cloud Hosting) or online storage. Even companies that use those services might think twice about explaining why to the CEO. And that’s especially true the larger, and more sophisticated the company. Go Daddy CEO Warren Adelman visits RWW HQ.

Adelman acknowledges “some amount of polarization” around the Go Daddy brand, but believes that the company’s scale more than makes up for any negative perceptions. Go Daddy is big enough to enjoy massive economies of scale, and to create a full suite of add-on products for all kinds of customers. Domian names, website hosting and site-building tools, SSL certificates, marketing tools like search engine optimization, search engine marketing, email marketing and social media. “It’s like selling hot dogs at the ballpark,” Adelman said. Sixty six percent of Go Daddy customers have a product in addition to a domain name, he said.

An App Threat?

Why the tech push now? Although Adelman says it kept growing through the recession, the reason for the push could be the gradual move to mobile apps instead of websites, a transition that threatens Go Daddy’s core business. But Adelman says he’s not worried. “The Web will die a slower death than predicted,” he said, adding that given the hype cycle and the rise of HTML5, it might not be long before you start hearing that “the App World is dead.”

Swapping Ideas, Not Spouses

First, let’s be clear. We’re not talking about sex. We’re talking about Founder Swap, a June 1 event in New York where teams from six different startups will get together, trade partners for a day and go home with an injection of fresh ideas. The tagline? “Like Wife Swap but for Founders. We want to get startups pregnant with new ideas.”

“Young teams who are working redline as hard as they can with just one or two other people, a little bit of fatigue can set in and you can get overfocused,” explains Jonathan Basker, VP of human resources at Betaworks and one of three people behind Founder Swap, along with Scroll Kit founders Kate Ray and Cody Brown. “Our goal is to disrupt that sequence and see what happens.”

Here’s what he hopes happens. Founders will soak up some objective perspective on their product and perhaps a little constructive criticism. And they’ll pick up practical advice - technical founders will glean tips from business-oriented founders and vice versa.

No Breakups Allowed

Here’s what he hopes doesn’t happen. Founders meet new people and fire their current partners. “That would be a horrifying result,” Basker says. “The idea is not to reformulate your team but to inform yourself about how you’re working. We’re not trying to be home wreckers here.”

The inaugural event will focus on software companies, to ensure participants have something in common. All six startups must have at least a product idea. Ideally, each team will consist of two or three people and will be pre-series-A, so no parental guidance from meddlesome VCs.

Founder Swap will decide who pairs off with whom. Couples will meet Thursday and spend Friday together. There will be no filming (though it’s easy to imagine how this might someday evolve into a reality show on Bravo).

“I would be ecstatic," Basker says, "if at the end of this, each team gets back together and says, ‘Wow, this was really cool,’ and feels energized by the event, if each one of these companies walks away with a new perspective or just one kernel of useful information they didn’t have before.”

Tip #1: Don’t get too full of yourself. “Show your parents that you have thought [your idea] through to the long term, not just what you hope happens in six months,” says Kelsey Meyer, Vice President of Digital Talent Agents. “Also, do not try to compare yourself to Facebook, Twitter or Instagram - those are the exceptions, not the rule, and parents know it.”

Tip #2: Do your homework. Scott Thompson left a comfortable career with a good salary and excellent health benefits to start a business 5,000 miles from home as part of the entrepreneurship program Start-Up Chile. “After their initial reaction of shock, sadness and worry, they quickly came around to being the #1 fans of my startup, Bungolow.com,” Thompson says. His parents provided expertise in graphic design, including helping design the company’s first logo. “Their support was influenced not only by unconditional love, but also the fact that it was clear I had done my homework, and that it was not just a spur-of-the-moment decision,” says Thompson. “I was thorough in explaining why I wanted to do it, and why this was the time to do it.”

Tip #3: See their perspective. “Until my third year of being self-employed, my parents - who are baby boomers - thought I was out of my mind,” says Faiyaz Farouk, whose company, S2 Leadership Consultants, advises businesses on working with Gen X and Gen Y employees. The strategy that won them over? “Understand and respect where they are coming from,” advises Farouk. “Use their values, and talk from their perspective, without losing your ground on your decision.”

Tip #4: Keep them in the loop. The concept for Eric Dresdale’s startup, a prepaid debit card launching in July, is all about seeking support from your family. “I wouldn’t have been able to launch this business without the help of my parents,” says Dresdale, Managing Member of Next Step Network. “They have supported the idea financially and emotionally from its inception.” Garnering their support required clearly outlining the business plan to them as if they weren’t parents, but investors. “I also keep them apprised weekly of headway being made with clients.”

Aron Susman, co-founder of TheSquareFoot Tip #5: Convince them of your passion. “My parents are in their mid-60s, and I believe with age comes an appreciation for life,” says Aron Susman, cofounder of TheSquareFoot, a site that helps small businesses find office space. “Even though I had spent five years at school to obtain my degrees, and my parents had sacrificed financially to make that happen, they knew that life is about the journey. They saw the passion I had for becoming an entrepreneur and wanted to support me in any way possible.”

Tip #6: Be completely honest. Seeing the hard work and dedication, Susman’s parents invested in TheSquareFoot about a year after the business began development. “Getting investment from family can change things very quickly,” Susman warns. “Make sure you have a strong enough relationship that this will not put on undue pressure. You must have ultimate trust between each other and talk through all the risks. Make sure they understand there’s a chance the investment won’t pan out. Lastly, make sure losing the money won’t impact their livelihoods or retirement.”

Wade Benz of USimprints.com

Tip #7: Show them what you bring to the table. When Wade Benz launched USimprints.com, an online provider of branded promotional products and imprinted giveaways, his parents not only let him live at home, but also let him work out of their basement, helped him with packing and shipping, and even financed most of the initial startup costs.

What convinced Benz’s dad, who had decades of experience in the industry, that his son could make a go of it? “He saw that I brought valuable qualities to the table,” says Benz. “My dad brought knowledge of our industry, initial contacts with vendors, some early customers and overall maturity. I brought a fresh perspective on the industry, forward thinking about where it was headed and an overall knowledge of technology, e-commerce and Internet marketing.” A year after launch, Benz’s father joined the company full time.

Tip #8: Explain your idea on their terms. “You have to instill confidence in them, not only that your idea is a good one, but also that you are capable of actually creating it, and convincing people to use it,” says Tashfeen Ekram, whose startup, SchedFull.com, helps physicians and other professionals fill cancelled appointments. “Selling it to them on their own terms is key. I had to explain the usefulness of the product from my father’s standpoint. We are trying to reduce wait times for doctors, and when he realized it could save him time and allow him to see his doctor sooner, he was sold [on its usefulness].”

Tip #9: Don’t gloss over potential problems. Ekram’s father is currently running his own startup, and has started other businesses in the past. This made winning parental support both easier - and harder - for Ekram. “My dad understood what it takes to be successful, and he knows that most startups fail, so I really needed to know what I was talking about,” says Ekram. When dealing with your parents, there’s no place to hide: “They know you very well,” says Ekram, “so you have to be honest about your shortcomings, where you might go wrong or potential problems in the business. My dad appreciated that, because someone who doesn’t have a good grasp of his shortcomings can never address them, and thus won’t realize when he is about to fail.”

Lead image courtesy of Shutterstock.

Hell, there are no rules here - we’re trying to accomplish something.
- Thomas Edison

Many people consider Edison America’s greatest inventor - ever. But he never had to deal with the reams of rules and regulations today’s startups need to heed just to stay out of trouble with federal and state governments.

Red tape is likely the last thing you want to think about when you’re in the throes of a startup, but there are some things you really need to consider:

Employees

Are you providing a safe working environment for your staff? Even if you’ve only got one employee, Occupational Safety and Health Administration (OSHA) regulations require you to make sure he or she operates in safe and healthful working conditions. If you have more than 10 employees, the requirements get a little tougher: For example, you now have to maintain specific records related to injuries and illnesses. The three most important parts of OSHA rules are:

1. All employees have access to your safety records.
2. Employers must provide personal protective equipment at no cost to their employees.
3. Manufacturers and importers of hazardous materials must be evaluated, and employees kept informed about the hazards.

Chances are these regs won’t affect startups like yours, but to be sure, you can ask OSHA to stop by your offices for a free evaluation and consultation. Check with your closest OSHA regional office.

Industry

Some industries have specific regulations you also need to follow. The federal government has more than 25 regulatory agencies with rules on what you can manufacture, how you should conduct your business, how you can advertise your products or services, and more. The Consumer Product Safety Commission and the Environmental Protection Agency are just two of the agencies that may have regulations affecting your business.

State and City Licenses and Permits

Depending on your industry, you may need specific business licenses and permits from your state or city. These vary depending on your location (and the cost varies, too). Lots of startups operate virtually these days, but does your city allow people to work from home? Zoning laws are created and regulated at the municipal level, so check with your city or town to make sure it’s legit to work out of your house or apartment.

Even if you operate a solo home-based business and use a post office box as your business address, you’ll need to register a street address where the majority of the business is operated and pay the fees to that city.

IRS Regulations

Finally, you can’t forget the Internal Revenue Service. Make sure you’re in compliance with the IRS and pay the proper business and employer taxes (if you have employees), or you may have an auditor knocking on your door.

Do you operate under a calendar or fiscal-year basis? What corporate structure (S corporation, LLC, etc.) did you choose? Did you get your Tax ID number or EIN number? If this all sounds like alphabet soup, check the IRS website for more information, then turn your books over to a trusted accountant to keep you in compliance. The IRS website also offers industry-specific tax information worth checking out.

Get Help

There are plenty of places where you can get help. Start at the top. Last year, the Obama administration created Business.USA.gov, a one-stop platform that helps small businesses get access to relevant government information. Search the site’s database by industry, then click on rules and you’ll find the agency guidelines that pertain to your business.

Once you’ve gathered the information online, make an appointment with a local agency such as your industry association, your local SCORE office or your nearest Small Business Development Center (SBDC). Their experts can help you comply with any pertinent business regulations, navigate any hurdles and fill out the required paperwork.

Just don’t expect any of this work to actually help your business succeed. That’s not how it works. All you can hope for is to keep the mountains of red tape and compliance issues from causing your company to fail.

The best way for startup founders to improve their chance of success is by learning to make better decisions. But if you want to make better decisions, you need better data. And that’s where Startup Compass comes in: It’s designed to help you benchmark your startup’s performance against thousands of others to identify what you’re doing right and what you need to improve.

Startup Compass collects data from tens of thousands of startups around the world. It collects lots of data, then creates best practices, recommendations and benchmarks to help entrepreneurs make better product and business decisions.

Big Data for Small Companies

“This is a big-data approach to startup success,” says Startup Compass co-founder and serial entrepreneur Bjoern Lasse Herrmann. “Big companies have analysts to make sense of their data, and executives can make decisions based on that data. But startups don’t have any access to that kind of analytics. We wanted to put analysts in the cloud for startups.”

“Startups can learn three key things,” Herrmann says. “First, which key performance indicators actually matter. Most startups don’t even know which KPIs they should track or why they should track them. Second, they learn how their KPIs compare to other companies’ KPIs so they will know if they’re on the right track. See, for example, their customer acquisition costs. The third thing they learn is what actions they need to be taking. We help businesses take the next steps.”

Startup Compass calls its approach “cracking the code of innovation.” We call it “how not to kill your startup.”

The 5 don'ts

The real value of Startup Compass is comparing your company to others like it, but Startup Compass also summarizes its findings in its Startup Genome report. Here are nuggets of wisdom from the first Startup Genome report, five things not to do:

1. Don’t scale too early. This is the No. 1 cause of startup failure. Startup Compass has found that 70% of startups crash because they scale prematurely.

2. Don’t work part time. Sleepy? Get used to it. People who work full time on their startups raise an average of 24 times more funding than those who work part time.

3. Don’t go it alone. Maybe you are the smartest guy in the room. But solo founders raise less than half the money that two to three co-founders raise.

4. Don’t ignore customers. Yes, they’re annoying. (What do they know?) But startups that track customer metrics have 400% more user growth.

5. Don’t forget about the technology. Startups without a tech-oriented co-founder are twice as likely to scale prematurely and have three to five times less user growth.

If you want advice on an ongoing basis, you can join Startup Compass and in exchange for data on your startup, the company will benchmark your startup monthly, comparing you to similar outfits, so you can keep your priorities in line.

Startup Compass has 17,000 companies now using the service for things like checking whether their churn rate is too high or their retention rate is too low - or if they should be spending more money on customer acquisition.

“We have a number of companies that have gone through the process and tell us they used our product and realized they were falling behind on this or that metric and were able to fix those things and adjust accordingly. As a result they were better able to acquire customers in the long run and didn’t waste more money on things that were not productive.”

Images courtesy of Shutterstock.

On the other hand, operating virtually is no panacea. Before you make the virtual leap, you need to figure out exactly what working virtually means to your business.

The concept of virtual work has many names, from telecommuting and teleworking to distributed companies and remote workers. And virtual companies can be structured in several ways:

1. Lead a distributed workforce, consisting of full- and part-time employees, independent contractors or some combination, all working out of their respective homes.

2. Operate out of an office space (either your own or shared). You allow your staff to split their time between working at the office and working at home.

3. Be the only actual employee of your company. When you need something done, you outsource it to freelancers and independent contractors.

Thanks to improvements in broadband and collaboration technology, the ranks of virtual workers are swelling. According to the latest (albeit a little dated) numbers from the Bureau of Labor Statistics, in 2010:

• 64.2% of self-employed and contract employees worked at home

• 25.8% of part-time employees worked from their homes.

Good for young and old companies

While it obviously makes sense for brand-new startups to begin virtually, the concept also works for existing startups that began life in more traditional offices. My own company - GrowBiz Media - did just that. We leased space for about 18 months before realizing we could save many thousands of dollars by working from our homes.

Even established businesses can benefit from virtual arrangements. Matthew Goldstein founded Idea Consulting about 12 years ago, but the company went virtual about seven months ago. The firm’s 53 freelancers and part-timers are now happily collaborating on a huge project, the EuraMedia 2012 summit, while scattered across the United States, the United Kingdom and Russia.

But Goldstein admits: “We are still making mistakes.” His biggest hurdle was finding high-quality virtual workers.“The majority of the people we found were not qualified and overcharged,” he explains.

Goldstein also found that, despite what the virtual job placement agencies he worked with (Odesk and Elance) promised, “There is very little accountability" when it comes to contractors. You may not be satisfied with the completed work, but since the placement companies get a commission, “they tend to always side with the contractor.”

So how can you make virtual work fly at your company?

“You must put in systems of accountability that replicate those of a brick and mortar office,” advises Goldstein. “There needs to be constant monitoring, incentives and penalties, and strict management.” Also key is finding the right technology to make your project work. “Collaborative sites like Basecamp are great for helping to engage workers and get them to collaborate,” says Goldstein.

Ask the Expert

Sara Sutton Fell, CEO and founder of FlexJobs, a website for flexible jobs, offers more tips for virtual startups:

• Plan ahead. If you want to take a physical business virtual, you first have to think about all the facets of your business and how you envision them continuing to run virtually. What will this change mean for outside stakeholders — clients and partners? How can you make sure the transition goes smoothly for everyone? Sometimes the best way to go virtual is gradually, transitioning existing staff to home offices [or adding contractors] in small increments, so that your clients and partners barely notice the changes.

• Think about the technologies (computers, software, services, phones, etc.) that are essential for working virtually. Security and usability are two big concerns for teleworkers. You want to make sure everyone can access important information securely and easily, using reliable technology. Sometimes [usually] your workers' home computers just won’t cut it. If possible, provide remote employees with a complete suite of required hardware, such as laptops, monitors, scanner/copiers, webcams, microphones and more. If you use independent contractors, don’t give them equipment, it can raise questions with the IRS.

• Consider communication services. When you’re managing a remote team, it’s vitally important to keep everyone communicating with each other. This helps keep people on task, reduces feelings of isolation and boosts engagement. Employing a wide range of collaboration tools like Yammer, instant messaging (IM), email, Join.Me and Skype can help keep everyone in the loop.

Technology isn’t everything. Schedule regular meetings (at least weekly). It’s also helpful to create channels and leave time for virtual water-cooler conversations to let the team connect and build camaraderie and trust informally.

No matter what you do, don’t expect an overnight transition. “Working virtually is not easy,“” Goldstein says, “and you must be ready to put aside at least three months to track people and test them out before you can count on truly developing a team.”

Image courtesy of Shutterstock.

A lot of founders out there are looking for their significant others. No, we’re not talking about love among the cubicles. We mean the search for a co-founder - someone to share your dreams, frustrations and late-night microwave popcorn.

If you’re a single founder, this is crucial. You need an Allen to your Gates, a Brin to your Page, because “starting a startup is too hard for one person,” notes startup guru and Y Combinator co-founder Paul Graham. He lists going solo as the leading cause of startup failure.

But never fear. Founder Dating is here. It’s a company that connects entrepreneurs.

It's Not Just About Your Contact List

We know what you’re thinking. Why would you need such a service? You’ve already got lots of contacts in your iPhone. But that’s exactly why, says founder Jessica Alter: “You know a lot of people like you. But those are not the best people to start a company with you. You want people with complementary skill sets, so you get more done.”

Smart entrepreneurs know this. Founder Dating’s first mixer, at a bar in Palo Alto in 2009, attracted people like Adbrite founder Philip Kaplan, LiveOps founder Patrick McKenna, and Geni/Yammer/Xoom/Eventbrite founder Alan Braverman. Alter thinks at least a dozen companies have been launched by Founder Dating members since then.

“The criticism we get a lot is, ‘Oh, that’s just not how co-founders meet,’” she says. “But people said the same thing 10 years ago about online dating: ‘You don’t meet your significant other online.’ Till now, co-founders have not found each other online, because this kind of service wasn’t available.”

In addition to its events - in the Bay Area, New York, Boston, Seattle, Los Angeles and Austin - Founder Dating has a site where members can search for other entrepreneurs by location, skills and interests. To join, you have to answer a bunch of questions about yourself and give references. And they don’t take just anybody: Only 55 out of 500 applicants were accepted for a San Francisco mixer earlier this year.

Craigslist Casual Encounters, this is not. “We screen very closely so we maintain a high quality of people on the site,” Alter says. “They’re coming out of great companies and great schools. They have high intent, and they’re ready to jump now.”

If you’re also ready to take the leap, check it out. You don’t even need your own idea. “We prefer people who don’t come in with an idea, because ideas change,” says Alter.

She describes a typical Founder Dater this way: “You haven’t started meaningful work on anything yet, you’re probably still at Google or Facebook, but you’re ready to leave and get something started.”

You just need someone to start it with.

Butterfield and Fake photo via Flickr.

Yesterday on Salon.com, those ideas came under attack as an Occupy imposter - instead of representing American’s youth, the post contended, they’re shills for “the most noxious aspects of the bipartisan status quo.” Gerber can defend himself, but in criticizing him, the authors seem to be condemning entrepreneurship. And that needs defending.

To give them their due, Salon authors Daniel Denvir and Adam Goldstein acknowledge, “There is certainly a place for entrepreneurialism,” and that “Research shows that start-up cultures are important for spurring innovation in technological industries.” But they have three problems with focusing on technology startups:

1. “To think that making cheap capital available to a young entrepreneurial elite will solve youth joblessness is dead wrong.”
2. “The idea that the jobs crisis in this country can be solved by turning everyone into an entrepreneur is just as wrongheaded as the notion that sending everyone to college will result in widespread gainful employment.”
3. “It is a big mistake to think that the tech sector is a panacea for the jobs crisis.”

Startups aren’t just tech

I too have a problem with usurping the word “startup” to refer only to new tech businesses. I debated this point last fall with someone from the Startup Weekend organization. The ability to code does not equal the ability to start, run and scale a business.

That said, I don’t think the authors fully understand the promise of entrepreneurship. I don’t believe any rational entrepreneurial advocate believes that everyone should be, or even can be, an entrepreneur. That would call for a vision of millions of solo businesses run by entrepreneurs and staffed by no one. That's not a sustainable business model by anyone’s measure.

But let’s not dismiss the fact that without startups (of all types), economies stagnate. The authors mention the oft-cited stat that “the majority” of startups fail within five years. This may or may not be true; we do a pretty lousy job of actually tracking business creation and failure in this country. But we do know (this became clear in the 1990s, the decade that many recall as the golden age of entrepreneurship) that new businesses create the vast majority of new American jobs and spark a lot of innovation.

If we all agree there’s a problem with young people finding jobs, wouldn’t it make sense to encourage startups that create jobs as they grow? The authors seems to think that startups are the province of what they term the “young entrepreneurial elite,” as if they believe that only the privileged can start businesses.

Startups do create opportunity

But what’s wrong with showing American’s young people that entrepreneurship can indeed be a way out of poverty? Isn’t it true that more than a few entrepreneurial empires were built by folks armed with nothing but an idea, a goal and a healthy dose of determination?

“Historically,” Gerber says, “startups create opportunities, jobs, innovation and wealth.” Indeed, entrepreneurship has long been the refuge of the disenfranchised. Immigrants, women and minorities have often turned to entrepreneurship because “Main Street” was more welcoming than big business.

Embracing entrepreneurship is not about supporting or rejecting Tea Party or Occupy Wall Street principles. It’s not an inherently political act, nor is it meant to be.

Instead, it’s about encouraging self-determination. It’s about building a path to the American Dream. I can’t quibble with that.

Disclosure: Scott Gerber has written a post for ReadWriteWeb’s Start Channel featuring insights from the Young Entrepreneurs Council: 8 Hard-Earned Insights Into Raising Startup Capital

Image courtesy of Shutterstock.

I have had the opportunity to mentor quite a few startup companies in the St. Louis region over the past several years, and it is also satisfying to see the widening of the entrepreneurial community in St. Louis. We just had a business plan competition (the Arch Grants) which gave away grants of $50k to 15 different startups, a few of whom are in the process of moving into town (as part of the deal to take the dough). This is just one of numerous ways startups can raise funds here, as Jay DeLong shows in this video.

The common theme that I keep coming back to is that taking care of the basics of business isn’t always easy. What do I mean by basics? Things like pricing, understanding your market, and making sure that your niche is as narrow as possible. Let me give you a few examples.

Not a Charity

One services firm I know was charging too little. In fact, after getting some mentoring, the company doubled its rates! Figuring out what you charge isn’t easy: I wrestle with this all the time, particularly in today's down economy. My own rates have fluctuated over the 20 years that I have been in business, and today I still marvel at firms that want me to do work for them at bargain-basement rates or, better yet, for free for “the exposure.” If I wanted exposure, I would go hiking in the mountains. I keep telling folks that I am not a charitable organization; I work for a living, and so should you.

Yes, there are times when I will work for free, but only under very structured and controlled circumstances. For example, I will speak at local community-based organizations’ conferences. A speaker friend I know books up to one pro bono event each month and puts it on her calendar. I like that method; you treat these freebies with the same value as paying gigs. She makes her money selling her books and consulting services from these events.

Sure, setting the right price is more art than science, but you do have to spend some time looking at your competitors and understanding that there is an implicit value in your rate. If you undercharge, you will be undervalued.

If you need help with your pricing, spend time doing testing; see what you can get at different prices from different clients. While this isn’t very scientific, it should give you an idea of how high your should (usually) raise your rates.

Finding Your Niche

Do you really have the right niche for your product or services? One software firm I work with has a very narrow niche for its product, and has done well continuing to focus on what people in that niche need.

But what happens if your niche is evolving? You have to evolve with it.

Typically, startups want to continually find a narrower niche, so they can become the dominant player in that niche. Many new ventures make the mistake of going too wide rather than deep; then you are in different markets with limited resources for each.

The term du jour is “pivot” (which used to mean solving a set of linear equations back when I was in grad school), describing the idea of refocusing your startup business as conditions change and you track your progress. Pivoting gives the impression that your original idea wasn’t sound. Instead, I like to suggest constantly refining your offerings.

Finally, once you establish the right price and the right niche, you need to find the right market for your goods and services. Another firm I know was focused on college-age young adults. When it developed a second service, it designed the new offering around this audience as well. College kids are customers who the company knows and understand. The idea is to leverage their existing expertise, not to try to be all things to all ages.

That kind of focus on business basics is a valuable lesson for any startup.

A Vocational School for Programmers

San Francisco-based Developer Boot Camp was an idea that started with a friend in need. Last November, a friend of Shereef Bishay was stuck in a dead end job as an administrator. He wanted to help, so he suggested his friend learn to code. 

“He lost a bet to me and owed me some money and I told him, 'hey, go teach yourself Ruby On Rails. You are a developer and you don't know it,'” Bishay said.

That led to a post on Hacker News offering to teach people how to develop in Ruby. Bishay would charge tuition but would refund it if the students got jobs as developers and he earned a recruitment fee from the hiring company. 

So began Developer Boot Camp. 

The initial class, taught mostly by Bishay and a group of volunteers, produced 21 students, 15 of whom got job offers (with an average starting salary of $79,000) as developers at the end of the program. Bishay now has a full summer class of 40 students and is taking applications for the fall. The program lasts 10 weeks and has tuition of $12,000. 

Wait. $12,000? To learn Ruby in a relatively short program with no official certification? That seems steep, especially with programs like Codecademy available for free online and other programs like Boston Startup School free for students that are accepted. 

Bishay said that the ability to get a job and become a developer is worth the expense. For the next two sessions, if students get a job and Bishay gets a recruitment fee, he will refund $5,000 of the tuition. If students don't get a job or there is no recruitment fee for the job they do get, Bishay keeps all of the tuition. 

“Right now it is a huge opportunity and it is going to be for the next decade. That is why I can afford to be so cheap... If 90% of my graduates are getting job, it means that tuition, it is nothing, right? Compare it to college. This is why people go to college, so they can get jobs. Then they leave $150,000 in debt and they don't get a job,” Bishsay said. 

Pay $12,000 to skip college and go straight to being a developer? If it gets you a job, it is justified. Right? 

Perhaps. At the end of the Developer Bootcamp’s spring class, its “career day” attracted 30 companies to interview the 20 students. That's a good ratio.

The initial class included one teenager, 10 people in their 20s, seven people in their 30s and two in their 40s (one person dropped out). The question is whether it is more effective to spend the money to gain entry-level employment as a Ruby developer where you can learn other software development skills on the job - or to go for an academic degree that may or may not set the student up for a lifetime of success. And vocational schools in other fields - for example, learning how to be a chef - often cost a lot more than $12,000. 

This is not the first time a Silicon Valley entrepreneur has advocated learning to code as opposed to going to college. A year ago, PayPal co-founder and serial entrepreneur Peter Thiel created the “Thiel Foundation” to give $100,000 to 20 people under the age of 20 to start their own companies. There is also Chicago-based Code Academy (not to be confused with Codecademy, the free online program to learn the rudiments of coding) that teaches both coding skills and entrepreneurship in a three-month program. 

Source: Dev Bootcamp Spring 2012 Student Exit Survey

Teaching People how to be Programmers

From a high-level perspective, Bishay just wants to teach people how to program. “I appreciate that the tech companies are hiring and there is a need, but that is not what inspires me. That just helps make it a business,” Bishay said. 

“What it was born from was I love my friend and I thought he should be a developer and I love my life as a developer. It is an awesome thing to be and I think everybody should learn to code, it is the new literacy,” Bishay said. He likens software programming to reading and writing 300 years ago, when only a few people could do it. He predicts that those that do not know how to code will soon be in the same position as peasants who could not read or write. “Software is eating the whole world and in 10 or 20 years, if you don't know how to program it [will be] like 50 years ago not knowing how to read and write. People need to do this,” Bishay said. 

Bishay also wants to dispel the myth that software engineers are some type of super people. “I think there is a myth that has been perpetuated. The myth goes something like this: Only a fraction of humanity was born with the genetic makeup to become developers. This is hard, complicated stuff and is not for the faint of heart and you need to be a special, special person to do it. People do not think that they will become programmers. It is something that other people do that are more special than them,” Bishay said. 

As Codecademy proves, anybody can learn to be a programmer. It does not take an IQ of 170 to learn Ruby On Rails. As for whether shelling out $12,000 for a 10-week programming program is a good idea, that probably depends on an individual's situation and their perspective on life and employment. And it could be a good way for entrepreneurs to learn enough coding skills to satisfy investors and evaluate programming talent. It certainly is not for everybody.

Top image courtesy of Shutterstock