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Sunday, December 19, 2010

Success in current day high-tech startup...

Wanted to voice my views about what I see happening in the high-tech space now. Success is built in multiple layers. All phases have to be successful in order to record a business success.
First, something new should be shown by the founders. These are classically the entrepreneurs, some lone range warriors, who want to change how things happen. Better user interface is the biggest focus making the trend alter in high-tech software products life cycle. Simplicity in getting things done is another driver. Lots of work is done in this space, take a look at most if not all YCombinator start-ups; that is the mantra. Programming languages and implementation strategy driven around interpretive realm have suddenly caught a lot of attention. Look at the absurd growth in JavaScript, Ruby-on-Rails, PHP, Python, etc. (Old school Java is also making moves in this space). They are easy to learn and quick to mock up. That is what most investors want now. Spend less, build quickly. If it has to fail then fail fast.
So the first phase of success is measured by showing something working. It don't matter if it is really relevant or not but show something working is key.
The second phase is the set of team-members who will build or at-least try to build the real business. This is where big money and serious commitments are required. Also, this is where real experience is required for success to materialize. Let me tell you that this is where lots and lots of money is required. Look at Twitter, Zynga, Linkedin, Facebook and I can go on and on and on. Between phase one and two most of the so called angels trade out of the market (Their are a few brave-hearts to hang onto their ownership, but the scare of getting diluted by the bigger investors are always the main worry). Angels are more like opportunistic stock traders, if you will.
The third and the most important phase is the exit. Two choices exists, IPO or buy-out. The last few years have shown us that IPO is extremely tough it his economy. You have show strong growth, multiple quarters and sometimes multiple years of profitability with demonstrations of gains in top-line as well as bottom-line revenues. So you have to be bought out. If you don't get bought out traditional investors don't get their returns.
A significant percentage of the entrepreneurs and their businesses die in second phase for a few reasons, the most important being their lack of experience and eal business know-how. Many have difficulties detaching themselves from the business and inviting more experienced doers. Doing a startup is like betting in Las Vegas most of the times. Their is only so many combination available to win. You don't hit the slot at the right movement, you lose.
Times are different and so we have to adapt and adjust to this model. Interesting times and interesting plays around for all of us.

Happy Holidays!

Saturday, December 4, 2010

Skype's move to the Web

Skype is finally moving to the Web. The following link discusses these moves from Skype. The funny part is that Linkedin is supposedly in talks with Skype to integrate VoIP over Web. The funny part is that your's truly was trying to do the same with Linkedin in 2008 when I was heading Products and Engineering of a VoIP software startup. Linkedin's VP of Engineering then and CTO as well as then CEO Reid did not seem to get it then.
Hope they get it now.

Sounds like Facebook also is excited about this integration with Skype

Wow, may be we were a little early then. The likes of Twilio will get it now and more importantly go beyond the minute arbitrage.