Mark gave a talk this morning at breakfast on the differences between running a startup now and during the early 2000’s and the original .com bubble. Mark is now the Vice President of Operations for b5media. b5 is an easy poster child for the current state of startups, they are easy to like guys (despite an uneducated and oddly pompous haranguing one of their employees thought we needed [“uneducated” and “pompous” might be a little mean, he wasn’t that cruel to us] – Jeremy is so easy to like that I feel like I actually know the guy, we’ve only met once. Some sort of east coast brotherhood I think.).
I can’t say that I heard anything new, but that wasn’t the idea. The room was full of quite traditional TorontoMoneyType people who, I think, would have found Mark’s examples to be fascinating. Mark has gone from a Startup that spend 100,000$ on office space and 30,000$ on branding exercises to a startup that has no offices and works out of a tiny basement when they actually do work in person. I love it.
b5media took 2million$ in funding from JLA Ventures (Rick) and Brightspark. My guess is that a large portion of that 2 million has gone to salaries and to allow a competitive level of pay-out to the bloggers they have in their network. My guess is in the respectable 90-100k range for the founders and Mark. I guess this because that is an understandable living-in-toronto income and Mark didn’t mention any sort of big cut in pay. My guess is the rest is going into hosting infrastructure and probably plans for some sort of recruitment and advertising strategy of their own. Who knows though, wild guesses.
You always wonder what taking in Venture Capital does to a company. I have been thinking about it a lot lately myself. It’s a tough question that only an entrepreneur can answer for himself and his/her company. Both bandwagons, pro-vc and anti-vc are easy to jump on when you aren’t in a startup yourself. There is something about seeing 1k, or 10k, or 20k, or 30k a month of your own money going out of your bank account and into this thing you have created. Then you have to listen to people from the sidelines telling you you are an idiot for wanting to take in capital, and you have people on the other side telling you that their money will save you.
In the end it probably comes down to a moment. A moment when you realize that either you are cut out to take in outside money or you aren’t. It’s not something you get to experiment with very much, so it is one of those things you have to know. Rick Segal seems like a good VC, he puts a lot of his own energy into the companies he works with and seems to act like a real partner, but they aren’t all like that. They don’t all do deals because the believe in an entrepreneur, or because they believe in a company, many do deals because they have the money to do it, and they think that they have to.
I think some of the reasons we new startups keep our companies lean are some of the same reasons we get so hung up on finding the right customers, and the right partners — the new end game is building a sustainable business. That means we aren’t building the biggest business possible, or even a business with the highest short-term gain possibilities it could have, we got sick of building things that didn’t matter in the first dot-com boom, now we want to do things the mean something, even if it’s just so we can feel good about ourselves (is that the real reason?).