1. Wayne Ting, a guy who started a Facebook-like app at Columbia University around the same time as Facebook explains how they lost to Facebook: they had too many features.

“A good website should have functionalities that 70 or 80% of users want to use. We had functions that only 10% wanted”

2. Marc Hedlund, a guy who started Wesabe (a competitor which lost to Mint.com) thinks they lost because they gave users too much work.

Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could

3. Netflix’s Chief Product Officer summed up the entirety of his years of testing various designs in just 3 words.

If I had to summarize our learnings in three words: “simple trumps complete.”

I think we’re seeing a pattern here.

I jotted down some notes from the talk which I thought were interesting.

• Intensive vs. Extensive
  He spent a bunch of time comparing these two types of innovation.  Intensive is building something new and truly innovative.  An example would be the Macintosh or Paypal – both blazed a trail to create something that had never been created before.  It’s carries a higher risk of failure but also greater rewards.  Extensive is building on ideas which are already in place.  It can be  a safer way to build a company, but not as lucrative.  An example would be putting accounting software online.  Or doing another social network.
  
• China
  He compared China and the U.S. saying that China’s next 20 years of growth are clearly extensive.  They can simply copy the model which is the U.S. and grow rapidly (build this many airports, this many steel mills, etc).  The U.S. can’t afford to do that and has the much harder job of pursuing intensive growth.  We can’t just make more doctors, lawyers, bankers, and houses.  To grow we need to build stuff the world has never seen (technology).
• There is a lack of focus on intensive innovation
  It was clear from his talk that intensive is where he’d like to see more focus in the U.S.  Especially Silicon Valley is full of too many people copying old ideas, and not breaking new ground.  He said this field of tech startups (their current generation) feels saturated and there are too many people making clones, or investing in poor ideas.
• The car industry 1920 – 1960
  The 1920′s saw a boom in automotive  with 300 U.S. car companies.  By 1960 there were only three.  This boom and consolidation is a natural cycle with new industries.  He said the internet and web companies aren’t quite to 1960 yet, but we certainly aren’t in 1920 any more.  He feels while there will certainly be successful web companies started in the next 10 years, but more and more of the profits will go toward the established players (Google, Facebook, Amazon, etc).
• Emerging Categories
  So if the web is maturing, where should entrepreneurs focus?  He said there is a boom yet to come in a number of emerging industries – artificial intelligence, bio-tech, energy, space stuff, etc.  But this isn’t the right way to think about it – don’t think in categories.  Think about something you are passionate about or something that would be cool & useful – then build that.  The passion is what’s important, not the category.
• Mobile is not the next big thing
  Internet was a big thing because established media companies (New York Times, Disney) could not make the jump.  It was just too different for them to adapt.  This left the field wide open for startups.  But he thinks mobile internet is similar enough to other internet that todays companies will make the jump.  The #1 social network on mobile will be Facebook, the #1 ad network on mobile will be Google, mobile payments on Paypal, and on down the line.
• CEO Salary = best predictor of success
  If CEO makes < $120k  he likes their chances.  If CEO makes > $160k he doesn’t like their chances.  When management is working for equity, incentives are aligned.
• Redundancy = Conflict
  People and relationships (investors, employees, etc) were the hardest problem for him and where he made the most mistakes.  One thing he learned, many sources of problems come from two people (experts) working on the same thing.  So find people with complementing skills and don’t duplicate people’s skills.  Redundancy will lead to conflict.
• Go where there isn’t competition
  Everyone is doing web startups now.  Go work on quantum computing – you will have almost zero competition.  Key to success: you’re passionate about it, few others are working on it, and it matters if you solve it.
• Social Entrepreneurship Doesn’t Work
  Somebody asked about social entrepreneurship.  He gave a candid answer: he doesn’t believe in it.  He said non-profits can be excellent, and for-profits can be excellent.  The intersection is small.  If there are starving kids in Africa, there is no profitable business there – you just need to get them food.  (Interesting I wrote something similar a while back.)

It was thought provoking overall.  I’ve got 3 business ideas I’d like to bounce off him given the opportunity, but he got bum rushed after the talk.  Peter – if you’re reading this message me, would love to do a quick call.

What do you think?  Agree or disagree on the state of tech entrepreneurship?

Leave me a comment below.

Until next time, keep breaking free!
Brian Armstrong

I looked into it and the scam is the same one you commonly see on Craigslist and numerous other sites.  It usually goes like this:

• Someone contacts you pretending to be interested in your services (tutoring in this case)
• They offer to pre-pay a large amount up front and send you a money order
• Next, they say they’ve changed their mind and would like a refund (minus some small fee for your trouble)
• You refund them with real money before realizing the money order is fake

These scams all have some common themes which make them fairly easy to spot, but they can still catch you unaware if you haven’t seen it before.  There are some red flags.  For example, the “buyer”…

• Usually resides in a foreign country
• Doesn’t write/speak English very well
• Wants to be refunded via Western Union
• Is reluctant or unwilling to meet in person or talk on the phone

Western Union seems to be used in most of these scams because the person can pick up the money in any country with just a confirmation code.  And since they’re in a foreign country you have ZERO legal recourse to go after them.  The U.S. isn’t going to be extraditing anybody for for less than probably $100,000 and most of these scams are for $1,000 or less.

I would be curious to know what percent of Western Union’s business is from people caught up in these scams (and people laundering money).  It wouldn’t surprise me at all if it’s 25% or 50%.  Their fee seems to be high enough that you’re unlikely to use it unless anonymity was essential to you.  If that is true, then Western Union is a prime target for a class action lawsuit – and I hope somebody does take them down.  They’re enabling a worldwide network of criminals, and profiting from it, which makes them very uncool in my book.

Anyway, I checked out my Google Analytics stats and 1,759 people from Nigeria visited the site last month, which is a little strange given that I have no tutors listed there.

There could be scammers residing elsewhere too, but this jumped out at me as new and probably one source of the problem.

How To Get Scammers Off Your Site

So here are some steps I’ve taken (or looked into) for blocking these guys – and how scammers can get around them.  You’re never going to make it completely impossible for them – the goal is just to make it difficult enough so they’ll spend their time elsewhere.  They are listed roughly in order of difficulty to implement.

1. Captchas

These are everywhere online now and a great first start.  They don’t prevent humans from messing with your site, but they do block computers (bots or automated scripts that people write).  And this is important because bots can spam hundreds of thousands of users in a few hours on your site before you catch it, whereas a human can only spam a few dozen people in an hour.  Captchas are your first line of defense.

How they can beat it: hire dumb people to fill out captchas all day.  I think the going rate for this is maybe $0.05 to fill out a captcha, which isn’t much – but at least it’s costing them something now and they can’t just automate the whole thing.  This one step alone will reduce probably 90% of the spam on your site.

2. Rate Limiting

The next step is to setup some checks to limit the number of messages any given user can send in a day.  Right now if a client tries to contact more than 15 tutors in a day, they’ll get a message saying they are sending too many messages and need to slow down.

How they can beat it: they can create new accounts.  If a new email address is needed for this (which it should be), then this takes them another few minutes to setup a new email address at Gmail or Hotmail (who use their own captchas).  Not a huge deal, but remember – the goal is just to waste enough of their time so they eventually give up and go somewhere else.

3. Tell All Your Users What To Watch Out For

Low tech, but effective.  Every time a student contacts a tutor through the site, I’ve included a note in the email warning them about these scams and linking them to this information page if they want to read more.

If you use Craigslist, you’ve probably seen similar warnings all over their site.  An educated user base is a great defense.  The only downside is that it uglies up your website and your users still have to read the stupid emails, so it wastes their time even if they don’t actually fall for the scam.

How they can beat it: they can’t really prevent you from educating your user base – it just means they now have to contact 10x as many people to find one who will fall for it.

4. Geocode Their IP Addresses

You can map an IP address to a country, and block entire countries from using your site.  This worked well in my case because I could block Nigeria (I have no real tutors listed there so no loss).  However, this doesn’t work as well if your scammers are mixed in the same countries with your real users.  IP address geocoding isn’t exact, so you could accidentally block your real users along with the scammers.  It’s important to remember that an IP address does not correspond to one person or one computer (in fact thousands of people can share the same IP address behind a university or corporate firewall) so it’s not an all encompassing solution.

How they can beat it: if they find out you’re doing it, they can proxy their IP address through another country or spoof it (which again, takes a little more time and possibly money).

This brings me to an important point: if you are going to block them, don’t TELL them you are blocking them.  Try to make it totally transparent to the user.  For example, if they come to your site and see a warning message saying “UniversityTutor is not available in your country” or “you are sending messages too fast”, then they know they’ve been caught and will start trying the above mentioned solutions.  Once they see the error message go away, they know their solution has worked and they’ll continue spamming.  Don’t give them any information to test solutions!

So if I detect the user is spamming, I still show the exact same success message back to them (your message has been sent!).  I just don’t actually send the message in the background.  This way they happily go on their way, wasting their time filling out forms on my site all day long (which do nothing).

For some reason I really like this idea that spammers are like mice on a treadmill, working away on my site all day without realizing they are going nowhere.  I even thought about starting a dashboard showing how many spammers I’ve tricked into filling out completely useless forms on my site, but I haven’t yet.

5. Hidden Cookies

In addition to the rate limiting mentioned above, you can also set another random cookie which survives the user’s session on your site.  This way if they logout and log back in with a new account they’ve created (creating lots of new accounts to get around your rate limiting) you can still track how many messages they are sending overall and not send more messages.  As mentioned above, don’t tell them when their message isn’t sent.

How they can beat it: they can simply clear their browser cookies.  The key here is that if they don’t know something is wrong, they may not think to do it.  Even if they do, it adds one more step to they process.

6. Evercookie

This is a neat little hack that a programmer put together.  It uses about 7 different methods to store cookie data all over the user’s browser and computer.  Some of them are very clever and hard to detect.  If one or more of the storage mechanisms gets deleted, Evercookie recreates all of them the next time it runs.  The result is a persistent browser cookie that is VERY difficult to get rid of (you can’t just clear your cookies).  As with many tools, this one could potentially be abused – but here is a case where it ends up working for good (blocking scammers).

How they can beat it: they’d have to spend quite a bit of time figuring out how to prevent it.  I’ve heard some reports that Google Chrome’s incognito mode is safe from it, but I’ve never tested it.  I suppose they could just boot up a new virtualized operating system every time, but in general, this is probably beyond what most scammers would be willing to do.

7. Panopticlick

Panopticlick attempts to identify an individual user of a website based on a hash of all their public user data.  Surprisingly, it claims to work about 85% of the time.  This could accidentally block a few of your legitimate users (false positives) in the worst case, but it could be worth it depending on how bad your spam problem is.

How they can beat it: they’d have to adjust something in their browser settings before each message to keep trying to get a unique identifier.  They could run out of settings after a while.  If anyone knows of this being used in production anywhere, please let me know in the comments.

8. Bayesian Filters

Currently the nuclear weapon in the fight against spam (the most technically sophisticated, but also the most powerful) – this applies equally well to blocking scam messages.  This is what Gmail uses for their spam filter, and it works quite well.

You’ll need a decent sample size of data (scam messages and real messages separated) and it will improve/learn over time.  You don’t even need to write the whole thing from scratch.  There are some nice open source libraries that you can drop right in, depending on what language you are using.

How they can beat it: they’d have to start changing the messages they send to not get caught in the filter.  This might include learning to speak English correctly, not using the word “money order” etc – which are non-trivial.  The algorithm would learn over time so they’d have to continually change it up.  Their weak point is their message: they are always going to have to say something slightly different than legitimate users.

Conclusion

The war against scammers is an ongoing game of cat and mouse that is never going to be completely over.  They might be annoying, but luckily they are just that – annoying – and rarely actually trick people out of money now days.  As people become more internet savvy (and start to recognize the words “Western Union” as a red flag), scammers will become less and less important.

Did I miss any other techniques?  Please let me know in the comments!

Brian Armstrong

I’d been contemplating this move for a while, and finally bit the bullet.  Why?  Well the short answer is that I don’t have enough time to work on it, and it never took off the way I’d hoped.  Actually, Email Service Providers have gotten a lot better since I created FeedmailPro (the narcissist in me would like to think I had something to do with that – pushing the competition in the right direction – but it’s probably totally unrelated).

Since I created it, 800 blogs have come to depend on it (albeit only 20 were paying customers) so clearly, communicating this news to the users of FeedmailPro is no small task.  I fully expect to upset some people in doing this, but there is definitely a right and wrong way to go about doing it.  Probably the biggest thing I was able to do was setup an excellent transition process for all the users to move over to MailChimp.  So hopefully this will be a step in the right direciton.  Below I’ve included some excerpts from the page I created on FeedmailPro to explain the transition to all the users.

I also made an effort give as much transparency as possible on the page.  I spoke in the first person and used the words “I’m sorry” (as opposed to “we apologize for any inconvenience” or hedging language like that).

The transition page is displayed below.

Until next time, keep breaking free (even when it means making difficult decisions),
Brian Armstrong

P.S. If you are ever facing a similar dilema on sticking with a project or dropping it, one of my favorite books on the subject is Seth Godin’s The Dip: A Little Book That Teaches You When to Quit (and When to Stick).

=================================================================

FeedmailPro Is Closing!

On December 1st, 2010, FeedmailPro will permanently shutdown and stop sending email.

It’s recommended for all current FeedmailPro customers to export their data and transition their email lists over to MailChimp, who we are working with to handle this transition.

This page will try to answer any questions you may have about the change, and assist you in the transition process.

Why is FeedmailPro closing?

Can’t you leave the site running even if you don’t have time to work on it?

Could you sell or donate FeedmailPro to someone else to keep it running?

Why MailChimp?

What is the schedule for shutting down?

What does MailChimp cost compared to FeedmailPro?

Ready to start the transition?

Head over to MailChimp to create your account.

You will need to complete this process before December 1st, 2010 to ensure there is no interruption in delivery to your subscribers.

Note: if you don’t already have a MailChimp account you should sign up using the MailChimp link on this page so they know you are a former FeedmailPro customer.

If possible, please use the same email address to create your account at MailChimp that you used at FeedmailPro.

Detailed video walkthrough of the transition process:

Tip: set to fullscreen and 720p resolution for best viewing experience.

If it’s not a 10x improvement, is it really worth doing?

I tend to agree.

I also ended up reading the new book by Zappos CEO, Tony Hsieh, Delivering Happiness which I’d highly recommend.  The story of how Zappos came to be a billion dollar company is filled with many twists and turns, and near death experiences.

I just wanted to jot down a few ideas that stuck with me from the tour and the book:

1. Customer service = good marketing
   Zappos today is known for having great customer service.  But that wasn’t always the case.  When they were nearly bankrupt and had no money for marketing, they decided to reach out to their existing customers in the hopes they’d become repeat customers.  It worked.  Taking a $39 loss on a free pair of shoes might appear to be bad business on the surface.  But when that person told 5 of their friends, it ended up being more cost effective than $39 worth of advertising.

   This is a powerful idea that your customer service can actually be your best marketing.

2. Don’t outsource your competitive advantage
   At one point Zappos was relying on manufacturers to drop ship all the products they sold on their site.  This allowed them to carry zero inventory and run a simple business, but the orders only had about 95% accuracy and were slow to ship. It also limited the selection of what products they could sell.

   At some point they had to make a tough decision: if customer service is what they were all about then they needed to control the entire customer experience from beginning to end.  They made a major shift (and nearly went bankrupt) in the process of starting to keep their own inventory, but it paid off.

   It’s worth spending some time thinking about what your core competency is and focusing only on that.  Once you decide what it is, you may have to sacrifice in other areas to achieve it – so you can’t make everything your focus.  As Jim Collins said, “If you have more than three priorities, you have no priorities”.  What are you willing to sacrifice so that you can focus on your competitive advantage?

3. Fun & purpose > Money
   Finally, one of the most interesting take aways is that Tony ended up preferring fun and purpose over money.  Even after nearly going broke trying to keep Zappos afloat, he still realized that the money wasn’t that important.  He started valuing seemingly unimportant things like hanging out with friends at work or playing pranks around the office as bigger contributors to his happiness than money.

   This definitely showed during their tour as there were plenty of shenanigans.  It’s surprising how once a person’s basic needs are met, money starts to become much less important than how they get along with bosses and coworkers.

You can check out Tony’s talk from South by Southwest here and checkout Delivering Happiness on Amazon.

Thank you Zappos for the tour!

Until next time, keep breaking free!
Brian Armstrong

This is one of the toughest moments for entrepreneurs (especially engineering types) when you realize that building the whole thing was the easy part.  Now it’s actually marketing the damn thing that is going to take a while.

Here are 5 ways I’ve used to launch a website and get the first users to my site.

1. Target Your Niche On StumbleUpon

Stumbleupon has a tech savvy base of people who are looking for cool websites just like yours.  When they are bored, they check Stumbleupon to see what cool new stuff has just been launched.

What’s great is that you can target the exact group who might be interested in your site.  For example, with BuyersVote.com I knew people into consumer info and possibly bargains would like the site, and I was able to target those groups.

Pros: Only $0.05 per visitor (way less than Adwords).  Can target people with relevant interests.  Can see a feedback report afterwards with what percent of people liked/disliked it.

Cons: Stumbleupon users are pretty click happy and are just trying to prevent boredom, so they tend to have a high bounce rate.  But then again, aren’t most web users?  This is a good test to see if your homepage is grabbing people’s attention.

2. Tell people your competition sucks

If you’re making a cheaper/better/faster alternative to an existing product, why not tell people that your competitor sucks?  Use their name right in the headline.  These ads tend to have a high click through rate, and your ideal early adopter is someone who is currently using the competition and is fed up.

Facebook ads work well for this, and their ad targeting is outstanding, but it can work elsewhere also like in Adwords or blog posts.  You may recall I launched FeedmailPro.com because I was fed up with Aweber and thought they sucked.

Pros: Works best when going against an established competitor.  Usually gets a high click through rate.

Cons: Sometimes you’ll run into problems using a trademark in your ad headline and Facebook or whoever will take it down.  But if it happens no biggie, you just take it down or reword it.  Better to ask for forgiveness than permission.

3. Try to rank for long tail keywords

Traffic from organic search results is free, and 98% of people don’t click the ads when doing a Google search – they use the organic search results.  So obviously, ranking in search engines is great.  The problem is it’s very difficult for a brand new website.

The solution?  Target long tail keywords first – keywords which are more specific, have more words, are more obscure, etc.  One good way to make a long tail keyword is to add a city name or regional keyword on the end.

For UniversityTutor.com this is exactly what I did.  I had a couple dozen subjects (algebra, chemistry, Spanish, etc) and a bunch of cities (Austin, Boston, San Jose, etc) with tutors signed up.  So I combined the subject and the city name (and added ‘tutor’ in the middle) to auto-generate a bunch of long tail keywords, such as “calculus tutor Austin, TX”.  Then I auto-generated pages on the site that targeted those.  Within a few weeks I was getting 500 visitors per day (for free) from organic search results.

Even a brand new site can rank for long tail keywords with just on-page SEO.  If you can start getting traffic for long tail results, then you have early adopters who will eventually give you links, and you’ll eventually rank for more competitive keywords too (although this takes a while).  Oh yeah, and don’t forget to create a sitemap after you do this so Google actually finds the new pages.

Pros: Free!  Brings lots of traffic.

Cons: You need at least SOME good content on the pages for this to work.  It can be user-generated if your users are submitting content (this is best), otherwise you’ll have to generate it yourself.

4. Seed your site using Mechanical Turk

Amazon’s Mechanical Turk is awesome, and some entrepreneurs are using this to seed content on their sites.  Basically you create a simple task that can be completed by a human being (write a review, tag this image, vote this up or down, etc) and assign a very low dollar amount to it (say $0.05 or $0.10).  Then you can publish these to Mechanical Turk and thousands of stay at home moms, bored librarians, and people all over the world will complete your task for a few cents and become early users of your website.

Sure, they are getting paid.  But it can help to generate the initial content on a site, even for the SEO trick mentioned in #3 above.  The task is completely open ended so some people also use it to get people’s feedback.  You can make the task something like “try this out and tell me what you like about it and what was confusing about it” if you just want to do user testing.

I tried this on BuyersVote.com and the results were pretty good.  The main thing you have to worry about is quality.  You can approve or reject each result that someone completes, and Mechanical Turk lets you adjust some quality controls like their approval rate from past requests and what country they are in, English speaking etc.  I’d say overall about 95% of the work completed was worth keeping, and about 5% needed cleaning up or deleting, which is decent.

Pros: It’s guarantees the person will actually participate in your site instead of just viewing it, unlike the other methods.

Cons: Keep an eye on quality and clean up any junk that gets posted.  Start small (maybe 10 tasks) and see results before going to 100, 1000, etc.  There is an art to making your task instructions clear for 100% of people.

5. Have a blog

I saved the best for last.  Having a blog is both the most powerful and the most long term approach.  It takes years of dedicated work to build up a good permission asset, but once you do it is worth it’s weight in gold.

37Signals launched Haystack.com in the blog post pictured above.  Just three days later Haystack.com had thousands of registered users and was generating revenue in excess of $7,000 per month.  Their marketing cost for this was zero. This was all possible because 37Signals has about 100,000 dedicated readers of their blog.

Joel Spolsky did the same thing when he launched StackOverflow.com with a blog post.  In the last 6 months it has become the #1 programming website in the world because of the critical mass it achieved from his (and his co-founder’s) blog posts.

Bottom line: if you don’t have a blog, you should start today because it will almost certainly pay off down the road.

Pros: It’s free.  These early adopters know you and actually care about the site (they aren’t being paid) which means they’ll probably tell their friends.  This is the most powerful form of marketing you can do.

Cons: Takes a long time to build a following on a blog.  You can’t start a blog just to promote stuff. It has to be a topic you actually care about and would write about even if nobody was reading it (because that’s exactly how it will feel for the first year or so).

Conclusion

There are a few other methods people use, like scraping competitors data off their site (not recommended from an ethical point of view although it can be effective in some cases) and of course you should definitely email it to your friends, your family, post it on your Facebook profile, etc (it’s surprising how many people don’t do this first and most obvious step – HotOrNot.com launched just by emailing a few friends and was receiving 2 million page page views per day just a few weeks later).

You might get lucky and have your site blow up without any serious marketing effort on your part, but in my experience (and from talking with other entrepreneurs) this is very very rare.  It’s far more likely that, even if you have the coolest product in the world, you’ll have to spend just as much time marketing it as you did building it, if not more.  Hopefully these tips help you out!

What techniques did I miss?  Which have worked best for you?  Please post your thoughts in the comments below.

Until next time, keep breaking free!
Brian Armstrong

He covers topics that are right in line for readers of this blog, such as How To Build Wealth, How To Do A Startup, and How To Love Your Work.

His articles can be quite long (many of them have been compiled into a book actually).  But I’ve included some highlighted passages below that stood out to me as I was reading.

He is a programmer as well so I was able to relate on a lot of those points.  He built a software company in the 90′s which eventually was sold to Yahoo for around $50 million and became the Yahoo Stores product.  He is now a venture capitalist and started y-Combinator, something I wrote about in the past and was very impressed with (but didn’t know he was connected to at the time).  I’m surprised I hadn’t heard of him until now.  His essays are outstanding (he doesn’t really have a blog but there is an RSS feed for his essays which you can subscribe to).

Thoughts on wealth…

A surprising number of people retain from childhood the idea that there is a fixed amount of wealth in the world…When wealth is talked about in this context, it is often described as a pie. “You can’t make the pie larger,” say politicians. Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is– and you specifically are– one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you’ll get more for it. In restoring your old car you have made yourself richer. You haven’t made anyone else poorer. So there is obviously not a fixed pie.

If you wanted to get rich, how would you do it? I think your best bet would be to start or join a startup. That’s been a reliable way to get rich for hundreds of years.

If you’re in a job that feels safe, you are not going to get rich

If you’re a little, nimble guy being chased by a big, fat, bully, run upstairs. (Here he is talking about the idea of going after hard problems in business, and how small companies can solve them quicker).

On how to do a startup…

Do the founders of a startup have to include business people? That depends. We thought so when we started ours, and we asked several people who were said to know about this mysterious thing called “business” if they would be the president. But they all said no, so I had to do it myself. And what I discovered was that business was no great mystery. It’s not something like physics or medicine that requires extensive study. You just try to get people to pay you for stuff.

…you can recognize genuinely smart people by their ability to say things like “I don’t know,” “Maybe you’re right,” and “I don’t understand x well enough.”

If you work your way down the Forbes 400 making an x next to the name of each person with an MBA, you’ll learn something important about business school. You don’t even hit an MBA till number 22, Phil Knight, the CEO of Nike. There are only four MBAs in the top 50. What you notice in the Forbes 400 are a lot of people with technical backgrounds. Bill Gates, Steve Jobs, Larry Ellison, Michael Dell, Jeff Bezos, Gordon Moore. The rulers of the technology business tend to come from technology, not business. So if you want to invest two years in something that will help you succeed in business, the evidence suggests you’d do better to learn how to hack than get an MBA.

It’s worth trying very, very hard to make technology easy to use. Hackers are so used to computers that they have no idea how horrifying software seems to normal people. Stephen Hawking’s editor told him that every equation he included in his book would cut sales in half. When you work on making technology easier to use, you’re riding that curve up instead of down. A 10% improvement in ease of use doesn’t just increase your sales 10%. It’s more likely to double your sales.

If you want ideas for startups, one of the most valuable things you could do is find a middle-sized non-technology company and spend a couple weeks just watching what they do with computers. Most good hackers have no more idea of the horrors perpetrated in these places than rich Americans do of what goes on in Brazilian slums.

Start by writing software for smaller companies, because it’s easier to sell to them. It’s worth so much to sell stuff to big companies that the people selling them the crap they currently use spend a lot of time and money to do it. And while you can outhack Oracle with one frontal lobe tied behind your back, you can’t outsell an Oracle salesman. So if you want to win through better technology, aim at smaller customers.

Google understands a few other things most Web companies still don’t. The most important is that you should put users before advertisers, even though the advertisers are paying and users aren’t. One of my favorite bumper stickers reads “if the people lead, the leaders will follow.” Paraphrased for the Web, this becomes “get all the users, and the advertisers will follow.” More generally, design your product to please users first, and then think about how to make money from it. If you don’t put users first, you leave a gap for competitors who do.

For most startups the model should be grad student, not law firm. Aim for cool and cheap, not expensive and impressive. For us the test of whether a startup understood this was whether they had Aeron chairs. The Aeron came out during the Bubble and was very popular with startups. Especially the type, all too common then, that was like a bunch of kids playing house with money supplied by VCs. We had office chairs so cheap that the arms all fell off. This was slightly embarrassing at the time, but in retrospect the grad-studenty atmosphere of our office was another of those things we did right without knowing it.

The most important way to not spend money is by not hiring people. I may be an extremist, but I think hiring people is the worst thing a company can do. To start with, people are a recurring expense, which is the worst kind. They also tend to cause you to grow out of your space, and perhaps even move to the sort of uncool office building that will make your software worse. But worst of all, they slow you down: instead of sticking your head in someone’s office and checking out an idea with them, eight people have to have a meeting about it. So the fewer people you can hire, the better.

If two companies have the same revenues, it’s the one with fewer employees that’s more impressive. When people used to ask me how many people our startup had, and I answered “twenty,” I could see them thinking that we didn’t count for much. I used to want to add “but our main competitor, whose ass we regularly kick, has a hundred and forty, so can we have credit for the larger of the two numbers?”

Avoid starting a startup to sell things to the biggest company of all, the government. Yes, there are lots of opportunities to sell them technology. But let someone else start those startups.

On reaching “ramen profitability“…

Ramen profitable means a startup makes just enough to pay the founders’ living expenses….A morale boost on that scale is very valuable in a startup, because the moral weight of running a startup is what makes it hard. Startups are still very rare. Why don’t more people do it? The financial risk? Plenty of 25 year olds save nothing anyway. The long hours? Plenty of people work just as long hours in regular jobs. What keeps people from starting startups is the fear of having so much responsibility. And this is not an irrational fear: it really is hard to bear. Anything that takes some of that weight off you will greatly increase your chances of surviving.

On finding work that you love…

Once, when I was about 9 or 10, my father told me I could be whatever I wanted when I grew up, so long as I enjoyed it. I remember that precisely because it seemed so anomalous. It was like being told to use dry water. Whatever I thought he meant, I didn’t think he meant work could literally be fun—fun like playing. It took me years to grasp that.

What you should not do, I think, is worry about the opinion of anyone beyond your friends…This is easy advice to give. It’s hard to follow, especially when you’re young. Prestige is like a powerful magnet that warps even your beliefs about what you enjoy. It causes you to work not on what you like, but what you’d like to like.

The other big force leading people astray is money. Money by itself is not that dangerous. When something pays well but is regarded with contempt, like telemarketing, or prostitution, or personal injury litigation, ambitious people aren’t tempted by it. That kind of work ends up being done by people who are “just trying to make a living.” (Tip: avoid any field whose practitioners say this.) The danger is when money is combined with prestige, as in, say, corporate law, or medicine. A comparatively safe and prosperous career with some automatic baseline prestige is dangerously tempting to someone young, who hasn’t thought much about what they really like.

With such powerful forces leading us astray, it’s not surprising we find it so hard to discover what we like to work on. Most people are doomed in childhood by accepting the axiom that work = pain. Those who escape this are nearly all lured onto the rocks by prestige or money. How many even discover something they love to work on? A few hundred thousand, perhaps, out of billions. It’s hard to find work you love; it must be, if so few do. So don’t underestimate this task. And don’t feel bad if you haven’t succeeded yet. In fact, if you admit to yourself that you’re discontented, you’re a step ahead of most people, who are still in denial.

Definitely check out Paul Grahams’s site to get a taste for his articles or (for an easier time reading them) get his book.

By the way I’m working on a new design for StartBreakingFree.com (you can see most of it is up already).  More details on this coming up soon and other changes I’d like to make to the site.

Until next time, keep breaking free!
Brian Armstrong

Generally speaking, if you are answering your phone, opening snail mail, chatting, emailing, even talking with other people at all…you are NOT working.  Sorry to say it but you’re not.  Work is when you are alone, by yourself in your room, with all communication devices turned off.  20 minutes later you’ll actually be in the zone and then you’re really working.  That’s when you get real writing done.  That’s when you can strategize about the next moves for your company.  That’s when you can design great marketing.  That’s when you can design great art or great engineering.  That’s where breakthroughs happen.  That’s when you see connections between completely different ideas and how they could be better together.  That’s when you really produce instead of just reacting to things all day.

It’s a fragile state that you can be broken out of easily too with any sort of interruption.  Doing this type of intense mental focus isn’t easy, and it’s quite rare to do it for 8 hours a day (it’s like sprinting for 8 hours a day – you’ll need a long recovery period).  But it’s totally reasonable to do this for maybe 3 or 4 hours a day, staggered with periods of rest.  Most people have huge mental routines to prepare themselves for these intense sessions, and we avoid them psychologically.  Ok…first get coffee, then browse headlines, ok finally settling in for some work…put on favorite soundtrack…..avoid a dozen other temptations…and GO.  And usually every 90 minutes or so you’ll have to break out of that state and take a mental breather for 20 minutes.  You need the breaks to recover mentally and physically to keep blood sugar up etc.  It’s a mental marathon.  But it’s also the only way to get real work done.

Link to the video here.

Try to have more of these intense mental sessions every day on something you love and have the potential to one day be the best in the world at.  It could be practicing guitar, or it could be building the next great web company.  Stop talking about doing something and go do it today in an intense, focused session.

Please take a minute to check out their respective sites below and give them a look! It’s always pays to get around like minded people and see what you can learn.

• Gordie Rogers is an entrepreneur living in Tianjin, China and has built various web businesses
• Andrew is just graduating and debating how to navigate corporate America vs. the world of entrepreneurship
• John Bardos is runs JetSetCitizen.com and is living in Japan
• Erica Douglass sold her web hosting business for over $1M after coming to silicon valley in 1999 and is now a full time entrepreneur
• Manuel Zeh is currently traveling the world indefinitely and is a world class pianist. He has lived in dozens of countries (over 30 now?)
• Mike McCoy created CollegeTownMenus.com and is in the process of breaking free
• Gaurav Khandelwal helps companies launch new products and services online at the ChaiOne blog and has worked with numerous fortune 500 companies
• Andy Liu is an experienced angel investor and dispenses lots of wisdom to first time entrepreneurs
• Neil Patel is a self made millionaire having started a number of web businesses
• Charles Cohn runs a (somewhat) competing site at VarsityTutor.com and is a brilliant guy to brainstorm with
• Philip Arthur Moore is a freelancer living in Vietnam and fellow Rice University alum

These are just a few that I know of and there really is a “movement” going on right now of people who’ve realized working for someone else isn’t the end goal of life.

Who are your favorite entrepreneurs to listen to?