GigaOM

Five years ago, Michael McDerment built an invoicing system for his web design business. Today, FreshBooks lets nearly 400,000 users invoice their clients, track time and manage expenses electronically. Not all are paying — the service is free for users with up to three clients — but it’s growing fast. “We’re seeing double-digit growth for both users and paying customers each month since our May 2004 launch,” he said.

McDerment, who is also a co-organizer of this week’s Canadian Mesh Conference on Internet technology, has grown the company slowly; four years later, it has only 17 employees. And he hasn’t taken any VC funding, choosing instead to bootstrap from his web design agency and some individuals close to the company.

Another small-is-beautiful powerhouse, Infinity Box, runs a web forms service called Wufoo. The company has 75,000 users, of which 3,200 are paying customers. It launched in July, 2006, and was profitable less than 10 months later.

VCs might dismiss small startups as “lifestyle companies,” since with only small investments needed they’re often too small for big VC firms to work with. But for the entrepreneurs themselves, it’s a way to keep control and avoid dilution, a sentiment echoed by David Heinemeier Hansson of 37 Signals at Startup School 08 and by Bo Burlingham in his book, “Small Giants,” which is all about small companies: Continue Reading

Jim Barnett is co-founder and CEO of Turn, a three-year-old online advertising firm that uses an eBay-like auction to improve the way advertisers are matched to web publishers. Previously, Jim was president of AltaVista, and later, of Overture’s search division, which Yahoo bought for $1.6 billion in 2003. Jim talks to us about why he finally became a founder, why bootstrapping is not always the answer, and why sometimes co-founders need to part ways.

F|R: When did you first get the startup bug?

Barnett: Unlike some of your contributors, I’m a serial CEO. Historically, my passion and expertise has been taking entrepreneurial companies and scaling them into professionally-run companies. I did that with several companies, but ever since I was a kid I wanted to run a company from scratch.

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Networking has always been a high art in business. Just ask Susan Roane, my mentor and author of the seminal tome, “How to Work a Room.” (I know a handful of VCs and startup kings on Sand Hill Road who have her book tucked into a drawer.) I’ve been showcasing Roane’s lessons for founders in my Found|READ series, “What They Don’t Teach You At Stanford Business School.”

By now it’s time to address the latest, and arguably the most powerful, networking tool in any founders’ arsenal: Twitter. It’s simple. If you’re not “tweeting,” you’re missing half the conversation. Just ask Sarah Lacy. (How different Lacy’s now-infamous SXSW interview of Facebook’s Mark Zuckerberg might have been had she been plugged into the tweets flying around the conference room floor!) Don’t know how to use Twitter? No sweat. Here are my 8 Tips for How to Work a Twitter Party.
(Photo credit: News.com. SXSW Tweeters celebrating before the ill-fated Zuckerberg interview.) Continue Reading

Editor’s Note: This post is the second in a three-part series authored by Xobni’s VP of engineering, Gabor Cselle. Read a longer version (co-written with Marie C. Baca ) on Cselle’s blog starting Monday.

I run product development at Xobni, maker of an email application that helps you organize your Outlook inbox. My co-founders and I were fortunate to get seed funding from Y Combinator in the summer of 2006, and I now often speak with entrepreneurs that are applying to the incubator. And when I do, I give them this advice: The most important decisions are the ones you make in the beginning of the process, such as what product to build, and what market to serve. These will determine whether you’re headed for failure or a multimillion-dollar exit.

Xobni was extremely lucky in that even though we initially built the wrong product, we were always focused on our product-market fit. This helped us quickly correct our course, and eventually produce a product that is making Microsoft drool. I’ll explain how we turned it around. Continue Reading

There are a lot of different words that can be used to describe the venture capital community and its relationship with entrepreneurs. Many of them, however, cannot be printed. For example, I once heard a VC say to an entrepreneur: “It would be easier to build a nuclear reactor at [UC] Berkeley than to execute on this idea.” And I once heard an entrepreneur say of a VC: “If I ever see that guy in a parking lot, I will speed up to hit him.” You get the idea.

The Sand Hill Road crowd does have a reputation. In an unscientific opinion poll, the collective sentiment was probably best described by a friend of mine this way: “Let’s just say you probably don’t want to grab a beer with a venture guy, or want your sister to marry one.” Yikes, I am a VC. No one wants to have a beer with me? Where did this rap come from? I think it all starts with the clumsy poker that gets played out in pitch meetings.

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In my years covering technology, I’ve gotten more than my fair share of pitches related to the latest consumer Internet startup. Thanks to this I’ve been able to witness what amounts to be a near-familiar life cycle for these companies. Not every company hits every step, but most of these will be familiar to those of you in the Silicon Valley Social Media/Web 2.0-Something trenches. Continue Reading