How to save money running a start-up – tap talent don’t squeeze it


Jason Calacanis’ company Mahalo includes hundreds of interesting user submitted ‘How To’ guides. The team saw a gap, and created their own list of 17 (and growing) tips on how to save money running a startup.

It’s a good read, and eminently practical. The thrust of the tips are to save money on things that aren’t important, but to spend on the things that are important, particularly those that make staff more productive (which includes making them happy). For example, Jason says “buy cheap tables and expensive chairs” – tables are a commodity but good chairs make people more productive and effective. He also recommends buying extra screens for staff, which makes them more efficient at their work, and buying home computers for those who want to work extra hours at home. If staff are salaried, buy them lunch so they don’t leave the office, and get an expensive automatic coffee machine to keep people from wasting time going to the local coffee shop.

Some have suggested that Jason’s tips suggest a total lack of balance, and certainly all of this can be taken too far. However as long as people can go out to enjoy some sunshine when they feel it’s appropriate, this all makes sense.

The one tip that I absolutely don’t agree with is:

“Go to each of your vendors every 6-9 months and ask for 10-30% off. If half of them say yes you’ll save 5-15% on fixed costs. People will give you a discount if they think they are going to lose the business.”

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Will the innovation landscape become more fluid?


One of the single most important factors determining the future of business and society is the US legislative framework for innovation. US legislators shape the global patent landscape, due to the country’s dominant global role in both innovation and commercialization,. As covered in a New York Times article titled Two Views of Innovation, Colliding in Washington, Patent Reform legislation under consideration could shift the balance between large established corporations and smaller innovators, impacting how the patent landscape functions as a motivator of innovation.

As I wrote in my book Living Networks:

In the US alone, there are over two million enforceable patents. Only around 5% of those make money. The rest sit dormant, the documents quietly gathering dust on a shelf for the 20 year duration of the exclusive patent rights, or lapse due to lack of maintenance payments. Some of those patents are not applied because they don’t have a real commercial application. Probably many more are neglected because the patent holder is not interested in exploiting them, and they haven’t managed—or perhaps even tried—to match them with a company that could profitably apply them and would be prepared to buy or license them. This is not just a problem for the company that forgoes revenue on its portfolio of patents. It also means that part of the intellectual property landscape is unavailable, potentially squelching innovation by other companies. Because of the complexity and sheer number of existing patents, information about intellectual property has tended to flow extremely poorly. The promise of the next phase of the networks is that this flow will become far more fluid, resulting in better exploitation of our existing intellectual property, and a faster pace of innovation.

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Interview on client relationships in the management consulting industry


Michael McLaughlin, editor of Management Consulting News, recently interviewed me about how consultants can implement knowledge-based client relationships. A couple of brief excerpts from the interview are below – go to the full interview on Management Consulting News for the rest, in which I discuss trends in the industry, managing procurement professionals, the role of brand, consulting firm marketing programs, and related issues.

McLaughlin: What is a knowledge-based client relationship?

Dawson: It struck me early on that knowledge is the real heart of the value consultants provide. I don’t mean just the knowledge of the consultant, but the way that the consultant applies it so that the client learns or is transformed as a result of the engagement.

I distinguish between black-box consulting relationships and knowledge-based ones. In a black-box relationship, the client engages the consultant to come up with solutions, processes, or implementations and, hopefully, a result is achieved for the client. But, at the end, the client is none the wiser.

In contrast, a knowledge-based relationship has a higher degree of interaction and, as a result, the client actually learns to change. Maybe your client becomes better at making decisions, or managing processes, for example.

McLaughlin: If you look out over the next few years, how do you think the profile of a successful consultant will change?

Dawson: One of the driving forces in the economy is increasing specialization. As time passes, consultants will need deeper specialization.

Clearly, that in itself is of limited value. In part, increased specialization implies that greater collaboration within a firm will be necessary to succeed with clients. But as individuals, we need both an area of deep specialization and carefully selected areas in which we have a generalist understanding.

The importance of the individual practitioner, whether you work solo or you’re a specialist within a larger firm, is waning. The ability to work effectively in teams will continue to be the real driver of success.

Personal networks are another factor that has been important in the past and will continue to resonate. Clients are increasingly seeking out consultants, not just for their expertise, but for the consultant’s access to the unique insights of others in their networks.

Read the full interview.

Sydney goes for municipal WiFi


The NSW premier has announced that Sydney and other regional cities in the state will get free WiFi in their central business districts in the next three years.This is great news for those in Sydney, especially since Internet Service Providers in Australia are not the best at providing plans at reasonable prices, with low broadband download limits (sometimes 100MB per month!) a dirty eccentricity of the local industry for many years now. Yet go to the WiFi Networking News blog, and in its daily Metro roundup there are four announcements about municipal wireless availability around the world on the same day, including a PR firm providing free WiFi throughout Leicester Square in London. On a global level, the free municipal wireless trend is strong and rapidly building momentum. So what are the implications for telecommunications firms (among others)? Last week a highly-quoted piece in the New York Times on mobile phones with WiFi capabilities discussed how free WiFi will allow mobile users to cut out the mobile phone companies completely and speak for free. In fact, there are many restrictions, including the limited coverage of even the broadest free WiFi initiatives, and even more the very high battery drain of WiFi devices, which allow only fairly short speaking time on mobile phones. However there is no question that initiatives like Sydney’s municipal WiFi will cut out many revenue opportunities for telcos that are still striving to squeeze money out of their customers. On the other side is the far more important issue: individuals and businesses will be vastly enabled in connecting, creating, and tapping new opportunities. This is an exercise in unleashing the potential of connectivity. It’s an important step forward for Australia, which is at best in the second tier of developed countries in terms of its mobile and Internet connectivity.

Languages of blog posts


Technorati has released its August 2006 State of the Blogosphere report. As always, heaps of interesting information and insights, including about whether, now the blogosphere has reached 50 million blogs, the rate of doubling is slowing. Not yet, it appears. David Sifry has again taken up the theme of the language of blog posts, where English (39%) has once again taken the lead over Japanese (31%) in the last few months. Chinese (12%) is strong, while French (2%) and Korean (NR) are apparently underreported. I very much like the chart that David’s team has produced on languages of blog posts by hour of the day. It gives a better feeling for the truly global nature of the conversations. Examining European and Japanese blogging patterns shows that people tend to blog in the late evening.


Online advertising is a viable business


The head of Goldman Sachs‘ high-tech group has said that the IPO market is back for the right Internet companies. However the barriers are far higher, and we’re not likely to return to unprofitable or no-revenue companies getting piles of investors. Now that advertising is a viable business model, with further strong gains in online advertising dollars likely, many more online businesses can flourish, or at least fight for the advertising dollars available. On a related note, a group of prominent bloggers have united to create a blog aggregation site, which will compete with mainstream media and live on advertising revenue. They may not make a fortune, but just around now this has become a viable business model.

Newspapers respond to the online onslaught


The media landscape is rapidly shifting. Newspapers and magazines have seen the writing on the wall, with over the last six months US newspaper circulation dropping 1.9% and newsweeklies also slipping fast. Classifieds – which represent almost half of newspapers’ advertising revenue – are being assailed by online alternatives. McKinsey & Co executives recently forecast newspapers will lose 20% of their classifieds revenue by 2007. This is undoubtedly too optimistic. Competition is not just coming from the online recruitment sites such as and local city classifieds such as Craigslist. An entrepreneurial unit in eBay has established Kijiji as an independent classifieds site, with local operations around the world, including across many Chinese cities. Newspapers have been responding by buying online properties, notably Washington Post buying Microsoft’s online magazine Slate in January, and New York Times acquiring in March for $410 million.

In the next phase media is focusing on the power of social networking technologies. News Corporation spent $580 million last month to buy Intermix, with the youth networking site MySpace the jewel that merited the price. This gives News Corp access to a whole strata of society who are not prime consumers of traditional media. Its Australian rival Fairfax recently spent $A39 million to acquire online dating site RSVP. Google, which is increasingly moving into media space itself, acquired mobile social networking company Dodgeball earlier this year. The future of news media – and especially its revenue models – is increasingly focused on running the networks within which people interact, rather than simply broadcasting information one-to-many. Watch this space.

Microsoft toys with social software


Avid watchers of the “social software” scene have been galvanized by Microsoft’s recent announcement that one of its research teams has developed the core of a product called “MyWallop”. Screenshots show that the software would allow people to map their social networks and personal similarities between people in their network, as well as to blog.

In the last 18 months a multitude of social software applications have blossomed, including Ryze, LinkedIn, ZeroDegrees, Spoke Software, and many others. If Microsoft entered this market, it’s an open question whether it would swamp or stimulate existing efforts. Either way, there’s no question that its imprimatur on this type of software – and its distribution power – would mean that there would be massive uptake and usage. This in turn would allow the true potential of social software to emerge. The more people that are connected with this software, the more it allows the networks to become visible, and for people to become connected in new and useful ways. In short, it would be a massive boost in bringing the networks to life.

All the hype aside, this is one of many dozens of research projects that Microsoft runs, all vying for attention and resources, so there’s no guarantee anything will happen with this. However the attention this is getting – at least with the people I speak with – may well prompt Microsoft to put this higher up their list of priorities.

Participate in this blog!


This blog has become participative! You can now add your own comments and thoughts to any article, and rate the comments made by other visitors. There will also be reader polls. The system is based on the open-source software PHP-Nuke, a fine example of users collaborating to create the software they want. Anyone can use and adapt it to their own purposes. One of the features I most wanted on this blog was the ability to rate each other comments. This is a fabulous example of “collaborative filtering”, which is a central theme of the living networks. This is marvellously illustrated by the seminal Slashdot site, where much of the value is being able to sort through and access the comments made and adjudicated by an extremely sophisticated community. I hope and expect that many very smart people will be visiting this blog, so please do contribute your thoughts! Slashdot and its foundational principles are well known to the self-confessed “nerd” community. My intention is to make these ideas more broadly known to the business community and beyond. Please join in the fun! Special thanks to Rodney de Pater for implementing the system – a fine job!

Technology enables personal creativity


Creative people now have far more choices about how to market what they produce. The New York Times yesterday reported about authors who have successfully self-published. One author, for just $99, had her book laid-out in a print-on-demand format, and on the basis of its succes shortly after got a large advance from a publisher. Another established author chose to self-publish a book that subsequently reached #1 on As the article goes to pains to point out, these are the exceptions. Very few self-published books are more than moderately successful. However these new channels for distributing intellectual property (with parallels in music, art, design etc.) open up possibilities. In the chapter in Living Networks titled “Liberating Individuals” I described the generic model for distributing personal creative content.

In the first stage, people use digital distribution to attract attention and demonstrate to publishers (labels, distributors etc.) that they can generate an audience. They then achieve the peak of their career with major publishers, but subsequently go back to self-publishing in order to take a larger part of the rewards. The authors above are respectively at the early and late stages of this cycle. Many aging rock stars, like David Bowie and Todd Rundgren, are distributing direct to take more of the rewards than music labels would usually give them. One of the most important dynamics of this emerging model is simply how much content becomes available as everyone can market themselves directly. The publishers and labels do play a role of filtering that is useful, but they overplay their importance. Collaborative filtering, which helps us collectively to sort through what is out there and identify the best, will be at the heart of information flow moving forward. More anon