photo credit: Arthur40A

Data of all kind is being increasingly accumulated on the web by millions of people who are embracing ‘technology’ and new style of working.

Unlimited data is virtually stored on the internet and with the rise of Web 2.0 services such as social networking, blogging, cloud computing etc companies have started to struggle in coping up with costly and complex networks of server computers.

Many tech startup founders believe that they have ‘almost’ reached breaking point. Companies don’t really have the money to keep buying servers, hire people to manage them or build huge facilities to keep, power and cool them.

Startup companies have found out ways to deal with this issue. Server efficiency has definitely and massively increased with virtualization of data but tech companies are still finding ways to make this better. Various methods are adopted by tech companies to reduce the number of servers and increase their efficiency. For example; using flash memory instead of traditional spinning (the way songs are stored in iPods) is one of the methods used by Fusion-io Inc

While some companies focus on server efficiency, others concentrate on networking gears that moves data from one machine to another. Datacenters need better quality and faster networks which can handle over-burdened servers.

Companies are also looking out for ways on how to structure the vast amount of data and figuring out ways in which they can used more effectively by businesses and consumers. Restructuring data, providing information and changing the database architecture is the next target market for tech startups.

For more information on how startups are coping up and taking advantage of the data flood we suggest you read this post on Wall Street Journal

Azul Systems Inc., No. 6, and Schooner Information Technology Inc., No. 34, build specialized servers for specific datacenter software programs, which they say perform significantly better than general-purpose servers.

photo credit: woodleywonderworks

Entrepreneurs (most of them) see insurance as a ‘cost’ that you can get away with. Let me remind them – insurance is an investment, not a cost for a startup.

Future is uncertain, and so are the associated risks. Businesses can’t predict a ‘disaster’. May be these risks are small or even affordable, but there is a good chance you are underestimating them. The chances of your business catching fire or getting hit by a flood are low, but can you imagine the disruption that it may cause?

A criminal act, calamity or anything minor can cause major disruption. Entrepreneurs leave the insurance phase for later, but I would suggest getting your startup insured as soon as your business is launched.

Many clients also ask for insurance details before they are prepared to do business with you. Public liability is important for many clients. It also helps you build credibility.

For more information on this, please visit:
http://www.startups.co.uk/6678842907520208545/why-you-need-insurance.html

Despite not being able to trade, you will still have to pay your staff, rent and other costs. You could lose a very significant amount of business or incur heavy costs while attempting to maintain it.

photo credit: johnxlewis

Mr. Kevin Rose created Digg.com – a user driven social content website that attracts 38 million visitors each month. After you submit content to the site, other people read your submission and “Digg” what they like best. If your story receives the most Diggs, it’s promoted to the home page for other visitors to see – a unique concept which caused a revolution in social media.

Digg.com was launched in 2004 and has been a successful in luring millions of visitors. But achieving all this wasn’t as easy. Kevin Rose had a tough time launching Digg.com – a once upon a time ‘startup’.

Kevin Rose worked for a television company and worked on Digg in his spare time to keep costs down. He says “If you are really passionate about something, it is possible to work a fulltime day job and have that side project, but be prepared to make sacrifices”.

At some point net entrepreneurs will have to decide between quitting their jobs and committing to their ventures, but the longer they can work without taking help from investors, the more equity they will maintain in their start-ups.

Some other suggestions for startups from Mr. Kevin are:

•Dispensing with an office – Digg didn’t have one for 6 months
•Renting and not buying server capacity for testing
•Skipping expensive conferences and networking at after-conference parties instead
•Not to design too many features in your startup product initially
•Hiring people from the start so they can see the big picture right from the beginning
•Avoid taking money from unknowledgeable ‘dumb investors

Mr. Kevin also mentions that being worried, tensed and hyperactive about your startup product is perfectly alright. He also had a stressful time after Digg’s launch, ensuring the site wasn’t hacked or taken over by spammers – “it was really scary. I can remember waking up early in the morning because I didn’t know what was going to be on the homepage.”

A lot of advice for startups from the founder of Digg.com himself

For more details visit: http://www.stuff.co.nz/technology/digital-living/3358151/Digg-com-founder-boosts-startups
 

photo credit: woodleywonderworks

So you create a Facebook Fan Page and have 200,000 fans in two weeks. How do you get the benefit out of this? Well this is a 100 percent opportunity to become an ‘entrepreneur’ (in good faith).

The dilemma is – can a famous Facebook page become a real startup?

We have two kinds of people here;

1.Intentional – who form a Facebook page or open an account with Twitter before launching a website (bona fide startup.

2.Unintentional – who form a Facebook page, get massive number of fans and then decide to launch a website with the same idea

In both cases, the biggest question is whether the popularity of a Facebook Page can be easily harnessed to build a standalone website. The obvious advantage is that Facebook has a huge number of users who are very active (Trust me – Facebook is extremely engaging). If a user becomes a fan of your page, then updates you post on your page will automatically show up in the user’s profile. Building an audience through Facebook is comparatively easier.

Now the problem is that users might be reluctant to visit your website when they can get all updates from Facebook (user friction)

It will be a long way before a Facebook page can turn in to a sustainable and profitable business.

Econsultancy explains the topic elaborately in this post by citing an example of Secret London

As a standalone website, Secret London will have to convince its users to visit and use yet another website. That means far more

PS: My friend launched a Facebook Fan Page yesterday and has above 300 fans already – she is already thinking on the same line

photo credit: Torley

Sooner or later, any business or startup needs to refine/reshape its client base for one of the following reasons:

• To part with low-profit customers – proactive
• To part with customers whose demands don’t fit the company policies and damage profitability and morale – reactive

In some scenarios parting becomes necessary and the difficult part is that it requires a lot of effort and finesse. Here are a few tips on how to manage it:

Identify the ‘vital’ customers - Follow the Pareto Principle (80/20 rule). In business, 20 percent of the customers account for 80 percent of the sales, while another 20 percent account for 80 percent problems. Identify the profitable 20 percent for your business. For every minute you put on solving a problem of the costly ones, spend four minutes taking care of the profitable ones.

Get Proactive - Define the customers that cause your startup time and profitability. Solution is to keep them satisfied and less costly is by revising cost and services.

Get Reactive (if you need to) - If you think a customer is causing serious damage to your startup and the costs exceed profitability, then it is time to part ways. Tip here listen carefully, don’t get defensive and try reaching on an agreement (If possible)

As a startup, you should try and identify both kind of customers and try your best to keep them satisfied. If for some reason (genuine ones) a customer is causing more damage than benefit, it is definitely time to part ways.

For more information on this we suggest you visit:
http://www.entrepreneur.com/sales/customerservice/article204926.html

Follow up. It's important to keep in touch to see that the referral worked out. Your aim here is twofold: to help the customer and to avoid any sense of abandonment that could lead to negative reviews of your business.

photo credit: liewcf

The post is a gist of the speech by Jay Jamison discussed in his blog leaving the flock

At an early stage all startups are usually advised to focus on building a great product/service and getting an audience. And then revenue will flow automatically. How right is this concept? Is it advisable not to think about the revenue too early in the life of a startup?

It is extremely important to focus on your idea and building something people want, but at the same time thinking about the revenue model (at least a bit) at an early stage is recommended as well. Don’t divert your attention from the main goal since a great product is the lifeline of a startup. But it is also advisable to at least have a revenue model which you can always change it later on. Don’t rush into monetizing though, monetize when it makes sense.

A startup can have various kinds of business models, the popular ones being;

Figure it Out Later/ Ads (Google, Twitter)
Market Maker (Paypal, Ebay)
Freemium or Subscription (Animoto, Salesforce.com)
Virtual Goods (Facebook applications)
Price Per Use or Copy (MS Office)

Another important suggestion for startups is – know your industry model inside out. It is very important to analyze the industry. Ask tons of questions and connect with customers and market. Build a belief that your revenue model will work in the industry model.

I’ll talk about my thoughts on types of revenue models, a sort of revenue model 101.  Nothing too revolutionary here, but hopefully a useful primer if you’ve not thought through a business model before

photo credit: Marco Bellucci

There are a few ‘best’ questions related to startups which pop up in our mind now and then. Questions such as - when is the best time to startup? Which sector is the best to startup in? Which is best - funding through revenues or investors? In this post we attempt to answer these questions precisely. The post is inspired by a very good article I came across recently.

The Best Time
Anytime is a good time to startup with a slight tilt towards starting up during a recession. And why is that? That is because if you survive turbulent times then you definitely learn how to manage a business given any other time or scenario. The tough times teach you. On the contrary if your startup has flourished because of the boom period then it will be difficult for you to sustain in times of drought.

What do GE, Disney, HP and Microsoft all have in common? They were all startups that took off the ground during steep declines in the U.S economy.

The Best Sector
If we take a close look at all companies today, we will find out most of the companies started as outliers (extreme deviation from what their original idea was) , and then with time grew in mass and had a bunch of companies following them to form a so called ‘best sector’. Was there an aircraft manufacturing sector before a Boeing? Not really. So the tip here is not to worry about the sector, just do your business where you have a sustainable competitive advantage in what you’re offering.

Investors
Always keep in mind that investors have different motivations from entrepreneurs. As an entrepreneur, you want to build a company over a long term and as an investor, you want to exit with a good value over the next 7 years (entrepreneurial investors are really rare to find).

Your first option should be getting your funding from customers (revenues i.e.) And if you need outside investors then keep in mind the time frame in which you have to generate real value and a ground-breaking idea that will get you an actual investment. And of course, shape your pitch according to different investors – be a good marketer.

photo credit: striatic

I will first start by explaining what a ‘Crocodile Salesman’ exactly means – a person who doesn’t listen, only talks (sells). Big mouth and no ears, they’re people who are always (mostly) talking. Perhaps they have the best product/service to offer, but only pitching without listening won’t do them any good.

Mark Suster explains the ‘Crocodile Salesman’ in three scenarios in his recent post. Here is a brief outline of what he had to say:

1.   When You are Selling

As a startup entrepreneur ‘selling’ starts coming to you naturally. Entrepreneurs are so engrossed in promoting their product/service that listening to others becomes practically impossible. Startup founders are in sales mode from the launch day.

A humble advice to all startup entrepreneurs here is to ‘listen’ and understand. Everyone understands you have something great to offer, but blatantly pitching without listening can be very harmful. Recognize a problem and offer a solution, don’t keep offering solutions to problems you don’t even know about. Crocodile sales are seldom productive. They just make you sound desperate.

2.   When Hiring Sales People

It’s the time when your startup decides to hire a sales person. Beware of the crocodile salesmen in such a scenario. How to identify them? A most common trait among these people is that they keep talking about themselves and their achievements for what may seem like ages. More than wanting to know about their role, they will be busy bragging about how good they are. The interview remains one sided – such people can’t encourage discussions. They may be really good but not apt for a sales position in a startup.

3.    When Pitching a VC

Raising money for your startup is definitely selling your idea. But also make sure you research your idea, build rapport and credibility and understand what the VC has to say. Avoid being a crocodile salesman.

I know because many entrepreneurs I spend time with I can tell are in their own brains when we’re meeting rather than trying to understand what my position is.

photo credit: billaday

The Wikipedia definition of a Term sheet – a bullet-point document outlining the material terms and conditions of a business agreement

It can be described as a non- binding document (like a Letter of Intent) which records two or more parties’ intentions to enter into a future agreement.

Venture Capitalists (VCs) backing out of a term sheet agreement for any reason can be very harmful to a company’s reputation.

If the VC has agreed on the conditions of a term sheet earlier, and then for some reason has backed out, then it’s not his fault. The term sheet by no means is legally binding upon any party involved in the contract.

VCs generally have valid reasons before they decide to back out from investing. Any void term sheet can be devastating for a startup company. If one VC backs out of an offer, then other ‘potential investors’ will look at a startup suspiciously and raising investment will become difficult.

Just remember – be diligent, don’t over promise and NEVER forget that a term sheet is not legally binding.

Read the following articles for a greater insight on the matter:
http://www.readwriteweb.com/start/2010/02/how-your-term-sheet-affects-yo.php
http://cdixon.org/2010/02/03/backing-out-of-a-term-sheet/

It was at Bessemer that I learned you never back out on a term sheet except in cases of fraud etc. I never saw them back out on one nor have I heard of them doing so

photo credit: Jakob Montrasio

Considering the recent world scenario, we think of China either when Copenhagen Climatic issues come up or its recent tiff with Google regarding hacking and censorship. And rightly I believe. Keeping all the issues behind, China still recorded a magnificent growth recently.

An American Entrepreneur in China (Calvin Chin) wrote a guest post in TechCrunch about the startup Culture in China. He recently also attended the World Economic Summit in Davos (Switzerland).

Calvin Chin talks about how the Chinese Government has put stability on the top – with the goal of lifting millions of people out of poverty (and yes at the cost of freedom of information). He believes that in China emphasis is laid on stability which allows big decisions to be made quickly.  

Many tech startups in China know that the stability of the government is paramount for economic growth (despite the freedom to operate is limited). As soon as the government legislation changes, they don’t sit and whine but work towards doing the best they can in the existing framework. For example; when the government decides to censure microblogging sites, startups use the existing infrastructure to set up a microblogging site that screen Tweets. The lesson here is that as a startup founder – you don’t have the time to sit and cry over spilled beans but instead react to the situation by taking full advantage of what you have.

There are many lessons a startup can learn from startups operating in china. The article on TechCrunch provides a great insight to this matter.

The thing is while the majority of Chinese netizens really don’t care that much about what’s going on outside of China, the ones who do care, people who would start companies, people who want international news, all know workarounds to use services they like or read about sensitive topics from other perspectives