02:48 AM

Startup School: Launch fast, update frequently and be lazy

Mark Coker reports from Startup School at Stanford university where 600 people from around the world listened to some of Silicon Valley's top entrepeneurs give out their best advice.

By Mark Coker for Silicon Valley Watcher

Palo Alto - Launch fast, keep it simple, update frequently. That was the message hammered home this Saturday to 600 wide-eyed entrepreneurs packed into Stanford University’s Kresge Auditorium for Startup School 2006.

Attendees at the invitation-only event, who came from as far away as Europe, South America and Asia, were there to learn startup business advice from over a dozen tech industry movers and shakers. The crowd, mostly men in their early twenties, sat in rapt attention as they heard war stories of tech business success and failure from men and women not much older than themselves.

The event was co-sponsored by seed venture firm Y Combinator and Stanford’s BASES organization, and featured presentations covering fundamental topics such as funding, hiring, marketing, operations, and legal planning.

Joe Kraus: I'm a startup addict

Joe Kraus, the former co-founder of the Excite search engine that sold for $6.7 billion in 1999, kicked off the conference by confessing to the audience that he was a startup addict. The crowd laughed, probably wishing the same affliction upon themselves.

Kraus proceeded to share stories about the early days of Excite and how his passion for startups led him in 2004 to do it again, this time with JotSpot, the wiki software collaboration company. Throughout his speech, he called upon the aspiring entrepreneurs to remain persistent in the face of obstacles, hire only “A” players and accept minimal funding at first.

Kraus told the crowd that it was easier than ever to start a company because of low cost hardware and open source software. He cautioned, however, that it’s still difficult to build a successful company because lower financial barriers to entry mean more competition.

Mark Flecher: Creating the infrastructure

Kraus was followed by Mark Fletcher, another serial Internet entrepreneur, who doled out advice about how to create the Internet infrastructure necessary to support high traffic sites. His first two startups, ONElist and Bloglines, both had fairy tale endings in the form of acquisitions from Yahoo and Ask Jeeves, respectively.

Ann Winblad: Software industry breakout

Next up was Ann Winblad, whose venture firm, Hummer Winblad has been a Silicon Valley institution since 1989. To this day, they continue to invest exclusively in software firms. Winblad declared that the software industry was on the verge of a strong four year cycle of wealth creation, driven by exciting new software delivery models such as on-demand.

Tim O'Reilly: Watch the alpha geeks

Tim O’Reilly, founder and CEO of O’Reilly Media, encouraged entrepreneurs to keep their eyes on the “alpha geeks,” the early adopters whose interests in emerging operating systems, programming languages and scripting languages often presage seismic shifts in the industry. The Perl language, he said, became hugely popular among alpha geeks in the mid-‘90s before the mainstream computer trade press had taken notice, even though it was being used to create a new generation of web applications which would later spawn what is know today as web services.

O’Reilly told attendees to focus their businesses in markets where there’s the possibility for “asymmetric competition.” He cited the Internet classifieds site Craigslist as an example, noting that in 1995 Craigslist had only 18 employees compared to other big media companies such as TimeWarner and Disney that had tens of thousands.

"Figure out which industry is ripe for disruption and take the costs out of that business," he stated.

Paul Graham: Expose your ideas early

Creative destruction was a common theme of the event, where entrepreneurs were told to constantly revise the expectations of what their businesses should be, not to confuse products with business models, and let their users be their guides.

Paul Graham, a partner at Y Combinator, urged attendees to launch their Internet businesses early, even before all the development is complete. “If your idea is stupid,” said Graham, “it will be exposed early.”

He also urged entrepreneurs to continually pump out new features designed to improve user experience. Graham, known for his lyrical metaphors, declared, “Users are a fickle wind. If users pick you up, there’s no competitor that can knock you down.”

He also told the audience that in order to succeed with an Internet business, you must “sing for your supper or die.”

Caterina Fake: Less funding is good

Graham was followed by Caterina Fake, co-founder of , the photo sharing site acquired by Yahoo earlier this year. Fake, building upon Graham’s comments about quick deployments, said that it’s important to make your mistakes quickly and learn from them.

Fake recommended testing usability by listening to users, but more importantly, observing how they interact with your site.

When asked if Yahoo was going to add videos to Flikr, Fake smiled and said, “I wouldn’t exclude the possibility of there being video on Flikr some day.”

Fake spoke about the early days of Flikr and how the company had no money for marketing or PR. Yet she said that in retrospect, being under funded was a good thing because it forced them to build a product that was viral in nature, which in turn improved the overall user experience by encouraging stronger community. In the early days of Flikr, the company generated 80% of their new users from blogs.

Several speakers spoke of the need for software developers to strip out all but the most essential features when launching their businesses, and to do more by doing less and keeping it simple.

Om Malik: Don't over-engineer products

Om Malik, a Business2.0 reporter and publisher of the popular GigaOm technology blog, entered the stage waving a stack of index cards in his hand. Scribbled on the cards were his speaking notes. He announced to applause that he wouldn’t be using PowerPoint and then challenged the attendees to create an application better than index cards, because index cards were portable, cheap and easy to use.

The primary theme of his presentation was that great businesses, products and applications force a positive behavior change among customers, often by making something much easier to use. Many products today are severely over-engineered, he said.

Counseling entrepreneurs on their communications with the outside world, Malik urged them to keep their messages simple when trying to connect with users and the media. He chastised the recent batch of Web2.0 startups because it’s too difficult to discern what they do, and their appeal is not mainstream.

“Silicon Valley is very insular,” he said. “Many startups are looking to serve just geeks but what’s cool is rarely profitable.”

Chris Sacca: Too many stale pitchess

Chris Sacca, Head of Special Initiatives at Google, lamented that most Internet business pitches he receives from among his 1,500 emails a day have gone stale.

“Many Internet companies are starting to look the same,” he said, scrolling down a list of hundreds of Web 2.0 sites as the image of a homely sheep’s head emerged in the background his presentation. He called upon developers to add “interestingness” to their applications, citing photo sharing site Flikr as and example of how to do it right.

Lawyers: Invest in legal infrastructure

Several of the startup veterans, as well as lawyers Page Mailliard and George Willman of Valley law firm Wilson Sonsini Goodrich & Rosati, urged entrepreneurs to invest the money necessary when they form their ventures to file the proper legal paperwork, such as “C-Corp.” articles of incorporation in Delaware, founders agreements and stock option agreements.

In answer to a question from the audience about the cost of legal representation, Mailliard responded that her firm often agrees to provide up to $20,000 in legal fees on spec until a startup secures its first round of funding.

Joshua Schachter: Be lazy

In a form consistent with his pioneering role of popularizing Internet tagging, Joshua Schachter, founder of community bookmarking site del.icio.us delivered the sparsest PowerPoint presentation of the day. Each slide contained a single word, such as “market,” “listen,” “design,” and “scale.”

The final slide was labeled, “lazy,” for which he made the point that entrepreneurs should be lazy by avoiding low value transactions that consume your limited time, and focusing on what really matters for your business and ignoring what doesn’t.

Smart mobs: The audience reaction

During the breaks and lunch hour, attendees networked with a fervor, comparing notes of who had met whom, eager to find others willing to listen their project pitches, and mobbing Kraus, Fake, Graham, O’Reilly and Malik.

Bryan Wood, 20, who had flown all the way from Dallas, Texas, stood outside the auditorium during breaks, passing out printed flyers advertising two of his four Internet properties. One, which just launched, is LendMonkey.com, a peer-to-peer trading exchange for movies, games, music and books.

He asserts his service is far superior to better buzzed sites such at Lala.com and Peerflix, and he’s looking for capital to expand his marketing to compete. To support his fledgling businesses, he does contract programming on the side although his real dream is to devote full time to the businesses.

Earlier during the presentations, when Ann Winblad outlined the elements for a business plan, Wood murmured excitedly, “This is the type of information I came to learn.” When Caterina Fake recommended that it was important for news users of community sites to be greeted by an online host, Wood smiled again and said, “I’m going back to my hotel room tonight to build that - I’m going to greet my users too.”

Wood was not alone among Startup School 2006 attendees in his giddy exuberance, because for many attendees the emotions rivaled that of a religious revival. These programmers, many of whom must pursue their entrepreneurial dreams at night while they hold down day jobs, came here from around the world, hungry to unlock the secrets to tech business success.

During the lunch break, Eduardo Flores Verduzco, a soft spoken software systems integrator at FusionMX Software in Mexico City, joined a table of strangers. Verduzco, like most Startup School 2006 attendees, mixed effortlessly with other attendees, all of whom enjoyed sharing ideas as if conference were participating in one virtual message board.

Eduardo said he traveled to the event to learn more about the business ecosystem in Silicon Valley that allows technology ventures to sprout like vegetables in fertile soil.

In Mexico City, he says, they have the technology and the skilled labor to build technology applications, but they lack Silicon Valley’s infrastructure of law firms, PR firms and venture capital that are the catalysts of new business formation. Furthermore, he says, Mexican software developers lack the knowledge to protect their intellectual property, or to market their products on a global scale.

When asked who he wanted to meet, Verduzco smiled and answered, “Paul Graham of Y Combinator.” One of those at the table pointed to a man sitting six feet behind Verduzco and said, “there he is.”

Verduzco quickly reached into his bag and pulled out what at first glance appeared to be a think business plan, although a second look revealed it was a large coffee table book of Mexican art - a gift for Graham and an advance token of appreciation for what Verduzco hoped to learn from him.

Audio archives of the conference will be available early this week at http://startupschool.org/.

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Mark Coker, former founder of BestCalls.com, dreams of launching his next startup. By day, he’s president of Dovetail Public Relations, a firm that specializing in representing venture-backed startups.