i wouldn’t recommend doing this to your wheel. the fall (over my handlebars and very fast, but off the trail and at least not on top of any rocks) was not nearly as painful as the walk to the car (about 4 miles and with my bike on my back – at least it was my hardtail which only weighs about 17 pounds). so much for the HuGi (guess i’m in the market for a new wheel) …

Just over 48 hours ago 72 people came together in Boulder Colorado to see if they could come up with a business idea and launch by midnight Sunday.  We started Friday night with a handful of ideas . . . winnowed the list down to the top 3 favorites . . . and picked one to run with.  Here’s the result:

The process of working on a business with 70 people in such a short period of time was amazing.  I’ll put up some of the notes I took throughout the weekend in a post tomorrow but you can see a running tally of the experience at www.startupweekend.com.  This was entrepreneurship on steroids and was as much about the social experiment of starting a business as it was about the idea itself (something lost on many of the comment authors on our TechCrunch posting, but not lost on anyone who actually participated). 

Check out what we accomplished, but know that this is just the tip of the iceberg…

I don’t know much about your business but I’d guess that you’re burning too much cash.

Ok – that’s an over generalization but it’s also probably true. Businesses – and particularly early stage businesses – have some kind of gravitational pull towards spending too much money. Some of this is just the nature of entrepreneurship – entrepreneurs tend to be optimistic people who believe strongly in their business idea and their ability to grow their company. Some of this is that spending less money by definition means making trade-offs and potentially slowing down. Some of it may be left over exuberance from the internet bubble when businesses were rewarded for spending cash faster and looser. I don’t know all the causes, but it’s almost universally true.

Unfortunately, unless you have unlimited funds, spending too much money early means that you may not be around if your market takes longer than expected to emerge (it will), your technology doesn’t work the way you thought it would (it won’t), your sales cycles turn out to be longer than planned (they will be) and your funding harder to come by than you anticipated (’nuff said).

While there have been plenty of times over the years when I’ve avoided this pitfall, there have also been plenty of times when I’ve completely ignored what I know to be true about early stage company spending habits and allowed things to get farther along than they should. I always look back on these situations with frustration because this is something that is completely preventable. It’s rare to be sitting around a board table saying “I wish we had ramped up the burn earlier –we’re really paying for that now”; it’s much much much more likely that you’ll be kicking yourself for spending too much too soon, before you really had a good handle on the most efficient way to use the money. That extra few months of cash burn could really come in handy right now…

Everything in the start-up world is relative and your spending will depend a lot on your funding situation, you industry and the stage of your business. That said, below is a quick rule of thumb for web/internet/software businesses at various stages. If your net burn exceeds this amount (where burn = actual change in cash month/month, not GAAP and not gross expenses) or if you have less than 6 months of cash in the bank at your current burn rate and don’t have a funding plan in place, take a look at what you’re spending:

• seed stage: $40k/month
• angel stage: $100k/month
• early venture stage: $250k/month
• venture stage: $500k/month

I’ve rarely had success in businesses that ramped their spending above $750k net a month – it’s just too much money to be spending for any extended period of time in the name of “market acceleration”. I’ve had lots of experiences where we’ve kept spending below $450k/month and had great success.

So please be careful with your cash. It’s not that it’s bad to spend money – it’s just that it’s bad to run out of it.

One of the great challenges of business in general and smaller, fast growing businesses in particular is figuring out the balance between near term focus and long term vision.  While all companies become slaves to the calendar (striving for quarterly sales targets, specific product release dates, etc.) too many never look up to see where they are really headed.  I’m not talking about making sure you have the latest IDC report on your industry on your bedstand, I’m talking about having a meaningful understanding of your business, you competitors and spending real time focusing on how and where you are going to take your company.

The typical paradigm for this is wrong, in my estimation – and most companies that I’ve seen are missing the boat.  Companies spend almost 100% of their time focused on the here and now and designate only discrete periods of time on future planning (their annual strategy session, at the board meeting where they review their next year’s plan, etc.).  To borrow an analogy from mountain biking (sorry – cycling season is in full force and it’s on my brain), companies need to be focused on where they are headed, as opposed to where they are, and use their peripheral vision to avoid current obstacles.  In cycling you look up trail – focusing not on what you’re riding over at the moment, but what you’re about to come upon (and by the time you’re there, you’re focused on the next thing).  The faster you’re moving, the farther ahead you need to be looking (because it’s on you before you know it). 

Management teams that get this right are consistently engaged in conversation about the future of their company and industry.  Product strategy discussions are broad and include not just product management and engineering but executives from across the company.  Feedback from customers is not siloed in sales, but is shared across an organization.  These companies have regular time set aside for execs and employees to spend unstructured time together taking about what’s working in their business and what needs improving; what customers are asking for; what their competition is doing; what the trade press is writing about; what would be ‘cool’ to include on their product wish lists; what’s not working in the business; etc.

This activity doesn’t replace knowing where you are (your peripheral vision is important) but better informs where you are by knowing (really knowing) where you are headed.

A few things that individually aren’t a full post but that I wanted to point out.

First – there are a lot of idiots on the internet – at least 409 of them (the fact that this number matches the most annoying accounting/tax regulation is pure coincidence, I’m sure…).

Second – My dad’s take on my assessment of the patent situation (including where he disagrees with me – thanks for reading dad!).

Third – A post from Rich McIver on VC presentations which underscores many of the points I’ve made in post on the same subject (here and here)

Finally, a few tidbits from a report from The Nomura Research Institute on worldwide voice vs. data mobile usage (sorry – couldn’t find a link to the report; I’m sure if you contact them they’d be happy to sell you the report <g>):

• China is SMS crazy; they are also the world’s largest mobile phone market with over 460 million subscribers (but the penetration varies significantly by region of the country).
  
• Japan has huge usage of mobile internet.
  
• Russia has more than 100% mobile penetration (meaning there are more mobile accounts than there are people in Russia) – 96% are prepaid.
  

A little while back I wrote a post on how much I love start-up office space.  It’s messy, it’s small, it might not have a window and it might smell a little bit funny, but it’s the best office space you’ll ever have.  I received a bunch of emails, comments and pictures from people with whom the post resonated.

I really liked the following picture sent to me by Darrin Husmann who has a start-up company making intelligent irrigation systems with offices in both Oklahoma City and Baghdad ("Strange how war can bring two people from across the world together to work on sprinklers, eh?"). 

Here’s the note from Darrin that describes the pic:  Here is what the inside of a Baghdad startup office looks like. At this time the biggest issue is only having 2-3 hours of electricity per day and no kerosene to power the generator. (So Haider has to code really fast when the PC is working….).

 I love it!

Brad has a nice series running on patents which I’ve enjoyed a lot (I think the existing patent system is completely hosed, totally ineffective and open to blatant abuses of power – see this post from Jason for the perfect example).

Well today, there’s a glimmer of hope that change may be on the way as the administration and it’s head patent policeman Jon Dudas announced the intent (note the gap between intent and action, but at least it’s a first step) to reform the patent system. While I generally like the idea of requiring patent filers to include more information on why their invention is ‘novel’ the gem for me in today’s announcement is the idea of opening up patents to more of a peer review. What a novel idea – have people who are actually in a particular field help determine whether an idea is truly novel and therefore patentable. In a system where the average patent is looked at by an examiner for about 7 hours before being approved (and where the default behavior seems to be “assume this is novel until proven definitively otherwise) far too many patents which are both obvious and not particularly original are being issued.

While I don’t think software patents will ever be outlawed, perhaps the PTO will someday go the next logical steps and more significantly tighten up the requirements for issuing a patent (and issue far fewer patents) and completely abolish method patents all together (ok – I’m deluding myself on that last one). I’m hoping today’s announcement is a step in that direction.

If you have a minute and are looking for a laugh, check out this list of patents actually issued by the PTO – I particularly like the electrified table cloth (to keep bugs off your table, of course). Why didn’t I think of that one?!?

Thanks to Brad for pointing me to the article – I’m sure he’ll have his own post up about this move in the right direction when he gets back from a few days unplugged.

I have to admit that when I set up my Twitter account I thought I’d be turning it off after a few days for lack of interest. Instead I was calling up T-Mobile ordering a higher volume sms package.

I have to say there’s something addicting about it – I like the short message format; I like hearing what my friends are up to; I like the record of my day that it creates for me and for people that are following me; in short – it’s just fun. My Twitter ID is Sether (www.twitter.com/sether) if you want to see what I’m doing.

A few quick comments, in case this post finds its way to the Obvious gang (creators of the Twitter app):

• it’s too hard to find users and even harder to add them to your network. seems like this should be much much easier. and while we’re talking about it, what’s the difference between friends and followers?
• i’d like to be able to reply to the individual sender – replying to a twitter message sends a note back to twitter (meaning it gets broadcast as a twitter message to your friends and followers) rather than sending a message back to the poster. at a minimum a reply should trigger a ‘comment’ like feature (that would keep it w/in the twitter ‘system’ if that’s what the issue is), but ideally, you could reply directly to the message originator.
• it would be great to be able to twitter pictures.

If you really get into the service, check out TinyTwitter (www.tinytwitter.com) – an app written by my friend Kevin Crawley which will save you the hassle (if you think of it that way) of constant IM pings. Very slick and in typical Kevin fashion both simple and extremely useful at the same time.

I’ve had a few people ask me about this recently and it felt “blog worthy”. At issue is the question of whether it’s ok to use title as an incentive to either keep someone at a company or attract them there in the first place . . . is playing to someone’s ego an acceptable employment practice?

I know some people who get really bent out of shape about this stuff, but my view is that using title as part of a ‘comp package’ is ok –in certain circumstances and with a full understanding of the potential pitfalls. Most importantly, this can only be used in “bubble cases” where someone is truly on the line between senior manager/director or senior director and vp (the most common case in my experience where this becomes an issue – getting a vp title is seen as a big step). Promoting someone too early or hiring someone in at an inflated level where they are clearly not up to the standards of the rest of the team at that title grade is a mistake – people see through it and it causes an internal mess. Along those lines, titles like CFO, COO and President are not to be thrown around lightly – it sends a very specific message to an organization, investors, clients, etc – and a decision to hire at this level (vs. a VP of Finance or VP of Operations, etc.) is too important to play around with. That said, bringing someone in as your “VP” of Engineering when they are on the bubble of accepting an offer and where the issue is your desire to call them the “Senior Director” of Engineering shouldn’t cause you any heartburn. And while your first move should probably be to convince someone to take the tile you think is fair and review and promote them later (I’ve had great success with this in many of the companies I work with), when title becomes a real issue in a comp negotiation I think it’s ok to use it to your advantage.

While we all want to think that it’s the work, the environment and the “opportunity” that attracts people to move from one company to the next, the reality is that many execs are looking for some upward mobility and providing that for them can be the difference between making a great hire and spending the next 2 months trying to find another candidate to fill the job.

Would you work for $1? Here’s a few people who do.