How to save money running a Web 2.0 startup



Hat tip to blog maverick

A few wise words for Web 2.0 entrepreneurs.  I’ve added some additional points from Calacanis.

1. Don’t start a company unless its an obsession and something you love.
2. If you have an exit strategy, it’s not an obsession.
3. Hire people who you think will love working there.
4. Sales Cures All. Know how your company will make money and how you will actually make sales.
5. Know your core competencies and focus on being great at them. Pay up for people in your core competencies. Get the best. Outside the core competencies, hire people that fit your culture but are cheap
6. An expresso machine ? Are you kidding me ? Shoot yourself before you spend money on an expresso machine. Coffee is for losers. Sodas are free. Lunch is a chance to get out of the office and talk. There are 24 hours in a day, and if people like their jobs, they will find ways to use as much of it as possible to do their jobs.
7. No offices. Open offices keeps everyone in tune with what is going on and keeps the energy up. If an employee is about privacy, show them how to use the lock on the toilet. There is nothing private in a start up. This is also a good way to keep from hiring execs who can not operate successfully in a startup. My biggest fear was always hiring someone who wanted to build an empire. If the person demands to fly first class or to bring over their secretary, run away. If an exec wont go on salescalls, run away. They are empire builders and will pollute your company.
8. As far as technology, go with what you know. That is always the cheapest way. If you know Apple, use it. If you know Vista… ask yourself why, then use it. Its a startup, there are just a few employees. Let people use what they know.
9. Keep the organisation flat. If you have managers reporting to managers in a startup, you will fail. Once you get beyond startup, if you have managers reporting to managers, you will create politics.
10. NEVER EVER EVER buy swag. A sure sign of failure for a startup is when someone sends me logo polo shirts. If your people are at shows and in public, its ok to buy for your own folks, but if you really think someone is going to wear your polo you sent them in public, you are mistaken and have no idea how to spend your money
11. NEVER EVER EVER hire a PR firm. A PR firm will call or email people in the publications, shows and websites you already watch, listen to and read. Those people publish their emails. Whenever you consume any information related to your field, get the email of the person publishing it and send them an email introducing yourself and the company. Their job is to find new stuff. They will welcome hearing from the founder instead of some PR flack. Once you establish communications with that person, make yourself available to answer their questions about the industry and be a source for them. If you are smart, they will use you.
12. Make the job fun for employees. Keep a pulse on the stress levels and accomplishments of your people and reward them. My first company, MicroSolutions, when we had a record sales month, or someone did something special, I would walk around handing out 100 dollar bills to salespeople. At and MicroSolutions, we had a company shot. Kamikaze. We would take people to a bar every now and then and buy one or 10 for everyone. At MicroSolutions, more often than not we had vendors cover the tab. Vendors always love a good party :0

In addition, some good and some controversial tips from  Jason Calacanis

  1. Buy Macintosh computers, save money on an IT department
  2. Buy second monitors for everyone, they will save at least 30 minutes a day, which is 100 hours a year… which is at least $2,000 a year…. which is $6,000 over three years. A second monitor cost $300-500 depending on which one you get. That means you’re getting 10-20x return on your investment… and you’ve got a happy team member.
  3. Buy everyone lunch four days a week and establish a no-meetings policy. Going out for food or ordering in takes at least 20-60 minutes more than walking up to the buffet and eating. If you do meetings over lunch you also save that time. So, 30 minutes a day across say four days a week is two hours a week… which is 100 hours a year. You get the idea.
  4. Buy cheap tables and expensive chairs. Tables are a complete rip off. We buy stainless steel restaurant tables that are $100 and $600 Aeron chairs. Total cost per workstation? $700. Compare that to buying a $500-$1,500 cube/designer workstation. The chair is the only thing that matters… invest in it.
  5. Don’t buy a phone system. No one will use it. No one at Mahalo has a desk phone except the admin folks. Everyone else is on IRC, chat, and their cell phone. Everyone has a cell phone, folks would rather get calls on it, and 99% of communication is NOT on the phone. Savings? At least $500 a year per person… 50 people over three years? $75-100k
  6. Rent out your extra space. Many folks have extra space in their office. If you rent 5-10 desks for $500 each you can cut your burn $2,500 to $5,000 a month, or $30-60,000 a year. That’s big money.
  7. Outsource accounting and HR—such a no brainer.
  8. Don’t buy everyone Microsoft Office–it’s too much money. Put Office on three or four common computers and use Google Docs.
  9. Use Google hosted email. $50 or free per user…. how can you beat that?!?! Why screw with an exchange server!?!?
  10. Buy your hardest working folks computers for home. If you have folks who are willing to work an extra hour a day a week you should get them a computer for home. Once you get to three hours of work a week from home you’re at 150 hours a year and that’s a no brainer. Invest in equipment *if* the person is a workaholic.
  11. Fire people who are not workaholics. don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or stabucks if you’re not into it you want balance in your life. For realz.
  12. Get an expensive, automatic espresso machine at the office. Going to starbucks twice a day cost $4 each time, but more importantly it costs 20 minutes. Buy a $3-5,000 Jura industrial, get the good beans, and supply the coffee room with soy, low fat, etc. 50 people making one trip a day is 20 hours of wasted time for the company, and $150 in coffee costs for the employees. Makes no sense.
  13. Stock the fridge with sodas—same drill as above.
  14. Allow folks to work off hours. Commuting sucks and is a waste of time for everyone. Let folks start at 6am or 11am and you’ll cut their commute in half (at least in LA).
  15. Go to each of your vendors every 6-9 months and ask for 10-30% off. If half of them say yes you’ll save 5-15% on fixed costs. People will give you a discount if they think they are going to lose the business.
  16. Don’t waste money on recruiters. Get inside of linkedin and Facebook and start looking for people–it works better anyway.
  17. Really think about if you need that $15,000 a month PR firm. Perhaps you can get a PR consultant to work on 2-3 projects a year for $10-15k each and save 75%. More PR firms are wasted half the year while you build up your product anyway.
    {I’m going to add a couple more of mine as I remember them }
  18. Outsource to middle America: There are tons of brilliant people living between San Francisco, Los Angeles, and New York who don’t live in a $4,000 one bedroom apartment and pay $8 to dry clean a shirt–hire them!
Technorati Tags: Connect and Share anything!

Now this is great. Thanks to Alex and Kevin over at Diggnation for the tip.

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A nice video explaining how it works –

Start-ups saving a bundle thanks to free software programs

The Chicago Tribune reports how
a new start-up, is using Web 2.0 technologies cheaply to run its business.

I love stories like this. Another new business that “Just get’s it..”,0,3666288.story?coll=chi-business-hed

The Top 25 Web 2.0 start ups from the UK

The Register has a nice story listing the Top 25 start ups based in the UK.
Its long overdue that UK talent in Web 2.0 technologies is finally being recognised. Show your support to these sites by signing up to them!

1. Garlik – Garlik is an online privacy firm that monitors your personal information online, and lets you know if there’s any problems .
2. Tape It Off The Internet – Allows you to share details of what you’re watching with friends, and it also points you in the direction of (legal) places to download shows.
3. OnOneMap – A property site that plots houses for sale onto Google Maps, and bills itself as a property search engine, NOT an estate agent.
4. WeHangHere – More location-based Web 2.0, wrapping social networking elements around Google Maps, with clusters of people who hang out at the same places you do.
5. MailSpaces – MailSpaces is a mix ofWeb 2.0 features, including RSS, tagging, and wikis, which aims to organise information among communities
6. Webjam – Content-sharing among communities, where you create your own pages, share them, but can also replicate other people’s and pass them on
7. Zopa – Social lending, matching borrowers and lenders like eBay matches buyers and sellers.
8. Design The Time – A “virtual reflection of time”, with a timeline that anyone can upload their content (photos, videos, text) to, as well as holding footage and info on public events.
9. YesnomayB – A dating service, with Web 2.0 features
10. Mobizines – “Mini Mags on your Mobile” Hmmm sounds awful to me
11. Ebeebo – Matchmaking for jobs, giving recruitment a Web 2.0 spin with a service matching jobseekers with positions
12. Sleevenotez – a website connecting real-time information around what you’re listening to on
13. SelfcastTV – Originally pitched as a “Brit YouTube”, with the theory that people will be more likely to come back regularly if they’re presented with more culturally relevant videos
14. Yuuguu – a remote-access application that lets people see, share and take control of each other’s screen and applications, with live messaging alongside it.
15. Mobango – provides you with tools to convert videos, music and photos to mobile-friendly formats, then 1GB of space to store them online AND share them with other people.
16. Horsesmouth – social networking community built around mentoring. So the idea is you can sign up to find a mentor, and get their advice on your lifestyle, job or whatever
17. Cerkle – based around smaller networks of real-life contacts, using mobiles to share information and keep in touch
18. Friction.TV – a video-sharing service for people’s news and views, from professional activists to just normal people with something to get off their chest.
19. – Listen to something new. radio learns what you like and gets better.
20. Trusted Places – social networking around specific locations (pubs, restaurants, museums etc). It’s more about finding cool places based on people with the same tastes as you
21. DropSend – Send large files of up to 1GB without installing software on your computer, or just use it for online storage.
22. Idio – create a profile of your interests, then get an interactive magazine back with articles from all manner of sources, including blogs
23. Elertz – a free web toolbar that delivers alerts to consumers from brands, when they’ve specifically asked for them.
24. Izimi – Self-publishing, being able to serve files, photos, music and videos up from your computer to friends through their web browsers
25. Crowdstorm – Social shopping, you find stuff to buy based on how much of a buzz there is around it, as well as signing up trusted users whose opinion you’d seek before buying.

25 Startups to watch for in 2007

Business 2.0 magazine has listed 25 Web 2.0 startups to watch for in 2007

1. [Social Media]
2. [Social Media]
3. [Social Media]
4. [Social Media]
5. [Social Media]
6. [Video]
7. [Video] (Using a weird “loser” logo??
8. [Video]
9. [Video]
10. [Video]
11. [Mobile]
12. [Mobile]
13. [Mobile]
14. [Mobile]
15. [Mobile]
16. [Advertising]
17. [Advertising]
18. [Advertising]
19. [Advertising]
20. [Advertising]
21. [Enterprise]
22. [Enterprise]
23. [Enterprise]
24. [Enterprise]
25. [Enterprise] launches

Startupping is a one-of-a-kind community resource created for Internet entrepreneurs by Internet entrepreneurs. It is a place to share information, ask questions, and tap into the experience of others who have built and are building web businesses. Read blog posts about startup issues and participate in discussion forums.

An online gem!

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