David Hornik talks about building a company on a shoestring – or “One Red Paperclip and Some Worm Poop“. Now, that’s an interesting combination.
I understand the “poop part” – it refers to TerraCycle, a company making plant food and pesticides out of waste, packaging it in recycled material at a plant largely equipped with donated machines and furniture. Even their PR coverage is largely free, thanks to the charismatic founder and some marketing tricks – they make good story. So TerraCycle is a showcase of how to build something out of nothing, be profitable and help the environment.
It’s the red paperclip part that I have trouble with – it’s the story of a guy who started with one paperclip, and through only 14 consecutive deals he traded it up to a house. Sure, it’s a story of creativity and a good dose of luck, but as far as the trading partners are concerned… well, insanity is the first word that comes to my mind. I’m not sure I’d consider this an entrepreneurial model.
What happens when you combine MySpace with Second Life? You get SecondSpace. Well, not really, but I am not any closer to knowing what SecondSpace really is than Charlie O’Donnell is, who launched a contest to guess their business model. The award for the best guess is a Jamba Juice. The award for SecondSpace is $6.5M in VC funding. Oh, well, I am ready to launch ThirdSpace, the bidding starts at $10M … do I hear 11?
Talk about contests, Rhapsody has put together a contest to develop the best web service integration with Rhapsody. The winner gets a road trip for 2 to see their favorite band anywhere in the world. – Hey, that beats a Jamba Juice! Fred Wilson, who pointed us to the news is one of the four judges.
Peter Rip’s VC Binds that Tie is a must-read, providing the insider view of the motivations of VC#1 bringing another VC into the syndication whether the startup founder is comfortable with it or not. It is based on an actual story where the Founder came back to him for advice, even though he had previously turned his funding quest down – I guess it tells volumes about Peter, the Founder must have really been impressed.
Still on the subjects of how to know which VC is right for your startup, avoid “cheap” ones, like “Valley VC” in Rick Segal’s post. How does Rick always come up with good stories? His posts are always entertaining, I’d read them just for his metaphors. This time it’s the toilet seat experiment and managing developer’s understanding of customers’ comfort zone. As Scoble says: “Always thinking outside the box. Or, in this case, off the throne. 
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As for the Home Depot mission, Rick, in the true spirit of supporting startups, I suggest you check out Brondell. 🙂
“Venture capitalists awash with cash — may soon beg you to take some” – reports Matt Marshall at the SiliconBeat. he goes on: “So it’s a great time to be a small or even large company looking to snag cash from these firms. Disclosure: You may have to certify that you are alive and breathing to get some of this dough, but that may be about all.”
Buying Time is often justifiable, but it’s costly, and don’t just think of direct cost (your burn rate), but the opportunity cost of nor being on the market, and the breathing time you just gave your competitors. Fred Wilson is clearly suspect of buying time when it’s to make a decision, especially employee-related ones: chances are you really only bought time, not any more information….
Will Price announces Hummer Winblad’s funding of Krillion, a “brand new service that makes it easy to find key products in the best stores in your local neighborhood.” I’ve always thought the Venture Community pretty much agrees on not having top-heavy startup teams -see recent posts on the subject by Ed Sim, Dharmesh Shah and yours truly, and also a quote from Mayfield’s Allen Morgan:
“Almost no early-stage startup seeking VC funding should ever have one founder as the “CEO” and another as “President” or “Chief Operating Officer”. This is almost always a sign of title inflation (usually to assuage someone’s ego). Almost guaranteed, any startup that has both a CEO and a President/COO has the wrong person in one or the other (or both) of those roles. This sort of title inflation and proliferation is almost always – like most other “contortions” of the standard org chart – a red flag to VC’s. Can easily be taken to indicate that some of the co-founders are more worried about titles (and ego’s) than success.”
Apparently Hummer Winblad did not consider Krillion having a CEO and a COO before they even launch – or perhaps there were way too many green flags to counter the red one:-) I’d love to hear Will on this.
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