Word: start
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Dates: during 2000-2009
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Graham is a partner in Y Combinator, a Mountain View, Calif., company that invests small sums of money in LILO-style start-ups and advises them during their ramen days. The difference between a start-up and a small business, by the way, is that a "start-up is designed to grow - it's scalable," said Graham. Compare a hair salon with Facebook. "Hair salons scale linearly," he explained. "You have to do twice as much work to get twice as much revenue." But once Facebook was built? It grew exponentially...
...days, start-ups tended to get funded before they launched. Think of the dotcom archetype, Amazon. Only after getting a $300,000 check from his parents did Jeff Bezos set to work building his site. That was typical: entrepreneurs first put their energy into writing business plans - a map that spelled out what they hoped to build. After the money was in hand, they got to work...
...owning a tiny percentage of their company as their ownership got diluted each time they brought in a new round of investment. The second was that there's often no correlation between the assumptions in a theoretical business plan and reality. Many great business plans turned into lousy start-ups - one reason for the last dotcom crash...
Will it be the next Facebook? The next Blogger, Digg or Twitter? Who knows? It almost goes without saying that many more start-ups fail than succeed. Reid Hoffman, founder and CEO of the job-networking site LinkedIn and an angel investor in many start-ups (including Facebook), says, "The biggest problem facing any website is distribution." In a world where it's so easy to start a company, how will anyone find yours...
...common wisdom would suggest that Tayman couldn't have picked a worse time to start a company that depends on automotive advertising. But he knew that going in. "I wanted to launch into the dip so that by the time advertising improves, MotorMouths will be sitting pretty," he told me a few days ago. He said he was optimistic, based on recent figures that show auto ads are on the upswing. "If our current growth trends hold and the ad trends hold, MotorMouths could be a $250,000-revenue company within 18 months...