Credit Card VC

Now in the midst of my second startup, people often say to me, “Wow, so you are one of those serial entrepreneurs.”

It’s true, I suppose. I didn’t exactly plan it this way, but here I am.

The whole notion is regarded with a great deal of reverence, the latest example of which is here. (Hat tip Brad Feld.)

I’m not disagreeing with any of the sentiments. Lord knows I learned lots of lessons in my first one, MyTrafficNews, that I’m applying to the Legislative Database, LgDb.com.

But allow me to throw one other thought into the mix:

Let’s just say that I wanted to get a big job at a big company. Part of the accepted wisdom is that I would never want to do that, that I could never work in such an environment. There’s probably a grain of truth in that, but lets say that I could set that to the side and get excited about the goals of a large corporation, and would enter that organization in a position that would be interesting. The pay would be great, I wouldn’t have to worry that I’m taking all the risk, and when I went on my paid vacation I could leave the job at the job, and not think about it constantly, the way I do now.

Let’s say that could happen. Here’s the problem: It would NEVER happen. Never.

Why? Because I would feel stifled the first time I had to fill out a form to get a box of paperclips, or whatever?

Well, maybe, but it wouldn’t matter, because I would never get that job. It just wouldn’t happen.

For all the talk from big business about how they need to be more entrepreneurial, bla bla bla, they really all like their gig exactly the way it is. Nobody working within any large corporation is going to hire someone who will come in and upset the apple cart.

“Entrepreneurial” is another word for “Disruptive.” Corporations will issue press releases embracing “market disruptions” but what they really mean is they want to keep doing the same thing in the same ways, and by issuing a press release the execs can feel that they have done what they need to do to react to changes in the markets.

I’m not just blowing smoke here. If you are a person who has a steady career, you should think carefully before becoming an entrepreneur. It’s great, no doubt about it, but you may never be able to go back even if you want to.

(One note about this blog, it’s been quiet for a bit. It will be seeing some big changes and a big announcement soon. Stay tuned!)

Quite often, it seems, people violate, or come too close to violating a non-compete clause after they sell a company. Here’s the latest example.

Davis previously sold a recruiting blog to Jobster, and worked with the company for a while. He eventualy left, but apparently had a non-compete in place.

I never really understand why this noncompete stuff ever comes up.

When I sold MyTrafficNews to Traffic.com, I worked hard for them, and enjoyed it. When the contract was over we parted as friends. I gladly signed the non-compete.

Now I’m running another startup, but in a totally different indsutry. As much as I loved the traffic business, I’m very happy to NOT be in it any more.

That’s why I don’t understand when this kind of thing comes up. I would think entrepreneurs, by nature, would want to move on to a different challenge, and apply what they learned in one area to a different industry or niche that needs the same kind of new thinking.

I shouldn’t have to say this, but apparently I do.

That guy somehow convinced some reputable VCs to put money into his anti-identity theft venture.

The rub: it turns out that the (accused) slimeball is himself an ID thief, and he did it to his own dad.

Happy Father’s Day!

University Hospital is the last I see in a series of this kind of announcement.

Despite moving to a new facility, the University of Colorado Hospital is expected to layoff up to 70 people by the end of the month due to a budget shortfall.

“Despite”???? How about “Because of”?

We’ve seen this several times in Denver just in the last few months. Certainly newspapers are laying off around the country, but the layoffs at the Denver Post and Rocky Mountain News come just after moving into a shiny new building shown here under construction (in a link that gives a clue about when Google took all those cool new street level pictures) or here for some more recent shots.

And just a few blocks away is the DAM expansion, a dramatic new building that millions of people are not going to. Hence, they had a round of layoffs also.

What does this have to do with your startup? Well, just when you are thinking that it’s time to get a fancy new office, maybe that’s the time to hunker down.

I know I’m linking to Guy twice in a row, but his latest post makes it clear that he fully groks the Credit Card VC ethos:

By the Numbers: How I built a Web 2.0, User-Generated Content, Citizen Journalism, Long-Tail, Social Media Site for $12,107.09

Because of Truemors, I’ve learned a lot about launching a company in these “Web 2.0” times. Here’s quick overview “by the numbers.”

• 0. I wrote 0 business plans for it. The plan is simple: Get a site launched in a few months, see if people like it, and sell ads and sponsorships (or not).
• 0. I pitched 0 venture capitalists to fund it. Life is simple when you can launch a company with a credit-card level debt.

Now, Guy will tell you that this is not the next Microsoft or Google, it’s a service that may grow on its own and maybe someday some bigger organization will want to add it to a portfolio because of the user base or whatever, and so it may have a nice exit someday.

But the best part, I think, for Guy is that when people send him business plans about how they really need to have $1 million Angel Round so that the team can develop a prototype, he can look them right in the eye and say, “Why? I launched a site for $12,107.09, and within two weeks it had 315,000 hits in Google. Why do you need 82.596 TIMES the money I spent to do what you want to do?”

They better have a darn good answer to that question.

I don’t live or work in the valley, but it’s becoming more and more clear that things are koyaanisqatsi (life out of balance).

Michael Arrington, founder of TechCrunch, wrote about this with great clarity this morning.

Times are good, money is flowing, and Silicon Valley sucks.

I don’t know what it is, but the same thing happened in the late nineties before the bubble burst. Lots of startups got funded that made no sense but people got excited anyway. A unique, beautiful and well executed idea was not a story worth talking about until that first round of big, eye-popping capital. People become more anxious, and more likely to snap at someone in anger or jealousy. Rumor mongering spikes, and a crucial balance is lost. It’s no longer about beautiful products and genius developers. It’s about the money and the status, and hot PR chicks and marketing departments.

I wasn’t in the valley for the first one, but started MyTrafficNews by bootstrapping, and the whole dot-bomb thing actually helped us, made it possible for me to afford developers.

Now it’s a bit nutso, and I am actually out looking for investors, but I’m not doing it in the midst of the insanity. I love my current startup, love the people I work with, I even love the customers — the real live paying customers who depend on us for the tools they use every day.

I think that’s the only way to avoid not only crashing when the bubble pops, but to have fun along the way.

Introspection for a blog is a good thing, and will always be part of any good blog. Old media doesn’t do as much of that, they don’t have to wonder what is their core purpose — they know that their job is to deliver advertising. The good ones try to reach that goal by being interesting, etc., but that’s not why they exist.

(That said, it’s clear that the big papers will soon be much like sports teams, owned by people with oversized egos. The two best examples are David Geffen trying to buy the LA Times and now Rupert trying to buy the Wall St. Journal. Warren Buffett and I spotted this trend at the same time!)
A blog is different. Well, it is for all those people who aren’t so nefarious as to get into pay-per-post, etc.

I’ve seen two great bits of introblogtion recently from two of the best.

The first one is from A VC:

I know one thing for sure. This blog has to have a personal feel or its just another windbag pontificating about technology and we already have enough of that on the web.

The other one is local to me, Brad Feld. In that one, he makes a connection between what he read about Global Warming and what a reader sent to him complaining about the blog.

Both are good, but Brad’s, I think, does what good blogs do best, which is make connections between things that may not seem to be connected.

Now, you may be asking, why am I linking to two different VCs in a blog that is designed to talk about how to avoid VC? That’s a good question!

Don’t think that it’s actually possible to start a company using only credit cards and then have it grow until something good happens?

It’s a good thing that Randy Morin didn’t think that way.

He started a project in his spare time and it just sold to NBC Universal.

This was certainly not a blockbuster deal, just one of dozens of deals like this that happen every week, most of them getting little or no mainstream media attention.

But, lest you think it’s easy, take a look at this quote, which instantly enshrines Morin into the CreditCardVC hall of fame:

And lastly, do you have any tips for someone starting their own business?

Let’s start by saying that 95% of Americans and Canadians don’t know what an honest days work is. Most people reading this will likely say they are part of the 5% that do. Those people should ask themselves a simple question. Do you honestly work 40 or more hours per week? Remove lunch. Remove water-cooler downtime. Remove all breaks. Remove personal phone calls. Remove solitaire. If you are part of that 5%, then do it. But don’t quit your day job. Do it part-time until you can pay the bills.

That sounds like a guy who groks the CredictCardVC manifesto.
OK, back to work for me.

If you are building a company, and you are hoping that company has a healthy exit some day, the way to do that is to focus on what it is you are doing, and do it so well that some larger exit opportunity comes along.

It’s kind of Zen, but you really can’t focus on the exit, you have to focus first on the task at hand. Sure you have to be smart, be well positioned for an exit, etc., but most of getting well positioned for a good exit is the same stuff you have to do to run a smart and solid business in the first place.

There’s a flip side to all this, however. If you do have an exit; If your company does get bought by some larger company, the way the rules of this country work, and the way the rules of human nature work and even the way manners dictate is that after the exit, it’s no longer your thing. It belongs to the ones that wrote the check. You have to just let go.

Here’s an example of two otherwise fine young men screwing that up. If you don’t want to click, it’s the story of two guys quitting Google because — grab your Web 2.0 Kleenx — they weren’t getting enough attention from their bosses.

So…. Alex and I quit Google on Friday.

It’s no real secret that Google wasn’t supporting dodgeball the way we expected. The whole experience was incredibly frustrating for us - especially as we couldn’t convince them that dodgeball was worth engineering resources, leaving us to watch as other startups got to innovate in the mobile + social space. And while it was a tough decision (and really disappointing) to walk away from dodgeball, I’m actually looking forward to getting to work on other projects again.

Whhaaaaaaaaa!

Look, if these guys want to quit, I have no issue with that. Fine. It’s the whining about not getting enough attention that rankles me. If they wanted to complain privately, I’m sure they could and some other sources could make their case in probably a much more effective way, as in this post from A VC pointing out how Google really is just a big company now. He easily could have written that post without having to link to that whiny missive.

I speak from direct experience here, as my first company was bought by bigger guys. I suppose I could have complained about something or another (though probably not as it was a great transaction.) And now that I’m out looking for investors in my next thing a connection from California through New York actually made it back to Traffic.com in Pennsylvania. The key guy there had great things to say about the whole transaction. If I had complained publicly, would I have gotten that positive back-channel feedback? I don’t think so.

And worse, I’m now running a great business, one that won’t be as big as YouTube or DoubleClick, but still could be a great acquisition for Google or some other big name. Knowing the bad taste left in the collective mouth of Google about this Dodgeball thing, aren’t they going to be just thismuch more shy about all the deals that are less than $1.5 billion?
Look, if you didn’t get the support you needed from within the acquiring company, that says more about your inability to work within the structure of a big company. If you can’t succeed at that, don’t blame the big company for acting like a big company, blame yourself for not being better at playing by those rules. If you just don’t want to be good at it, that’s fine, but don’t burn those bridges… other people may still want to use them.

So, thanks for nothin’, Dodgeball.

I heard that Cher and Madonna are friends. They’re on a first-name basis.

Over at my day job, the worlds best legislative database, we struggle sometime with our name, which can be hard to prounounce.

It’d be nice in some ways to go out and spend 30 Large on some consultant to come up with a great name, but that’s not the Credit Card VC way.

Luckily there are some great (free) naming resources out there, and some of them don’t even take themselves too seriously.