Friday, March 14, 2008

Global Or Die: Is There A Future For Local Startups?

When the commercial Internet emerged in the early nineties, the first startups were very local, addressing their local markets. Take search for example: we had search engines all across Europe using different technologies, different names and indexing local content in their local language.

None of them have survived; they were all acquired or killed first by companies like Yahoo, and then later by Google. It reminds me how fast an established leadership such as the one Yahoo had, can disappear in a record time. French or Germans were mostly looking at French or German sites and not so much outside. We had hundreds of auction sites like EBAY. How many are left now?

This is all over, startups have to think globally now, unless they want to just sell for cheap. Look at the Internet in Europe: how many world class Internet leaders there? We had Skype, it is now Ebay owned. We had the leading european travel site, it is now owned by Sabre. I could go on and on - most european companies that could become world leaders are now American owned. This is sad but just a fact. Of course there are exceptions like the dating site Meetic that many tried to acquire and remains European, but there aren’t many like these.

Here is my advice to startups just starting to think about their product and target market:

1. Think global as you create the business

It is very difficult because our natural tendency is to think local, to eat lunch and dinner with people around where we live and think in our own language. I lived in Paris most of my life and I was naturally addressing the French market first. Moving yourself and your family to a very international city like London, NY or San Francisco helps

2. Move to Silicon Valley

Talking about a move, that is clearly the best environment in the world for a startup. It is where you can gather the best team and the best partners. It increases your chances to get big faster. The European video site Dailymotion was launched before YouTube, was not a copy cat, but YouTube became larger more quickly and was sold for over a billion to Google while Dailymotion still keeps raising funds.

3. Create an original product: new and different

Digg or Twitter have created new social relationships and even though they have hundreds of copycats, they will remain the originals. The best way to succeed is definitely an original and great product.

4. Do not create a copycat, unless your goal is only to get acquired

Do not do copycats, even if you are in a remote market and even if it is tempting, unless you are just here to create a company and sell it quickly to the leader, which is a business model that some entrepreneurs have become masters about. Why not partner with the mothership and launch them where you are instead of copying ? Innovate, do not copy, life is too short for that.

5. Try to raise funds from world-class VCs

They will help you become world-class, but if you are not based in Silicon Valley you have a lower chance that they invest in your company. If you go for local VCs, always take the most international ones.

6. Hire people from all nationalities as much as possible

Americans hire Americans. French hire French. Spanish tend to hire Spanish people. Even if it is easier, you should hire as much as possible a team with as many cultures and languages as possible. Cultural cross pollination is a wonderful way to stoke creativity.

7. Register your domain names in the key countries you are interested in (and the large ones you are not interested in)

A common mistake made by most startups. Very difficult given how rare good domain names have become but you would absolutely try.

8. Protect your brand Worldwide

do not wait to sort out trademark in the key regions

9. Make a site that is language ready day one, even if you launch in English

More non-English content is posted every day on the web than in English. It is ok if you localize when you have built the product, but at least make it very easy to do by separating the language text files of the interface. Obvious? Yes. Do not forget that many languages have words much longer than english words and they tend to break the interface, take Finnish or German and you will see what I mean.

10. gather an international community since day 1

International starts the first day you launch the company. Having members from all around the World will give you different perspective and different uses of your own product. We have not even launched Seesmic yet but we have users from more than 20 countries who came and used it. We learnt each time.

11. Talk to the most active members of the community to help you understand their market and become evangelists there

these active members can be very powerful evangelists in the different countries, they can also help you get introductions to potential partners

12. Create an application that lets your community translate the site by themselves

the way Facebook translated its site in many languages using an application where members could do inline translation and then vote when there was a discussion on the best term to use. This was a brilliant way to come back with high quality and fast translation. It also helps you have languages you would have not even thought of launching. Do not forget what it takes to maintain them though.

13. Languages are not the same in all the countries they are spoken

French in France is different than French in Quebec so is Spanish different in Mexico and in Madrid. Words may not even be understood the same. email for example is “email” in French (it’s just as often the english word) and “courriel” in French canadian. Use “courriel” or “pourriel” (for spam) in France and some people will laugh at you. Same for “chat” which is “clavardage” in quebecois and just “chat” in France…

14. Do not think that Europe is the U.K.

Most US companies launch from the U.K. thinking they are launching in Europe. There are more than 20 languages in Europe, and the cultural differences between a Danish, an Italian and a Portuguese are huge. Succeeding in the U.K. does not mean you will succeed in the Netherlands.

15. Manage costs properly

Going international by creating your own office or dealing with a partner is expensive. Think about incorporating the company in a country you do not know, respecting social and work local laws, accounting, reporting… In some countries work is not flexible, if you had to close the office and fire your team it could cost you up to a year of payroll…

16. Never do a 50/50 deal with anyone

The famous “golden share” is very important. If you do 50/50 deal nobody has control and it leads to a mess most of the time. The best is of course to be in control of your own business.

17. Do key partnerships with large local players

A great way to go international is what LinkedIn has just done in France by partnering with the largest human resource organization, APEC. APEC’s established position on the market will guarantee LinkedIn initial volume and branding.

18. Never trust that if the partner is large your service will be a success

Partnering the the largest ISP or portal in a Country does not mean they will heavily promote you. You are likely to end up as the service #867 promoted on a page nobody watches. They would never do that to you? I experienced this many times… You would better partner with a small site in your space which will really feature your service than a large one where it will be lost like in a Christmas tree.

19. Create an international reseller program

Sharing a nice % of the business with your partners or resellers is a good way to get them motivated. Web hosting companies have been good at establishing worldwide presence by offering reseller programs, partner conferences, joint marketing, etc.

20. Kill your local copycats

Despite all your efforts, you will have copycats in many markets if your product is successful. Try to kill them first, if you are the leader you should have more traction and means

21. Buy your local copycats if you can’t kill them

Can’t kill them Buy the best ones to grow, if they are copycats they do not have that many exits possible, most of the time they were created for you to buy them. Think about making sure the team will stay in place and not only the founders…

22. Be very pragmatic

In some markets it could be a joint venture, in others it could be a partnership with a large player, and other places just creating your own team works

23. Do not apply any of this to Asia

I do not know the Asian market enough to judge what is happening there but it seems that most large US sites that launched in China pulled back or were not successful. The Japanese market has its own leaders, but I wont’ risk an opinion on an area I do not know enough, I would just be very cautious there.

24. Do not apply any of this to Russia

Everybody forgets the Russian Internet market, it is huge and growing fast, the leaders there are local and operated by russians. They even buy American startups - LiveJournal was bought from Six Apart by Sup.

25. This advice only applies to Internet startups

My experience extends only to Internet startups. Other young companies may find that much of this advice does not apply to them.

Kaynak :

Thursday, March 13, 2008

Çinli Filozof Chang Ying Yue'dan

Her kim gün boyunca arı kadar aktif, bir boğa kadar güçlü, bir at kadar çalışkan olduğu halde, akşam olunca bir köpek kadar bitkin eve dönüyorsa; bir veterinere görünmelidir. Çünkü eşek olması, kuvvetle muhtemeldir.

Saturday, March 8, 2008

How to save money running a startup (17 really good tips)

How to save money running a startup (17 really good tips)

[ UPDATE: This post caused some big debate over at TechCrunch. I respond here with the blog post titled "can you work at a startup and have a life?" I updated #11 to make my point a little less harsh, more true to my true feelings ]

The HowTo team at Mahalo has been an amazing surprise effort. We didn't plan on making howto articles, but when we built various how to search pages we realized that many howto articles were, well, lacking. So, we started building select ones where we thought we could help. This one on how to save money is very good.

I've got a bunch of tips on how to do this for business. Among them:

  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 ording 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 Areon 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. Jura espresso machineGet 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!

Anyone else have startup money saving tips? I will post them below as they come in...

  1. Peter Rojas of RCRDLBL: You probably don't need to rent an office, at least not at first. It's really easy to collaborate online, and unless you have a really compelling reason for everyone being in the same place at the same time, you should save your money for as long as you can get away with it. Plus it'll force you to hire people who don't need to be micromanaged.

  2. Pat Phelan gives a ton of advice including: a) No company cars, b) put your HQ in the burbs to save 50% on rent, c) Blog instead of hiring a PR firm, d) let one person book flights since it's an art, e) keep conference calls to a minimum (amen to that!).

Recent Posts

Reader Comments

(Page 1 of 5)

1. In my experience cutting corners on human assets loses more in cultural capital than it saves on actual costs.

'Always be splurging' or at least give the appearance thereof when it comes to people you have hand-selected to share your wonderful journey on.

Your biggest saving will always come from servers, software, bandwidth, and energy.

1. Never buy new servers from a Top3 vendor. Refurbish fire sale hardware from imploding startups or roll your own to spec. Newegg is your friend.

2. Always use open source and free software when its feasible. Leverage your dev talent in growing homebrew solutions for CRM and infrastructure. Look for third party alternatives to the money pit of enterprise solutions packages.

3. Instead of buying dedicated bandwith you don't need 24/7, buy redundant pipes from multiple vendors, then consildate using a load balancing router bought at a fire sale. Then supplement with burstable cache provider for those critical moments. Also S3, etc.

4. Be a total power conservation nazi at every juncture of your endeavor. Hibernate machines after 5min of non use. Flourescent bulbs. Recycle waste heat. Telecommute. Seeing your energy bill drop even 10% is like winning the lottery.

Posted at 2:40PM on Mar 7th 2008 by djibouti

2. What is your opinion of outsourcing development?

Posted at 2:44PM on Mar 7th 2008 by Sean Ammirati

3. Jason, maybe the best post you've written that I've read. Coming from a true entrepreneur who sees the REAL world.

I especially love #11. Spot on!

Posted at 2:46PM on Mar 7th 2008 by Kenneth Holland

4. Doesn't it strike you as ridiculous that people still need to be told these things.?

Posted at 2:50PM on Mar 7th 2008 by kerry morrison

5. Your point about Microsoft office is great. I would add to that by saying you can do this with a lot of big ticket software. Then you can setup up Remote access to those computers. That way everyone has their own login/remote desktop on those machines - so they have their own settings... and they do not have to get up from their work place.

Posted at 2:52PM on Mar 7th 2008 by Matthew R. Miller

6. "Outsource to the sweet spot middle America" - did I hear it from you before? :-)

Posted at 2:53PM on Mar 7th 2008 by Subhankar Ray

7. Excellent post, Jason. I especially liked the tip about giving staff excellent chairs.

Posted at 3:02PM on Mar 7th 2008 by Siamak

8. We have one phone that's shared amongst 20 or so people. It's used maybe 5 times a day. Imagine the waste of putting one on every desk...

Posted at 3:14PM on Mar 7th 2008 by Nathan B

9. Great set of tips, Jason. What employee wouldn't love working for a place like that? (particularly 11 and 12 - gotta have caffeine) I know I would.

Posted at 3:31PM on Mar 7th 2008 by Joey

10. This is small but the numbers are so striking I gotta point it out:

Don't buy whiteboards at an office store. Just buy white "wallboard" at home depot. Its a little bit less easy to clean off, but a 4'x8' wallboard is about $8. A comparable offical "whiteboard" is $400. Multiply that by all your conference rooms...

Legal fees are highly negotiable. So is their payment plans. Just cause people have a nice office and wear suits doesn't mean they don't haggle as much as hack limo drivers.

If you MUST get a phone system, consider the following:
- Centrex. Its cheap and it works with normal phones
- Second hand. You can buy a whole generation-or-two ago phone system (phones and all) for $100. Some nerd in your office will think this is a fun sunday project to set up.

Get a Seamlessweb account for your whole office and make dinner free if you stay after 8. People leave cause they are hungry, you get AT LEAST another hour/half hour where they are groovin' waiting for the food to come.

You can get really nice furniture from companies that are expanding to larger offices and don't want to deal with moving or are doing big redesigns and want everything to match. The best companies for this are the image-conscious ones: design studios, marketing firms, ad agencies, architects.

On basic internet connectivity, get two totally different systems. Rather than getting some ridiculously overpriced T1 with a useless SLA or "business class DSL", get whatever the cheapest cable you can get is and the cheapest DSL you can get is (or directv satellite if you can't get both of those.) hook it up with one of those auto-failover boxes. The additional internet service will be $100. Think about the savings in lost productivity from periodic cable company power outages. INSANE. And so, so much cheaper than high-end data service and more reliable.

A good follow-up post would be where NOT to cut, what's worth spending on (engineering staff, hosting, etc.)

Posted at 3:33PM on Mar 7th 2008 by Never Mind That

11. How about hiring an IT guy with a warez connection. I worked at a startup where most of the software was warez. Saved a lot of early capital (Photoshop aint cheap). The only downfall was when the company was going to be acquired, all those licenses had to be paid for.

Posted at 3:37PM on Mar 7th 2008 by magnusdopus

12. If your employees aren't worried about their desks you could even skip the kitchen tables and go straight for the plastic fold-up tables from Costco. It would be economical and would free up space in a second for reorganization of the office.
Imagine folding up the tables and using the floor to have yoda classes with Veronica....
We also all know how much Jason loves Costco!

Posted at 3:50PM on Mar 7th 2008 by Oliver Baddeley

13. "Get an expensive, automatic espresso machine at the office."

Even though I do like Jura machines and have one myself, I don't completely agree with 20 minutes for someone to go and get a cup of coffee close by to be such a waste... you need breaks between your work. People can't be productive all the time sitting at the desk... they need to get up and go for a walk every so often - unless they are superhuman :)

Posted at 3:58PM on Mar 7th 2008 by Lukas

14. Lots of good ones there Jason!
How about:

*Open Office
*iChat/Skype for video conferencing
*None traditional office space

Posted at 4:01PM on Mar 7th 2008 by ET

15. If you're just starting out, don't bother hiring an image consultant or graphic design firm. Just go onto one of the many photoshop forums and start a competition to design your corporate logo with a few hundred dollars to the winner. You'll end up with alot of varied designs and you can hire the winner to do the rest of your graphics on a per job basis.

Posted at 4:06PM on Mar 7th 2008 by Adam Cains

16. Given the ribbing you are taking on TechCrunch and elsewhere, you might want to rethink #17.

Or at least have someone with some common sense preview your blog posts before you hit "publish".

Posted at 4:19PM on Mar 7th 2008 by Deano

17. I agree with some of your points, like the second one. But in general, I think, they are horrible! You deal with humans not horses. When people go out of the office to take a cup of coffee from Starbucks, they actually refresh their mind, get air and get relaxed. This is not Newton mechanics, this is psychology. Humans are advanced machines and can't be controlled with such linear equations.

Posted at 4:46PM on Mar 7th 2008 by Emre Sokullu

18. Best post you have written in a while! I would never know this stuff without a post like this.

Posted at 4:58PM on Mar 7th 2008 by Bruce Prokopets