My predictions My thoughts and predictions on technology and business, and sometimes strong ones at that

I’ve learned a great deal since being out in the valley, first, is the confirmation that I do love the atmosphere. Second that I really miss the fall, but more importantly I’ve learned a lot that I feel is useful in a startup environment. The startup environment and business model is a very unique one, especially in recent years. It seems to not require a business model to get someone just to give you $10 million and hope you come out with one at some point. And in some cases it works, I mean it did for google, but well the failure stories are a lot more abudant than the success ones.

Here’s a quick run down of how I think one can build a successful startup in any economy, and why I feel our current state is prime for someone following these steps.

1. Have a business model. Yeah, it’s less glamorous that a facebook that has millions of people log on to it each hour. Take for example the guys at 37 signals, they’re probably happy to get a million uniques in a month, or perhaps even a year. But per employee, per their cost, their revenues are at least 10x if not 100x of facebook’s. And they most likely see that in revenue per employee as well. Why is this the case? Simple put, they have a business model. They have some product they build and people want it, not want it in the sense that they will spend hours of time aimlessly using it if its free and convenient. It accomplishes some actual goal, and saves people time and makes their lives easier. Oh and something I’ve probably said too many times on here, but ad’s isn’t a business model, unless your specifically an ad company.

2. Get competent employees, I want to even take this a step further and say to get employees that believe in the technology but also in the business. Its one thing when your at a large company to have someone that’s extremely specialized. But at a startup everyone wears a variety of hats. Your secretary could land a big lead on a sale, your intern developer could come up with your future marketing slogan, and because of this everyone you bring on board needs to be fully on board with every aspect of your business. If you’re growing slower than you hoped it’s fine, and worth it to be short rather than over inflated.

3. Part of the reason you’d rather be short than inflated is you don’t want to take on capital. To quote someone else I’ve recently come into contact with, ‘you want to get off the tit as fast as possible’. To give a little more explanation, most startups take sizable investments from VC’s or other parties to get going. The problem here is that you then have to answer to them, if you’re the one with the idea, with the vision, why would you want to give up any control of that. And the fact is you shouldn’t, going back to point 1 and 2, if you have the business model it shouldn’t be long before you see revenue, and if all your employees believe in the company, they wont expect a high cushy salary, they’ll take ownership in the company as part of their compensation.

4. Keep your employees happy, the easiest way to do this is pizza and beer. It’s simple, but works. If you have happy employees enjoying what they do they’ll work harder and longer. The smaller you are the more poisonous it is to have employees that don’t fit in and embrace your culture. Sure diversity can be a good thing, and you do need some balance of it. But more than that you don’t want to ruin the atmosphere and comraderier that comes along with a startup. In addition to keeping your employees happy those small things help, pizza and beer for 20 to get an extra hour of work and the intangibles of helping build relationships that allow them to work better is far cheaper than paying them extra dollars to work late.

5. Don’t overspend, this may seem in contrast to 4, and often times poeple go with one extreme or the other. Pizza and beer makes sense, Lobster lunches do not, I don’t care if you are google, they still don’t make sense. If you are doing extremely well and want to give back to employees give it with cash, they’ll appreciate it more. Bsimilar search for John McCain shows a normal pro-McCainut order in lunches every day and pool tables are no necessary expenses.

If there’s enough response I’ll follow up with some of the more tangible ways of making this happen, but for now, enjoy these big picture take aways.

As I watch the news and posts roll in each day with new layoffs in the valley, ranging from large corporations such as HP and EA, down to the small guys such as seesmic, imeem, searchme, and zillow to name only a few, there still seems to be a demand for certain job skills. While as I look down the list some of these I dont feel are any longer demanded skills, and others will soon be there. In part I want to call attention to facebook first. While everyone and their brother, when launching a website wants to build a facebook app to deliver some of their content on to facebook, the time and effort put into this is no where near the return. The market has become so flooded the penetration you will get is quite trivial. Futhermore cpm’s have already plummeted for advertising on facebook, ranging in some cases around .10-.15.

Meanwhile iphone developers are still rushing to get their idea into the app store. While a decent idea, and I more than support new applications, so that I can use them on my phone, a 10 million person marketplace is still extremely small, especially if you’re not a mainstream application. It used to be that one million users on your website was the golden point in social networks when you could really go for significant funding, or you could start talking a selling price. But thats not the case anymore, much less to reach that on the iphone you would have to be somewhere between the top 10 and top 25 elite apps. 

So sure, you might not have that many users that download your app right? But theres ad revenue possibilities. Well that works right now, the iphone is seeing insane cpm’s in some cases as high as $50. This is simply not sustainable. While some claim that mobile advertising is the holy grail of ad’s, that only works if you can capture user intent, which in contrast isn’t so simple. It works for search, because well when I’m searching for something that usually captures my intent, not so for when I’m using my phone. I strongly suspect that as these new hot markets calm down, companies will do proper analysis of ROI and no longer want many of these niche skills.

In these cases I think there’s going to be able more smaller bubbles bursting and a lot more niche developers searching for something more than developing the occasional website for the store down the street.

I recently attended part of the recent Techcrunch 50 conference, and when I wasn’t there I was watching much of it online. For probably 80% of the companies when it came time to ask about their business model, they said ads. Then they talked about cause they have all of this great information about the user they can advertise better than they used to. The problem is they’re forgetting all about user intent. This is why ads on facebook simply arent working, with some CPM’s being as low as .05. 

Ads work on search because users are looking for something, and if you place an ad for it they’re fine with it, because they didn’t want to stay on the search page. When a user goes to facebook they want to stay on facebook, not leave. When a user is in an application they want to stay in the application, as long as the site or application is a destination or resides on a destination it will not make great revenue from traditional ads. Yeah, theres oppportunities for newer creative advertising, but this form of ad’s will not provide the same revenue yet as others. If you’re launching a product or site, actually consider how your worth making money, just saying ads in most cases is not a business model.

Forget the benchmarks, forget whether its truly faster or slower, forget whether the market share is 30% for non-IE browsers (though is this only for US or internationally). Google Chrome evolution or revolution, whatever you want to call it, it makes me actually want to stay in the browser. I just want plugins, that function as well as the browser alone does. Yeah theres rendering problems, and some oddities, but the browser as a whole is smooth. I actually feel thus far its the best of IE and safari melded together. The only problem I see right now is the lack of plugins, which my guess is will come VERY SOON. Meanwhile firefox when having the plugins I want enabled can be sluggish, if Chrome plugins are of equivilant quality then I can’t see how the browser wouldn’t be at LEAST as smooth.

Chrome really is a win for Google, whether they can monetize it or not. It helps them to keep people off the desktop and in the browser. I could go on for hours about bad moves they’ve made, such as picasa, but Chrome was actually a good one.

As I currently work at a startup I have a small stake in the company. When talking with one friend of something I have been working with someone with on the side, the question came up over if this was a conflict of interest. I was actually quite shocked to hear the question at first, not only did I expect them to do likewise, as I know many that do. The full on conflict of interest statement just shocked me. Being at a startup it does make it slightly more of an interesting statement, but I received similar comments sometimes at my former Fortune 100 employer. I’ll start with that place and then migrate to the startup environment.

I could not disagree more being an employee at some place, and working on additional things being a conflict of interest. In short you are an employee, not property, your best interests lie with yourself. Sure its great if you believe in the company and what they do, but in our generation you are not attached for life to the company you work for. The company has claim on what you do between 8-5 with regards to work, sure if you do things that may damange a company brand or your effectiveness to do business its fair for them not to retain you, but simply doing additional work in your spare time? Hardly!

Now as we move on to the startup atmosphere, where it’s pretty standard that when becoming employed you receive some amount of equity in the company. In most cases with not being a founder this stake is of relatively small size. Sure you could consider Google where I believe it was over 400 employees that were made millionaires by their IPO, but these situations are very rare. The equity receive normally vessts over a period of time, and from my perception is simply equivilant to a portion of your pay no more no less. Sure it does make you feel more of a sense of ownership, but does not extend to the full extent of the business owning you.

As an employee you’re being paid to perform a job, they don’t have full claim to what you do on your time.

Many people criticize Wal-Mart for the way they run their business. I personally find no problems with it, as their goal is simply to make prices competitive. If you care about the other details then either A. shop else where or B. donate to those causes you feel should be supported with the money you save. While sure some of these qualms may be justified I’d like to hint at another thought, of why people don’t take advantage of the same approaches.

You see I recently started using a service, which I’d prefer not to disclose yet that gives me access to completing very monotonous and tedious tasks for very low price. Indeed there is some overhead involved but once you learn to manage it effectively, and that is the key to do it effectively. Because in reality anyone can manage, but the vast majority over manage things, rather than giving them just the right amount of attention. But back to the primary point, the idea of taking tasks that you normally wouldn’t do because of their tedious low value nature and getting those completed for a very low cost can become extremely valuable for you. When you start to think out if you had more time to do those tasks hundreds of things probably come to mind, so I’ve encourage everyone to explore the low cost options for work/support and try to leverage them to your advantage

Live video streaming from your phone might just seem like another form of lifecasting, a video form of twitter, or even a mobile version of ustream.com or justin.tv, but it really is far more than that. A few people have taken these mobile streaming services such as Qik, Flixwagon, and Kyte and really used them to their fullest capacity. Sure you can go to an extreme like Robert Scoble, but admittedly most of his content from Qik can be pretty good.

The real thing about mobile video streaming is something that some people have mentioned about twitter. Twitter often breaks the news, or has more information about breaking news than anywhere else. As much as anything thing else it allows for quick live footage of events. Whether its breaking news or an impromptu interview that someone happens to come across. Those willing to embrace this new form of potential reporting, and sacrifice expensive editing and high end video equipment will come away with more interesting pieces and find a rapidly growing following of consumers that tune in.

Mobile video streaming is far far bigger than ustream and justin.tv. It’s about more than showing the day to day happenings of your life whenever you want, and more about continuous access to news and happenings.

So traditionally I’ve been a very do it yourself person. I wanted to be the person that didn’t have to rely on anyone, and thus far it’s worked pretty well. I can handle my day to day chores, as well as do my job, and most any side project of venture I take on I feel like I can accomplish pretty well. However, I recently asked my question if that was the best approach. While it’s good to be self reliant, the people at the top seldom do everything on their own. If I take notice of where I spend my time, most of it is on tasks that produce very very little value. Meanwhile there’s other tasks where I only have time to spend a few hours a week that produce much larger value.

On this point what I’m looking into is outsourcing many of these tasks. While it will take additional time to manage that process and delegate the tasks I believe I’m currently at a break even point where it makes sense. From there it can only go uphill and not down. I’ll likely post again in a few weeks after I’ve seen how this is progressed, but it seems those that are accomplishing a lot, in large part its because others do so much for them.

In the coming weeks I’m going to be working with a friend to help his venture in a new partnership that someone has approached him about. This partnership is rather large and I’m not at liberty to disclose details yet, and while this is indeed great news for the site, the great news for users is the site is already fully available.

In short fotoviewr is one half of an online photo album, it doesn’t store your photos for you, but allows you to take your existing photos from flickr or smugmug (with other support coming soon) and instantly put them into a visually appealing gallery. To me the nicest thing about it is the variety. I’ve used piclens before, and while I love piclens to scroll through 1000’s of pictures quickly, that seems to be the extent to which I use it. I can’t use piclens to show off my photo’s to friends or family. While browsing through a standard flickr page isn’t a bad experience, it isn’t a good one. Fotoviewr really does seem to deliver the other piece of what is missing from online photo sites.

Check out a few of the sample’s below, I’ve taken a few of my personal pictures from the past 4th of July and put them into a few of his views that are available. All-in-all this took me a fraction of the time it took to type this post, which is how more things should be online, simple.

At a conversation today we got into a discussion about how ebay can compete with amazon. Which alone is enough content for an entire post, as they really aren’t playing the same game so not really competing. Instead I’d like to talk about where the conversation progressed to. To me the most interesting thing about ebay isn’t how they won the long tail, or how users are unhappy with the increasing costs placed on them. Instead its more at the level of where they really lost out.

You see, ebay had a devoted following back around 2000. Millions of people would visit their site, buy items, focus on their feedback rating, often spending time in the same category. While at the time most of this was indeed innovative, they stopped there. If they had only taken it a step futher and exposed the final piece of the puzzle by allowing users to interact with each other. If they had developed a network of users that could communicate with each other, that shared interests based on product categories, they could have easily been one of the largest early social networking sites out there. As facebook initially exploded as a social network for college students, and other more recent ones focusing on younger crowds, meanwhile you have linkedin to as a professional network. Ebay could have very much been the network for collectors, or anyone purchasing similar items. Not only would have this increased user engagement, it would have driven more sales.

Take for example if I’m a fan of a particular brand of jeans. I may be very proud of the brand I’ve found, but recently discovered some that were newer and more hip. Well I’m going to be a bit more hesitant to share that with my friends I hang out with as I want to be the one that’s hip versus everyone else having them as well. However if I have a similar community that I connect with online, I can share this information, build a repoire with them, and still maintain my step ahead of friends. It allows your users to become you product recommendation engine versus the Amazon approach of through a lot of machine learning at the problem.

And the most unfortunate part of it all, I’m not sure ebay even realizes they missed the boat.