Startups don't need to be ruthless

Post ImageGreg Linden asked a very interesting question today: Is ruthlessness the key to success for Web 2.0 startups? He cites examples of Facebook, MySpace, YouTube and others using spam, porn, or other “ruthless” means to become successful. While the idea might be intriguing, I think it is far too simple.

First of all, being “ruthless” is relative, right? What’s ruthless to me might not be ruthless to you. More importantly, I’m pretty sure Facebook and the others did a bunch of other things that contributed to their success. Saying they became huge by “spamming Harvard students” makes for an entertaining article, but probably avoids the more boring reality of why they are popular.

Secondly, the idea doesn’t hold true in all Web 2.0 startups. As was suggested in the comments on Greg’s post, there a bunch of other companies that did not rely on such ruthlessness to make it big – Flickr,, and 37signals, just to name a few.

It’s pretty common to hear that you need to be ruthless to succeed in business, but I don’t think it’s the kind of ruthlessness that Greg is suggesting. Perhaps instead of porn and spam making them ruthless and thus successful, it’s working long hours, making sacrifices, cutting costs, and being creative that made them “ruthless” in the pursuit of their ideas.

Read: Greg Linden

What would Apple do without any content?

Post ImageImagine for a moment that the record labels restricted or entirely removed Apple’s access to their catalog of content. What would Apple do? I’m not suggesting the record labels are going to do this anytime soon, but it seems Microsoft has gotten smart and come up with a way to attack iTunes, and it’s not related to the hardware:

Nobody partners like Microsoft. The company is one of the shrewdest deal makers on the planet, when it isn’t competing with partners…There has been buzz for sometime that labels were unhappy with Apple’s single pricing and were looking for a cut of iPod sales…Seems to me: Microsoft is looking to suave labels’ hurts as it seeks to get the deals that could make table stakes for taking on Apple. After all, Apple doesn’t control the content.

When you consider Microsoft’s deal with Universal Music, the possibility of similar deals with the other record labels, and it’s recent Xbox Live Video moves, it becomes clear that access to content is at the heart of Microsoft’s new strategy.

Apple’s strength is hardware, it’s what they do best. Without any content for that hardware however, it becomes a much tougher sell.

Read: Microsoft Monitor

Simple advice for acting on your software ideas

Post ImageJustice decided to play the “hypothetical situation” game today, with a post asking what you should do if a great idea hits you. I started out writing a comment, but it got ridiculously long, so here’s a post instead. First, I’ll answer the questions Justice included in his post, then I’ll suggest some of my own questions. Not that you need to be reminded, but I’ll say it anyway – I’m not an expert on these matters, so take this advice with a grain (or jug) of salt!

Okay, so you’ve got a great world-changing idea for a software application/business. What now?

Do you even tell *anyone*?
Yes! This is the easiest of the questions to answer. I think you have to tell someone, preferrably many people. You might think your idea is amazing, and maybe it is, but you won’t know until you get someone else’s opinion. Be prepared though, an honest opinion from someone can have you hitting the ground hard.

If/when this occurs to you, what do you do?
Well, tell someone first. Get another opinion. After that, decide if you really want to proceed. I don’t like doing things half-assed, and I’m sure you don’t either, so this is really an “am I all in or not” kind of decision. It’s not quite the point of no return, but once you commit, you had better follow through.

How do you get started?
In the case of software (or most things of a technical nature), you need to help people visualize your idea. That means getting a prototype or mockup or something going as quickly as possible. It’ll help you refine the idea, and it’ll make it easier to attract help later on. If you don’t know any programming languages, I guess you should learn one of those first 😉

Do you quit your job immediately and begin laboring intensely to bring this to fruition?
This is a difficult question to answer. It comes down to opportunity cost I suppose. It really depends on your individual situation. If you can quit your job and still manage to keep a roof over your head and coke, er, food on the table while working on your idea, I say go for it. Be prepared to give up any social life you might have however!

One caveat is to make sure you have something else going on in your life. If all you do is work on your idea, you’re going to burn out. You need to be able to take a break every now and then.

Do you immediately rush out and try to gather every talented and qualified person you know to begin building what you understand will eventually end up altering the world for the better?
In short, no. First, get that prototype/mockup going. Once that’s done, you can think about adding to the team. Here are some of the things you need to consider:

  • A large team can actually slow you down!
  • Waiting too long to bring in other developers may mean they spend all their time learning what you’ve already done before they can become productive.
  • Make sure you’re ready to share the glory if you decide not to go it alone.
  • A small number of people with specialized, complementary skills can be excellent for development.
  • How will you pay everyone?

What other questions should you be asking?
Well, there’s a bunch. Here are some that came to mind for me:

  • What problem am I solving? This one you need to be able to answer right away.
  • Do I want to be rich or do I want to change the world? This will have an impact on how you decide to pursue the idea. If you’re lucky, you’ll get both.
  • If you decide to go for it, will you get a Pareto efficient outcome? Of course it won’t be perfectly Pareto optimal, but that should be the goal. If your family has to suffer greatly for this to work, maybe reconsider.
  • How much is this going to cost me? In dollars, time, etc.
  • Are you prepared to hear “no”? Because you will, a lot.
  • Do you value sleep? You’ll get less and less if you go after your idea.
  • If this becomes a real business, are you ready to give up control one day? You’ll likely need to bring in outside help, investors, etc.

There’s dozens of other potential questions you could ask. Most of them don’t need to be asked right away, however.

So, what now?
I really believe you need to do two things: create a visualization of your idea, and get as many opinions as you can. After you’ve done those two things, you’ll have a better handle on the idea, and you’ll be in a much better position to answer any questions.

Read: Gray’s Matter

Canada to tax Income Trusts

Post ImageBy now you’ve probably heard that Finance Minister Jim Flaherty announced today a new tax on income trusts. The decision has drawn lots of criticism, especially since it comes just three weeks after BCE proposed the biggest trust conversion in our nation’s history. Telus was another major corporation looking to transform itself to an income trust.

So what the heck is an income trust? That’s been my question throughout all of this. According to Wikipedia:

An income trust is an investment trust that holds income-producing assets. The term also designates a legal entity, capital structure and ownership vehicle for certain assets or businesses. Its shares or “trust units” are traded on securities exchanges just like stocks. The income is passed on to the investors, called “unitholders”, through monthly or quarterly distributions.

Interestingly, the article also points out that they are most common here in Canada.

Anyway, that definition helps a little, but not a lot. When I heard that “BCE wants to turn itself into an income trust”, I thought, “but they are a company?” So if I understand things correctly, they just wanted to save some money on taxes, and becoming an income trust would allow them to do so. And indeed, as the CBC article points out, BCE would have saved itself $800 million in taxes by 2008. That’s some serious dough.

Actually, it turns out the CBC article is more helpful in understanding things:

Trust conversions are increasing in popularity because trusts do not pay corporate tax. Instead, they pay out most of their income in distributions to unitholders, who then pay tax on those distributions at a preferential rate.

Clearly, the government was not happy that it would be losing so much tax money. Existing trusts have a four year grace period until the new tax takes effect, while new trusts face the new rules immediately.

I don’t know if this is a good thing or not. I simply don’t understand things enough to say one way or the other. Certainly the markets don’t like the new rules. My feeling is that companies like BCE and Telus simply discovered a weakness in the laws and sought to exploit it. The government realized it had a problem, and took immediate action. Which one of them is correct? I don’t know. Tax avoidance probably isn’t a good thing for the country, but on the other hand, the companies were not breaking any rules. I can only hope that Mr. Flaherty’s rhetoric about income trusts hurting the economy is true, and not just a statement made up for his own purposes.

Read: CBC News

Ben Metcalfe rips apart Google

Post ImageGoogle made an interesting post to their official blog yesterday, titled Do you “Google?” which aside from being extremely calculated and condescending, slightly mocks Yahoo (you know, do you Yahoo?). The post explains that you can’t use “google” and “search” interchangeably, because they don’t want to become genericized like so many other names have (elevator, zipper, etc).

Needless to say, the post sucks. I can’t say it any better than Ben Metcalfe:

But in the end, regardless of whether it’s positive, harmful or somewhat in between for Google, I for one don’t like to be told how to use the English language.

We own our language. So Google, you can go shove your lexicographical ‘advice’ up your ass.

Seriously, go read Ben’s entire post. He does an awesome job of deconstructing the Google post. The Yahoo search team have posted their own comments too.

I understand the need to try and protect your trademarks and other intellectual property, but I am not sure going after the public like this is a good idea. Google should stick to going after organizations and publications which abuse their trademarks. You need to prove that you’ve made every effort to protect your trademark, but going after individuals is never a good idea. Just ask the RIAA.

If “google” turns out to be a generic term in the end, so be it.

Read: Ben Metcalfe

Wizzard Software buys Libsyn

Post ImageThere isn’t much news on this story yet, except for the official press release from Wizzard Software. Today the company announced that it has agreed to acquire Libsyn, currently the world’s largest podcasting network. From Podcasting News:

According to the companies, the acquisition combines the world’s largest and fastest growing podcast network with Wizzard’s expertise in speech technology integration, creating a powerful new service for podcasters worldwide.

Wizzard has been pretty busy lately, snapping up Switchpod back on September 21st and Blast Podcast less than a week later.

So far, there is no word of this deal on the Libsyn blogs or forums. I’m interested to hear their comments, because I think they understood they had to do something. Wizzard gets the top hosting service, and Libsyn gets some financial support to improve their service (and more importantly, quality of service), so it’s a good deal for both I think.

Libsyn CEO Dave Chekan seems excited in the press release at least:

“We’ve had several investment offers in the past and we chose Wizzard due to its expertise in speech technology, its passion for podcasting and its desire to make money for our independent content creators.”

Terms of the deal have not yet been disclosed.

Read: Wizzard

Odeo relegated from company to product

Post ImageYesterday, Evan Williams announced that he has formed a new company called Obvious Corp. which has purchased all of the assets of Odeo Inc. from the other investors and shareholders. Some people are probably surprised at the move, but I’m not. In fact, I saw it coming back in July:

Maybe it’s time everyone stopped calling Odeo a podcasting company. I’ve been critical of Google’s apparent lack of focus and direction many times in the past, but they’ve got nothing on Odeo. I mean here’s a company with some very smart people working for them, some substantial venture capital behind them, and yet very little to show for it.

I’d guess the investors are happy to have gotten out without any losses (TechCrunch thinks the buyout price is a little more than $5 million). Odeo is no longer a company by itself. Instead, it is now simply one of perhaps many products in Obvious’ new “model for building and running web products.”

The new model that Evan describes in his post is vague, but interesting. More importantly, he seems really excited about it, and he’s right, “from excitement and bold moves, great things often happen.” I wish him the best of luck with Obvious Corp.

So what does this mean for Odeo? A post on the official blog says that they are now “even more focused on giving Odeo the attention it requires.” Frankly, it would be difficult to be less focused than they are right now, so I guess that’s a good first step. It appears it will be business as usual for Odeo, at least for the foreseeable future. It’ll be interesting to see what, if anything, they change or add.

Read: evhead

TEC Connector 2006

Post ImageThis afternoon was TEC Edmonton’s annual TEC Connector networking event, and for the second year in a row, Dickson and I decided to go. We were actually invited to setup a booth for Paramagnus, but we opted to just mingle instead. The TEC Connector is kind of an important event for me, because I consider it the start of our adventure with VenturePrize.

There seemed to be more people this year, and also unlike last year, we actually knew a few of them this time! It was nice to reconnect with some of the very smart and very interesting people we have met over the last year. These kinds of networking events are funny in a way, because you can meet some great people, but they also show just how small Edmonton can be. There are more familiar faces than unfamiliar ones.

There was some talk today about VenturePrize and the new student category that has been launched. I think it’s great that the program is expanding! Dickson and I will be one of the featured presenters in this year’s VenturePrize seminar series, an opportunity I am really looking forward to. We’ll be sharing our story with this year’s participants on November 1st.

Read: TEC Edmonton

Google buys YouTube for $1.65 billion

Post ImageThe ramifications of this deal will be felt for quite some time. CNET is reporting that Google has purchased video sharing site YouTube for $1.65 billion in stock. The deal has been rumored for some time, but I didn’t think it would actually go through:

“This is one of many investments that Google will be making to put video at the heart of a user’s online experience,” said Google CEO Eric Schmidt on a conference call after the deal was announced. “When we looked at the marketplace and saw what was going on, we saw a clear winner in the social networking side of video, and that’s what drove us to start the conversations with YouTube.”

You can listen to an audio interview with Eric Schmidt and YouTube CEO Chad Hurley here.

Also today, YouTube announced some major distribution deals with the big record labels. All of a sudden, the threat of a lawsuit looks much less likely, doesn’t it? I wonder what the MySpace people will think of this deal. I’m sure they are a little scared now that YouTube has Google’s backing.

So the deal is done, Google is now king of video. Still, I can’t help but wonder if a simple, exclusive ad-deal with YouTube would have been a better investment for Google? I guess time will tell.

Read: CNET

Audio: Review of Dragon's Den Episode 1

Post ImageWednesday night was the first episode of CBC Television’s new business reality series, Dragon’s Den. I found out about the show a long time ago through VenturePrize when the show’s producers were looking for contestants. Dickson and I considered throwing our names in the hat, but we decided we didn’t necessarily want the exposure (at the time we still hadn’t launched Podcast Spot). After watching the first episode, two things were confirmed for me (barring any changes in future episodes):

  • Had we participated, we’d have been the youngest ones, which is pretty normal for us.
  • I think our idea would have fared really well compared with the other contestants.

What I didn’t expect, was that I wouldn’t really like the show! As a result, I decided to do a review. I have always thought that podcasting is a great way to do reviews, because they are usually somewhat boring to type and somewhat boring to read. It’s much more interesting to listen to or to watch a review I think. So with that in mind, here’s my audio review of the first episode of Dragon’s Den!

I’ll probably watch again next week, just to see if my opinions change at all. And to see if any of the contestants have really interesting ideas.

Read: Audio Review