Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

Cheaper and Easier 1

It’s hard to focus on the very important point Guy Kawasaki makes as he lists the costs of Truemors.com amidst the clamor of the so-called industry elite complaining about the Truemors site itself, or, even more bizarre, wondering why legal costs were $4K. Who cares?

The real point is that this means barriers are coming down. This is about accessibility, and leveling the playing field. The latest Web wave has radically changed the rules of the game. The new Web 2.0 wanna-be entrepreneurs aren’t locked out of the game by the supposedly elitist venture capital (VC) crowd. Just do it. Or shut up.

This has been true for a while. Do a good Web search and you’ll find dozens of references. I attended a recent session in San Francisco led by Michael Arrington of TechCrunch that focused  on this same basic point. You can read about that in David Hornik’s (he was a panelist in that session)  Web 2.0 Expo post at his Ventureblog.

Ten years ago it took a few million dollars to fund a Silicon Valley industry-elite high-profile start-up. Now it takes $250K or so, maybe even $500K, or even, if you’re able to pretend that  Guy Kawasaki’s personal brand isn’t the same as capital, only $15K. That’s the real point.

The capital market has some serious sorting out to do. Arrington was convinced that the decimation of general start-up costs threatens the business model of the mainstream venture capitalists. He argued that VC firms have to invest large amounts of money over limited timeframes, so they need deals that absorb $2 million or so each, not $300K. Hornik of August Capital and fellow VC Michael Eisenberg of Benchmark Capital bravely insisted that the low start-up costs were only from idea to validation, and would need VC money to take the next steps. Let the market decide that one.

While the industry implications are the main point, the flap at Guy’s blog and Digg is worth a good laugh. The expletives fly as the supposed Internet intelligentsia actively dislike the Truemors site. Guy has to be laughing at that while the traffic pours in. The site picked up 246,210 page views when the Inquirer called it the “worst website ever.” I recommend reading the comments on Guy’s blog, many of them aggressively insulting, and remember as you do, that he gets to approve or delete each comment. Again: who cares?

And legal costs give us another bit of comic relief. The $12K total costs include $4,824.14 in legal costs. Dozens of comments rake Guy over the coals for either inflating costs or being stupid to pay them. That’s hilarious! Again, who cares? Aside from that, this guy (no pun intended) has an international reputation and a major business to protect, and his office is in Palo Alto, CA; you can spend that much in legal costs in one meeting.

Those are just distractions. The main point is much more important. Quoting Guy on this: "One thing is for sure: no entrepreneur can tell me that he needs $1 million, four programmers, and six months to launch this kind of company. Things are a whole lot cheaper and easier these days."

-- Tim

  • http://www.palmit.com Cale Bruckner

    Well said and I think you nailed the point of the Truemors.com experiment for Guy – an almost educational experience that may or may not become a real revenue generating businesses. If Truemors.com fails Guy doesn't loose anything – in fact he gains a lot. He gains invaluable experience and brand (the Guy brand) awareness. The "Guy" brand and knowing what it takes from a cost perspective to start a Web 2.0 business (he's also a VC) are more valuable to him than any revenue Truemors.com will generate.

    He does a pretty good job of summarizing his plan for Truemors.com on his blog.

    “The plan is simple: Get a site launched in a few months, see if people like it, and sell ads and sponsorships (or not).” — Guy

    – Cale Bruckner