Back in 2003, I had long discussions with David P. Best, a board member on There.com about their startup and business model.  He was one of those venture capitalists (VCs) that believed in throwing money at something and then watching for the business model to "emerge."  But David learned the hard way as There.com got sold off at a loss.  Now he's thrown himself into the old brick-and-mortar of tangible goods: woodworking and craftsmanship.

Didn't these VCs learn anything from the dotcom bubble bursting?  Apparently not.  Startups are getting money thrown at them and they have no business model, no plan.  I talked about this last year when Badazz was asking how Gloto.com was going to make money.  They won't.  These little startups are all hitting second and third stage funding at this point.  Some of them sell off to other companies & that makes a tidy little profit, but most of them will eventually go under.  But its OK because the CEO of the company had a nice severance package built in- of course he or she doesn't care if the business actually makes money.  No one cares about the wage slaves whose jobs suddenly evaporate.  This system has been working the past few years because there was a high demand of tech jobs.  What is going to happen now as the US economy is tanking? 

For the VCs investing in Tech it is all about the culture of cool.   They could be putting their $40 million into a new yacht, but you can't write off your racing yacht when you crash & burn with it.  A tech company running at a loss is great for a VC.  They can write it off and get that lovely feeling of power from having people fawn for their money.  Have you watched the Dragon Den?  They think they are being all charitable "giving a hand to lift up the little guy."  They love to tear people to shreds- it makes for great TV, high ratings, and good advertising revenues. And they have great pleasure in wielding the power of their money.  They don't really care if they lose half their money- this was disposable cash they would have just spent on toys anyway.

And now, what has happened as a result of all this VC money?  Free content on the net.  There are a few tech hobbyists out there who make free websites, but for the most part, no one charges for their service because they have big VC bucks to carry them through.  There is a lot of debate about the impact of this on the internet economy.  And I think they are right. I think its made a superficially strange bubble again.  Just like the dotcom.

Here are some articles on the debate about the Free internet economy & VCs:

Free is killing us- Blame the VCs

Free 2.0: Don't blam the VCs

Free and Freetardis

"No man is an island, entire of itself; every man is a piece of the continent." - John Donne

Jevon MacDonald has an excellent blog posting, "I love my city, and so should you" at Startup North.  He talks about how open, creative and connected communities could be Canada's own Silicon Valley with out having to clump everyone into one area.  I absolutely agree.

We are an itty bitty startup in Edmonton & just have begun making connections within Alberta. And we are already learning that shared experience benefits everyone, whether it ranges from the simple emotional support of exchanging tips on common problems to all-out business partnerships. And we are hoping that down the road when we are ready for the next step in growing & going for financing, we’ll have lots of mentors willing to give us advice. 

Now that the US is having a recession, Canada's definitely up and coming in tech.  With strong business connections, I think Canada could be a real powerhouse in the world.

Are you familiar with Guy Kawasaki?  He was part of the Mac/Apple team back in the day.  Now days he's a big entrepreneurial guru.  I just got his book "Art of the Start" at the library.  Very good read. 

I also like his blog. http://blog.guykawasaki.com/

If you scroll down a little on the right there are categories for bootstrapping & pitching any of you entrepreneurs out there might enjoy.

Currently Reading The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything By Guy Kawasaki see related

In the future, hubby and I would like to start a brick and mortar real life company with a building and employees and all that jazz. Alberta has a very competitive market for IT workers and it is hard to recruit and retain loyal employees. Even with an economic downturn happening in the nearby US, Alberta's crunch for technical workers shows no sign of letting up.

In planning for a new business, I've been trying to look at other creative ways to find and keep good staff. At hubby's new job, the orientation & training were nearly absent. The first thing I want to do is show new employees they are valuable and important to us by making sure they know what they need to do and where to get answers for questions they run into. I have an unconventional management style where my philosophy is to empower the employee and I think this will work to our benefit. As their boss, I believe I am there to lift them up in their jobs, not treat them as my slaves. My staff always have my trust and I show this by giving them self-learning and personal development goals. I show my confidence in them by delegating as much of the challenging work I can, even if it means I have to do the filing or data entry at times.

As a startup, we won't have a lot of funds for bonuses and not a lot of places to go in promotions at the start. However, there are ways I want to explore of rewarding employees that include more flexible time schedules, time off, more privacy and better working conditions. One of my biggest beliefs in managing employees is to prove cross training. By making everyone multi-functional, it boosts moral because people understand what their coworkers are doing. It gives the employer a little slack if someone is ill and it relieves the boredom that can happen in strict job roles.

For us, its all still a long ways out- two to three years, I would guess. I think it is going to take me that long to learn all the nuances involved.

This is too cute, but mine always ends in

Not enough money.
Not enough money.
Not enough money.
Not enough money.

http://www.onemorelevel.com/games.php?game=566