Startup Toolbox

Jay Parkhill November 8th, 2007

In Founders at Work, Joshua Schachter advises new entrepreneurs to keep the product simple- do one thing and do it well, in essence. This strategy worked well for del.icio.us, which is a simple (in a good way) web tool. He built it largely on his own in his spare time while working for Morgan Stanley and that setup worked very well for him.

Mike Ramsay from Tivo, on the other hand, developed an extremely complex product (I found great humor in the section of the book where he describes the enormous back-end efforts to manage programming information for every TV service in the US, and then explains why he feels compelled to throttle anyone who describes Tivo as “like a digital VCR”) that required enormous engineering, marketing and other resources. Tivo raised significant money from VCs and went public to raise even more. Again, this has worked well for Tivo.

This pattern also reminds me of the Dick Costolo/Marc Andreesen online debate about raising outside capital that I continue to see discussed from time to time. Dick built Feedburner with a relatively small amount of outside cash, developed an excellent product with it and sold the company to Google for a solid return. Consequently, his advice to entrepreneurs is to raise enough capital to allow for a good return for founders and investors even if the business is not a home run.

Marc, on the other hand, has built two large businesses and sold each of them for over $1B- two grand slams. Both companies were heavily VC funded and Marc believes that the cash gave both businesses the wherewithal to survive difficult times, revise their business plans and ultimately become very successful. Based on his experience, then, the advice is to raise as much money as possible whenever it is available on acceptable terms.

All of these companies and people were successful, which means all of them are correct. Del.icio.us and Feedburner needed only modest capital to acheive their objectives. Tivo, Netscape and Opsware needed far more.

This brings me back to a piece of advice I picked up years ago in an entirely different context. Professional cyclist Greg Lemond wrote a book on cycling training in which he talked about one of the great fallacies of training- emulating someone else’s habits just because the person was famous or successful. As he put it “what works for ___ is good because it works for ____. That fact that it worked for ___ doesn’t mean it is right for anyone else.”

In other words, the paths to success of others are valuable for the ideas they can provide, but they are not the “right” path for everyone. Past experiences are data points to analyze, not prescriptions to swallow whole.

• Financings , Startups , Tips & Tricks
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Jay Parkhill October 16th, 2007

For a number of years, and especially since launching my own business a year and a half ago, I have made a study of how to introduce people in a way that is meaningful, appreciated and effective. It’s a challenging thing, to be sure, and subject to a number of variables. Still, I’ve been on all sides of the intro equation and I have drawn a few conclusions. Apologies they seem obvious- things often seem that way to me too once I’ve articulated them.

1 ) Both parties need to be receptive. This doesn’t mean that both people need to be actively looking for one another, but you need to be able to define a need that each introducee fills for the other. The risk here is that the intro may seem “spammy” to one side if the need hasn’t been defined.

2) Flowing directly from #1, define the value to each party. It may be specific and immediate (e.g. “here’s my friend. He is starting a company and needs a lawyer”) or it may be longer term (”so-and-so is an accountant and I think there may be a lot of overlap between your businesses”). Whatever it is, you need to be clear about that.

3) Once points 1 and 2 have been addressed the introducer needs to determine a proper form for the introduction. Quick email intros can be effective and quite valuable, but usually only where there is a short-term defined need. It takes a little more commitment to actually bring people together- to suggest that the three of you all grab coffee or lunch, for example- but lacking a short-term reason for the people to contact one another anything less may end in awkwardness.

Articulating these factors helps me think about how to make useful introductions among my contacts, and how to get the most out of introductions people make for me as well. I hope this provides some valuable to others as well.

• Tips & Tricks
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Jay Parkhill October 1st, 2007

I like nothing better than when my worlds come together. I just finished listening to a very insightful podcast conversation between Jim Holland, CEO of Backcountry.com, and Chris Grover, Director of Sales and Marketing at Black Diamond. Startups, web services and outdoor gear are three of my favorite things.

The former company is an outdoor gear e-tailer and poster child for success by bootstrapping. It was founded in the 1990s, but unlike many of its crash-and-burn contemporaries it never raised outside money. I believe this let them chip away at the online marketing puzzle. Had they raised money, hired lots of people and jumped into lots of things before the revenue path became clear, they might never have made it.

Black Diamond is an interesting example of lemons-from-lemonade. Patagonia used to make rock climbing hardware until someone fell out of a harness, died and his family sued the company. Patagonia decided to get out of the hardware business and divested it- creating Black Diamond. The company has risen from that tricky start to become the major US brand in the Euro-dominated climbing/technical backcountry equipment market.

The podcast has a lot of interesting tidbits about marketing, leadership (esp. the difference between leading and managing), compensation (don’t trust the public statistics) and other important business questions. I wanted to to interview Backcountry.com co-founder John Bresee for a Startup Review interview a few months back, but we both got busy and never quite connected. The interview covers a lot of the same ground and it’s well worth the 40 minutes spent listening.

• Startup Review , Startups , Tips & Tricks
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Jay Parkhill September 11th, 2007

I am reading a great book called Founders at Work: Stories of Startups’ Early Days- it is a compilation of interviews with tech company founders, prepared by one of the Y Combinator founders. The whole book makes for terrific reading, very much like Startup Review on a larger scale.

Excite co-founder Joe Kraus makes some phenomenal observations that go straight to the heart of the startup experience. When asked “Did it seem like you were onto something huge?” he responded by saying:

The hardest part in a startup is that you wake up one morning, and you feel great about the day and you think “We’re kicking ass.” And then you wake up the next morning and you think “we’re dead.” And literally nothing’s changed.

I’ve certainly ridden that rollercoaster many times since starting my own business, and I’ve learned that it is part of the process. Everyone wishes there was a linear path to success, but there isn’t. You just keep plugging along, trying everything you can think of, and when success happens you still can’t point to a single thing that caused it- it just happened.

Good book. It should be required reading at “startup school”- wherever that is.

• Startups , Tips & Tricks
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Jay Parkhill August 29th, 2007

My father gave me an HP 12c calculator several years ago when I talked to him about how I need to understand financial statements better. He also gave me a whole bunch of stuff to read that has definitely helped me to understand how to look at a balance sheet. I’m still a better lawyer than a finance guy, but the calculator is brilliant.

In truth, I never use any of the advanced features. Fortunately, my clients rely on actual financial experts for serious data-crunching, but once I got used to the way the HP works there was no way I was going to go back to a “regular” calculator.

The best feature is that the calculator “remembers” things better than most others. You don’t need to hit “M”; it just automatically stores the last number in memory.

Along with this goes the “reverse polish” input method. Someday I’ll understand how this name came about (though it’s probably a story not worth telling), but the essence of it is that you enter a number, hit “Enter” to put it in memory, then enter the next number and then hit the function you want: add, subtract, etc. I constantly screw up when I go back to a regular calculator now and do things in the wrong order. It’s worth the trade-off, though, because if you mistype on the HP you can hit “clear” and re-start right before you messed up. No starting all over with a long string of addition. My fumblefingers appreciate this immensely.

The last really fun thing about the calculator is the manual. The 12c was first introduced in 1982 (I’m told it was incredibly revolutionary at the time). The manual hasn’t been updated since. It uses examples like “I bought a computer for $2000 and a disk drive to accompany it also for $2000″. I’m sure someone decided that these archaisms (?) made the examples much more interesting and fun, and deliberately decided not to update them.

Now you can get the 25th anniversary “platinum edition”. I’m almost tempted since I spilled a drink on mine and some of the keys still stick occasionally, but it works so darn well apart from that I think I’ll hang onto it. It’s also constructed like a tank. I bet I’ll still have mine when the 50th anniversary edition comes out. Ooh, diamond. I might have to upgrade for that one.

• Tech , Tips & Tricks
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Jay Parkhill August 22nd, 2007

I wrote a post for Found|Read on some common complaints I have heard about working with lawyers, and how to avoid them. The title was supposed to be “How to Work with your Lawyer”, but the “with” got dropped so now it reads “how to work your lawyer”. I guess that is ok, too.

• Blogging , Startups , Tips & Tricks
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Jay Parkhill August 9th, 2007

Someone pointed me to this interesting column on the inner thought process of developers- the tension between building an application to fail fast or fail slowly. Here’s an analogue from the legal world.

One type of language I have seen a bunch of that drives me crazy is “by way of example”. Sometimes certain ideas are hard to capture precisely and people fall back on “by way of example” to help add clarity, such as “by way of example, during a leap year Februay 29 will not be considered in accounting for . . .”I don’t like this. My goal in drafting any document is to capture the meaning simply and clearly. That’s not to say I succeed all the time and occasionally ideas are so complex that a good example can paint the picture that replaces 1,000 words. It’s a tool to use sparingly, though- not a shortcut or a substitute for clear drafting. If I find myself reaching for the “example” too often, I must not be putting enough effort into capturing the ideas properly.

Leaving out the example with inexact language may be like failing quickly- though the consequences may be litigation rather than restarting the program.  Undesirable either way.  Adding the example may let the agreement fail slowly- getting the language right and using examples sparingly where really necessary let the agreement be flexible enough to accommodate changes in user circumstances.

• Tips & Tricks , contracts , legal
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Jay Parkhill July 18th, 2007

When I started my business I decided to switch from PC to Mac.  It’s been a very happy transition generally, but there are a couple of applications I haven’t been able to adequately replace on the Mac platform.  One is a Word redlining-on-steroids program called DeltaView that is tremendously useful for comparing documents.  The other is billing software.  I just haven’t found a satisfactory legal billing program for Mac.

I’m also start to use contractors and QuickBooks online holds out great promise of easy remote data entry.  That sounds good to me- I hate entering my own time notes, never mind someone else’s as well.  Unfortunately, QB online only works on Internet Explorer for PCs.

Enter Parallels.  It looks really amazing.  I’m excited to see how it works in real life.

• Apple , Tips & Tricks
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Jay Parkhill June 21st, 2007

I went to a really useful lawyer’s education panel yesterday courtesy of the San Francisco Bar Association on “2006 Hot Topics in Business Law”. The panel was a Matrix-style download of a year’s worth of legal developments jammed into my brain in the course of an hour and had numerous great nuggets.

One of the biggest, I thought, was the status of a case called National Federation for the Blind v. Target. It is still at a preliminary stage, but the results could be game-changing and to my mind it is a harbinger of ideas to come regardless of how the case itself turns out.

The National Federation claims that the target.com website fails to adequately incorporate technology to help blind users shop on the site. Wikipedia does a good job describing the basic technical details.

Last fall the case survived a motion to dismiss by Target on the grounds that the Americans with Disabilities Act doesn’t apply because the site is a mere adjunct to Target’s physical stores and 800 number. The court found that the ADA can apply equally to web sites, regardless of the existence of physical stores. The case is now being certified as a class action and will wend its slow way through the courts.

If the court ultimately rules in favor of the plaintiffs, the outcome could be huge. The result could not only mean that potentially a huge number of web sites must accommodate blind users, but also every other condition covered by the ADA as well.

The chances of this happening are hard to gauge currently. However, my own view is that alternative-access concerns are going to become more prominent as the Internet gets more fundamentally integrated into daily life. Smart businesses will start thinking about these ideas early to avoid playing catchup later on.  I once worked on a technology platform that had to be abandoned after $100M+ had been poured into it just because the software couldn’t be made Y2K compliant, so I am sensitive to the importance of planning ahead.

• Startups , Tips & Tricks
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Jay Parkhill April 18th, 2007

Apologies to readers for a dearth of posts recently. Recovering from a bicycle accident has gotten in the way of my writing. I should be back at it soon, though.

In the meantime, here is a neat, sad story about a Japanese temple construction company supposedly in operation by the same family since 578. Its long run finally ended, apparently, as the company folded under excess debt.

The article’s author does a good job identifying some factors that helped the company survive for 1,400 years. Perhaps unsurprisingly, they aren’t that different from what helps startups make it: focus on the core business, but be flexible to changing circumstances and the needs of the business.

• Startups , Tips & Tricks
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