Category Archives: startups

been busy blisting and hanging with the loomiacs

Posted by Todd Sawicki on June 14, 2007 View Comments

blist and Loomia have been keeping me busy for sure.  And on top of that helping with the Casual Game Association’s – seattle conference (Casual Connect) coming up next month I’m swamped!  I have a bunch of posts in the backlog that I need to get on here, but in the meantime, just wanted to drop a note to say I haven’t disappeared or forgotten about this blog.  

Startup observation of the week – should startups provide computers and software anymore?  Is it necessary – everyone who works in tech seems to own their own laptop and with free alternatives to practically all software today from productivity apps like office (zoho, open office, google) to even programming and graphics apps as well.  I know there have been plenty of posts about how its 10x to a 100x less capital intensive to start a tech or web-based startup today, but this is part of that story.

Food for thought.

It’s a small world after all

Posted by Todd Sawicki on April 20, 2007 View Comments

One thing about working in online startups is to remember never burn bridges because you never who or when you will bump into someone from your past.  It’s a small world after all.

I had a few such experiences this past week at the Topix party around Web 2.0 Expo (BTW – thumps up to Topix – great venue and guest list). 

First I ran into Alison Macondary former GM of Wired News.  Well a few years ago the company I was almost acquired Lycos including Wired News.  It was fun to trade a few war stories about that deal which resulted in one Daum acquiring Lycos (ed. note – one of the major – huh? as in what are they thinking deals of the last couple of years).

Then I ran into Kurt Buechler currently SVP of Sales and BD for Aggregate Knowledge (as Loomia calls it – AK – they are a Loomia competitor).  Kurt once upon a time was the head of BD for Windows Media back when I was at Loudeye.   Kurt was a major partner of the company so I knew Kurt quite well as we were jointly trying to expand the digital music landscape.

Later Kurt “introduced” me to the CEO of AK – Paul Martino.  Paul and I immediately recognized each other and then realized we had done a deal together back when he was at InterTrust many moons ago while I was at Loudeye.  Needless to say Kurt, Paul and I wasted no time in trading all war stories.  Even as competitors now, it is nice to see old faces in new places.

A little Loomia history

Posted by Todd Sawicki on April 20, 2007 View Comments

David Marks, CEO and co-founder of Loomia, has written a piece over at the new GigaOm site – Foud+Read – that talks about how startups including Loomia often change direction to be successful.  Loomia’s position and success today is definitely related to the changes it made a couple of years ago.   David, Ken and Francis - the co-founders of Loomia – deserve a lot of credit for shifting the business to a better place.

Loomia’s not unique based even on my experience - almost every startup I have been at has been through something similar before becoming successful – for instance Loudeye changed its model from service provider to ASP.  And it’s still happening today – look at how Andy Sack and the Judy’s Book crew have had to change their model from local reviews to a deal search site. 

DIY/NIH: The Economics of Abundance and Startups

Posted by Todd Sawicki on April 10, 2007 View Comments

Fred Vogelstein’s interview with Eric Schmidt presents an interesting story about classic DIY/NIH impulses that comes from engineers and developers - in this case Larry and Sergei desire to build a financial system themselves instead of buying one from Oracle.  At every startup I have worked at this desire comes up.  Developers are builders and they like to build things and more importantly they like to know how things work which they often feel comes from building things themselves.  And as a business guy, you will often find yourself wanting to hit your head against the wall as your dev teams want to build things that should just be bought.  For instance at a fomer company, the devs tried to build their own CRM system.  Let’s just say that Salesforce.com is currently the CRM system being used there.  Lesson learned.

At some level hearing the Google story is encouraging to hear that what I have experienced with developers is not unique.  But it’s interesting how a lot of the innovation in the web 2.0 ecosystem absolutely flies in the face of the developers’ natural instinct to build it themselves.  Numerous VCs and entreprenuers have talked about how its easier and cheaper then ever to do an internet-based startup because you can outsource so many elements of the business – accounting software, CRM, hosting, email, storage and even CPU hp thanks to Amazon’s Web Services.  And in startups where resources are scarce (and money even scarcer), you have to leverage whatever cheap, outsourced alternatives you can so you and your team can focus on building the nugget of IP and value that makes all those back-end services unqiue to your customers.

Today only in enterprises where abundance is king – and Google certainly qualifies much like Microsoft in its hey day – can you even think (however irrationally it likely will be) about building or doing things yourself.  It will be interesting to see how the excess of profits that Google enjoys plays out in terms of building enterprise value or whether Google’s cultural bias to build things themselves ends of wasting billions of dollars of enterprise value.

Personally as I embark down my own startup paths, I can certainly tell you that I am big fine of the innovation in outsourcing and plan on outsourcing as much as humanly possible.

It pays to break the rules

Posted by Todd Sawicki on March 26, 2007 View Comments

Mark Cuban’s question in a post below asks us to imagine if my old company – encoding.com aka Loudeye (which encoded lots of a-list music and video) decided to throw all the content it had online.  That would have been one hell of a site from a user’s perspective – movies, music videos, cd’s (in fact at one point every single music CD sold online), and more.  The only problem is that it would have been illegal. 

That trip down memory lane started by Mark’s comment, did get me thinking.  First there was Napster.  Then MyMP3.com and now arguably YouTube.  All skirting the rules or maybe downright illegal.  But this isn’t meant to be another rant on the legalities of YouTube as I will leave that to Mark, et al (and for those that don’t know Mark knows what he’s taking about with regards to the DMCA since he was active in the trade group – DIMA – that negotiated the law). 

My point is how those legal risk takers were rewarded.  Napster got a lot of funding from Hummer Winblad and a buyout from BMG (what were they thinking).  MP3.com was bought by Vivendi Universal making its founder a multi-millionaire.  Kazaa made a fortune for its developers and future owners Sharman Networks.  And we all know about YouTube’s $1.6 billion dollar buy out from Google.  That’s a lot of money for potentially illegal business activity.  Who says you can’t profit from illegal activity ;-)

And what happened to the companies that tried to follow the rules?  Dave Pakman’s mylocker.com with a legal version of MyMp3.com hit a wall (Dave did go on to run the now successful eMusic site).  Loudeye struggled to get commercial music licenses for two years ultimately missing the boat on consumer music apps when iTunes came onto the scene.  Not to mention the gutter of history filled with online video companies who struggled to license content like AtomFilms (think how big that would have been with a nod and wink to copyright).

I am not arguing whether the current laws and rules are fair – I often think they are a major pain in the ass.  Just because you don’t like them does it mean you can ignore them as some VCs seem to want to imply - just ask Cablevision Systems (seriously given the the MyMp3.com ruling I don’t know how they thought they were going to prevail without direct licenses).  But if you were an enterprising person – breaking the rules might be just the thing to make a lot of money. 

Too Early = Wrong

Posted by Todd Sawicki on March 14, 2007 View Comments

Thanks to Dave McClure, I had a chance to sit down the other day with Scott Rafer, CEO of myBlogLog.  In the course of our conversation (largely reliving the ups and downs of the online business sector from 98 to present), Scott made the good point that when it comes to a business idea or company – being too early is the same thing as being wrong.  And from a business and investment perspective he’s right.

Seeing an idea born out by another company later on down the road doesn’t mean you were right at the time – it just means you weren’t crazy in the first place.  If you were right, then you would have waited until the timing was right.  As the cliché goes, timing is everything.

For instance, at then encoding.com, we came up with the idea of building a web service for people to upload their home movies to share online with their friends and family called myhomemovie.net.  We came oh so close to launching the service, but could never get the economics to work – users had no bandwidth to support video, servers were expensive, storage was even more expensive and bandwidth was even more expensive than storage.  We even looped in att worldnet to see if we could make it work.  In the end, the numbers never penciled out and we rightly scraped it.  Now just because YouTube came along 7 years later to sell itself for $1.6 billion dollars doing essentially the same thing doesn’t make our idea right since the timing wasn’t right.

I even wrote a business plan in 2003 that is strikingly similar to what the Fon guys in spain are trying to do these days.  I pulled the plug on the project feeling a consumer wifi play was too early (though I had nibbles from angels so I knew I wasn’t crazy).  Scott made the counter argument that my plan wasn’t too early but that my idea and Fon’s awere and are likely just wrong.  His point is that given the rollout of 802.11n, public wifi networks, and high speed wireless broadband from WiMax to affordable 3G effectively marginalize the market potential for a personally deployed wifi network like Fon is trying to build.  Time will tell on Fon, but sometimes you’re not too early, you’re just wrong.

Startup People

Posted by Todd Sawicki on March 1, 2007 View Comments

I was able to attend the PaidContent.org Seattle Mixer tonite. It was great to run into old faces dating back to my early days in Seattle at encoding.com (later known as Loudeye). One point brought home again is that startup people are startup people. The craziness, chaos and adrenaline rush that working at and with startups attracts certain people and those people tend to work again and again at startups.

Startups are not for the faint of heart and they are not for everyone. I have hired plenty of people over the last decade who wanted to work at startups but weren’t meant for them. At the same time, startup people are not corporate or mature company people. It takes a different breed to work and thrive within a known entity with mores, structure and lots of daily rituals. I came out of that world a long time ago and am glad to have realized that work environment is not for me. Startup people or mature company people are not any better then the other, they are just different.

So before you rush to join a startup – ask yourself – are you a startup person?