I’ve read a lot here about how to hack a funding term sheet, or how to navigate the confusing terms and conditions in the legal contracts startup founders must sign. But what about rent? It’s probably one of your biggest operating costs, and in the current spirit of cost-cutting, there are several ways to squeeze cash out of your commercial real estate agreement, too. I started Rofo to help entrepreneurs do this, but I’ve shared my top “lease agreement hacks” here. They will save you plenty of headaches and money — and possibly even help you generate new revenue streams for your startup.1. Don’t pay for space you can’t use. All square feet are not created equal. Have the landlord pay for a “space plan” to determine your “load factor.” (Also sometimes referred to as a “loss factor.”) This is the ratio between the non-usable and usable square feet that your rent will cover. Examples of non-usable square feet would be building common areas, such as corridors, or a lobby. Typically, office space load factors are in the range of 20 percent to 30 percent, meaning for 1,000 square feet of usable office space, you might pay for 1,200 square feet. Landlords like high load factors because they pad the bottom line. In a market like this, however, they need to secure tenants, so you have more leverage than normal. Negotiate the load factor down to at least 15 percent.

2. Beware of free rent. Structure the rent so that you phase into the space. Pay for half the space during the first six months of the lease, the full space at seven months. If you get “three months free,” be sure the landlord has not extended your lease term on the back end, to 39 months from 36, a common tactic. 3. Avoid standard improvement allowances. If the rental rate being offered includes a standard improvement allowance and you do not want or need to make improvements, then amortize this allowance out of your rent. 4. Cap operating expenses. In most office buildings, operating expenses are included in your rent. They increase yearly, but you can put a cap on operating expense increases. A 5 percent cap is reasonable. It protects you from spikes in utility costs or increased property taxes if the building is reassessed. Also, retain the right to audit operating expenses. 5. Negotiate your renewal option in advance. Landlords like to include a commitment to renew up to one year before your lease is up. This forces you to address your real estate needs long before you’re ready. Negotiate the renewal down to six months by agreeing to a renewal rate equal to fair market value. Renewal rates are re-negotiated at re-signing anyway. The important thing is to move back the option deadline. 6. Negotiate holdover rent penalty in advance. Holdover rent occurs after your lease term has expired and, for whatever reason, you’re unable to vacate the space on time (usually when your pending move is delayed). Landlords will want double rent as a holdover. Negotiate this down to 125 percent of current rent. 7. Consider a buildout. If a landlord offers an allowance to build out a space to your specs, take the time to get a construction bid. Make the landlord pay for the estimate. Be sure the allowance can be used for architects, construction management, your moving expenses and data wiring. Most landlords draw the line at furniture and fixtures, but ask for it. 8. Demand right to sublease. Get it in the term sheet that you can sublease your space to anyone you wish for any amount of rent, subject to an approved use. Also, be certain that the landlord cannot impose any fees to your sublease. A common fee to avoid is a “document review fee” to cover the landlord’s attorney bill. Also, insist that the landlord turnaround sublease approvals quickly, within three to five business days. The last thing you want is to lose a subtenant to administrative delays.

Alan Bernier is Co-Founder and CEO of www.Rofo.com, a real estate resource for startups.

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Tags: rofo

Paul Polak, a Pop!Tech 2008 featured speaker, has been starting businesses since he was 15. He’s now 75, and says he has succeeded — and failed — with more ventures than he can count. Polak’s first was a strawberry distribution operation in his hometown of Millgrove, Ontario. Later Polak prospected in real estate and oil and made millions. In 1981, he invested the proceeds into a nonprofit incubator of sorts called International Development Enterprises.

Most of the ventures Polak has debuted out of IDE have one thing in common: They specialize in delivering low-cost engineering solutions to “micro-businesses” in the developing world. The most famous is the $25 treadle pump: a simple, foot-powered irrigation system that millions of farmers in India, Cambodia, Ethiopia, and Nepal have used to bring themselves out of poverty. Irrigation allows farmers to grow crops irrespective of season. When they can diversify, they are no longer subsistence farmers. They become businesspeople.

Since his customers are the poor, Polak is called a social entrepreneur. But he’s hardly the sort to sacrifice profits for “do-gooder-ism.” In fact, Polak won’t invest in a venture that can’t pay for itself in a year. One year! It’s a high bar by venture capital standards, but Polak says a one-year break-even is one of his top three “don’t bother” rules, along with a market opportunity of at least 1 million customers and having conversations with at least 25 of those prospective buyers.

Polak knows a lot about building successful businesses in dire economic circumstances. It’s a skill set in high demand these days, and Polak often lectures at Harvard’s and Stanford’s business schools. In addition to his three “don’t bother” rules, Polak points the way to success using 12 Steps to Practical Problem Solving, “because business is problem-solving…no matter what market you’re in.”

This week Polak shared his ideas with hundreds of business elites at Pop!Tech. He also sat down with Found|READ to flesh-out his wisdom, tailored to startups. It’s below.

The 12 Steps to Practical Problem Solving: 1. Go where the action is. “Spend significant time with your customers. This is how you learn what they need,” he says. Not hours, days. Polak lived with his farmers for 6 months. 2. Interview at least 100 customers a year. You do it. Not an employee. Listen to what they have to say. “Too many entrepreneurs build the product they want to build — not the one that’s needed.” 3. Context matters. If your solution isn’t right for the context, for example, if it costs too much for the customers you’re trying to serve, you won’t succeed. 4. Think big. Act big. 5. Think like a child. 6. See and do the obvious. Others won’t, which is opportunity for you. 7. Leverage precedents. If somebody has already invented it, don’t do it again. 8. Scale. Your business must have potential to scale. Remember, your market must include at least 1 million customers. 9. Design to specific cost and price targets. Not the other way around. (Celeste: it means — Do not price to your design, design to the price you need to hit to make your product appropriate to your customer.). 10. Follow practical three-year plans. Two years is too short. Ten is too long. 11. Visit your customers again. And again. “Any successful business in this country is based on talking to your customers all the time. A good CEO spends half his time ‘in the field.’” 12. Stay positive. Don’t be distracted by what other people think.

You can read more about these rules in Polak’s book, “Out of Poverty: What Works When Traditional Approaches Fail.”

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10 Things to Be Thankful For in Greentech Earth2Tech – by Josie Garthwaite "; Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick ";

Posted by Carleen Hawn on GigaOM  |  Permalink  |  10 Comments
Tags: Harvard Business School, International Development Enterprises, Out of Poverty: What works when traditional approaches, Paul Polak, PopTech, Stanford Graduate School of Business

This week I was in Camden, Maine, attending Pop!Tech, an annual gathering of thought leaders in technology and design launched in 1996. This year Pop!Tech inaugurated a three-day bootcamp for social entrepreneurs, called the Social Innovation Fellowship Program, the latest addition to Pop!Tech’s year-old startup incubator, Accelerator.

The purpose of the program was to tutor 16 social entrepreneurs, most of whom run nonprofits, in “go to market” strategies. But many of the 22 lecturers delivered advice equally relevant to for-profit startups. (Fans of Y Combinator should check out Accelerator.)

Particularly useful was a primer on branding by Cheryl Heller, the founder and CEO of Heller Communication Design in New York. Most companies invest hundreds of thousands of dollars to produce successful branding campaigns. Heller’s three-hour session gave Pop!Tech’s social entrepreneurs a good dose of that value for free. Now you’ll get it, too.

Most of us think of our brand as a tool for communicating who we are and what we do. We think of logos or catchy names — totems that convey the mission or identity of our businesses.

A good brand does express identity, Heller said. But great branding goes one step further. You must think of your brand less as a tool for communicating identity, and more as a tool for conveying a promise.

“You don’t have a brand,” Heller said, “you have a brand promise. [A] brand promise does more than express who you are, it indicates to your audience what they can expect to get from your company in exchange for their money and time — whether they are a customer, partner, investor or employee.”

There’s a key word in her definition that 99 percent of entrepreneurs overlook: employee. “Employees are the most important audience any company has,” Heller said. If your brand promise does not engage your employees, you won’t be able to deliver it.

Heller offered a simple case study to illustrate her point. The Ritz-Carlton Company, widely recognized for effective management, also has a very successful brand promise:

Ritz Carlton: Ladies and gentlemen serving ladies and gentlemen.

As Heller explained, this tells investors: Ritz-Carlton serves a distinguished clientele. It tells employees: A high level of behavior is expected of you and you can expect a high level of treatment from Ritz-Carlton. It tells customers: You can expect a certain experience when you stay at a Ritz-Carlton hotel.

When done right, the most effective branding is really an act of persuasion. Can your brand convince people to do something they wouldn’t ordinarily do, or buy something they wouldn’t ordinarily buy? Can the power of your brand persuade people to buy your good or service, even when external circumstances (such as a recession) suggest they ought to prioritize other actions, first?

If you can answer yes to any of these questions, you have a persuasive brand. But the real payoff of persuasive branding isn’t loyalty, Heller emphasized. It is forgiveness. Every company makes mistakes. Have a bad stay at the Ritz? Have a bad flight on United? Which has the more persuasive brand promise? (United: “Fly the friendly skies.”) Which company are you more likely to forgive?

So how do you create a brand message that expresses your identity, delivers a compelling promise, and persuades your audience to behave in a certain way?

Four Tips on Persuasive Branding:

1. Be brief. Be clear. “Clarity and brevity do not come naturally to entrepreneurs with a mission,” Heller lamented. Use the Ritz Carlton promise as an example. Notice it does not include words like “luxury” or “hospitality.”

2. Don’t clutter your brand promise with references to how you differentiate yourself. “Who you are and what you do is core to your brand promise,” Heller said. “How you do it, that changes as you grow.” Wizbang as your technology is, it is only one of your tools. Don’t mention it.

3. Avoid common words used by other companies. Heller’s examples: strategy, core values, mission, vision, operational excellence, efficiency, value-added, character, integrity, positioning, sustainability, corporate citizen, cause.

4. Speak to all your constituents: customer, partner, investor, or employee.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  4 Comments
Tags: Heller Communication Design, Pop!Tech Accelerator, PopTech, Ritz Carlton, Social Innovation Fellows Program, United Airlines, Y-Combinator

Someone recently pointed out to me that “a crisis is the ultimate teachable moment.” Startup founders have long known this. Whether you find yourself dealing with a sudden lack of access to commercial loans, the collapse of a funding round, a management change, or even a failed product, you can help yourself work through such unpredictable — yet probably inevitable — business challenges by being prepared in advance with a response plan. One of the most important areas of your preparation, but one that is often overlooked, is your communications plan.

Maintaining clear and consistent communication with your staff, investors, customers and your partners can make all the difference to the success or failure of business in crisis, says Wendy Lane. She is founder of the public relations and marketing firm Lane PR based in Portland, Ore. Over the years Lane has helped clients, cope with all kinds of crises: from bankruptcies, to public political snafus, and in once case, a violent tragedy at a place of business. (Believe me, this sort of crisis puts the stock market turmoil into perspective, fast).

The point is, a crisis is a crisis because it creates uncertainty. You cannot predict exactly who you’re going to need help from in a pinch – employees or lenders, or both? People you thought you could rely on will surprise you in positive and negative ways. This is why keeping healthy lines of communication open with all of your constituencies is so important. Naturally you should do this as a matter of course in your daily business, but in the end, says Lane, “Good crisis communications is about transparency, transparency, transparency.”

Lane’s firm has a crisis management plan for its clients. She offered to share it. Here are some takeaways:

1. Identify risk areas of your business that could lead to an internal crisis, or be compounded by an external one. You’ve already done this with your business model, now think about how your risk area could be compounded by exposure to customers or the media. Risk areas to consider: death or serious illness of a senior executive; serious on-the-job injury; technical challenges; natural disaster; security breach.

2. Create a crisis management team and have a senior executive it. Appoint an internal communicator to support employee communication activities. Select an external communicator, to deal with outside parties like media or retail customers. (If you have one, this is your PR counsel.) Deal with investors. If you cannot take it on, appoint another senior staffer to deal with partners. Just make sure no constituency is getting communication from more than one person – consistency is important.

3. Develop a call list. Sounds like a call tree, but do it. You have no idea how much it will help you in a panic to have previously prioritized who among your senior staff, or your board, needs to be contacted, and in what order. Contacts for every member of your crisis management team should also be on the call list. 4. Develop your message. Do not do this in a vacuum. Use your crisis management team to help you. Any outside adviser you enlist for help (a lawyer, etc.) is now de facto part of your crisis communications team. Choose carefully. 5. Notify your constituencies in a concerted effort. Tell non executive-employees collectively about your crisis in order to dispel rumors and speculation. Call a staff meeting, send a broadcast e-mail or voice mail. Do not communicate piecemeal. Be candid. Deliver updates as information is available.
6. Assume that any information you share with employees, partners, investors, etc. could be communicated to the media or outside parties.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  10 Comments
Tags: communications, crisis management, Lane PR, Wendy Lane

Fundraising always demands patience and grit, but passing the hat in the current environment will test your founder’s mettle unlike any time in recent history. Even investors still flush with cash that, only weeks ago, they had planned to put to work, now have grown skittish over the frozen credit markets and are knotting their purse strings instead. If you’re looking for financing, be prepared to work very, very hard for it.

This is true even for the most seasoned entrepreneurs, like Scott Painter, whose pedigree boasts 29 companies, including the early web auto retailer, CarsDirect.com, software and services provider, Zag.com, and most recently, TrueCar, the Zillow for car buyers.

Last summer, as the financial markets inched toward collapse, Painter closed a $15 million Series C round for Zag.com. It was harder for him than normal. Painter has raised hundreds of millions of dollars in his career ($350 million for CarsDirect, alone). Zag has a seasoned management team, plays in a space Painter knows well, and it generates over $1 million in monthly revenues.

“All that and I still had to pitch 120 investors to get one to say yes – 120 twenty pitches later!” Painter booms into the phone. “But look, don’t despair either,” he quickly adds. “Fundraising is a numbers game. The biggest thing founders need to hear right now is that it doesn’t matter if it’s a good market or a bad market, there is someone who will fund every quality company that solves a relevant problem in capital-efficient manner. You’ll have to be realistic: It is most important that you get the money. Don’t quibble about terms and conditions. Forget valuation. Just meet more people, meet more people, meet more people.”

If getting through 120 pitches daunts you, Painter has help. Over the past 16 years, he has streamlined his pitch method to an art –- even using web tools to automate much of the work for him. He explains how, below, in his 12 steps for short-circuiting “the funding numbers game.”

1. Skip the PowerPoint. ”It’s expected, [but] a waste of time,” says Painter. “I never go into a meeting planning to present a slide deck.” 2. Build a web toolkit instead. Painter means a web-hosted version of everything you would have put in your deck, including your financial models. This screenshot shows such a slide for Tag. The value-add: “Viewers can toggle the metrics up or down if they think my assumptions are wrong, and the whole model adjusts.” Painter finds investors love playing with it.

3. Lock it. Make your tool kit a private site, accessible with a login ID and temporary password of your choosing. When you invite viewers to the site, require that they use a personal email as their login ID. 4. Build your mailing list. Painter starts with up to a thousand VCs and narrows it to “a few hundred” who have investments compatible with his startup. Use sites like The Funded to help you narrow your list. 5. Send the “sexy tease.” By now Painter’s email is written, and it’s short. He introduces himself in a sentence, offers a sexy tease on the company and closes with: “Here’s a link to a site if you’d like to learn more.” Do not ask for a meeting, Painter warns. Do include your site’s password. 6. Wait two weeks. Change the password. 7. Check the logins. Since you’ve required personal emails for the login ID, you’ll see each investor who looked at your plan, what they reviewed, and for how long. “And when a VC says ‘We’re going to pass,’ I can tell if he hasn’t even gone to our site. Expect a 10 percent view rate from your email blast. 8. Now reach out. Your first round of calls goes only to VCs who have already reviewed your plan. The cold call is now a warm call: “We see you went on our site. You looked at X. Do you have other questions?’” Expect two-thirds of your viewers to return your call. 9. Request a meeting. By now you’ve reduced your initial task list of 200 VC-contacts to 20 calls and 12 phone conversations. Be pleased if half of these take a meeting. 10. Meeting one. Smile. Listen. Be responsive. “And get out of there as quickly as possible,” says Painter. “The only goal is to get meeting two.” 11. Meeting two. Make it long. “I always try to see how long I can keep them asking questions.” Talk about your philosophy, your industry. Spring to get employees on the phone with answers. 12. Dinner. “This is about getting personal, because you’ll need a champion, someone who’ll say ‘this is my deal’ in the final partners meeting.”

If you get this far, you’ve done your job. The rest is out of your control. Painter’s method is no guarantee of funding success, but it will cut weeks off the path to a final ‘yes’ or ‘no’, sparing you precious resources and energy.

Meanwhile, Painter offers parting encouragement: “VCs are still sitting on large funds. The biggest financing impact will be on mid- and late-stage companies that aren’t yet self-sufficient. Rounds for startups are still closing. They did last week, as well. True enough, there is panic. But this does not mean entrepreneurs should pack it up and go home. Building companies during a recession is certainly more challenging, but sometimes it’s a better test of what should survive in the first place.”

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10 Things to Be Thankful For in Greentech Earth2Tech – by Josie Garthwaite "; Europe Struggles With Three Strikes, Fox Exec Wants It Anyway NewTeeVee – by Janko Roettgers "; Desert Bus For Hope Rides Again for the Third Year NewTeeVee – by Liz Shannon Miller "; Smartbook No More — What Should We Call Them? jkOnTheRun – by James Kendrick ";

Posted by Carleen Hawn on GigaOM  |  Permalink  |  9 Comments
Tags: CarsDirect.com, credit crisis, economy, fundraising, Scott Painter, TrueCar, Zag.com

Daniel Meyerov, OnlyBusiness.com

I was crazy enough to start two businesses at the same time — OnlyBusiness.com and Polaris Blue. My partner and I run them concurrently, and fortunately both have done well. No doubt we got lucky, but I want to share a concept critical to our success that might help other founders, especially in this uncertain market. Create three versions of your strategic plan, one each to address a different potential outcome for your business: the overnight success, slow-but-steady growth and survival mode.

OnlyBusiness.com is a community platform that offers web tools and services to small businesses. My partner and I developed a multi-outcome strategic plan, detailing how the operation would perform under three, clearly defined scenarios. The exercise gave us more options for coping quickly with surprises that might ordinarily have caused big problems.

I’ll show you what I mean, by sharing how we staged three critical budgets for each potential outcome.

I. Marketing PLAN A (Overnight Success): If sales growth is 120 percent of target per quarter, consistently, we’ll know our marketing is working and plan to ramp it by 30 percent to 50 percent, but in a graduated manner, in case growth isn’t sustained. PLAN B (Slow Growth): If sales growth is 80 percent of target in that time, we adjust up, but only where minimum marketing-to-sales ratio of 1 to 5 is still met (i.e., $10,000 of marketing generates $50,000 in sales.) Plan C (Worst-Case Scenario): If we aren’t meeting minimum performance, we slash marketing by up to 50 percent, cutting generalized magazine and newspaper advertising, but not highly targeted web programs like PPC and SEO. II. Payroll PLAN A: If sales growth is 120 percent of quarterly goal, we expand aggressively, first by doubling ranks in the mission-critical areas of sales, marketing and customer support, with incremental expansion each quarter thereafter. Second, we add staff in production and project management, limited to 50 to 75 percent growth. PLAN B: In slow growth, we maintain current payroll as long as possible, ensuring that no particular staff member is overburdened while all business aspects are covered. Any incremental additions are evaluated for their impact on profitability. Plan C: We radically cut payroll, simply to keep the operations functioning. The owners take on more direct sales and marketing responsibilities. Our goal is to maintain sufficient financial reserves to operate at a bare-bones level for 12 months, in case income during this time is zero. III. R&D PLAN A: We ramp the engineering base by 200 to 300 percent over three months. New coders and maintenance teams are dedicated to additional system/module development, with dedicated project managers. A group for Q&A and testing is also implemented. PLAN B: In the slow growth scenario, we meld a single team to handle all development, project management and testing. New product features are added in order of priority, and additions are interspersed with testing and maintenance activities.

Plan C: We cut engineering teams to focus on maintenance and system stability. Only new features that are extremely light, easy to implement and test, and that benefit a majority of customers are considered.

No starry-eyed entrepreneur wants to seriously consider worst-case scenarios, or even so-so performance outcomes. But entrepreneurs need options to trouble-shoot effectively under pressure. We had our initial budgets set for Plan B. Happily, OnlyBusiness.com adhered mostly to a hybrid of Plan A and Plan B, but at points we leveraged strategies mapped out in all three plans. When you stage your cost commitments and plan for ‘what if’ situations in advance, you prepare yourself to respond swiftly to the challenges of running a company. Giving yourself clear options increases your chances for success.

Daniel Meyerov is founder and CEO of OnlyBusiness.com.

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Tags: Blue Polaris, OnlyBusiness.com, Pay per click, SEO

We’ve written recently about how bootstrapping founders can help themselves navigate a very tight credit market. Now, the implosion of the investment banking industry promises to level what was left of the landscape for both IPO and M&A exits. Startup founders would be wise to reassess their strategic priorities.

With fewer opportunities to cash out of their current and future portfolio companies, the agendas of angels and VCs will also shift. Founders who are raising funds will certainly want to revamp their pitch decks, if they are to have any success raising capital in the current climate.

But how? What should a startup founder put on that slide in their investor presentation that addresses potential future outcomes? How can founders adjust their messaging to demonstrate to VCs that they have their strategy aligned with the needs of the investing community now? We asked Faysal Sohail, the managing partner with CMEA Ventures, for advice. Here’s what he had to say.

Sohail’s 5 Ways to Build a Crisis-Proof Business:

1. Start with gap analysis. Build companies that address product gaps left by large companies. Always make sure you have two or three potential buyers with real market caps and which can pay higher exit multiples. For example, in software space you can build a vertical that will be interesting to SAP, Oracle and others. If you are successful, you will have at least a couple of buyers. In the Internet space you have at least three or four buyers that can provide a good outcome (Google, Yahoo, Facebook, eBay) In this case it means building a product/feature instead of a new platform. It is very difficult for existing players to integrate new platforms but a product built on their existing platform becomes valuable on day one.

2. Start with the exit multiple in mind. We often say, “Start with the end in mind.” Here, it means avoiding business sectors that pay low multiples on revenue or earnings, such as semiconductor, capital equipment or consumer companies. Instead, choose sectors that pay for strategic mergers rather than revenue aggregation. These are usually high-growth sectors. Examples would be clean technology, pharmaceutical and enterprise solutions. In addition, make sure the sector you choose has two or three potential acquirers in it, with healthy market caps, meaning they can pay higher “exit” multiples.

3. Focus on “must have” products/features with large markets. Nice-to-have stuff all goes out the window quickly. This means avoiding merely “lower cost” or “higher productivity” plays. At CMEA we see a lot of technology entrepreneurs optimizing a small part of the solution. While these things are important, and attractive in good times, they are insignificant in the larger context. For example, higher productivity features may optimize power savings of certain circuits, but these circuits may only take 10 percent of the chip. This lack of scope is the biggest issue with most deals that don’t get funded.

4. Look for existing sales channels you can tap into. Developing new channels can be the highest cost for a startup, and is not a good use of venture capital.

5. Look for strategic funding from corporate partners. This can solve both funding and potential exit issues.

Faysal Sohail is Managing Director at CMEA Ventures, in San Francsico.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  6 Comments
Tags: CMEA, financial crisis, IPO, m&a

Five months ago I became a founder for the first time. I am not a total novice to the Valley; I’ve been fortunate to work with and befriend some very smart (and now influential) people from companies like Google and Powerset. But I am also a Midwesterner who migrated to the Valley in the late ’90s, and my resume includes staid institutions like NASA, which while innovative is not exactly a go-go Silicon Valley company. I tend to think of myself as a member of the Valley “digernati” — working off Valleywag’s radar, not a member of those startup mafias that seem to follow every liquidity event.

Still, one thing that has happily surprised me is my success at networking my way to just about anyone I wish, or need, to see — even if I’ve never met the person previously. Granted the connections often take longer than I’d like, but 9 times out of 10, when I reach out to find someone, it produces an email exchange, a phone call or a meeting. This is how I got to critical partners, added advisors, and found new hires.

Friends tell me: “You’re such a natural networker!” and it makes me laugh. As an engineer who spent most of his awkward teens in his bedroom writing code, I couldn’t disagree more. The truth is that I have taught myself to network, and I work at it — a lot.

Maybe it is consistent with being a geek, but I actually honed my relationship-building skills through practice and experimentation: I took a year sabbatical when the dotcom bubble burst and during this time, the only contract I made with myself was that I would focus on building my professional relationships. I learned some important lessons about networking during this time. Maybe they will also be helpful to you:

The First-Timer’s 4 Rules for Networking: 1. Never, ever, underestimate anyone. That old adage of the guy who cuts someone off driving to the interview, only to find out in the parking lot it was the hiring manager, is true more often than you’d like. The woman scraping the gum off the floor in the restaurant may be the owner, you don’t really know. I believe that every human being has something positive to give to this world, and those who are open to that premise stand to benefit from it the most.

2. Be genuine. While many people will tolerate a blowhard, most won’t reciprocate without self-interest. But by engaging with people you genuinely enjoy, you’ll quickly see reciprocal engagement and spontaneous acts of generosity. Being genuine is also more efficient. Put on an act, and you’ll end up wasting precious time in business relationships that may be useful to the other person, but which are not in your own interest. 3. Be patient. If people think you are expecting something from them, they tend to feel used or taken advantage of. What’s the rush? One contact I made resulted in a very important and marquis advisor being added to my company — three years later.

4. Give before you get. As soon as I meet someone new I’m immediately thinking about whether I can help them, not because I want to trade a favor (I may not need anything from them), but because this is how I would like to be treated by them. Pro-actively giving may seem like a cost, and it may require you to be a little extra patient as well, but in the end, the reciprocal support I receive, simply by offering to help people who aren’t asking for it, is overwhelming. It builds tremendous loyalty and respect.

Andrew Hoag is founder & CEO of Black Drumm, a stealth-mode startup developing tools and services for specific areas of social commerce. In his spare time, he chairs Founder’s Nest, a private peer group of entrepreneurs & CEOs in San Francisco.

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Posted by Andrew Hoag on GigaOM  |  Permalink  |  18 Comments
Tags: Black Drumm, Founder's Nest

Last week we offered you one founder’s rationale for taking money from angel investors, instead of venture capitalists. It’s a trade-off of sorts: smaller checks, but they often come with better deal terms. Some readers took slight umbrage at this proposition:

“The reality is that our deal terms are going to be the same as a VCs,” says Ian Sobieski of the Silicon Valley-based Band of Angels. “We also want five to 15X returns, it’s just that since we’re only investing $500,000, we can get it at a much lower exit than a VC.”

In other words, just because angels cut smaller checks, don’t expect closing angel funding to be any easier. Competition is tight, says Sobieski. “The Band sees 60 deals a month, and usually accepts one. We’re very selective.”

Being a former founder, Sobieski knows a think or two about jumping through hoops to get a check. So below he offers a few tips to help you close that angel deal, so you can get back to the real work of running your startup.

5 Hacks For Closing an Angel Round: 1. Accept a lower valuation. Train yourself not to think of valuation as the value of your company. That makes it too personal. Valuation is just a trade off of time from the moment you get your financing, to the moment you receive your ultimate payoff. If you want to close your funding sooner, take your valuation down a notch and give your investors “a great deal.” This means selling me one-third of your company for $500,000, which is still a smart, $1 million pre-money valuation. 2. Use the same lawyer as your investors. You need a lawyer to explain the law and to draft documents. But when a lawyer works for just one party in a transaction, s/he tends to get engaged in business decisions. This can drive up legal fees. When you use one lawyer for both sides, decision-making stays between entrepreneur and investor, as it should. Hire a good lawyer, just make sure your attorney is willing to sign a waiver saying they will represent both sides in the transaction. (Expect kicking and screaming; this will slash their legal fees.) 3. Bring an advocate. Find someone outside your company who can vouch for you with your prospective angel(s). It does not need to be a “gray-haired type,” but it must be someone outside your founding team. 4. Identify your company’s “safe place.” Investors are afraid of dead-end projects. Figure out how much money you’ll need to get to an operational “place of safety” –- a.k.a. the inflection point that gives your investors confidence that more money will be forthcoming, and on favorable terms. Examples might be: cash flow break-even; a deal with Google; revenue benchmark; or a patent award. Whatever it is, show that you can get to that “safe place” with $500,000, and people will get excited. 5. Don’t inflate your burn. One way to make investors really comfortable is to keep your burn rate the same after you close your financing. Use your capital to pay for only those things that you cannot pay for with sweat equity. If you’ve been paid with sweat equity for six months, do it for six more, or at least long enough to show that you’re focused on getting to your “safe place.” If an entrepreneur came to me with this proposition, I’d know s/he was not just viewing the funding as a down payment on their payday.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  14 Comments
Tags: angels, Band of Angels, funding, Ian Sobieski, venture capital

Lately we’ve been discussing the many reasons why taking smaller, angel-sized investments instead of larger venture capital stakes often makes more sense for startups in a wobbly, exit-bereft market like the current one.

Today, Ron Conway, the well-known founder of the Silicon Valley-based Angel Investors LP fund, now associated with Baseline Ventures, weighs in with his own assessment of the benefits of the “all angel” investment path.

A former semiconductor executive who went on to co-found Altos Computer Systems, Anchor Intelligence and, most recently, SNOCAP, Conway took up angel investing in 1998. He’s seen his share of both hits and duds, but among the investments that earned Conway his “super angel” status are Google(s GOOG), Digg, PayPal(s EBAY), and Ask Jeeves (now Ask.com(s IACI)). He is also an advisor to Facebook. In other words, Conway knows what he’s talking about. So, if you’re seeking funding, you’d do well to consider his advice, dished out below the fold.

1) Angels are not fiduciaries. Angel investments are always going to be smaller, but the due diligence process is also going to be less rigorous, because angels are not acting as a fiduciary to another investors. VCs are duty-bound to put your company through a thorough review process because they are investing other people’s money. This is why I enjoy being an angel and not being a fiduciary: I can make my own decisions based on my intuitive process, my own opinion and gut feel about a company, because I am investing on my own account. This means I can make decisions faster, which is also good for the entrepreneurs.

2) Angels are often vertical specialists. Some VCs tend to be generalists when it comes to an industry (e.g., retail), or technology (e.g., mobile). Because angels often come from a successful industry background, you can do a better job of hand-picking a partner who will add expertise and value relevant to your precise market area — not just money. If your company operates in social networking, you might be enticed to go to a bulge-bracket, or marquee VC firm—and they would consider you because the space is so hot. But chances are that even some of the biggest VC firms won’t have someone with deep domain expertise in social networking, it’s just too new. But you could go see Owen Van Natta, who just left Facebook. You’re in cloud computing? Go get Diane Greene, the former CEO of VMWare. They’d both make great angels. 3) Angels have one-degree of separation from people in their professional network — not two, or three, or four. But because angels tend to be operational types, the business relationships they bring to the table are personal, not transactional. Angels also tend to invest in concentrated themes, consistent with their operating experience. So when it comes to accelerating your business development — through things like recruiting, partnerships, cultivating sales, etc. — angels tend to connect the dots. The combination of first-hand relationships and focus means an angel can might get your company to an “exit” sooner.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  23 Comments
Tags: Altos Computer Systems, Anchor, angel investors, Ask.com, David Weiden, Diane Greene, eBay, facebook, google, Khosla Ventures, Open Table, Owen Van Natta, paypal, Ron Conway, Snocap, TellMe, Vinod Khosla, VMWare

This week, Lookery, the ad network launched last July to serve über-cheap ads into Facebook applications, has announced a new $2.25 million round of funding. It’s a nice sum for the 14-month-old startup, which now sends Facebook some 3 billion ads a month, according to Lookery’s CEO, Scott Rafer.

But here’s what’s really interesting: Rafer and his cofounder, David Cancel, elected to raise the money almost entirely from angels, forgoing the traditional venture capital most companies would pursue at this stage. This is Lookery’s second funding event. In January, it raised a $1 million note, which converts to equity given in this deal.

The participant list is heady, including Salesforce.com founder Marc Benioff; Reed Hundt; Tickle founders James Currier and Stan Chudnovsky; and About.com’s Scott Kurnit. There are some notable VCs in the deal, too, but they’re participating individually, not with their firms: Ted Dintersmith, late of Charles River Ventures; Ravi Mhatre of Lightspeed; and Allen Morgan, of the Mayfield Fund, who is also a Lookery director.

Serial founders with good track records, Rafer (MyBlogLog) and Cancel (Compete.com) could have gone after marquee venture firms if they’d want to, but the pair has specific reasons for favoring angels. After the jump, Rafer explains why other founders ought to consider doing the same.

Lookery’s 5 Reasons to Go All Angel 1) Focus. Angels can concentrate on the individual strategy of your company, rather than the larger portfolio management strategy a VC must bear in mind (e.g. How deep are my fund reserves? How fast must I spend them?), most of which don’t apply to your company. “Founders want their startups managed as sovereign entities, not as portfolio segments, “ Rafer says. 2) Fewer confusing ownership terms. Angels don’t get the level of liquidation preferences VCs demand. Angels like convertible notes and often get what Rafer calls “thin preferreds,” but you’re unlikely to suffer the dreaded participating preferreds. Without a multi-tiered equity structure, every investor, including founders, gets paid in proportion to what they put in. 3) You will control negotiations on future funding rounds. You’re less likely to have a “dissonant chorus of voices between the common shareholders and preferred shareholders, each at the table and wrestling in a different direction” over the terms of the new round, Rafer says. 4) Transaction control. If a good purchase offer comes your way, you’ll get to decide when to sell. You won’t have to seek permission from investors who aren’t on your board or worry about what a VC needs to have happen vis á vis managing his limited partners. Chances are you’re not an LP, so why should you care? Angels have no LPs, so their agendas tend to be far more transparent. 5) Angels aren’t compensated in ratios. Angels get 100 percent of the profit they generate with their investment in your company. A VC only gets a fraction of the “carry” generated on your deal. This is one reason a VC might be motivated to urge you to sell bigger; they need the numerator in the exit math ratio to be bigger, or the denominator to be smaller, to maximize their piece of your deal. With an IRR compensation method, VCs get paid even more if you sell faster. But the thing to remember is that a VC is negotiating for the interests of others, not just himself. With angels, “it’s a merit-based discussion, or at least much more so, because the angel is actually getting the entire return,” Rafer says.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  15 Comments
Tags: About.com, CHarles River Ventures, compete.com, David Cancel, James Currier, Lightspeed Venture Partners, Lookery, Marc Benioff, Mayfield Fund, MyBlogLog, Reed Hundt, Salesforce.com, Scott Rafer, Ted Dintersmith, Tickle

It’s not a new idea to make hay by seizing the messy business opportunities no one else wants. Innovating the distribution of a technology, rather than inventing the technology itself, isn’t novel either. This is the model that made founder Michael Dell a billionaire. Now, San Francisco-based Sungevity is taking a page from Michael Dell’s playbook in an effort to do to solar panels what Dell did to personal computers.

Solar installs are typically custom jobs — labor intensive and therefore costly. While there are rebates and tax incentives to cut the costs, the paperwork is dizzyingly complex, so consumers (and even developers) often don’t bite. Since most solar startups are focused on making the sexiest technology, Kennedy figured it was a no-brainer that Sungevity could effect more change, and make more money, by addressing the logistically painful process of selling, installing, and handling the paperwork associated with everyone else’s gear.

Michael Dell innovated the economy for PC-manufacturing by taking commodity computing components, then custom-assembling them to each buyer’s order in what we now commonly call a “just-in-time” supply chain. Similarly, Sungevity uses off-the-shelf web tools, commodity solar modules and drop-shipping to streamline a sales process for the retail solar industry that once took weeks or months. (Read more at Earth2Tech). Below, Kennedy offers a few tips for How to Spy Startup Opportunities in the Sales Cycle:

1) Identify a technology/product that has experienced enough innovation to be approaching commodity status, but which is still not widely distributed. “A solar module is a solar module, like a motherboard was a motherboard when Dell started out,” Kennedy says. Dell simply delivered them farther, wider, faster.

2) Are operators in your industry warehousing their products? Begin with a geographically small scope and use a drop-shipping partner to compress delivery. Sungevity serves California, but plans to expand into up to seven states next year. 3) Are you looking at an industry where the sales cycle is slow, say, longer than 30 days? Can you compress the sales cycle simply by digitizing the paperwork? With CRM systems no sales cycle needs to be this long. 4) Does the channel you’re considering involve government bureaucracy or rebate programs? You can make a business out of offloading these processes all alone. One of Sungevity’s strongest selling points is that it handles the paperwork for tax rebates. 5) Can you apply standard technology to create a new, value-added process? Sungevity’s “big invention,” says Kennedy, is an innovative software application it wrote to use pre-fab satellite images to remotely determine the right solar panel configuration for a roof.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  2 Comments
Tags: Governor Arnold Schwarzenegger, Michael Dell, photovoltaics, solar power, Sungevity

With the tech conference season upon us, Found|READ thought some tips for how to master conference marketing on the cheap would be useful. Today’s tips are courtesy of serial entrepreneur Pete Grillo, currently founder of iterasi, a one-and a-half-year-old startup in Portland, Ore., that has built a hosted storage service to capture and archive web pages. It’s a seemingly simple tool, but it allows you to save web pages in perpetuity — personal archives for individuals and businesses!

Iterasi had been living off angel funds since 2006, so even though Grillo’s investors might have been fine with a marketing blitz, Grillo didn’t feel like he could spend the $10,000 needed to get an iterasi booth at TechCrunch50 or sponsor a $5,000 dinner at last month’s Gnomedex. But iterasi was about to launch a new release, and Grillo recognized that an impactful marketing play would be necessary if it was to get noticed in a very noisy market.

So Grillo and his team came up with a non-traditional marketing tactic. They found an old yellow school bus with a dubious battery and an owner/driver who wanted to get to Gnomedex, too. Then they invited several bloggers, a dozen programmers and tech folks from the Portland area to ride along with them to Seattle.

They borrowed equipment from their office to provide Wi-Fi on the bus and then Twittered and texted their way north. When iterasi arrived, Gnomedex organizer Chris Pirillo greeted them. They drew conference-goers to the bus by keeping it conveniently stocked with drinks and snacks, and they parked it a short walk from the conference entrance.

Word about the bus spread. Iterasi hosted a day trip to Bherd Studios, a local art gallery that became “a favorite non-conference moment.” Everyone who went received a commemorative T-shirt, emblazoned with “iterasi bus tour, Gnomedex 8.0.” Soon, they were worn like conference talismans.

In the end, Grillo says, iterasi attracted more attention from its bus program than if the company had sponsored Gnomedex. Better still, iterasi paid far less and had more fun: Total cost for the bus was less than $700 and T-shirts were another $900.

You, too, can get edge on the cheap. Here are Grillo’s 5 Guerilla Tactics for Good Marketing:

1) Host an non-conformist event. The Magic Bus Tour has been done. Host a massive tailgate outside the venue in a Airstream draped in your logo. Or an off-site BBQ at SXSW (I know a company that did this.)

2) Not all schwag is equal. T-shirts are a cheap, but surprisingly powerful tool. Everyone needs them. Coupled with the successful Magic Bus to Gnomedex, they became a conference currency.

3) Ask for a discount. It is not a sign of weakness to say: “Look, we are and under-capitalized startup but we’d like to attend your event to showcase our new release.” People do want to help you. By offering something like a fresh look at something cool, you give them a reason to say “yes.”

4) Enter contests. We created a video to get free passes into Supernova 2008. We did it in less than a day and won. 5) Blog. Blog. Twitter. Flickr. Create a Facebook page. We all know this. Be active in these conversations, but judicious. Monitor sites that cover you, but only add comments where you add value. Respond quickly when you do respond. Ignore trolls.

Photo credit: Kris Krug

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  9 Comments
Tags: facebook, Flickr, Gnomedex, iterasi, Pete Grillo, Supernova 2008, SXSW, TechCrunch50, Twitter

Founders are notorious for falling in love with their visions. How else could we survive 18-hour workdays or a multitude of setbacks with our optimism still intact? The problem with this is that it’s impossible to predict what the future holds. So, to be successful, you’ll have to grow comfortable with transforming that vision you’ve fallen so deeply in love with into something you may never have considered.

Becoming part of a Fortune 1000 company was never part of our vision for PartnerUp, so when Deluxe Corp. first approached us in March, we were skeptical. Deluxe’s primary business is check printing for financial institutions and small businesses. It was difficult at first to make a clear connection to PartnerUp, a four-year-old social network for entrepreneurs. But we eventually came to see that our goals were more than compatible; they amplified each other. Our acquisition was completed in July.

Knowing that you’ve built a business that another company finds enticing is an amazing feeling, and being a part of a growth strategy beyond what you originally envisioned is a privilege few entrepreneurs get to experience. While no two transactions are the same, I’ve learned some things that might make it easier for your startup to embrace an M&A deal — even if one isn’t part of your current vision.

Tips for M&A ‘Re-Visioning’: 1. Questions not answers. When you meet with a potential acquirer, you’ll have tons of questions. Don’t expect tons of answers. When Deluxe came to us, we didn’t know what they wanted or how we would work together. It wasn’t until four months into the process that they gave us any clear answers. Instead of sitting in limbo, however, we decided to spend those months researching Deluxe’s products and services and deciding for ourselves if we were a good fit. Eventually the wheels began to turn, and we started to see the different ways our companies could benefit from each other. 2. Divulge with discretion. They’re going to ask you for everything from revenue projections to what you paid for paper clips last year. This may make you uneasy, but information exchange is a necessary part of the process. It wasn’t until we met with Deluxe to map out the business case that we saw exactly how we fit within their strategy. The trick to information exchange, though, is being smart about it. So lawyer up. A lawyer can counsel you on what should be exchanged and what shouldn’t. If you’ve been through this before and feel you can handle the upfront work (compiling due diligence information, negotiating purchase price, etc.), then wait to engage a lawyer. Negotiating the terms and conditions of the final contract must be done by a professional thoug

4. Start with the end in mind. Decide on the post-acquisition future of your company before the deal closes. Establishing the structure and strategy ahead of time is important. As I sat in meetings with Lee Schram, CEO of Deluxe, and his management team, I saw that this group recognized where it wanted to be, had a strong sense of urgency and was willing to commit the resources necessary to get there. They understood PartnerUp, and they knew where they saw us years down the road. Knowing that they had a definitive end result in mind gave us peace of mind that we were in good hands. Also, if you know where you’re going, you’ll have a better idea of how to get there. So make sure that your company will move in a direction you’re comfortable with while those decisions are still in your hands.

Just remind yourself that, in the end, having the ability to be flexible with your vision can bring success you never even dreamed of. So if an interesting opportunity comes your way, don’t be afraid to feel it out and potentially go for it.

Steve Nielsen is founder and CEO of PartnerUp, where entrepreneurs find co-founders, partners and other business resources. Read more from Steve here or on his StartUp Blog.

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Posted by Steve Nielsen on GigaOM  |  Permalink  |  4 Comments
Tags: Deluxe Corporation, Fortune, PartnerUp, Steve Nielsen

If you’re a major league baseball fan, you’ve probably read “Moneyball,” the best-selling book by journalist Michael Lewis chronicling the successful statistics-driven management of Oakland Athletics General Manager, Billy Beane.

Baseball has long been a game of stats, but Beane’s philosophy gave the tradition a twist: Instead of tracking a player’s batting average or runs batted in, Beane tracked a player’s on base percentage. The unorthodox approach helped Beane build the A’s into a remarkably efficient team that has reached the American League playoffs five times in eight years with a payroll that’s consistently near the bottom third of all 30 MLB teams ($78.5 million in 2007).

Plenty of corporate executives have tried to apply Beane’s tactics to their own operations. NetSuite CEO Zach Nelson did one better: In 2007 he invited Billy Beane to join NetSuite’s board of directors.

Nelson says tracking nonstandard performance stats has helped improve the efficiency of NetSuite’s sales process. Most CEOs track their marketing spend, lead generations and closed contracts independently; NetSuite tracks which marketing plans (players) turn into leads (walk ons) and which leads convert to sales (runs). If improving your company’s sales efficiency is the aim, then “walk ons” — or how you get to the sale — is the key stat, just as in baseball. Below Nelson offers a few tips from Beane’s play book to get you started “managing by the numbers.”

Management Rules from the School of Beane: 1. Just start measuring it. In the early stages of your business it may be difficult to know which stats will be the most important for evaluating your operation. (Operating expenses or burn rate? New sales or renewals?) Don’t get too hung up on selection, just start doing it. “It’s easier to measuring things now than later, when your business is much more complicated,” Nelson says.

2. Reduce the number of systems you use. Whether you’re using sophisticated SaaS applications, or a simple spreadsheet system, streamline. It’s best to unify data tracking into a single system so you can correlate the data. It’s fine to use multiple applications (one for finance, another for marketing), but keep in mind that when you fragment your data, it becomes harder to “connect the dots” and draw operationally useful conclusions.

3. No such thing as a wrong metric. It doesn’t matter if you discover you’ve been measuring a useless data point. Once you know, you can eliminate it and choose something more appropriate. There is such a thing as overkill. Nelson found that measuring the number of product demonstrations his sales representatives were doing wasn’t helpful; he could never correlate a single demo and a final sale. “Since there was no value in collecting that data point, we don’t track it anymore.”

4. Consistency is king. The one thing you can’t do is modify, in midstream, the specific terms you use to collect a data point. If you start out tracking contract renewals by geographic region, don’t change midstream to collect renewals by product line. Just start collecting a second data point. It’s more important to build up a body of historical data than to make changes in the heat of the moment.

5. Trust your data. Even when your intuition suggests otherwise. You have to have the courage and conviction to trust your data, and act on it, Nelson says. If your data says spending money on conferences like CES or Web 2.0 Summit does not convert to sales, don’t go — no matter how important you think it is to be seen at such events.

Photo credit: Geoffrey Ellis.

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Posted by Carleen Hawn on GigaOM  |  Permalink  |  5 Comments
Tags: Billy Beane, CES, Michael Lewis, NetSuite, Nick Swisher, Oakland Athletics, Web 2.0 Summit, Zach Nelson

Last month we offered bootstrapping founders a short index of cost-optimization sites to help cut expenses for things like health insurance, web hosting, wireless plans and electric bills.

Many of you wrote in to offer your own recommendations, so this week we’re expanding the list with seven additional resources to help you cut costs associated with project management, conferencing, financial planning and accounting — plus, an entire search engine devoted to sourcing free applications for just about everything else, including: data backup, CRM, product price tracking, professional video editing and more.

As always, if you’ve discovered additional tools for cutting startups’ commodity costs, please share them in the comments section.

1. Financial Modeling

Even if you never plan to raise professional money, you need to know how to build and read financial and accounting models in order to run your business effectively — especially during a recession. FinancialModelingGuide.com offers free tutorials and Excel spreadsheets (available for download once you register) that you can use to round out the capital-investment and cash-flow models in your business plan and help you with ongoing operations accounting. You’ll likely find the template for the enterprise software company useful. The site claims an active community of some 4,000 finance professionals, entrepreneurs, and academics who can give you quick and unbiased feedback.

Also take the time to listen to this lecture, by Prof. Aswath Damodaran of New York University’s Stern School of Business, in which he explains the how to easily assess the beta risk (or market correlation, a.k.a. recession exposure) of your business. (Ever wonder what tobacco companies and Twitter have in common? A low beta!) Other valuation resources are here.

2. Web Hosting (Addenda)

Slicehost.com is a reader-recommended site for web hosting and applications development. It includes a community for seasoned developers to share their tips and war stories and a very long list of free tutorials for building e-books working in MySQL, Ubuntu, Debian, Capistrano, etc. (Reviews of the tutorials are positive.)

WebhostNinja.com is another reader-recommended site that aggregates hosting vendors so you price-compare and buy wisely. We especially like this site for its index of coupons for further discounts and this handy list of articles, such as “The 3 key numbers when buying Web Hosting.”

3. Credit Assistance

Interactive media and online advertising firm MediaTrust is behind SmarterChoices.com, which aims to help consumers and startup founders (some of whom are also, we presume, MediaTrust’s clients) with certain finance and credit pressures. The site already provides auto loans, cash advances and will help you repair your poor credit. Apparently health insurance, debt consolidation and auto refinance are on the way. The sites seem a bit predatory at first, but MediaTrust is an established company, and heck, it’s an ugly truth that such services will be needed in tough times.

4. Conference calls

Freeconferencecall.com offers reliable and free conference calls under a variety of plans, including one you can use for a mini-conference, called Simple Event, in which up to 96 organizers and panelists can conduct a presentation for up to 1,000 passive listeners. One caveat: we hear this service isn’t as effective for some VoIP users.

5. Task Management

Priacta.com offers a list of 108 free or low-cost software tools designed for various kinds of task management. They’re intended to save you time and, therefore, money. The site trades on author David Allen’s best-selling book, Getting Things Done: The Art of Stress-Free Productivity. If this doctrine appeals to you, consider the coaching pages — but know that Priacta’s Totally Relaxed Organization (or TROG) toolbar, for which the site serves as a lead-generator, is only free during trial. If you like how it manages your calendar, you’ll have to pay to keep it.

6. Free Apps for Everything!

The SearchFreeApps.com engine was built by our friend and early Found|READ contributor Bruce Judson, of the Yale School of Management, expressly to help bootstrapping startup founders access free (or mostly free) resources for building and running their companies. Bruce personally vets every application entered into his database (we don’t know where he finds the time), which now includes applications for things as basic as business cards, virus protection, data storage, legal forms and CRM, as well as business-enhancing applications for things like video editing, foreign language instruction, mind mapping. Bruce adds new applications daily.

Also consider Bruce’s book: Go It Alone!: The Secret to Building a Successful Business All On Your Own.

7. Spending Priorities

We’ve linked to The Calacanis Cost-Cutting Hacks post before, but we include it again for his very useful instructions on how to prioritize your startup spending (e.g., why you should pay for expensive chairs, but not a phone system). He also offers tips on how to minimize some of the latent but recurring “costs” that drain your day-to-day operating efficiency (e.g. the hours your workers spend each month standing in line at Starbucks). But we think Jason’s most important cost-cutting tip is No. 15:

“Go to each of your vendors every 6-9 months and ask for 10-30% off. If half of them say yes you’ll save 5-15% on fixed costs. People will give you a discount if they think they are going to lose the business.”

We suggest you print out this advice and frame it on your wall.

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Tags: Aswath Damodaran, Bruce Judson, Capistrano, Debian, Jason Calacanis, Mahalo, MediaTrust, MySQL, Starbucks, Stern School of Business, Twitter, Ubuntu, Yale School of Management