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March 16, 2010, 9:17 am
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POLL: What's the Best Way to Support Startups, Services or Cash?
March 16, 2010, 7:03 am
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After wrapping up a panel with a gamut of pro- and anti-VC types at SXSW, I'm left wondering why there aren't more services-oriented startup firms.
Let me explain: Most of the time, when a startup goes after venture capital, they're still in the process of building a product and bringing it to market. They need things like servers, developers, marketing tools and sometimes office space. Do they need money per se? Or is capital an increasingly arbitrary and unnecessary step in building a tech startup?
The fact is, almost every startup needs a little help. Maybe you get that help from the bank of Mom and Dad; maybe you get that help from your good friends at Mastercard. Often, you get that help from folks who want equity; you end up trading part of your assumed long-term success for resources you need in the short term.
We are all familiar with the idea of trading equity for funds through angel financing and venture capital; we're also familiar with the TechStars and Y Combinator programs that help to incubate and accelerate startups through minuscule amounts of capital and significant amounts of mentorship.
But most of us are less familiar with models such as Mike Trotzke's SproutBox or Marcus Whitney's Remarkable Wit. These firms provide services (and sometimes keeping-Ramen-on-the-table amounts of cash) to early-stage startups in exchange for equity. They provide development, marketing and other services that most tech startups need without delving into the complicated issues of valuation and funding rounds. These guys are focused on the absolute bottom line of technology, which has nothing to do with money: Making a great product and finding people to use it.
So, we're interested to know from our friends in startups who aren't taking the bootstrapping route, given the choice between pure capital or business-building services, which would you choose? Take the poll, and let us know the reason behind your decision in the comments. We'll be following up soon based on the results.
What would you rather have for your startup: Services or cash?polls
Discuss
Librophile.com - An Easy Way To Find Free Audio Books
March 16, 2010, 5:51 am
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Five ways to pass or sink reform (Politico)
March 16, 2010, 4:40 am
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Toyota dismisses Calif. man's runaway Prius report
March 16, 2010, 4:33 am
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ictQATAR paves way for careers (Zawya)
March 16, 2010, 3:35 am
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Flames let one slip away against Wings
March 16, 2010, 12:30 am
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Getting Healthy Hair and The Way to Maintain It
March 15, 2010, 11:59 pm
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KIL.A.TON: How Do I Blow Thee Up? Let Me Count The Ways [Review]
March 15, 2010, 11:56 pm
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Having Healthy Hair and A Way to Maintain It
March 15, 2010, 11:55 pm
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Anne Hathaway Must Adopt This Dog Named Chuck
March 15, 2010, 11:48 pm
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10 Ways to Improve Your Memory [Memory Forever]
March 15, 2010, 11:00 pm
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Norway's wheelchair curlers are colorful, too
March 15, 2010, 9:55 pm
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Toyota casts doubt on "runaway" Prius claim
March 15, 2010, 8:01 pm
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Frances Moore Lappe: Government - What's it Good for, Anyway?
March 15, 2010, 6:16 pm
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Libertarians must be ecstatic, even if a bit envious that the Tea Party's getting all the credit. Anti-tax groups are protesting loudly and calls for "limited" government, and even for cutting the federal government by half -- ala Glenn Beck -- are stirring the passions of frustrated Americans.
The slogans may have a lot of appeal... until we try to get our heads around question Number One: Hmmm, and where would we begin?
With the Department of Transportation?... And is that before or after it forces Toyota to stop selling cars that can suddenly go speeding off the road?
With the Environmental Protection Agency... when 40 percent of America's rivers and lakes are still too polluted to swim and fish in?
Or the Food and Drug Administration... when 76 million of us get sick and 5,000 die every year from contaminated food, costing an estimated $152 billion?
Beyond the wildest naysayers, the longstanding debate about government isn't, of course, about doing away with government entirely, but simply making it small enough to "drown it in the bathtub," as Grover Norquist put it so colorfully in 2001. It is big government that's the problem. That's the Tea Partiers' insistent message and a lot of people feel that way.
But in some big ways, a focus on government's size distracts us.
Think about it: small government can oppress, too. After all, in late nineteenth-century India, British civil servants maintained control with just one of them for every three hundred thousand Indians. Government's size doesn't tell us much.
What matters is whether government is accountable to citizens and whether we're willing to stand up in its defense because we grasp its essential roles in democracy. So we'd best put sloganeering aside and explore: What are the appropriate roles of government in a thriving democracy?
Beyond security and essential infrastructure, on which agreement is easiest, I'd start with government as fair-standard setter and enforcer. Thomas Friedman, hardly a man of the left, sums it up this way, "[G]overnment's job is to set high standards, let the market reach them, and then raise the standards more."
If government fulfills this role well, it can be lean. Why? Mainly because it's not burdened by damage control, by the costly and complex job of mop-up after things go awry.
Take poverty, for example. The real cost for all of us is not government over-reaching; it is government inaction.
By 2008, almost 40 million Americans were living in poverty -- many more than the entire Canadian population -- and that was before the Great Recession took its toll. Set aside, if you can, the incalculable human suffering and consider some of what we can tally up.
So many American children are poor -- with one-half dependent on food stamps at some point in their upbringing -- that the cost to the U.S., counting only that from lost economic output, higher health care expenditures, and the impact on crime, is estimated at nearly $500 billion a year--or most of our defense budget.
We know how to make government work for us to reduce costly poverty because we've done it. Remember the 1960s War on Poverty -- naysayers' proof of government ineptitude? Actually, Americans cut the poverty rate in half during that decade.
Similarly, enforcing standards to protect the environment is a steal compared to the mega-billions needed to deal with the messes made possible by lax government. One in four of us lives within four miles of one of these messes -- officially designated toxic waste sites. "Superfund" cleanups of the hazards have already cost tens of billions of dollars since they began in 1980. And, over the next thirty years, an additional $250 billion may be needed for as many as 350,000 such sites, reports the Environmental Protection Agency -- some of which will be paid for with our tax dollars and much of the rest passed on to us in higher prices.
Only accountable government can prevent costly and people-killing poverty and environmental degradation.
Government's role as fair rule-setter to create opportunity for all doesn't mean "big."
At the top, it means, for example, keeping the market free by standing up to monopoly. Take the monopoly on seeds. If you eat, this one matters to you. One company, Monsanto, controls genes in seeds making up 80-90 percent of our main feed crops. And the cost of monopoly? Since 2001, prices for these seeds have risen five to almost seven times faster than the consumer price index.
Here, we need government to stand up for both us and a free market. Size has nothing to do with it.
And at the "bottom" where the workers are? Ensuring a federal minimum wage that keeps up with real costs of living and protecting our right to organize without fear -- neither requires "big" government.
Plus, government can serve citizens well as an efficient fiscal agent. Medicare's administrative costs are significantly lower than those of large private insurers and HMOs. And for Social Security, administrative costs amount to less than 1 percent of benefits. That's a tiny fraction of what privately managed investment accounts charge.
Finally, government can serve a uniquely powerful role as public convener to devise solutions to problems, including the choice of what we protect as a right versus what is a commodity available only to those who can pay. All western industrial countries, except the U.S., have chosen to make health care a right, saving themselves vast sums -- on average about half what we pay for health care per person -- and some achieving greater longevity, too.
And about food? In 22 countries food is now a constitutional right, though still relatively unenforced.
But in 1993 when citizens of Brazil's fourth largest city Belo Horizonte elected an administration that had run on the platform of food as right of citizenship, things began to change. Government didn't suddenly balloon. With government serving as convener and rule setter, civil society, business and government collaborated to make sure good food is within the reach of the poor. Within a decade their innovations had helped reduce deaths among young children by 60 percent. The cost to the city? About one penny per day per resident.
Maybe we here in America could hit on great bargains like this one -- once we drop the unhelpful debate over big versus small government and get down to the real question:
How do we make government accountable to us?
Frances Moore Lappe is the author of Getting a Grip 2: Clarity, Creativity and Courage for the World We Really Want (March 2010) and 17 other books, beginning with the three-million copy Diet for a Small Planet. Fellow Huffington Post blogger and Small Planet Institute Senior Writer Stefan Sirucek contributed editorial support. Find more on living democracy at Small Planet Institute.
Toyota dismisses account of runaway Prius
March 15, 2010, 6:15 pm
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6 Ways to Better Living: Inside an Internet of Things Home
March 15, 2010, 6:15 pm
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What if we took the leading sensor-based products currently being developed or already on the market, put them all under one roof, and added a typical American family? Would they just be the techiest family on the block, or would it have a significant impact on their lives?
Here are six ways this Internet of Things family can see their lives change. They exercise more, save energy and water, budget better, know where their kids are at any moment, and they'll always have the right lighting for activities in the house.
We last month about Green Goose, which is a green egg with an ethernet connection that can sense how many miles a person has ridden on their bicycle instead of a car. This data ultimately could be synced up with each family members' bank account. So if they chose to ride a bike instead of a car, an automatic transfer of the allotted monthly gas money saved goes from a checking account into a savings account. Green Goose has plans for other similar sensors.
When it comes to physical fitness, this family has all the devices we explained in our sensors to keep you fit post. From Nike Plus running shoes, which sends running data to Mom's iPod via a sensor, to grandpa's exercise games via Wii Fit to their youngest son's training program via NordicTracks iFit, to Dad's miCoach pacer, this family is being encouraged by sensors to better understand and improve their physical health.
The Waterpebble is a simple sensor that's placed in the shower. It measures the duration of the first shower, and when the next person takes a shower a green light inside the pebble will turn to orange to let the person know that their shower-time is half way up. Once the shower goes longer than the recorded time, the pebble gives off a red light. The best part is that after each shower the Waterpebble will fractionally reduce the amount of time the person will be allowed to shower. There's also a reset button for when someone in the family is having a bad day and needs a longer shower.
All electrical appliances in this house plug into Picowatt Wi-Fi smart plugs, which allow the family to communicate and control energy usage via a command center like Intel's prototype home energy monitor. This monitor is what the New York Times refers to as an Energy Use Scoreboard, which calculates energy usage and displays costs in real-time. Once this technology hits the market, the family will be able to add a few goal-setting apps to the control panel and they'll have the tools they need to minimize their energy use.
Last January we reported on Trackle and the emerging era of alert services. In the Internet of Things house not only does Trackle alert the family about vital events and information going on in their neighborhood, but when Mom wants to make sure her daughter gets safely home from school on her own, she simply puts a Touchatag RFID tag in her backpack, which alerts Mom when her daughter is safely home.
Finally, this home's lighting can be regulated by Pachube (pronounced patch-bay) and Arduino. As we reported last summer, light sensors can be connected to Arduino, which is an open-source electronics prototyping platform. The light sensor data is then sent to Pachube, which connects the sensor data to the Web where the lighting can be controlled via twitter or via a home energy monitor.
Overall, it's important to remember that we're still in the early days of Internet of Things. As these products continue to develop we'll find more and more ways for our devices to coax us to refine our health and our environment.
Did we describe your dream home? Would you live in the Internet of Things home? Let us know in the comments below.
Photo by Svilen Milev.
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Is The Path Between VCs and Entrepreneurs A One-Way Street?
March 15, 2010, 6:00 pm
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Over the weekend, Frist Round Capital Entrepreneur in Residence Charlie O'Donnell wrote an interesting blog post that is making its way around the venture capital and startup communities and drawing a variety of responses. O'Donnell suggests that while some VCs began their careers as entrepreneurs, most native venture capitalists have trouble making the switch the other way. His reason behind this is that VCs operate with different goals, methods and mindsets which make the transition from VC to entrepreneur is an uphill climb.
O'Donnell speaks from his own personal experiences as a VC who tried to start his own company, Path 101, which ultimately failed. "I learned a ton about what it really takes to drive a successful business forward--skills and a mindset that doesn't necessarily square with the way venture investors think of the world," he says.
One of the differences between VCs and entrepreneurs he points out is the type of employees each values. O'Donnell says VCs tend to look at the leadership and the entrepreneurs as the top priority employees, while entrepreneurs will tend to place higher importance on the people "in the trenches," doing the programming and development. "Not many VCs really know how to evaluate team talent if they haven't run a company before--and that's a critical skill as an entrepreneur," he says.
Another wedge between these two types of businessmen that he notes is that entrepreneurs focus much more about what they can do with the resources they have, while VCs are constantly looking at what a company needs. O'Donnell says switching these mindsets can be difficult and that he spent too much time thinking of creating the "next big thing," rather than focusing on short-term goals and creating a solid foundation upon which to build.
Of course, as he points out, there are exceptions to the notion that a VC can't become a successful entrepreneur. As a commenter on O'Donnell's post points out, Hunch co-founder Chris Dixon began as an investor at Arbitrade and Bessemer Venture Partners before starting his own companies. Another commenter argues that its hard to make assumptions about this topic when the sample size of VCs trying to become entrepreneurs is relatively small.
Whether O'Donnell's suggestion has validity or not is certainly an interesting discussion, but the real lesson to learn from his post comes from his personal experiences in failure. One of the reasons O'Donnell doesn't think VCs make good entrepreneurs is that they may be prone to approaching the situation with advice for how to succeed permeating their brains. The trick is, success can be the product of any of a million different variables, and there is no single proven path to success. Instead, the best way to get there is to avoid failures.
Focus on the errors that most unsuccessful startups make and go out of your way to avoid them; more often than not you will find yourself inching closer and closer towards your goal this way. Just remember that errors and failures are not always things that were done that went wrong, they are sometimes things that were never done in the first place.
The question of whether VCs have a difficult time become entrepreneurs has drawn a mixed response so far from O'Donnell's blog, so what do you think? Is the road between them marked by a one-way street? Or is one side just paved a little more smoothly? Let us know what you think in the comments below.
Discuss
March 15, 2010, 5:49 pm
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Greece rescue debate under way
March 15, 2010, 4:35 pm
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