You’ll learn about five web sites that are your best source of competitive insight about new web startups. Chances are, you’ll want to bookmark these sites and add them to your collection of essential resources. But first, let’s consider why competitive research is important to any startup.

Why Do Competitive Research?

Billboard in Cienfuegos, Cuba (credit: Alice Kehoe)

Conventional wisdom suggests that you should do competitive research for two reasons. First, as part of your business plan, to show your investors you’ve considered risks of competition and are justified in anticipating success. Second, by looking at what others are doing, you’ll refine your mission, your market positioning, and your product’s feature set. But there’s a third reason to do competitive research. One that’s more important than the others. A reason that is so important, you must do it as early as possible in your planning.

If you’re going to launch a new business, you need to find similar established businesses. Here’s why.

If you can find an existing business that others know about, it’ll be easier for others to grasp your idea without seeing it fully deployed. Whether investors, business partners, or anyone else, it’s easier to explain what you want to do if you’ve got a common reference point. Are you launching an online auction site for the produce industry? Tell them, “It’s eBay for truckloads of tomatoes.” Find a way to define your objective by describing it in contrast to others.

The best reason for doing competitive research is to make it easier to describe your project to other people.

Read the full article here:
Competitive Research for Startups

The full article (with detailed instructions and links) has been moved from this blog to my web site.

Hi Daniel,

I recently ran across your blog. I found your suggestions in the article “Startup Mistakes: The Partnership Gone Sour” especially useful.

I have a related dilemma. I have an interesting project idea, but it requires seasoned programming skills. None of my friends and I are able to do this ourselves.

I’ve managed to contact two serial entrepreneurs by email, give them the pitch, and both of them agreed with me but commented that it would be a challenge to set up. I’ve also contacted my university’s entrepreneurial director who also said it was a feasible and interesting idea. Then, through SCORE (the nonprofit association of volunteer business consultants), I contacted a professor with experience in a related field and he liked it as well.

So you see my dilemma. How can I go about looking for a (very) good programmer willing to do this as sweat equity? Which avenues would you suggest I should take?

Best regards,
James

How to Find a Technical Partner

Here’s what I wrote in reply to James’s query:

You’re on the right track. You were smart to look for help from your university’s entrepreneurial director and from the nonprofit association of volunteer business consultants. I’m sure they were encouraging but as you no doubt discovered, their advice was likely non-specific. You’ve demonstrated your tenacity by contacting the two serial entrepreneurs but your project probably is not far enough along for them to do more than offer general encouragement. You’ll probably need to contact two dozen serial entrepreneurs with a very well-developed project before you get actionable advice and referrals.

You’ve done well so far. What I like is that you’ve looked for feedback about your idea from people who can help you evaluate its potential. In the process of gathering feedback, you’re beginning to develop a network of advisers and supporters.

First Things First: Your Requirements

You seem to feel that your project isn’t ready to move forward without a software developer (a “programmer”, as you say). I’m going to suggest you do everything you can to solidify and define your project before you bring on a technologist. I will caution you not to spend a lot of time with spreadsheets and PowerPoint. Instead, write a one-page summary that describes your project and put together a deck of ten slides to illustrate it (if you can’t get it down to one page and ten slides you’ve got a problem). Then spend all your time on two things: talking to people (networking) and creating a wireframe (a simple mockup) of your web app. Your wireframe serves as a “requirements specification” for talking to developers and investors. The process of creating the wireframe (and gathering feedback) will help you refine your business concept. Until your wireframe is done, it’s too early to talk to developers or potential investors.

You have two avenues open to you. You can find a technologist to join you as a partner, for half of the company’s equity. Or you can find seed-stage investors who will give you the money to hire a developer. Let’s look at a few variations on these alternatives.

Is Your Partner a College Student?

It’s common for a college student to do a sweat equity partnership with another college student. One partner takes on a business role and the other takes responsibility for technology. The upside is that both of you can work insane hours with little sleep for no pay (after all, you already do that and it’s called college). The downside is that your success is dependent on someone who has very little skill or experience. Your partner’s technology skills will be limited (relative to someone who has been in the workforce); moreover, your partner’s self-management and relationship skills may be very limited as well, so you both will learning as you go about working together. Ultimately, the project can founder on the “core incompetencies” you both bring to the partnership. If you cannot compensate for your mutual “core incompetencies” by learning quickly or bringing in additional help, your project will fail. So, one way of looking at taking on a partner is to ask, am I willing to make the success of my project dependent on my partner’s “core incompetencies” that I haven’t yet discovered? Generally, you’ll do so because you like the person; they are a friend and the prospect of your project failing or succeeding is less important than the pleasure you’ll have in working with a person you admire, respect, or appreciate. So that’s that; partnering with another college student introduces a high level of risk but has the advantage of requiring no investment.

If you want to partner up with another college student, and you don’t know any technology geeks, you’re going to have to make an effort to broaden your social circle. Go to meetings of any campus entrepreneurs groups. More important, go where the geeks hang out. Post flyers around the CS labs. Go to CS lectures and events (even if you can’t follow what anyone is talking about). Go off-campus to other universities. Infiltrate the social networks (Facebook and Twitter) and then try to connect face-to-face. Practice your business development skills; you’ll have to be the socially skilled person because many technologists are shy and introverted. Be prepared to encounter technologists who are highly opinionated, ambitious and have their own ideas for startups. You’ll have to be further along and closer to funding to convince them to drop their idea for yours.

Looking for Experienced Developers

Your next alternative is to find a technology partner who already has been in the workforce. Unlike most college students, you’ll be joining forces with someone who has been accountable for actual deliverables. And they may have more experience at self-organization and team work. Your challenge will be to convince someone that your project is viable. That’s why you need your wireframes and a clearly defined scope of work. If your potential partner sees that it’s very clear what he or she needs to build, that it can be done relatively quickly, and that you have a network of potential investors or business partners, you may be able to get your partner to build what you need for a share of equity or deferred payment.

Where to find a workforce technologist? Again, go where the geeks are. In this case, figure out the technology platform you’re likely to use and go where the users gather. If you’re likely to use Ruby on Rails, find the local Ruby users group monthly meeting. If you’re in New Haven, you may have to go up to Boston. If you’re in Sacramento, go to the Sacramento Ruby Meetup and go to the San Francisco Ruby Meetup as well. Use Google and search for “ruby” or “python” of “php” and “meetup” or “interest group” or “user group” and your city (or the nearest big metro area or technology center). Again, you may not know what anyone is talking about. And you will have to be the one with the mad social skills. Be prepared to encounter other startup entrepreneurs who are more interested in their own ideas than yours. And consultants who aren’t going to work for you for free. But if you are sufficiently prepared, you may be able to convince someone who is between jobs (or open to a side project) that your idea can be implemented quickly and rapidly funded or launched.

How to Pay for Development

Try to bring in a technology associate with a deferred payment rather than shared equity. You’ll meet some consultants or contract programmers who are used to waiting thirty or sixty days after completion of a project to get paid (though they usually get paid something upfront before they start). If someone is out of work or between assignments maybe they won’t mind getting busy with your project in exchange for a promise to be paid later, while they wait for their next real job to start. You’re asking someone to take a chance that with the code they deliver you can get funding or gain some revenue traction. For that, you’re going to have to offer them more than they usually get. That may be attractive to some people. The alternative is to offer them equity in your company. But realistically, anyone who is skilled enough to earn good money for their work is not going to work for equity in a college student’s startup. Money talks; bullshit walks; but if you can impress someone that your project is easy to build and likely to fund, and if they have time to spare, you may be able to get it built for a deferred fee.

What if you can’t find a technologist who will work for a deferred fee? That’s why you need to be looking for seed-stage investors at the same time as technologists. Your most likely source of funding is friends and family, if your circle includes anyone with financial resources who values entrepreneurism and is willing to take a chance on you. If your funding needs are specific and detailed, such as paying a developer for two months to build a web app based on your wireframes, and you have a developer’s firm bid or proposal in hand, you may find that an investment from a family member is more likely to be forthcoming than if you are asking for a handout to support yourself indefinitely while you “launch a startup.” If your friends and family can’t capitalize your project, then you’ll have to extend your network to include business advisers, potential business partners, and angel investors. Though it will take longer, if your funding needs are specific and detailed, you are more likely to find the capital you need.

How much will you need? What will it cost to build your project? It depends on the scope of the project, of course. But let me put it this way. If you can do it for $5000 to $15,000, you’re likely to be able to finance it with a deferred payment or a loan from friends and family. If your project is going to cost more, you need to go back to your concept and your wireframes and reduce the scope. That’s the key. Refine your project so it can be launched with a deferred payment or a family loan. You can add to it after you begin to generate revenue or find your investment partners, but if you can build it and launch it cheaply, you’ve kept the concept simple and got your project off the ground.

Further Thoughts

James, you’ve read my post “Startup Mistakes: The Partnership Gone Sour” so you know I recommend getting someone with CTO-level technical expertise to review the credentials of anyone you’re bringing in as a technology partner. You don’t have to hire a consultant (though that’s an option). You may find that some of the more experienced developers who you meet while networking may be willing to help you vet a potential partner or contract developer. It’s basic bootstrapping; you’ll want to leverage a little bit of high-level technical expertise to minimize risk.

James, I hope you’ll give us an update later and let my readers know how this unfolds for you.

And readers, leave a comment if you have any ideas for James.

The top blogs are not easy to identify. You’ll want to find the bloggers who have the most readers, who are recognized as authorities, and who get the most interesting discussions started among their readers’ comments. How will you find them? Many people assume Google is all you need. Google can get you started but Google isn’t much help in identifying the best blogs. That’s why I’m going to share with you sophisticated techniques for identifying the top blogs for any topic.

As far as I know, the top experts in Internet marketing and search engine optimization don’t know these techniques (or have kept them secret!). I’m going to reveal the details here.

What’s a Top Blog?

For those who’ve been living under a log, a blog is a web site with articles (or “posts”) that an author adds on a regular basis. Web applications for blogging make it easy for an author to add new articles without requiring technical expertise (he or she doesn’t have to love HTML). Additionally, most blogs offer an opportunity for readers to add comments (which fosters discussion of each article).

The best blogs in any subject area are written by consultants, journalists, “thought leaders,” or people who are simply obsessed with a subject and unable to keep their enthusiasm to themselves. I call it a “top blog” if the author writes frequently, if he or she has more readers and more comments than other blogs on the topic, if other bloggers frequently refer to the blog’s articles, and if the articles are frequently mentioned on Twitter or bookmarking sites such as Delicious or Digg. These are good criteria to identify the web’s authorities in any field.

Unfortunately, Google doesn’t use these criteria for its rankings. Google is good at identifying web pages where keywords of interest are used extensively and it will show you web pages that have many links from other sites. Google’s strength is finding web pages, not sites. A blog is a site that has value not just because one or two pages are useful, but because the entire site is a collection of related articles that stays fresh and relevant. Sometimes an article from a top blog will show up in Google’s search results (mixed in with every other web page that might be relevant) but most often, when you want to know the five most popular blogs that cover a particular subject area, Google will be of no help. That’s why the following techniques will be helpful.

Start With Google

I’ve written previously about how to do keyword research. If you’re searching for top blogs, you won’t need to know the entire keyword universe, just a few relevant descriptive phrases. Let’s say we are interested in finding the top blogs for “personal productivity.” Keyword research will reveal related phrases such as “time management” and “lifehacks.”

Start with a Google search for “personal productivity blogs,” “time management blogs,” or “lifehacks blogs.” With the first search, you’re in luck because several people have already compiled and posted lists of “50+ Personal Productivity Blogs You’ve Never Heard of Before” and “The Top 50 Productivity Blogs Of The Year” and “100 Blogs that Will Save You Time & Make You More Productive.” This may be all you need, if you want to casually browse a variety of blogs. But I’m going to show you techniques to identify which blogs are most influential.

Going Beyond Google

What if a Google search doesn’t give you a ready-made list of blogs in the subject area you’re searching? I’m going to give you several research techniques that will be more helpful than Google for finding blogs for a given topic.

But first, a word about “blog search engines.” Google has its own at http://blogsearch.google.com/. And there’s a dozen more “blog search engines” listed on Wikipedia. I wish I could say that one of them gives you a comprehensive list of the top blogs for any search. They don’t. Each searches blog postings and may show articles that contain the terms you’ve searched for. If you want to know which bloggers are most influential, and which blogs are most popular, the blog search engines are simply not designed to do this (with one exception, Technorati, which we’ll look at in detail). You may be able to pick out relevant blogs from the maze of articles, but most blog search engines do what Google does: they show you a list of pages, not sites, that match your keywords.

Going Deliciously Beyond Google

To identify which sites are most useful takes some human help. Fortunately, hundreds of thousands of people are already working on it, by saving and sharing their bookmarks with social bookmarking sites. I’ve found Delicious to be the most valuable. People save their web bookmarks to Delicious and tag the bookmarks with descriptive keywords. Fortunately for us, a common tag is “blog.”

Here’s how to search Delicious for blogs on any chosen topic. Create a URL like this:
http://delicious.com/tag/blog+productivity
and you’ll see a listing of all the web pages that Delicious users have marked with the tags “blog” and “productivity.”

You can also do a search using the Delicious search box, but I get better results constructing the URL myself. The advantage of Delicious (over Google) is that you get the benefit of actual humans identifying and categorizing web pages. They’ll know a blog when they see it and mark it as a blog (something Google can’t always do).

The Technorati Challenge

If you’ve tried Google and Delicious and you’re still hunting for relevant blogs, it’s time for the Technorati challenge. Technorati is the best of the blog search engines. The “challenge” is figuring out how to use it. In 2007 it was redesigned as a news portal with “mainstream” appeal and now its main page looks like AOL’s home page. There are several ways to use Technorati to find blogs by topic, all obscure.

A good place to start is the Technorati “tag search” which is buried on the Technorati Advanced Search page. For example, use the Technorati “tag search” to find posts tagged with the phrase “time management.” Technorati creates a URL that’s similar to the one we created for a Delicious tag search. The Technorati tag search URL looks like this:
http://technorati.com/r/tag/time-management
and, like Delicious, you can create the URL directly without going to the Advanced Search page if you want.

What You Get From Technorati

Technorati has volunteer editors (from blogcritics.org) for some popular tags and you may find your tag search yields a page with a nice summary article as well as a box with “Top blogs about time management.” There’s a link at the bottom of the box that may give you everything you need: “View all” top blogs.

Here’s a tip. For your search for top blogs by topic, you can skip the Technorati Advanced Search page entirely. Just create a URL like this:
http://technorati.com/blogs/tag/time-management
and you’ll see a list of blogs that Technorati users have tagged “time management.” Best of all, each blog is ranked by “authority” (the number of other blogs linking to a blog over the last six months) and shows how many “fans” the blog has among Technorati’s hardcore users.

Technorati’s list comes close to our goal of identifying the best blogs for any topic. But chances are, you’ve found other blogs that Technorati doesn’t know about (and thus won’t include in its ranking of top blogs). If that’s the case, I’m going to show you a technique for ranking any arbitrary list of blogs, whether you’ve found them on Technorati, Google, Delicious, or through random surfing. This technique is the ultimate tool for creating a master list of top blogs, ranked by importance.

Making a List of Blogs

As you find interesting blogs using Technorati, Google, Delicious, or any other means, you’ll want to compile a list. As you add each interesting blog to your list, make a note of the URL for its RSS feed. That’s the link you get when you click on an RSS button on a blog. You’ll need the RSS feed to sort the blogs by importance.

There’s a zillion ways to compile your list of blogs. You can create a simple list in a text file or spreadsheet. Just copy and paste the URLs. Some people will add each to their favorite “feed reader” software. Or add the interesting blogs to web apps like Netvibes or Google Reader. If you plan to winnow down your list of blogs to only the most influential, I don’t recommend adding them to a blog reader at this point. Instead, wait until you’ve ranked them by importance. Use a simple text file for now, or try the following “advanced technique.”

An Advanced Technique for Making a List of Blogs

If you want something a bit more efficient than a simple text file for your list of interesting blogs, you can use the Firefox web browser with the “OPML Support” add-on. This allows you to bookmark each RSS feed for each blog you view and then export an OPML file when it’s time to sort the blogs by importance.

Sorting Blogs By Importance

Whether you’ve found a ready-made list of a hundred blogs, or you’ve compiled a list from your own research, you won’t know which of these blogs are the most important and you probably won’t have time to follow them all. I’ll show you how to rank them by importance.

Your secret weapon is PostRank. This is a service that takes blogs and scores each article by number of comments, inbound links, mentions on Twitter, saves in Delicious, votes on Digg and other feedback metrics. PostRank can be confusing but you don’t need to know how it works, only how to add blogs to the service and how to check their rank.

Go to PostRank.com. You can try a search with the box that’s labeled “Find a topic, feed, or user” but chances are you’re searching for a topic that isn’t yet tracked by PostRank. And you’ve already got a list of blogs that you want to follow. You just want PostRank to analyze the blogs you’ve found and rank them by importance. To do that, you have to create a PostRank account and enter a list of the blogs you’re interested in.

Using PostRank

Set up a PostRank account (“Join Now”) and log in. Next, find the “subscriptions” link (at the top of the page) and click the “Import” tab. You can upload an OPML file (which is a fancy name for a list of blogs in a fancy format) which you might have if you were using Firefox to save a bookmark for each blog. If your list of blogs is in a simple text file, you’ll choose the “Direct Input” option and enter blog URLs line-by-line. Here’s where things get tricky. You don’t actually enter the URL of each blog. You have to enter the URL for its RSS feed (that’s the link you get when you find an RSS button on a blog).

As you add the URLs for the RSS feeds of blogs you are interested in, you can give the list a “topic” tag. You’re creating your list of “Best Blogs” for the topic you’re interested in. PostRank will need a day or two to analyze any blogs it doesn’t already know about. When you come back, you’ll find your list of blogs (under “topics”) ranked by importance. What you do next is up to you. You can start reading the posts from the most important blogs right from PostRank. Or you can export the list of blogs, for example, to Google Reader, which many people use to read the articles on their favorite blogs.

I’m indebted to Marshall Kirkpatrick at ReadWriteWeb for his articles “Comparing Six Ways to Identify Top Blogs in Any Niche” and “How to: Build a Social Media Cheat Sheet for Any Topic” which helped me develop these techniques.

Is It Worth the Effort?

If you’ve gotten this far, you’ll realize the technique described here is laborious. It’s a lot of work to find interesting blogs and enter each one into PostRank just to get a list of blogs sorted by importance. If you are only casually interested in a topic, you’ll be better served by idling browsing a few blogs at your leisure.

The technique described here pays off if it is your job to find the most influential bloggers for a given topic. It’ll be a day’s work to compile your list of top blogs, but the effort will pay off if you must monitor current affairs in any field, or contact the most-read and best-known bloggers for your marketing efforts. This method leverages your efforts and allows you to focus your attention on the blogs that matter.

Got ideas to improve this technique? Have you created an awesome “best blogs” list? Leave a comment for other readers.

Whither Twitter?

Why Twitter? Every few years, there’s an important new way to use the Internet. There was a time when I’d ask someone for their email address and I’d hear, “My computer’s not set up for that, but you can fax me.” That changed all of a sudden, around 1996, when everyone discovered that email was really useful. The Internet works like that. BBS’s, USENET, email, the web, Google, instant messaging, blogs, social networking. Things that are dweeby, geeky, or an apparent preoccupation of youth suddenly go mainstream. Guess what’s next?

It’s called Twitter. Like email, people are using it for a variety of purposes. For that reason, no one can quite explain what it’s about and everyone seems to have a different explanation of why it’s important. Whatever the reason, it’s suddenly getting mainstream notice. David Pogue wrote about it (twice) in the New York Times. During the first weeks of March, Jon Stewart ranted about Twitter on The Daily Show, Good Morning America jumped on the Twitter wagon, and it appeared in the Doonesbury comic strip. This week, Oprah started using Twitter.

Why We Twitter

If you’re friends and family, I won’t presume to tell you why you might want to use Twitter, other than to say it’s nice to hear what’s going on with people you care about. Kind of like a Christmas newsletter, only it comes every day in short installments.

If, like me, you’re involved in a web startup, you absolutely must use Twitter, for the same reason you would read a newspaper or a trade magazine (especially since many of those no longer exist). Twitter will keep you informed of current events and tie you into a community, but more important, it will immerse you in the culture and mindset of startups and the consciousness of the Internet.

Twitter is about broadcasting short messages to those who follow you, and reading short messages from those who you follow. On the surface that doesn’t seem like much. But (to some) it also didn’t seem like email was much different than a fax. Trust me; you need to try it. But there’s tricks to getting started. Unless you get a little help, you’re going to end up scratching your head and not really using it.

How to Get Started With Twitter

Here, then, is how to get started.

Sign up at twitter.com. In most cases, you’ll want to use your own name so people who know you can find you. There’s really no point in being anonymous (you’re smart enough not to post something embarrassing, right?). Here’s an article on 8 Twitter username tips.

Go to “settings” to enter a short bio with keywords that will help identify your interests. If you’re interested in knitting, other knitters will find you if your bio describes your interests. When you check out other Twitter users, you’ll look at their bio and their recent messages and see if you want to follow them.

Next, upload a photo. It’s going to show up as a tiny little “avatar” so choose a photo that is bold, without intricate detail. I like headshots, because seeing a face helps me associate messages with a personality. But if you’re shy, you can upload something else that serves as your personal “logo.” Just be sure to upload something; using the Twitter default avatar will communicate that you are lazy or clueless.

Start Following

To get going fast, start “following” a few of the services that “retweet” the most popular tweeted URLs. To “retweet” (abbreviated “RT”) is to find an interesting message among the people you follow (often a link to an interesting web page) and post it for the people who follow you (like forwarding an email). These services will show you popular “retweets” and give you a taste of what people are finding interesting:
http://twitter.com/Retweetist
http://twitter.com/twitturly
http://twitter.com/tweetmeme

To “follow,” click on a link like http://twitter.com/danielkehoe and click on the “follow” button (you can follow me if you want!).

It’s fun to see what’s interesting to everyone in the Twitter universe but you’ll want to follow some people, too.

Follow Your Friends

Start with your friends. It’s difficult to find out if people you know are using Twitter. There’s an option to search your email contact list if you use Gmail or other popular email hosting services such as Yahoo, AOL, Hotmail, or MSN. Choose the “Find People” link and the tab “Find on Other Networks.” You can also search for people you know who already have a Twitter account with a username and first or last name. Mostly you just have to ask your friends if they are on Twitter.

When you follow someone, they will know you’ve followed them. And they may check you out to see if they want to follow you. It’s considered polite to follow people who follow you but, really, you don’t have to follow people who are not interesting to you.

Follow Strangers

Here’s a tip. Wait until you’ve posted a few messages (known as updates or “tweets”) before you start following people you don’t know. People who don’t know you will look at your tweets to see if you’re interesting before they decide to follow you. You may think you don’t care if anyone follows you but really, if no one follows you, you’re not going to have the opportunity to ask questions and get helpful replies (which is one of Twitter’s benefits). So start posting a few tweets that reveal your interests and personality.

How often to “tweet”? Try one or two messages every few days to start. If you wait weeks to post new tweets, people will figure you’ve signed up for an account and have not figured out how to use Twitter. On the other hand, if you post dozens of tweets a day, you’d better be an extremely interesting person or else people will get fatigued and stop following you. As a rule of thumb, if you look at Twitter every day, and find it interesting, you can probably manage to contribute an interesting tweet once a day.

So what do you tweet? Personally, I aim for a mix. 25% retweeting interesting URLs, 25% insights or inspirational thoughts or funny observations, 25% personal life, 25% gratuitous self-promotion and business communication or problem-solving. But that’s just me. You can find your own Twitter personality type here: The 14 Types of Twitter Personalities.

Abandon Twitter.com

Now here’s the most important thing to know about Twitter. You’ll never get the hang of it if you just use the Twitter web site. That’s just where you go to sign up. No one would ever use Twitter if that was all there was to it. Just as there are zillions of ways to use Twitter, there are hundreds of applications and web sites you can use to read and post tweets. Almost all of them are better than Twitter’s own web site. If you a really want to get any use out of Twitter, install a good Twitter app on your computer.

Tweetdeck is among the very best. It runs on Macs or PCs (using the Adobe AIR software system). Download and install it. Now you can really use Twitter.

In TweetDeck, set up some columns for “searches” for keywords you are interested in. Pick words that are unique and common only to people who care about the things you are interested in (if you are guitarist, don’t pick “music,” pick “stratocaster”). Then look to see if you might want to follow some of the twitterers. Click on their name, look at their bio and recent tweets (useful? amusing? tedious?) and click to “follow” (you can always unfollow later).

Search and You Shall Find

You can also use some services to search for interesting people:
http://www.twellow.com/
http://twitority.com/
http://whoshouldifollow.com/
http://wefollow.com/

When you find someone interesting, look to see who they follow and start following them yourself. Chances are, people who are interesting to you are following interesting people themselves. If someone is following a thousand people, look at the people they first started following to see who they really are interested in.

Overwhelmed? Don’t Be

How many people can you follow? You’d be surprised. This is not like email. You don’t have to read every Twitter message. You won’t get backlogged.

And Twitter is not like subscribing to a blog. You’re not slogging through entire articles. Twitter messages are only 140 characters long. It’s more like reading headlines (or haiku). It takes barely a microsecond to scan a tweet and gain something useful from it. With little more than a glance, you can keep up with a constant flow of tweets, staying stimulated and informed.

You don’t have to feel bad if you “fall behind.” If you just sip a little from the firehose whenever you want, you’ll be satisfied. So follow a thousand people if you want. Get selective. Sift and winnow. If someone is consistently tedious or irrelevant, just unfollow. Clear out the people who clutter your Twitter window. Soon you’ll have a constant flow of fascinating, interesting, useful Twitter messages. Which you can read or ignore, when you want.

What do you do if you’re following dozens of active, prolific Twitter strangers but your dearest friends only post once a week and you always miss their tweets? Here’s where TweetDeck comes in handy. You can set up a “group” for people who post infrequently. Use the TweetDeck “group” feature to make a column of tweets just from your friends who post infrequently. Call it the “infrequent” group.

You can also use the TweetDeck “group” feature to make columns for people who post only about certain topics that interest you. That way you can see, at a glance, the most recent postings from knitters (for example).

Reaching Your Twitter Comfort Level

How will you know if you’re up to speed with Twitter? Probably when you “check tweets” before you check a website for online news. (Plane down in the Hudson? It was on Twitter first.) You’ll be getting unique and timely news about your profession or avocation if you’ve followed peers and prominent people in your area of interest. And you’ll know you’re up to speed if you find you’re calling or emailing friends to congratulate them because you saw important news about their lives from their tweets. (You’ll be really up to speed — and you’ll be an advanced Twitter user — if you use the Twitter “direct message” feature instead of email to contact friends.)

Finally, you’re truly up to speed when you use a tweet to ask a question and get a dozen useful answers. That’s what’s convinced many people that Twitter is worth the effort.

Is Twitter another Internet time sink? Look at it this way. Twitter has become popular because it takes less time to stay in touch than email. And less time to stay current than blogs. Scanning a few dozen tweets at a time happens at the speed of thought. Twitter gives a lot of value for the amount of time you spend with it. After you’re up to speed, you’ll see. Hopefully, with these tips about getting started, you’ll get up to speed quickly.

More Tips and Tricks

28 June 2009 — Check to see if someone is a spammer before you follow them: TwitChuck.

14 September 2009 — What’s not allowed on Twitter: People You Won’t See on Twitter Anymore.

24 June 2010 — How to decide who to follow on Twitter: Angpang’s Twitter Follow Back Formula.

Why Comment? Just Tweet Me

Was this article useful? Let me know when you’re up and running with Twitter. Just post a tweet with my name, “@danielkehoe” and I’ll see it.

1937 photo by Dorothea Lange

Maybe because a downturn is the best time to launch a startup (see “6 Reasons Why This Economy Is Good For Startups”). Or maybe, “Why not?”, because what else are you doing that’s truly worthwhile? Or maybe, finally, because startups are the only way to create prosperity when established businesses are failing.

Whatever your motivation to launch, some of the rules for success just changed (along with everything else that got broken with the collapse of 2008).

The End of the Road for the Silicon Valley Success Story?

For the last twenty years, the technology business has been dominated by one success model: start with a clever idea, put together a stellar team, pitch the venture capitalists and get their funding, build and launch, and exit with an IPO or an acquisition. The model has evolved over the years. You could put together a team by offering equity, with little cash required, but after the dot-bomb days were over, skilled programmers started demanding cash instead of equity. The role of angel investors increased over the years, so now most startups look for angel investors before they look for VC funding. The importance of building prototypes (as opposed to going straight to build and launch), as well as expectations for customer acquisition before funding, have also changed over the years. But in late 2008 the whole picture changed.

Silicon Valley got its wake-up call in October 2008 when the eminent VC firm Sequoia Capital presented its R.I.P. Good Times slideshow (brought to the public by TechCrunch and VentureBeat). Their message? If you’re a startup, slash spending, lower risk, reduce debt, and get “cash-flow positive” because money from VCs is going to be tight. And don’t expect to exit with an IPO or acquisition in the forseeable future. Sequoia Capital didn’t mention it, but even more challenging are questions about the viability of venture capital firms in the new economy. Given the poor performance of venture investing in the last seven years (returns of only 0.2 percent), and a shortage of money among the investor class, VC firms may no longer be driving the bus for everyone looking for high-technology success (see Venture Capital at a Crossroads from an enterprising San Diego reporter). Paul Graham of Y Combinator wrote at length about this (December 2008) in his essay Could VC be a Casualty of the Recession?.

What Happens Now?

If you’re planning a startup and you expect to get venture capital, make yourself a note. It’s time to rethink your plan. You might get VC money someday. But it’d be a good idea to consider how to launch and grow your business with a smaller investment.

Fortunately there’s good news. The reality is that VC-less bootstrapping is now possible.

The cost of development has declined considerably in the last five years. What used to cost $1.5 million can now be done for $150 thousand. And the $150,000 project can now be built for as little as $15,000. That’s a difference of an order of magnitude. It’s one of the reasons angel investors have gained importance in the last five years; often, an investment of $50,000 to $200,000 (typical from angel investors) is enough to develop and launch an online business. It also makes it possible for a business to launch with $10,000 to $50,000 of “friends and family” money, given a narrow and highly focused scope and, most important, a very efficient and productive development process.

Here’s more good news. If you can launch your business with less than $50,000 of seed money, you have a good chance of success in the new economy. One reason is paramount: You’ll be building a lean company and you’ll have to focus on customer acquisition and revenue growth far earlier in the game than most web-era technology startups. Without the deep pockets of a VC firm, your value proposition will have to obvious and you’ll have to execute without error. There will be no “do-overs,” with either your business model or your development effort.

Getting Expert Help

There’s a problem, though. You’re losing more than a funding source when you try to build a business without a VC firm. You won’t have access to the guidance of seasoned entrepreneurs and technologists. You’ll have to find people who are facing the same problems as you. It’s important to get to know other web entrepreneurs (online and face-to-face). You should also talk to angel investors, but in doing so, recognize that their advice may be more available than their checkbooks. Get networked, online and off. And listen carefully when you’re offered advice.

For technology advice and services, recognize that you can get help from consultants and part-timers. See my blog post, Startup Advice: When to Use a Consulting CTO. Increasingly, people who were only available as full-time, equity-position founders or stock-option employees are available on a part-time basis.

Again, it’s important to avoid costly mistakes. Arguably, technology mistakes are your biggest source of risk with a new startup. They may be the most expensive mistakes you can make. And they will cost you precious time and opportunity. Recognize that most business-side entrepreneurs are unprepared to make technology decisions (is that true for you?). Be careful who you rely on to help you with these decisions. Now’s not the time to place the future of your business on a guess or blind trust. That’s why it’s a good idea to bring in outside expertise.

Your Development Process Is Key

There are two kinds of expertise you’ll be looking for. One is help with technology choices (“implementation choices”). This will include your web application framework (Ruby on Rails, PHP, Microsoft .NET, etc.) and architectural choices (cloud computing, web services, etc.). More important is the guidance you’ll need in defining your development process.

I’ll take a stand on this. Your success as a startup in the new economy depends absolutely on the efficiency of your development process. Development is the most costly and error-prone aspect of the startup game. You’re not going to have money to make mistakes. The only way to maximize the likelihood of success is to get help planning each step of your process so you execute efficiently. You’ll maximize your chances for success if you use a methodology that has been tested and proven successful.

Key Decisions

Here are some of the decisions that you (or your CTO) will have to make about your development process. Experience in making these choices, and drawing conclusions from the results, is what it takes to develop a methodology for launching startups.

• How will you define the scope and functionality of your application?
• Will you produce a requirements specification? Use cases? User stories?
• Will you produce a wireframe or mockup?
• Will you produce a prototype?
• Will you demonstrate a proof-of-concept to investors or stakeholders?
• Will you use an Interaction Designer?
• Will you do user experience testing? At what stage?
• When will you engage a graphic designer? And for what?
• What software development practices will you use? Adaptive (“agile”) or predictive (“plan-driven”)?
• What role will testing play in the development process?
• Will you need a lead developer, director of engineering, and CTO? Which? When?
• Can you send development offshore?
• Can you run any development processes in parallel?
• How will you prepare for problems of scale?
• What will be your release milestones and how will stakeholders participate?
• What are the stages of development and what dependencies are in play at each stage?

All these decisions are critical elements of the development process. And each is critical to your ability to execute efficiently and launch with minimal capital.

There’s Bad News

In my experience, most business-side entrepreneurs don’t have the expertise to make these decisions and often don’t understand why they matter. That’s not surprising because much of the required knowledge is part of the arcane lore of software engineering or project management.

Unfortunately, I’ve also discovered that many technologists are not qualified to make these decisions, either. They may recognize some of the elements of effective process (for example, “agile” versus “waterfall” software development practices) but often make decisions based on what they’ve done before, without evaulating whether it worked well or not, or even if there is another way to do it. They may not know where a process is most likely to fail and what the best choices are for a web startup. This is why the “art of the startup” requires special expertise. And this is why so many startups spend more money than they should. And spending too much money? That translates to “fail” in the new economy.

But Help Is Here

To increase your chances of success, I’m going to focus on the most important elements of the development process in future blog articles.

UPDATE (August 12, 2009)

Fred Destin, one of the most articulate VCs in Europe, writes about The Funding Drought (and its consequences) in a blog article.

Crashed Hard Drive

Another horror story. This from TechCrunch, “All Data Lost Without Backup, Company Deadpooled” (also discussed on Slashdot). Briefly, a blogging company named JournalSpace was put out of business when their web site database was erased. The company speculates it was the victim of a malicious act from a disgruntled ex-employee. But the real culprit was poor management and the victims were its thousands of customers who lost years worth of creative work.

Responsibility and accountability have to be built into every startup’s company culture and business policies. What can you do? Read on for some advice.

If a company fails because of poor planning or execution, the victims are not just the founders, the investors, or employees but the customers who expected to receive an online service they were willing to pay for and trust. Increasingly we are going to see wannabe online services culled from the ranks of successful companies by the founders’ willingness to be accountable to their customers.

Business continuity, disaster planning, system security and data integrity are a CTO’s responsibility. Creating a plan to back up a database server may not be as much fun as developing a customer acquisition plan or rolling out new functionality on a web site but someone has to do it. And whether he does it himself, or delegates it to a system administrator, the CTO must take personal responsibility for making sure customer data is secure and recoverable.

What if you are a CEO? Do you just delegate responsibility to your “guy handling the IT” (as the founder of JournalSpace says he did)? First of all, if you’ve got an online business of any size whatsoever, and you have a “guy handling the IT” instead of a C-level technology executive, you are headed for FAIL (sorry, just had to make that point!). Your responsibility as CEO is oversight of your CTO’s job responsibilities. You need to ask, “What’s our disaster plan? What can go wrong? Are systems in place? Have we tested the recovery protocol so we know it works?” And don’t take a nod of the head and sincere assurances as sufficient. Ask to see a recent log report (even if you have to ask how to interpret it).

The chain of command stops with you, if you are the CEO. Governance means taking responsibility, putting systems of accountability into place, and also bringing in expertise to assess risk, identify deficiencies, and advise on best practices. The founder of JournalSpace trusted his “IT guy” to do the right thing. Apparently, his IT guy betrayed the trust, either by negligence or malfeasance (though, of course, no one knows the real story of what happened at JournalSpace). If you’re a CEO, or a company founder, can you say you’ve done everything you can to make sure your customers’ trust is not sabotaged by neglect or a criminal act? What do you need to do to meet your obligation of responsibility?

Obviously, in hindsight, we can say that founder of JournalSpace should have hired an outside firm to do a security audit. Maybe it was something he thought of doing and put off as a low priority or “too expensive.” But he didn’t have to pay for an independent security audit to take responsibility for his customers and his company. Without any budget at all, he could have asked for some peer advice. All he needed to do was bring up the topic with an acquaintance at a conference or pick up the phone and call someone else in the business and ask, “What do you guys do for backup? What kind of questions should I be asking my IT guy about disaster recovery?” It would have cost him nothing and might have saved his company.

How about you? Whether you are a CEO or CTO, is there something you need to do right now, while you are thinking about it, to make sure your startup can survive disaster or systems compromise?

One thing you can do is download my Job Description for a Web Chief Technology Officer and use it as a checklist to make sure you haven’t neglected key areas of responsibility. It’s a template and it might not fit your organization perfectly but use it as a tool for review. If you’re a CEO, you can use it as a checklist when you meet with your “technology guy” to make sure no aspect of the job has been overlooked. If you’re a CTO, consider it “best practice” research. Take a look and see if it helps you (and let me know if I can make improvements for others who use it, too).

Don’t leave disaster preparedness to chance. I don’t mind if you call me just to chat for a few minutes about what a startup should do to safeguard its customers’ trust. This is what I do as a consulting CTO. The call is free. The company you save may be your own.

Stockholm syndrome

Have you experienced “Stockholm syndrome” in working with a developer? That’s the psychological condition where a victim becomes loyal to a powerful abuser, to the point of defending them despite obvious danger. It seems crazy to say an entrepreneur might act like that after hiring someone to do programming or web design, but I’ve seen it, and I think it’s more common than you might think.

What are the tell-tale signs and what can go wrong? Read on.

Entrepreneurs develop “Stockholm syndrome” because they come to rely for assessment of risk on the people who are the most likely to lead them into danger. It’s your development team (software programmers or web designers) who are most likely to be the cause of your project’s failure. Yet few entrepreneurs have the experience needed to assess the accuracy of the reports they are receiving from the technical team. And even fewer entrepreneurs have the technical knowledge to evaluate the quality of the technical team’s work. When the project starts to go sour, an entrepreneur will often cling to whatever promises the technical team offers, and may even commit more resources with the same team, hoping to salvage any losses.

Aidan Fitzpatrick mentions “developer Stockholm syndrome” this week. He’s a consulting CTO in the UK and I always look forward to reading his blog. This week he’s got a great article on “Problems with Development Consultancies”, which could easily be titled, “What Can Go Wrong When You Hire a Development Firm?”

The article describes six areas of failure. Here are dangers he mentions:

• Compliance & security: If you outsource to Pakistan, will your confidential data be secure?
• Quality: As an entrepreneur, can you tell if your developer is delivering quality code?
• Specification & contract control: Have evolving project requirements sabotaged your fixed-cost project?
• Cost and cost management: Is saving money going to cost you money?
• Intellectual property: Are your developers building a project using someone else’s proprietary code?
• Disengagement: Are you throwing good money after bad?

He’s got eight tips to avoid danger, which I’ll suggest you read yourself. His best advice can be summarized as this: “Get help from people who have started web businesses before.” That means reading blogs (like his or mine), finding other web startup entrepreneurs, and hiring experts (like a consulting CTO) who can help you contain costs. If you get into danger and the only person who can help you is the person who got you into danger, you could be setting yourself for “developer Stockholm syndrome.” That’s why Aidan Fitzpatrick says, “get an independent third party to vet or manage” your development team. I’ve got more advice about “When to Use a Consulting CTO” in another article.

Have you seen the symptoms of “developer Stockholm syndrome” on a project? What do you do to manage risk? Leave a comment and I’ll add an update to this article.

This week brought a story with three classic elements of a startup “tale from the crypt:” technology, money, and people. This time it was technology (with attendant uncertainty and doubt), money (lack of it), and people (the dark side: their personalities). I hesitate to tell this chilling tale because it’s not over (and may yet have a positive outcome). But hearing it may save readers from a similar fate.

The Story

A charming and enthusiastic entrepreneur called me a few weeks ago. She had very little money and no technology experience, but she had a clever idea, a domain name, and enough moxie to launch a rocket. All she needed was a rocket scientist. That is, she needed to find a technology partner to build her dream. She’d found a potential developer on her own. All she needed was some help in evaluating his experience. In the course of our phone call, and a short follow-up email, I gave her a dozen questions she could use to determine if he was qualified.

Loretta (not her real name) called the next day to thank me. Not only was she satisfied with his answers, her potential developer was so excited about her idea that he wanted to join her as a co-founder, contributing $20,000 of his own money to the startup. Within days, they signed a partnership agreement. Soon, at Loretta’s suggestion, he was calling me to “bounce some ideas.” It became clear he wasn’t asking the kind of questions that would indicate he was well-qualified to launch a web startup. As tactfully as I could, I suggested to Loretta that they’d need some time for her co-founder to get up to speed on current web technologies and development methodologies. He said he was very experienced at building corporate web sites using the Microsoft .NET (“dotnet”) framework. To me, that’s not the ideal background for building a large-scale, consumer-facing Web 2.0 site. But I figured, he’ll be smart, he’ll learn what he needs to know, and he’ll recruit the technology team he needs. Loretta was not following the program I recommend for rapid rollout of a startup. But she’d found a partner who was enthusiastic, which sometimes makes up for lack of experience. With a bit of luck, plus her indomitable moxie, she’d succeed.

Two weeks later I heard from Loretta. She had a falling out with her co-founder. “Mea culpa,” she said, “He seemed so confident and enthusiastic that I didn’t think I needed to ask you to review his qualifications.” Not long after after their first meeting, she’d signed a partnership agreement giving him a 45% share in the company. But soon she began to have doubts. Some of the terms she’d heard about, and thought might be relevant to their project (like “cloud computing”), were unfamiliar to him and he was spending a lot of time doing “research.” At the same time, he was already negotiating with programmers to start coding the new project, without any preparation of mockups and wireframes, or drafting of a specification. There’d been no discussion of platforms or development methodologies. He insisted that she agree to hire a programmer he already knew, resisting her desire to put the project out to bid. No need, he said, he knew what he was doing. Which might have been fine, if he’d been able to demonstrate to Loretta that they were on the right track. But her enthusiasm and faith had given way to doubt and dismay.

She told me she was going to cut him loose and start over. She’d been angry but she was ready to move on. She already knew she would need to get a signed agreement to dissolve the partnership and abrogate any claims he might make.

Today she called again. Her former co-founder wasn’t willing to agree to dissolution of the partnership unless she was willing to pay him for the “research” he’d done for her. She was going to have to use her limited funds to pay either the ex-partner, a lawyer, or both. She understands, correctly, that she will never be able to fund the project with investors’ money if there is any possibility her former co-founder will come forward with a claim he contributed intellectual property. That’s a situation that can block any funding and kill your startup before you take another step.

Lessons Learned

What are the take-aways from this unhappy story?

• First and foremost, when you accept documented help from someone be sure they’ve released any claim to contribution of intellectual property.
• Don’t pick a technologist based on their apparent knowledge of a subject you know little about; find someone knowledgeable to help you evaluate their skill.
• Recognize that there are specialties in technology, like any other discipline. The domain knowledge required to build an investor-funded web business is specialized. Someone who has worked in corporate IT or built a corporate web site or a nonprofit site may be unaware of the best practices that will make a web startup succeed.
• Hire your technologists as independent contractors without making them shareholders and diluting your equity.
• When the time comes, use a share of equity as an incentive for someone to stick around, after they demonstrate an ability to make valuable contributions, not as an incentive to get involved at the start.
• Don’t assume that you need a technology partner; you may be able to hire everyone you need without distributing equity.
• If you bring in a partner, be aware that it is a marriage, know them well, and don’t create the partnership unless it can be dissolved without encumbrance. Don’t share all your equity at once; establish a vesting schedule that is contingent on recognizable contributions or other milestones.
• Don’t take investment money from someone you may have to fire.

Recommendations

Here are the steps I recommend. These are recommendations for a single, founding entrepreneur. (If you’ve jointly developed your idea with someone else, you’ve already got a partnership and these suggestions apply to bringing someone else into your association.)

• Execute a nondisclosure agreement with anyone who collaborates with you and include a release of claim of contribution of intellectual property
• Prepare a preliminary mockup and development specification before you recruit a developer.
• Don’t search for a technology partner; instead, find a part-time paid consultant and, with his or her help, hire a lead developer.
• Don’t give up a share of equity to a CTO or developer; hire a programmer for cash; and if you don’t have cash, try for some form of deferred compensation.
• Move as quickly as possible to an alpha release and private beta, avoiding partnerships and equity dilution until you’ve established the value of your business.

Just like any horror story with vampires and werewolves, a little sage advice can serve as your garlic and silver bullets.

What would you have done? Any advice for others? Leave a comment.

The methodology I describe is unique; you won’t find this approach described in all the ebooks and articles on keyword research you’ll find on the web. My approach doesn’t require expensive membership subscriptions; it combines free data from a social bookmarking site, a web traffic measurement service, and Google user data to create a comprehensive inventory of your keyword universe.

How Effective Is It?

I developed this approach when I worked as a consultant and Internet marketing mentor for my friends Joe “Mr. Fire” Vitale and Jerry and Esther Hicks. Joe Vitale is now well-known as an “Internet marketing guru” and Jerry and Esther Hicks have become NY Times best-selling authors. Keyword research has been a foundation for the success of all my consulting clients. Over time I’ve refined the approach and I describe it in detail for the first time.

Read the full article here:
How to Do Keyword Research

The full article (with detailed instructions and links) has been moved from this blog to my web site.

If you don’t know, TechCrunch is the most active publication focused on investment in the web startup community. In an earlier century, it would have been the leading trade magazine for Internet entrepreneurs and investors (that is, it would have been Red Herring). It’s 2008 now, so it’s a blog. The publisher of TechCrunch, Michael Arrington, has organized a series of events to showcase outstanding web startups, with the collaboration of the Internet entrepreneur Jason Calacanis. The two day event in September 2007 was named TechCrunch40; the three day event in September 2008 was named TechCrunch50. In 2009, TechCrunch50 will be held September 7th to 10th.

The format is something like a “battle of the bands” (or “American Idol”). About one thousand startup companies applied in June 2008 and were evaluated in a series of elimination rounds by TechCrunch staffers and affiliated experts. Fifty-one companies were selected and given the opportunity to make an eight minute pitch in front of a panel of well-known investors and experts and an audience of 1700 angel investors, corporate and venture capital investors, influential bloggers and media people, plus assorted students and other web startup entrepreneurs. At the conclusion of the presentations, one company was selected by the panel of judges to receive a “best of show” $50,000 prize.

In addition to presentations by 51 web startups at TechCrunch50 in 2008, there were several content panels and “working lunches” with subjects such as “Mastering the Top 3 Challenges of the Start-up: Financing, Recruiting and Customer Acquisition.” Like other conferences, the content panels and lunches tend to be only as strong as the invited panelists, and in some cases, the panelists seemed to have been invited only because they were well-known (or friends of the conference organizers?). In general, the content panels and lunches were not as educational as they could be, with only a few useful takeaways for entrepreneurs, and not worth the price of admission. In comparison, the focus on educating entrepreneurs is stronger at Seedcamp; maybe TechCrunch will improve the education component in future years.

In addition to the series of company pitches in the main hall, there is a sideshow called the DemoPit that runs concurrently in the venue’s entrance concourse.  The DemoPit is where the action and the opportunity lies for web entrepreneurs. The DemoPit is like a tradeshow on a microscopic scale. There are about a hundred cocktail tables set in four rows, with representatives from the previous year’s TechCrunch40 alumni, the 51 web startups “in the cut”, plus about 130 semi-finalists: companies that were not selected from the applicant pool but were offered the option of showing their company in the DemoPit.

The DemoPit is absolutely fascinating. Each day the exhibitors are different because TechCrunch only gives the semi-finalists one day each in the DemoPit (perhaps to optimize the number of semi-finalists who are given exposure). Among the 51 web startups on stage and the 130+ “also-rans” in the DemoPit, you get to see a fascinating cross-section of the most innovative and ambitious startup companies launching on the web this year. You can get an in-person demo from each startup’s founders, learn where they see a market opportunity, ask about their development process and funding story, and see the future of the web displayed in one large noisy room.

Ultimately, the $50,000 prize is not what TechCrunch50 is all about. The opportunity is to become part of a community of web startup entrepreneurs and investors. And the DemoPit is the heart of it.

What does it cost to attend?

This is a very expensive conference (probably because most of the paying attendees are venture capitalists who presumably can afford to pay to see a well-screened selection of possible investment opportunities). Admission is $2,995 for anyone who does not qualify as a student, volunteer, or member of the press.

If you’re an entrepreneur and your company is selected among the fifty companies that will make pitches onstage, there is no cost to attend. To TechCrunch’s credit, this is not a “pay to play” event for the selected companies. Recognize, however, that few companies are in a position to apply and be selected. You must be a web startup; your site must not be publicly launched; and you must be far enough into development to present a credible demo to the TechCrunch evaluators. In all likelihood, this means your company already has angel investment of $100,000 or more; you’ve been actively developing your site for six months or more; and you’re close to launch. (How Much Money Does It Take To Be A TechCrunch50 Finalist?) If you’re ready to launch, you’ll have to decide whether to delay launch and use the TechCrunch event as a launch promotion opportunity.

If you are not likely to make the cut as a selected company, it is still worthwhile to apply so you have an opportunity to participate in the DemoPit. You’ll have to pay for a conference ticket ($2,995) and you’ll have the opportunity to show your company for one day on a cocktail table in the DemoPit. This is ideal for many startups. You can be part of the conference excitement, getting coverage from the media, and joining in the conference networking with more visibility than you would have as an ordinary attendee. If you are self-funded, this might be where you meet an angel investor; if you are angel-funded, this might be a chance to raise your your Series A financing round. There are very few events that will give you better exposure to web investors.

If you want to set up a table as an exhibitor in the DemoPit and you are not an applicant semi-finalist you’ll have to pay $10,000 for a full exhibitor package. Not many companies opt for this; I saw one recruiter and a few technology service companies in this category.

If you are a student with web startup entrepreneurial ambitions, it only costs $149 to attend. Put the airfare on your credit card, sleep in an alley, and don’t miss the opportunity. There were dozens of students at TechCrunch50; kudos to TechCrunch for making it possible for them to attend.

You can also attend as a volunteer. If you have desperate ambitions to launch a web startup and $3,000 is more than you can afford, you may be able to sign up with TechCrunch as a helper and get a sense of the environment of web startups.

Should you participate?

Should you attend? Should you participate in the competition? It depends on who you are.

• If you’ve already taken angel investment of $100,000 or more, you’re looking for Series A funding from a venture capital firm, and you are close to launching, apply and hope you make the cut as a finalist. You’ll be in the sweet spot for your launch and further funding.
• If you’ve self-funded your web startup, or you’re early in development with angel funding, apply and grab the opportunity to participate in the DemoPit.
• If you are a student with web startup entrepreneurial ambitions: It’s the best bargain of your educational career, so don’t miss it.

What can you expect?

• If you’re a web entrepreneur or investor, you’ll find more of your peers here than just about anywhere else.
• You’ll see the leading edge of web innovation and glimpse where the smartest entrepreneurs and investors see the market opportunities.
• You’ll see fifty founders pitching their companies to a panel of expert investors and advisors. You’ll see a few great presentations and some that could use a lot of improvement. Hopefully, you’ll learn to refine your own.
• You’ll hear a panel of expert investors and advisors asking questions and offering critiques following the presentations by the company founders. You’ll learn what questions to expect from investors and how to respond appropriately to suggestions and criticism.
• You probably will not be selected as a finalist (among the top 50) if you don’t already have significant investment and a well-developed product. But you can still get into the DemoPit.
• If you are a finalist, you probably will not be selected as “best of show” unless there’s already a buzz about your company in the startup investment community. Don’t be naive. Any company that is going to stand out among dozens of well-funded startups is already known among the most influential investors and analysts in funding circles. Chances are the founders are already known and admired for previous successes. They’ve worked their way to prominence in the ecosystem and the “best of show” award is further recognition of their abilities. Don’t focus on the “best of show” award. It makes for great publicity but it’s not the reason to participate in TechCrunch50.

What not to expect

Some aspects of the TechCrunch conference are more like an enormous user group meeting than a professionally-run conference. People accept it as part of a youth-focused startup culture, though, where making deals in dive bars and writing code in coffee shops is part of the fun. If you go, leave typical conference expectations behind and enjoy the charm of the startup culture. After all, like startups, home-brewed conferences like these are often more satisfying in their early days before they get bought out and run by a corporate parent.

Summary

In summary, this is a chance to immerse yourself in the web startup atmosphere for several days. If you’re self-funded, it will burn up a good chunk of your financial resources but it may yield the connections that get you to success.