Hire evangelists for your business

If a startup is thinking about firing its developpers, it should do it fast. If you're going to make mistakes, make it as fast as possible. However, a startup should always prevent mistakes. Don't hire developers, software engineers, scientists, CEOs, CTOs unless you're sure the person is an evangelist of your business. An early startup should never hire to fire.

Create your own world

Every startup dreams of being the next google, the next microsoft, or kill google, kill microsoft. Well, I have two words for you: be yourself. That's why you start a statup; to solve a personal problem, not google's problems, nor microsoft's. Stop following what google or microsoft are doing. In fact, if you want to be the next goog, or msft, you will get your wish. You will be goog#2, or msft#2. In this competitive world, #2 is an ugly place to be. It's either you're first or last; there's no #2; #2 means last. You're either be google(first), or yahoo(last); facebook(first), or myspace(last). Don't get me wrong, yahoo and myspace are valuable; according to alexa.com, they are #1 and #2 most visited sites in the world. But who cares; yahoo is a confuse conpany; today they decide to be a media company; next month they want to be a search engine company; a few days later, they're angry, and want to fire 10% of their workforce. For myspace, what can I say? Last time I went there, I thought it was a daycare center; a whole bunch of 4 year old.

The time is now.

After months of working on this prototype, we finally have something to show for. It's been an on and off project; I'm at Harvard; my soul mate works full-time as one of the lead engineers at Depaul University. After this semester, I'm taking a leave of absence from school, and he'll quit his job to work full time on this startup. It might not be the best prototype, but it's a starting point, we promise we will build from it. http://www.woozai.com:8080/woozai/collab.swf

There's room for one more startup.

When starting a startup, we shouldn't worry about if there's room in a particular market or not. If we're solving a problem, there's always room. Who would have thought google would become the biggest software company in the world. Software moves to the web, and google is the leader in that world. Almost everyone uses goog applications in one way or another. When our startup is in the idea stage, many companies can emerge into our market, and we wouldn't have time to track all of them down. If we have a competitive advantage, there's always room. We don't start a startup to be 20% better than the competitors; we start a startup to be 20 times better than the competitors. When goog started, there were excite, lycos, aliweb, altavista, webcrawler..., but goog came in and kick ass. If we have to know something about our market, make sure we know if the market is new, or declining. Trust me, if we're solving a problem, and we have competitive advantage, there's plenty of room.

Startups high pre-money valuation is a killer

Startups like to raise fund at a high pre-money valuation. It's understandable; founders want to give up little % of their company for a lot of money. But that could be very dangerous, even fatal for startups/founders. When the company is new and unproven, it's better to raise capital at a low pre-money valuation. Founders know when the company is a few thousand line of code, or barely bringing revenue, it shouldn't be valued as high, but they raise the valuation bar anyway. Let's say the founder's wish come true, and the company gets acquired, which is the new business model for most startups now these days. Investors will get the money they invested and more, before founders get anything. Sometimes founders get nothing. It's never about founders get 45%, investors get 65% of the company's stocks. Investors always want to get their investment back, and possibly more... If taking 65% is higher than taking 10X their investment, they'll take 65%; if taking 10X their investment is higher than taking 65%, they'll take 10X their investment. Investors get paid before founders. In an acquisition, the higher the pre-money valuation is, the more likely investors will take all, if founders don't sell as high as their company pre-money valuation. Now days, before a startup gets out of beta phase, it's already valued at millions. Facebook barely bringing $200 million in revenue is valued at $15 billion. Even Mark Zuckerberg doesn't think his company worth that much. Digg.com barely has a business model, is valued at $200-$300 million. What happen to the good old fashion of buying low to sell high? Startups need to buy investor's money at a low pre-money valuation to exit the company high to make a profit.