Why do we need things like LeWeb?

This post appeared verbatim as a guest post on the LeWeb blog.

Being an entrepreneur you soon learn that people like us are rare. It’s hard to find them among the usual population, specially cause we account for a very small percentage of it. Nevertheless, this percentage of entrepreneurs slightly varies from country to country. US for example has a very high percentage of entrepreneurs if you compare it with my home country Spain, who has close to none.

Because it’s hard to find us, we tend to move around a great deal, or at least we try. In the US though, this concept of moving around is something natural. Most Americans move at least 3 times among different cities and many professionals go back and forth between both coasts regularly. For most of them, this is something, not only natural, but essential. It’s something we, in Europe, aren’t used at all. Most Europeans only travel either during Holidays or for a business trip. Even in those cases, most of us bring our country culture with us. That is, there are still very real frontiers in peoples minds across Europe, even though from multiple angles (law, economy, etc.), Europe is finally one. Still, old habits die hard.

In my experience, most cases of cultural blindness are prompt from a lack of travelling. Even though most EU countries are very close (much closer than San Francisco from New York City for example), people see travelling there like an ordeal, like something close to an adventure.

So, why are things like LeWeb so important? Basically, LeWeb brings together not only Europeans, but plenty of other people from other countries like the US, China, Argentina, etc. During 2 days you can encounter with people from hundreds of different countries, people who share, in most cases, your same interests. But this is nothing new, international conferences have existed for ages. What it’s new for me is that now, thanks to plenty of social media tools, we are able to maintain those worldwide connections alive, even years after the conference took place. What I’m seeing is a convergence of entrepreneurs in Europe. I feel myself close to my European peers now, than what I felt 3 years ago.

Finally, the Internet is breaking the cultural barriers and history heritage that for so long has separated people in Europe. Finally, different cultures are working together to keep those links alive. Finally, we are starting to be one, and not many.

For all that, for that incredible experience, for enabling Europeans spread their love all over the world, thank you LeWeb, thank you Loic and Geraldine and thank you all, citizens of the world, that by coming together are enabling an incredible world flattening experience.

Scalability issues for dummies

Every once in a while I get people asking me what’s taking me so long to open my startup Inkzee to the public. They also ask me what exactly have I been doing as the web seems exactly the same. I normally answer that things aren’t easy, that it takes time, specially if you are alone, like I am. After a while I end up explaining my problems with scalability and that’s the point where people just can’t follow you. I’m going to explain here what are scalability problems and how deep the repercussions are for a small company.

Most web applications, like Inkzee, Facebook, Twitter, … are made of 2 parts. What we, the tech nerds, call frontend and backend. The frontend is the part of the application that’s exposed to the users, that is, the user interface (UI), the emails, the information that is shown. All that UI is a mix of different programming codes, let it be PHP, javascript, html, etc. The frontend is in charge of drawing the UI on the user’s screen and to display all the information the user is expecting from the application. But this information has to come from somewhere, well, that’s the backend.

The backend are all the programs and software applications that run behind the scenes and that are in charge of generating, maintaining and delivering the information the frontend displays to the user. The backend can be very homogeneous or very heterogeneous, but it’s normally comprised of 2 parts, the database (where the information and data is stored) and the software that deals with that database, does the data crunching and connects this to the frontend.

Now, some web applications have a barebone backend, very simple and light weighted. Normally some software that gets what the user inputs on the interface and stores it in the database and viceversa, retrieves it from database and shows it to the user. Other web applications have an extremely complex backend (i.e Twitter, Facebook, …). These not only manage the data retrieval, but have to do really complex operations with the data. Not only complex, but very expensive operations in terms of computational power. For example, each time a user uploads a picture to Facebook follows this path:

• The picture is stored in a specific hard drive. The backend has to determine which hard drive corresponds to that user (yes, there are multiple hard drives and each one is assigned to a bunch of users so the load is distributed).
• Once stored, the picture is sent to a processing queue where it will be turned into a thumbnail by an image processing software. This process is expensive as it has to analyze the picture and reduce it to a smaller representation if the image but still maintaining part of its quality.
• After processing it, the backend stores the newly created thumbnail in the database and stores, both the picture and the thumbnail in an intermediate “database” in memory for faster access (cache). This is because it’s faster to retrieve data from memory than from a hard drive.

This is an approximation of what a picture does when you upload it to a social network. I’m pretty sure it goes through a lot more processes though. So, supposing 1% of a social network’s users are uploading pics at any single moment, imagine uploading ~20 photos per user, 2.5 million users at the same time (Facebook has around 250 million users currently). Trust me when I tell you, that’s a lot of data crunching.

The problem

The best user interfaces (frontend) are designed so that all that complexity that goes behind the scenes is never showed to the end user. The problem is that the frontend depends gravely on the backend. If the backend is slow, the frontend won’t be able to have the info the user is requesting or expecting and it will seem SLOW to the end user. Not only slow, but in many cases inefficient or just not available to use at all (meet the Twitter Fail whale ).

So, now, what will cause the backend to be slow? Ohhhhhh don’t get me started!! There are so many reasons why the backend might be slow or broken! But, most of them are triggered by growth. That is, as the web application is being used by more and more users, the backend will start to fall apart. That’s what, in the tech world is known as scalability problems. That is, the backend can’t scale at the same speed the users pour into the application. The problem is that it’s not only a problem of more users, but having users that interact more heavily with the site. For example you might have 100,000 active users but never had experience big scalability problems. Suddenly you release a feature that allows your users to share pictures more easily… BAM!! Your backend goes down in 10 minutes. Why!! Why?!! you might scream while you watch your servers go down in flames. After all you have the same amount of users, so what happened? Well, most probably your backend system that handles picture sharing was designed and tested only with few users. Now it chokes with the big deal.

The REAL problem

Once you have scalability problems, the next logical step is to find where the bottleneck is and why is it happening. This, which might seem very easy, isn’t at all. It’s like looking for a needle in a haystack. Big backends are normally VERY complex with many parts coded in different programming languages by different persons. Not only that, but sometimes problems arise in different parts of the backend. So after a couple of really stressful hours you find the bottlenecks and think of a solution to fix them. Ahh my friend, then you realize it’s not as easy to fix as you thought. First of all, you have no clue if the fixes your team has come up with are good enough. Why? Because you’re stepping into unexplored territory. Few persons have had to tackle a similar problem and even less people have dealt with your data and systems. So even if you find someone else with the same problem, the solution might be slightly different depending on what systems you use for your backend or which architecture you have. This is the point where you realize that developers aren’t engineers, but craftsmen and that fixing these problems isn’t exactly a science but black voodoo magic.

So, here you are, with a bunch of possible fixes to a problem but with no clue if they will really work or it will just be a patch that will need extra fixes in 2 weeks. Normally you try to benchmark the solutions, but that’s not an easy task, specially because you have no real load to test it against except in your production servers and no, you don’t want to fuck the productions servers more than they are.

Finally, after some black magic and some simple testes you cross your fingers and try the fix on the production servers. After several hours of monitoring the backend for new “leaks”, you scream of happiness as the patch seems to work. Then you start to realize that the patch won’t hold on forever and that you need some extreme solution to the problem.

You sit down with your tech team (our on your own as it’s my case ) and you start drafting a new solution. Suddenly you realize that the best fix implies changing the way your backend works. And by change I mean, you need to redevelop a big chunk of your backend to fix the problem. This implies a couple of things, you’ll need to invest a lot of time and resources, you’ll loose the stability your backend had (prior to the incident), you’ll walk into a new unexplored territory for your team and worst of all, you can’t just unplug your production servers and change the backend, you need to do it so both backends coexist for a while until you switch all of your servers from using the old one to the new one.

Now, the REAL problem is that this change, this new redesign grinds the whole company to a halt. All resources, let it be people or money are invested in redesigning efforts so nothing new can be done. Most outsiders just don’t understand the depth of this change and will bash the company for not doing new things, for not releasing new features, for not fixing old bugs, etc. Not only that, investors will start to get anxious and will demand things to start moving. So, the outside world only sees that you’ve stalled, while the inside teams are suffering the pressure. Not only that, developers inside the company will get extremely frustrated by the pace of things. They won’t be able to add new features and even when fixing bugs they’ll need to fix them twice, one in the old backend, one in the new backend.

So, in the end, you realize the shit hit the fan and you got all of it. It’s hard, very hard to be there. If you haven’t experienced it you have no idea how hard it is. Not only as a developer but as a founder, CEO, or executive position you’ll feel the pain. You won’t be able to publicize your site cause more stress might accelerate the old backend problems, you can’t give users new features because you have no resources, you will try to explain the problem to investors but they won’t understand a clue of what you’re talking about… “backend what?”. Current customers will be pissed at you because the site is running slow and you are doing nothing to fix it. So, in the end, everything freezes until the new backend is in place.

How long does this takes? Depends. Depends on the size of the redesign, the size of the tech team, the skills of the team and specially, the skills of the management. During this phase, management must execute impeccably. Sadly, this is not the case in most places and so priorities are changed, mistakes are made and the redesign gets delayed over and over again.

It takes a very good leadership to make it through this period. Someone that knows where their priorities lie and that is able to foresee the future and the importance of the task ahead. Needless to say that such figure is lacking in most companies. That’s the reason it took so long for Twitter to pull their act together, to speed up Facebook, etc.

I am there, I am suffering the redesign phase (twice now). It’s hard, it’s lonely, it’s discouraging and frustrating, but it needs to be done. I just wrote this post so that outsiders can get a glimpse of what is it to be there and how it affects the whole company, not just the tech department. Scalability problems aren’t something you can discard as being ONLY technical, it’s roots might be technical but its effects will shake the whole company.

Let there be light

Anchoring an idea or product

I’m currently reading Crossing the Chasm (Geoffrey A. Moore). A friend recommended it to me when I told him I was struggling with the idea of selling services from my startup, Inkzee, to the enterprise. It’s an old book, (1991, revisited in 1999, old in terms of the tech scene), but the ideas and tips are surprisingly valid nowadays.

One of the key ideas for a successful “chasm crossing“, or selling an idea to the mainstream markets is to create a reference market to which your product/service can be compared on the heads of your clients. This principle is fairly easy to follow, but quite complex in nature. It taps into the way our brain works and it’s not the first time I’ve stepped onto it. Some months ago I finished reading another book, Predictably Irrational by Dan Ariely. It’s not an awesome book, but holds some very interesting insights into how humans react to different situations. One of the examples was about getting the correct pricing, or what the author calls the anchor price.

Both ideas are rooted on the same principle. On the first case, the author suggests that when selling something innovative, that has no competition, the way to go is to create that competition. How do you create that competition? Easy, you introduce 2 new concepts, the alternative market and the alternative product. You need to position your product close to a well know market by the customer. For example, if you’re selling an online word editor, you could make yourself close to the market of desktop word processors, aka Microsoft Word, that will be your alternative market. It’s a market known by the customer, where they buy from and most importantly, they have an allocated budget to buy from it. By positioning next to that market, the client can make comparisons between your product and what they’re already using. In other words, you create an anchor they can use to compare you against. You set yourself into a preexisting category in the customers head. The problem is that you need to differentiate your product from that preexisting market. The way to do this is by referencing your alternative product, that is, a product or service that is similar to yours, and is market leader but in a different market niche. In this example, you could name something like Salesforce.com. So you end up with a punch line like, “our online word processor is like the salesforce word processor”. So, in conclusion, the idea is to create an anchor point and a differentiating value proposition.

Now, in Predictably Irrational they idea was very similar. Instead of focusing on a product sales proposition, the domain was the pricing of a product. The example the author gave was the pricing of a subscription. An offer goes as follows, an annual subscription to The Economist (online access) costs $59. An annual subscription to The Economist (print) costs $125. Finally, an annual subscription (print and online access) costs $125. Which one would you choose? Chances are that the last one. Why is it like that? Truth is, that humans can’t value things without any reference. We always draw conclusions from comparisons. Our mind works under a cause/effect paradigm, that is, if the paper edition (lets symbolize the concept paper edition with the A symbol) costs $125 (B is the price), and online + paper (C) costs $125 (B as it’s the same price symbol as before) and online + paper (C) is better than only paper (A) then (here comes the effect) option C (paper + internet edition for $125) is the best one.

1. A -> B
2. C -> B
3. C > A

As we see from the simple logic equations from above, without [3] we can’t choose between the first 2 options. We need something to compare against. In the prices example, we are creating an anchor price, $125, something we know the value of, the printed edition of a magazine (our alternative market). We then offer a new product, innovative, something we aren’t familiar with, the online access to a publication. By virtue of putting it next to the magazine realm (in this case by virtue of the same price) we create a connection between both propositions. The problem is that we need a 3rd cornerstone to allow humans to see the difference, to be able to choose. In this example we are using a quantitative approach to choose, 2 things are better than 1, specially if that 1 thing is part of the other offer.

In the product example we use the product alternative to create a point of reference to which we compare the product to. In the former case the equation [3] isn’t as clear and powerful as in the subscription example, but plays the same role, a way to quantify and compare your product. For example, Microsoft Word (A) is part of the desktop publishing tools market (B), our product (C) is on a similar market (B). Salesforce.com (C’) is doing great and it’s similar than our product but in a different market niche (D). There fore, our product must be as good as Salesforce but in the market of desktop publishing.

1. A -> B
2. C -> B
3. C’ ~= C (similar products)
4. C’ best in D
5. C > A

As you see, the train of thought is slightly more complex, but ends up with a similar conclusion. Granted that it’s not as straightforward as the pricing example and you need to probe both [3] and [4] to get the client to buy into your proposition, but it’s much easier to do that, than to try and sell it blindly.

Ahh, the beauties of neuromarketing

Is the cloud the beginning of Skynet?

I recently went to see the latest Terminator movie, Terminator Salvation. I have to say that I’ve always been a great fan of this movie, even though I don’t really believe in such a catastrophic future. Nevertheless, after watching the movie, which was pretty decent by the way (a little soft at the end though), I start thinking about how smart Skynet is depicted in any of the Terminator movies. I though, hey, if you could just nuke the datacenter where Skynet is, you would eliminate it. But then I started thinking about cloud computing.

For those unfamiliar with cloud computing (those familiar can skip this paragraph), it’s basically a new way of using computational resources (I’m oversimplifying the idea here though). Instead of buying or renting servers to deploy any web application, you rent computational power from a provider and pay by the hour. In a simple way, companies with spare computational capacity on their own servers, will rent you that time for you to use. There is no need to buy expensive hardware or maintain it. Instead you use the computational units the time you need them and as many as you need. That way you can take care of temporal spikes of usage in your applications by means of using more computational units and switching them off after the spike. The cool thing about it is that you don’t need to care about the underlying hardware you are using, nor the replication of your data. That is, the cloud system will maintain several copies of your data transparently so that if you loose data, you’ll still be able to recover it.

So, back to Skynet. Most cloud computing systems are built so that they are extremely reliable, that is, if any of the servers that are used fails, the system will switch to a new server transparently. The end user won’t even notice the underlying hardware had a problem. The same happens for the data too. Those advances are part of a field known as high reliability and, although it’s not perfect, they are getting there. In a close future, few web applications will experience downtime because of faulty hardware or problems in the datacenter (like the recent lightning that struck an Amazon datacenter). That means that servers will be so extended that even if you nuked one of the cloud provider’s datacenter, systems won’t go down. Most probably a bunch of other datacenter all over the world will take over and you, as a user, wont notice anything.

Now, if you think about Skynet and strip out the AI, the backbone of it is just what cloud computing is trying to achieve right now. How many years more will we need to build a system that has not a single point of failure? Scary thoughts…

LeWeb and Paris

Last week I had the change to attend, for the first time, to LeWeb conference in Paris. LeWeb, organized by French entrepreneur Loïc Le Meur and his wife Geraldine, has become one of the most important Web conferences in Europe in past years.

This is the second time I attend a European conference, being FOWA @ London, the previous one and I have to confess that the feeling was different this time. When I went to FOWA I was impressed. There were some amazing keynotes and I got to know plenty of people. It really gave me a taste of what was out there in terms of tech startups. It actually put my feet on the ground and reset many of my expectations with my own tech startup.

LeWeb was quite different, the keynotes where stellar, even more that the ones at FOWA, nevertheless, my experience was distinct. A year has passed, I’ve met plenty of new friends, most of them working in tech startups and my own perception of the tech startup world is much more advanced now that my company is starting to operate with beta users. As a side note, it’s also true that once you are in this particular industry, you start to demystify many of the key players an so, talks that a while back seemed amazing to me, no longer have that effect.

So, this time, it wasn’t about getting a grasp of the market, but it was more about getting in contact with possible clients and partners. To that extend I succeeded in meeting very interesting persons and had an amazing time hanging with many European startups.

The keynotes were different from the ones at FOWA. The ones at FOWA had, in general, a high degree of technical content. The ones at LeWeb where much more business oriented and some of them where very inspiring. All in all, I think I like the LeWeb formula the most. Being a tech geek as I am, there is a problem with tech keynotes. Working all day as a developer, you really don’t want to listen to more developers talking about the same stuff you do at work. On the other side, some of them that might seem like amazing talks, become CEOs and CTOs PR talks. I don’t really get it, if you are doing a tech talk, give it, but don’t put a cool title for your keynote and then talk about what your company does and how well are you growing.

In contrast, LeWeb had very refreshing talks that touched very dear subjects to me, inspiration, neuroscience and music. Funny enough the keynotes I liked the most were the ones that had nothing to do with technology or big tech companies. The most amazing presentations, in my humble opinion, were these ones (in no particular order):

• David Weinberger
• Itay Talgam, Conductor
• Linda Avey, Co-Founder, 23AndMe, Inc.
• Helen Fisher, Visiting Research Professor, Rutgers University
• Paulo Coelho, Author
• Introduction with Morten Lund – Chief Ideologist, Lund XY Global Ventures
• Robin Good, New Media Innovator, Explorer, Independent Publisher,
Master New Media
• Chris Anderson – Curator, TED
• Joichi Ito, CEO, Creative Commons

I specially loved Chris Anderson’s talk which nearly got me crying. I also had the joy of talking with him for a few seconds after his talk (thank you Luis Rull for pushing me to approach him) and managed to give him my business card, which, of course, he won’t read. But anyway, it made me immensely happy to talk with him as it’s one of the persons I have a deep respect for. You can find most of the keynotes in ustream, so check some of them out, they are worth it.

Finally and as a side note, I had the impression the organization was, ironicaly, quite disorganized, which lead to a chain of problems which bugged everyone during the conference. You could reduce them to cold, lack of food and lack of Wifi. Three things which are indispensable in any conference and all of them failed the first day. I hope next year the organization pulls their act together and get those issues fixed as the rest of the conference was a blast.

I’ll be going to the Lift Conference in February 2009 with my friends from Sandbox Network, so if you plan to attend don’t hesitate on dropping me an email.

The curse of the short term vision

One of the biggest problems I’m encountering over an over again is the lack of vision of most people. Then I realized it’s not really a lack of vision, it’s just that people make decisions only based on short term information.

I’m sorry guys, but I believe that’s one of the worst curse our society suffers. The typical conversation goes like this: “Yeah, it’s a great idea/project/company but, how are you going to make money in 1 year?” or “ohh, yeah that’s a great idea, but it won’t work now, you need the next generation to do that”. Few things work on the short term and, of those that work, most of them are bad for some other reason. Just take a look at the recent financial meltdown, greed and short term vision brought all markets to their knees.

I guess it’s easier to take decisions based on the current state of affairs, you have fresh data and choices “seem” clearer. Nevertheless this is just an illusion, because data is fresh, the moment you take it into account it’s already outdated and worthless. Doing plans or strategies based only on current data is pretty myopic and dangerous as you don’t know if the next curve is right ahead of you. Not only you don’t know if the curve is ahead you, but even worse, you don’t even know what will you do if you reach it.

For example, some days ago I was looking at a bunch of graphs from one of the biggest financial company in the world and I realized something. Most graphs and charts always show an exponential or linear growth rate of something. Paradoxically that stroke me as a lack of mid and long term vision. Expecting something to behave in the same way forever is just the simplest thing to do. Granted that no one knows exactly when things are going to flip, but anticipating things is a must if you want to survive. Those analysts just do the easiest thing, because growth has been positive in the past years, this will be the case for the next 10 years and if things start to go downhill we’ll just reissue a new report adjusting it. Is that vision or laziness? Is that what you pay an analyst for? Again, you can make mistakes, it’s normal you don’t know the exact date and time of when something important is going to happen, but you should at least expect downturns down the way.

There are plenty of examples of this behavior and I really suffer from it. Why is it so hard for people to think about the future and not just the present. Why do people, even if they grasp the value of something, keep reverting to the short term solution? Another example: “Oh, I want a house, I know mortgages are madness right now, but I really want the house so I’ll buy it, I know I can rent something and that would be the wisest thing to do, but I really need to own that home!”. Couple of months later we all know how things have ended…

I wonder how can we make people start thinking about things in the mid or long term. Anyone knows a secret formula for this? We should teach this mental gym at school. I think this is how things work now:

1. Q: What would you do to solve this problem?
   A: solution 1
2. Q: Will solution 1 work in the future? (More than 6 months)
   A: hmmm, how do you expect me to know that? Solution 1 works now doesn’t it? Then let’s stick to it.

And this is how they should work:

1. Q: What would you do to solve this problem?
   A: solution 1
2. Q: Will solution 1 work in the future? (More than 6 months)
   A1: hmmm, well I have no clue, I’ll research future patterns and then I’ll try to give an estimate guess.
   A2: hmmm, yes, analyzing all the data we have from current trends we can do an estimate guess that this solution will hold in the future.

An important point is that decisions have to be always reevaluated, specially if they are long term minded, as new information might change the way things look like, but thinking about not only what will happen now, but in a near future will, most probably, alleviate a lot of pain.

I’m sure many readers have experienced this in one way or another? Care to share?

Image credits: www.ashesandsnow.org, pe.elmstreet-online.com

6 things you shouldn’t do when pitching a VC

Very recently I had the change to listen to several pitches presentations and I understood many of the critics VCs and Angels say about them. When you’ve listen to 3 in a row you start to see a pattern. The following are a couple of lessons I learned by doing my own pitch and listening to the rest.

1. Do NOT add a balance sheet and/or cashflow analysis slide if you haven’t been asked for. First of, the slide will probably be crowded with numbers which the VCs won’t have time to read. Secondly, balance sheets should be in the business plan so there is no need to show them in a 20min pitch. And finally, adding that information is just looking for problems. If by any chance you screw up your numbers (which you have a fat chance to) and a VC notices it you’ll won’t look good.
2. Add the amount of investment you are looking for and from whom. This was my personal bad, I forgot to add a slide with the amount I needed to start my company and what type of investors I was looking for. Theoretically you wouldn’t need to add the type of investor as if you are pitching to one, you’ve already chosen, but in my case it was an heterogeneous jury so I got asked.
3. Ugly presentation design does matter. A presentation pitch isn’t just some random slides where you show your business idea, it’s your brand. In the same way you carefully choose your cloths (or at least you should) when giving a presentation, you should carefully choose your slide design. Please, avoid using canned designs, when you listen to 10 presentations a day, trust me, you can tell when it’s canned. Avoid using ugly color combinations like blue background with yellow letters or standard MS Word titles (yeah, you know which ones I mean, the rainbow title!). And for god sakes, don’t use pixalated images.
4. Answer the question. This might seem straightforward but what I saw is that most of the time, the CEO is so nervous that when asked a question they answer something completely different with no connection what so ever with what they had been asked. This makes you look bad, makes you look as if you didn’t listen or didn’t understand the question, or both.
5. Don’t tell the story of your company. I’m sure you wrote it in the business plan, no need to add a slide about it. Investors want to hear the problem and the solution, not your fancy background which I’m sure it’s interesting, but not for a 20min pitch.
6. Do NOT show fancy market size graphs. This is something Guy Kawasaki stresses and I agree with him. All presentations tend to have a slide with a graph from _insert_your_favorite_analyst_firm_here_ with the market size which, of course, is always huge and getting bigger. Simply, don’t. Throwing some numbers isn’t bad, but please, be original and avoid the “the market is huge and growing” song. And do yourself a favor and avoid any mention to the infamous “” if you don’t have detailed information to back it up.

I have to say I learned a lot by watching a couple of pitches and I now understand why VCs say what
they say. Most presentations are identical, same structure, same market charts, same texts. Be original and listen carefully to VC questions and suggestion, it will help you get better with your
presentations, at least it worked for me.

Want to add another point? Please leave a comment! And remember, if you like this blog, subscribe to the RSS feed here.

Why well funded startups waste money?

Sometime ago I had a conversation with a friend who asked me how much money I though was needed to get my startup going. I told him I though it would take 100.000€ to bootstrap it in the US, but that  it might be less. I still remember his skeptical face. I though he was going to tell me it was way too much, but to my surprise he told me it was way too low. I realized then that there is a great gap between bootstrappers and corporate drones. Enterprise people need like 5x to 10x more cash than what a bootstrapper needs but the truth is that this is just an illusion. It’s not true you need 10x more cash, it’s just that you aren’t used to save money.

As always, nothing is black or white and there are exceptions to this, but most of the time it’s just people flushing money down the drain without any real results. I really feel it’s because the money isn’t theirs and so, they don’t feel the pain it is to earn that money. Nothing like having your own savings at stake to think twice about spending it in stupid things.

The problem isn’t that corporate guys think this way, the problem is that I’ve seen many startups behave the same and I must say, it really shocks me. Wasting money is a bad habit, specially if you
are starting up and I think most companies don’t make saving money and resources a critical part of their company’s culture. For me it’s something fundamental in an organizations culture. Everyone should think about this, even when there is plenty of money, wasting it should be avoided.

What really strikes me is that the same behavior can be observed on peoples lives. Plenty of people ask us how are we (me and my girlfriend) able to live the way we do. The answer is that we don’t pay for stupid things. When someone tells you that they’ve spent 600€ in a pair of shoes I just roll my eyes. And don’t get me wrong, if you can spare 600€ a buy some awesome handmade shoes, please be my guest. The problem is that 99% of the times, people just can’t afore to do that and they buy them either way, which I must say, it’s just stupid if you ask me.

Sadly the only times I see companies trying to save money is when they need to bump their profits for the next quarter. The problem with this is that it’s too late. Creating a culture takes time and you can’t just reverse crazy spending overnight. Employees should feel that if they waste resources it’s their own payroll money they are wasting. The more you save, the more you get back at the end of the month.

And yes, I know, some readers are thinking, hey but I do save and my payroll is the same, instead those greedy bosses of me are earning much more to my expenses. This is both, true and sad, that’s why new entrepreneurs should start thinking about this issues from day one. Transparency is key for this to work and the problem is that not everybody is willing to be transparent. I would love to think
that money doesn’t changes people, but it’s not true, but if you have some solid guidelines and stick
to the basics I’m sure we could do much better.

Have you seen crazy spending in your company, in your startup? Tell us about it!

Image credits: www.savingadvice.com

Would you buy a cool Twitter name?

Leo Borj asks a very interesting question, should we start registering potentially valuable Twitter names, like if they were domains? This is a very common practice with domain names known as cyber squatting. You register a domain name with the idea of selling it in a future for a higher price to a 3rd party. You could also call it, name speculation. The domain squatting is a quite profitable market, albeit it sometimes touches some ethic boundaries. Anyway, the real question is, is it worth doing the same with Twitter names?

In my opinion, it might be worth trying, although there is a fundamental flaw. With domain names, it gets down to who registers it first (except in cases where you can probe that someone else is using a registered mark with nasty intentions and even though, it’s hard to get it back if you aren’t a multimillionaire corporation). In Twitter that law doesn’t holds, or better of, doesn’t holds always. Instead you have the following general condition:

We reserve the right to modify or terminate the Twitter.com service for any reason, without notice at any time.

As you can see, if you play the squatting game, you have a very high risk of having your account suspended if Twitter deems so.

Another question that arises me is, would people follow an account that isn’t from a real person nor a company nor a brand? I mean, would you follow a Twitter user named: @sexy_toys ? Personally I wouldn’t, but hey, I’m sure some people would if that account follows them first (the problem with this is that after the recent spam limits imposed by Twitter you have a fair chance of having the account suspended).

And finally, would you sell your Twitter account, either directly to 3rd persons or indirectly selling ad Tweets? I’m sure this is going to hit hard, I do think it would work if you play it well. Some basic ground rules I would like to see:

• Don’t spam your followers. Some recommendations are ok, but don’t transform the account into a damn billboard
• Don’t advertise things that no one cares about or that don’t have nothing to do with your Twitter audience.
• Don’t advertise or recommend something you don’t like or haven’t tested. It’s bad for your followers and it’s bad for your reputation.

After all, I’m a true believer of what Dave Winer sometime said: “because perfectly targeted advertising is just information.“

What are your opinions on the matter?

Next generation search engines

I was reading Scoble’s post about Windows Live Search and I realized what the future of search is going to look like (or so I think). I realized that the users don’t know how to express in a written way what they are looking for. Most of the times, you type a couple of keywords that should, theoretically, yield some results from which you can identify the one you are looking for. Human powered search engines like Mahalo have the same problems. They rely in human beings building pages with the most relevant information about a topic, but if you are looking for something not that common you’ll run into problems. Last but not least, semantic search engines like Powerset are closer to the goal, but there is still a big hurdle in the user’s way. How do you phrase, as a user, the information you are looking for? You need to type a phrase, but it’s not that obvious what that phrase should be, making it hard and slow to search things.

Now, the big problem again is writing down what are you looking for in a way the search engine understands it. How about another approach? How about a search engine that reads your mind so that it knows what you are really looking for? Most readers must have had a good laugh with the former statement but I have to say that mind reading devices are a big reality with their own field of expertise called Brain – Machine Interfaces (BMI). Several gaming companies are already using these devices to allow their players to control virtual avatars with their minds.

And how do these devices work? Generally speaking, it’s a helmet that reads neuron impulses in several areas of your brain. In the gaming example, they read the brain areas dedicated to movement, mapping neuron firing patterns to an specific movement in the game. This technology is still giving its first steps in the commercial arena, but I’m pretty sure  we’ll see more and more devices working with it.

Now, is it a big stretch to say that we can use similar devices to read our search intentions? It is indeed, it’s something that is still out of reach. Not because of technology but because of a lack of Neuroscientific data that can be use to pinpoint which brain areas we use when searching online. But it’s just a matter of time (I’m talking about 5 to 10 years here).

Big problems with this type of search, you not only need a web index, but a neuron firing pattern index and an engine to understand them and translate that into a web search query. Another big issue is brain privacy. Your neuron firing patterns would need to be transmitted through the Internet and stored somewhere. That’s a source of major privacy concerns that should be address before using a search engine like this.

Nevertheless, and with all the problems than might arise with an idea like this, I truly think we’ll someday see something like this and I have to say it will be awesome. I don’t know if any company is currently investing in developing a mind controlled search engine, but it would be a great project for a big company like Google, IBM or Microsoft.

Do you like the nextgen search engine? What problems do you see with it? Would you use something like that?