I recently had breakfast with a guy (he shall remain nameless) who told an interesting story.  In short, it went like this: there was a 5 person start-up that built an impressive web-based software product.  They went to sell it to a large organization that had a 75 person development team (with, incidentally, zero testers or QA people).  Two guys from the product company met with the CEO and the head of technology.

That giant dev team had been struggling to produce anything of any degree of quality, and the CEO nearly blew a gasket when he saw what a tiny team was producing while his massive (and massively expensive) team was proving to be inept.  Funny thing is, the small product company didn’t get the sale because the head of technology blocked it, presumably by convincing the CEO that it wasn’t “enterprise ready” or something along these lines (i.e., covering his ass).

It amazes me how the combination of ignorance and people trying to protect their jobs can create such massive waste and inefficiency.  There are plenty of cases where big teams make sense, but 99% of the time your web application development project is not one of them.

Small teams.  Clear responsibilities.   Tight schedules.  Narrow scope.  Total accountability.   These are pretty simple concepts.

Mike Chasen was the speaker at the Potomac Officers Club event last week.  He talked about his experiences as the founding CEO of Blackboard, which he’s built from a 2 person partnership crammed into a tiny office in DC in 1997 to an 850 person publicly traded company with offices around the world.  Blackboard provides software that helps universities put their courses online.  Some points he stressed that stuck out at me in terms of lessons for growing start-ups:

• Focus.  He recognizes that a lot of entrepreneurs try to get started part-time, but he believes in 100% focus for start-ups.  Their original idea was to put college applications online (not courses), but he and his partner tried to do it while keeping their day jobs at KPMG, and it never got over the hump of initial resistance.  They faced the same resistance with putting courses online, but, because they were focused, they pushed through and made it work.
• Charge.  They’ve always stuck with a model of charging for software rather than giving it away for free in the hopes that their audience would grow and ad revenue would follow.  They faced pressure to “go free” in the dot com bubble, and while their decision not to makes them look smart now, he notes that the only reason they didn’t consider it was that they didn’t understand the model.
• Know your model.  One early day of fundraising involved two VC meetings.  In the first, after Mike explained that their model of long-term software licenses would create predictable revenue, the VC told him he was nuts — that everyone in DC makes money on consulting, and that they should give away the software but charge big for integration services.  A quick study, on his 2nd VC meeting that afternoon, Mike explained their model would be to give away software and charge for services, to which the VC countered that the margins on software sales were way more attractive and that services would be a bust. 
• Embrace turnover. He’s been through six heads of sales, and clarified that doing so was a natural reflection of their evolution as a company.  At each stage of their growth, Blackboard needed a different skill set to handle the specific challenges of that stage.  He also noted that they’re “right” about a hire about 50% of the time.
• Network. He credits local networking events for leading him to their first angel investor, who put up $200,000 as part of a $500k round.  They went on to raise more than $100 million. 
• Take it. He recommends raising as much money as you can in each round, even though he admits that their final round of funding (~$50 M) was hampered by their excess in the previous round.
• Pie. His ownership stake in Blackboard is down to 4%, but he points out that if he’d tried to hold on to more equity he wouldn’t have been able to grow Blackboard the way he did.  He’d rather have 4% of a big pie than 50% of nothing.

I was impressed by the story of Blackboard.  Mike started the company with only a couple of years of professional experience and grew it through some turbulent times.  For him to remain at the helm through all that change and maintain his passion and effectiveness is remarkable.

Now that we have all this space, we’re excited to fill it up with smart folks.  We’re hiring passionate people, and I predict you know someone who would be a great fit at Viget.  If you think I’m right, have them visit viget.com and send a resume to jobs.va@viget.com.  If we hire them, I’ll buy you both a beer (or soda, if you prefer).  Some roles we’re looking to fill:

• Office Manager - someone to make our sweet new office hum like a well-oiled machine by doing everything from reception to event planning to supporting little ol’ me in all kinds of work adventures.
• Rails Developers - both senior and less senior.  Come work with our guys who speak at events and conferences and build some seriously great apps.
• Designers - again, both senior and less senior.  Again, we have an awesome team, and we’re looking to make it even more awesome.
• Front-end Developers
• User Experience Designers

We’re actively interviewing for these roles.  If you know anyone who would be a good fit, please send them our way.  We have some very cool work going on and it’s a great time to join us.

Last month I mentioned Rails Rumble, the app dev contest that went down last weekend.  The apps are done — 92 of them, in fact — and now anyone can go play with them and vote for their favorite.  Two Viget-associated teams participated:

Clinton assembled a tiny all-star team with Julia Kulla-Mader and Jackson Fox dubbed “Snack Nut Item” and built Clubhouse:

Clubhouse is a network for clubs or teams or any organizations, providing them with loose and fun event scheduling. Anyone can create and join clubs, create events, and plan the future! It is more filling than a good breakfast. It is like Meetup.com, but free, and what the people want. Also, iCalendar! Yeah!

Ben, who couldn’t play the whole weekend due to “social obligations” (otherwise he’d have been in VL South along side Clinton), formed a solo team called “Texasbenonian People’s Front” and built Irksome:

Irksome is a web-based client for IRC, providing all the normal features of IRC through a much friendlier UI – and with searchable transcripts!

Nice work, guys.  As DC’s Startup Weekend draws closer, I can already tell that the insights from the Rumble will be valuable.

Update: check out Clinton’s post about Rails Rumble on the Viget blog.  He makes some great points …

The Era of Conversation event is happening in DC on October 4th, hosted by the Direct Marketing Association of Washington (DMAW).  I’ll be giving a talk about “building individual relationships and readers” in the tactical “Organizational Blogging & RSS” portion of the event.  From DMAW:

It’s too late to talk AT your customers and donors. The New Media Conversation involves talking WITH them. Blogs, social networks, wikis, user-generated video, and other web 2.0 interactions have put organizations in the listener’s chair. Meanwhile, companies, non-profits, and political organizations are scrambling to understand and embrace the two-way dimension in one-to-one communications [Don’t be discouraged. YOU can do this — and you WILL profit from the experience!]

Start with the basics. This unique “Era of Conversation” event discloses the underlying principles and tools of conversational communications (keynotes). Then, sessions hammer brass tacks into some of the more popular social media tactics (track 1), and spotlight real live case studies with [shock!] actual results (track 2). 

Hope to see you there.  If you have any specifics you’d like me to cover in my talk, leave a comment or email me — or just show up and heckle.

Local marketing / PR / social media guru Geoff Livingston, who blogs at The Buzz Bin and is the primary author of the upcoming book Now Is Gone, asked me a few questions about SEO that I did my best to answer intelligently.  He was way too generous with his description of me (*blush*), but I do appreciate the opportunity to discuss the topic.  Thanks, Geoff!

It’s official.  Today we announced our move into our new space at Viget.  I wrote about it on the Four Labs blog.  Kudos to Andy for making it happen on-time — it’s no small miracle that we managed to pull it off.  It’ll be another few weeks before all the furniture is in and we’re really settled, but for now it’s a thrill just to be in our own space.

Seth, intro’d as “the #1 marketing guru in the United States” (which he politely disputes,) posted this 6 minute video on his blog today.

It’s a quick summary of a lot of the themes he talks about on his blog and in his books including the recent history of marketing — a great way to get to know Seth and how he thinks. Some points:

• Old marketing (i.e., “yelling at people”) doesn’t work on TV, and, contrary to the hopes of marketers when the Internet arrived as a marketing platform 10 years ago, works even less online. Traditional Web advertising fails because ads are too easy to ignore.
• Getting permission to connect with potential customers is the key to successful marketing today and in the future.
• Web 2.0 is a lot about how customers can “market” (positively or negatively) on behalf of companies over the web — most of the results for product searches are for web pages not built by the product company.
• The key here is that the product / service needs to be truly remarkable so that people will be inspired to talk about it.
• Marketing for the next couple years will be all about empowering your biggest fans / customers to talk about your business.
• Web 4.0 will be when “the Net just gets smart” and — with permission — knows what you’re doing at all times and can therefore manage your life better.  His example: your flight is delayed and it not alerts you, but reschedules all of your meetings on your behalf. 
• Social networks grow fast and often die fast because “the party gets so popular that no one wants to go to it anymore.”  The key to success is balancing scarcity such that the right people are in the network, but enough activity so that these “right” people can find each other.
• He notes that blogging — not pounding the networks in Facebook and LinkedIn — is the best way to build credibility and foster this kind of discussion.
• Seth ends with words like “authentic,” “transparency,” and “reputation” — without these, none of this stuff works.

Paul put up a talk he gave at the final Y Combinator dinner of the summer called How Not to Die.  The message is not only to never give up, but to be as public as you can about your work to add extra motivation — since such publicity will make it “unthinkably humiliating to fail.”

There’s no doubt that without extremely dedicated founders, any start-up is doomed from the beginning.  Working hard and staying motivated through the miserable times (because there will be some) is essential to success.

Quitting makes sense sometimes, though, and the idea that quitting = failure = humiliating is dangerous.  Working extremely hard on a start-up for years only to eventually realise that it never had a chance to be successful no matter how hard and long you worked — that’s humiliating.  Not because hard work is bad, but because all that time could have been spent working hard on a different (and hopefully better) idea.

Good entrepreneurs have great vision and a unique perspective — on the market, their business, and the future of both.  Seeing ahead of time when hard work will get you through and when quitting is the best path to big picture success is what great entrepreneurs do well.

I like Paul’s essay.  His emphasis on focus is spot on.  His statement that “if you can just avoid dying, you get rich” is a bit much, but his analysis is interesting.  There’s a big difference between survival and success.

In this country, I maintain that it is relatively straightforward (but not necessarily easy) for a hard working person to build a sustainable business that supports a full life.  Hard work and decent decision making can pretty much get you through. 

Building an exceptionally successful business is complex (and hard) and often includes at least a few things going your way that are largely outside of your control, but within your ability to identify, understand, and react to — as long as you’re looking for them. 

So work hard, but not with blinders on.  Always balance intense effort with a quest for clarity and perspective.

Thanks to Peter for the link and Seth for inspiration.