In the final part of this chat, our guests discuss business models, companies they admire, influences, and businesses that don’t exist but should. (See part 1 or part 2.)

Choice quotes
Hedlund: “I just want to have a really clear and likely story for how money will show up. Step two can’t be "and then some magic happens"

Fletcher: “If you don’t have an audience, it doesn’t really matter what your biz model is.”

Hedlund: “I do think that the #1 thing that has helped me most is having and keeping friends who are talented.”

Hedlund: “Trust your gut more. When you read everyone in the newspaper saying one thing and your gut says something else, burn the newspaper.”

Linderman
Seems like lot of companies are going the "get an audience first and figure out how to make money later" route these days. What do you think of that approach?
Fletcher
I agree with that, at least for consumer facing internet companies. If you don’t have an audience, it doesn’t really matter what your biz model is.
Fletcher
And the bigger your audience is, the more revenue opportunities there are.
Hedlund
matt: I just want to have a really clear and likely story for how money will show up
Hedlund
step two can’t be "and then some magic happens"
Fletcher
Matt: That’s one reason startups should focus on big opportunities.
Linderman
Who’s been your biggest influence?
Hedlund
the people in the room count for me
Hedlund
Tim O’Reilly, obviously
Hedlund
I really liked talking to Eric Schmidt, I thought he was the most human "big exec" I met
Fletcher
Too many people to name. All you guys, of course.
Fried
I’m inspired by dentists and contractors who build things
Fried
they have a ton of different tools for the job
Fried
their success depends on great tools that do a few things well. Sometimes even just one thing well.
Fried
Instead of a swiss army knife
Fried
I’m also currently inspired by Ricardo Semler and James Dyson
Fletcher
Jason: Dyson the vaccuum cleaner guy?
Fried
MF, yeah
Fried
Fried
HIGHLY recommended book
Hedlund
I do think that the #1 thing that has helped me most is having and keeping friends who are talented
Hedlund
not b/c they are talented but it seems to work out that way :)
Fletcher
That guy’s cool. I have one of those vaccuums. Works really well.
Hedlund
JF, you recommended that a while ago, I need to read it
Fried
absolutely fascinating book about business, ideas, design, patents, stealing, lawyers, and, most of all, incredible persistence.
Fried
Such a fascinating journey. It’s amazing he didn’t give up.
Fletcher
Jason: thanks, ordering now.
Hedlund
"incredible persistence"—that matters a huge amount
Linderman
I think there’s a big misnomer with the whole "overnight success" thing—the press (or whomever) never seems to factor in the years of not succeeding.
Hedlund
ML: agree. I also think people believe that entrepreneurial ideas come to you in a flash. I don’t—I like what Paul Hawken says, "Work on the idea that won’t leave you alone."
Linderman
related: we still get labelled as a "startup" all the time even though we’ve been around since 1999.
Fletcher
So here’s a question: Which startup (not your own) from the past couple of years, do you wish you had started?
Hedlund
MF: Hmm. I don’t know if I can answer that
Hedlund
I love particular products, but I don’t think I want to do them myself
Hedlund
I absolutely love Flickr and I’m absolutely the wrong person to build it
Fletcher
I’ll start: Feedburner. I think those guys are doing a really good job and filling a need.
Fried
Hedlund
I think what you do should be an expression of you and your interests, and the way you work. The one I wanted to start was Wesabe, and I hope there’s none other just like it
Hedlund
that said I agree on Feedburner. Great business. :)
Hedlund
I have a big ole crush on Etsy— I love a lot of their ideas and the way they make their business
Fletcher
I’ve never used Etsy, but anything that eats into eBay’s business is good.
Fried
Etsy is really well done
Hedlund
I’m not a big fan of flash, but their flash ninja is unbelievable
Fried
IMHO, the best business out there today is Threadless
Fried
Their execution is STELLAR
Fried
They’re set to do over $20MM in revenues this year
Fried
they sell t-shirts that other people design
Fried
they sell t-shirts that other people have voted as the best designs. that helps reduce their risk.
Fletcher
Wow. I love all the services that enable people to create physical things from their designs.
Fried
And Threadless understands community better than anyone on the web.
Hedlund
I’m a big fan of a business that hasn’t launched yet: daylife. My friend Upendra started it and I think he, and the business, are amazing
Hedlund
I hope that they make it very big—upendra would be a great person to really change the way people learn about news
Hedlund
Upe was one of the people who started Firefly
Fried
Looks like daylife is trying to hire a few too many people for a company without a product: http://www.daylife.com/html/jobs.php
Hedlund
JF: heh. Well, like I say, I think the way people do things depends on them
Fried
5 people isn’t too many eventually
Fried
I think it’s too many at launch
Fried
just my opinion
Hedlund
I wouldn’t tell you to change 37signals, and I wish more people did what you do, but I also think that the process should suit the people, not the other way around
Fried
but if it’s a web app, you don’t need 5+ people to build it
Fried
especially for v1
Fried
and you don’t need a "QA/Release Engineer"
Fried
“Core Engineer / Research You will be a key member of our software development team, and will design and implement new data analysis components critical to our product, and optimize efficiency and effectiveness of existing algorithms. You will work primarily in Python, using both MySQL and PostgreSQL.”
Fried
Seems like overkill for a v1 too
Fried
but who knows
Hedlund
what I care about is what works for them and the result
Fried
everyone does things differently, of course.
Hedlund
if the result is good, great
Fletcher
Web crawling, machine learning, nlp. hmmm
Hedlund
so what are the businesses that don’t exist but should?
Hedlund
I was psyched about seeing http://www.GetHuman.com. not a business, but a great service
Fletcher
I’d like to see hosting services get better. Move more into database management, stuff like that. So small startups could outsource even more.
Hedlund
MF: what do you think about S3/EC2?
Fletcher
Marc: I’ve been scratching my head over those, actually. The main thing is, why is Amazon doing those?
Hedlund
I suggested that they preload the Alexa web crawl data on the EC2 machines to make the base install more useful
Fried
MF…
Fried
Amazon is doing it because they are sharing their technology
Fried
it’s a great move
Fried
they’ve built it, they have a lot of excess capacity
Fried
This is tech they’ve been developing for 10 yeawrs
Fried
for themselves
Fried
and they know it can help other businesses too
Fried
so they’re making it available. I think this is the sign of a very progressive business.
Fried
And I think you’re going to see more great companies doing this,
Hedlund
I agree in general that having more into hosting would be great.
Hedlund
it’s amazing how well some of the hosting services work now
Hedlund
having a DB host or other services would be fantastic for some apps
Fried
Amazon is basically saving: Infrastructure should be open
Fletcher
I do think that EC2 is a move in the right direction. Being able to easily scale up quickly would be fantastic. The devil’s in the details, tho.
Fried
Their data storage stuff isn’t a competitive advantage
Hedlund
A lot of people are trying to build "The great <foo> in the sky"
Linderman
Last question: If you could give you-but-10-years-ago one piece of advice (business/personal/whatever), what would it be?
Hedlund
trust your gut more. when you read everyone in the newspaper saying one thing and your gut says something else, burn the newspaper.
Fletcher
Matt: I’d tell myself to believe more strongly in my ideas and take a few more risks.
Fried
My advice: Do what you are passionate about.


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