Up and Running:

Sometimes things go even better than planned. And that can be really exciting.

This is a true story.

I thought I would tell it here now because of a dinner meeting last Monday night with someone who could be in a similar situation. That’s a maybe, unfortunately. He’s a nice guy; it’d be nice if he or I could be sure.

The turning point of this story was one Saturday morning in October. This was years ago, but the memory is still fresh.

We met in the company offices, three or four rooms over a Jaguar repair shop in Scotts Valley, California. Philippe Kahn was founder, president, CEO, marketing director, chief programmer and almost everything else of Borland International. The meeting included me, Philippe and at least two of the other three members of the board of directors.

In case the reference to board of directors sets you off, let me clarify that although it (and every other California corporation) had a board of directors, this was definitely not a big company. It was almost entirely Philippe. He had two, maybe three other people working there. Most of his programming talent was in Denmark.

I wasn’t happy about meeting on Saturday. We had four kids and I worked a lot, so I tried to keep Saturdays free. But Philippe hadn’t asked before as strongly as he did that time, so I thought it best to go.

I’d grown impatient with Philippe and Borland. When the company was formally set up as a California corporation in May of that year, the idea and the business plan were to move a menu system called Menu Master from the CP/M operating system to the DOS operating system. And throughout the months of that summer, every time I asked about progress, Philippe told me not to worry: “They’re writing a Pascal compiler.”

Now to be fair, in software, then as now, the normal interpretation of “they’re writing a compiler” to convert a software product from one operating system to another is “forget it, the programmers are lost in themselves, this is never going to work.” I hope you get my drift. It’s a big project. Writing a compiler is roughly equivalent to creating a new programming language. You don’t do that just to convert a software product to a different operating system.

So with that as background, you might understand why I may have been a little bit grumpy that Saturday morning when I had to drive an hour to go to that meeting.

And then Philippe showed us Turbo Pascal. The compiler his Danish programming team had written wasn’t just a means to convert Menu Master to DOS. No. Instead of that, it was a fabulous piece of software in itself, far better than Menu Master, one that hundreds of thousands of personal computer users would love to have.

Philippe gathered us around the computer and showed us Turbo Pascal. I don’t think Menu Master was ever mentioned again, at least not by anybody in that meeting. I don’t know for sure, but I guess the other three board members had been as impatient as I’d been. They, like me, saw instantly how good the somewhat accidental new product was.

Philippe never wavered. It was clear that he had seen it first and acted immediately.

Borland had no money. Philippe had borrowed $20,000 from his father to get it started. He’d done a deal or two for Menu Master to be built into some CP/M computers (an OEM deal with the manufacturer) to keep it going.

However, money or not, he pushed full speed ahead. He played telephone games with his one receptionist, tricking some ad salespeople to give him a couple of full-page ads (Byte Magazine and Dr. Dobb’s Journal) on credit. That was about $20,000 worth of advertising.

By the time we learned about it, it was already done. He bet the company on those ads. If they flopped, it was going to be hell to pay the bills.

But those ads produced more than $40,000 of immediate direct sales. The orders came pouring in. Philippe had to add people to take the calls.

So for the next month, he doubled the ad commitments to $80,000. And sales doubled again.

So there it is. Every so often it happens. A product takes off because people want it. And, wow, that’s exciting to watch.

That was in 1983. Borland International grew to more than $60 million in annual sales and went public before the end of 1986.

I’m watching the Kindle for several reasons. First, I own one, I use it and I like it. Second, it’s an interesting new venture: a big, powerful company moving into a new but contiguous market. Third, it’s an interesting product category: the e-reader. I’ve been interested in that idea for years, but it hasn’t (until now, maybe) been successful. Ebooks and ebook readers make sense to me. But why had they all failed, at least until this one?

Interesting data from Tech Crunch last week in We Know How Many Kindles Amazon Has Sold: 240,000:

The Kindle is such a small part of Amazon’s overall business that the company does not break out how many it’s sold. But we found out anyway: 240,000 Kindles have been shipped since November, according to a source with direct knowledge of the numbers.

Doing a little back-of-the-envelope math, that brings total sales of the device so far to between $86 million and $96 million (the price of the device was reduced to $360 from $400 last May). Then add the amounts spent on digital books, newspapers and blogs purchased to read on the device, and you get a business that has easily brought in [more than] $100 million so far. (Each $25 worth of digital reading material purchased per Kindle adds $6 million in total revenues).

Peter Kafka at Silicon Valley Insider adds, in Amazon May Have Actually Sold a Bunch of Kindles:

That number is more or less in line with Citi analyst Mark Mahaney’s estimates from May; Mark thinks the Kindle could be a $750 million business that accounts for 3 percent of Amazon’s sales by 2010. And by our thinking, it compares very nicely to Apple’s iPod introduction: Apple sold 376,000 units in the first year after introducing the MP3 player, in 2001. And the iPod, recall, didn’t require users to actually go out and purchase any music in order to use it–you could load up with music you already had bought, or had stolen. We’ve been skeptical about the Kindle’s prospects to date, but if these numbers prove out, we’ll be happy to reassess.

Interesting. So the Kindle makes it, while the ebook rocket, the Sony ebook reader and some other attempts didn’t. Were the others simply ahead of their time? Or maybe Amazon added a secret ingredient, like critical mass and market power? I’m not sure, and I don’t know that anybody can really be sure, but it’s bringing up some good questions to ask.

Fascinating startup: Add posterous.com to the mix of Twitter, Tumblr, new media and cool new websites. It’s like an instant blog platform, free and extremely easy to use. You just e-mail into it and, with your first e-mail, it sets up your site, automatically; then you can edit and tune it. I just heard about it in an instant message (see below) saying…

… posterous is going to find VC money in 5 seconds flat

For example, posterous lets you automatically post pictures into an instantly obvious and usable blog-like interface. and it has the quickest and easiest setup I’ve ever seen and, amazingly, it works.

Microblogging. This new instant small media, something that feels to me like instant messaging with a posting platform, seems all the rage. I’ve been on Twitter for a few weeks now, unable to decide whether it’s a gigantic waste of time or the next big thing. Twitter lets you post 140-character snippets. I’m finding some of my favorite people there, and they’re doing interesting things. There’s been a business plan contest and a poetry contest, I think, both limited to 140 characters. Think of the trade-offs.

Of course there’s the problem of attention span, as the instant messages interrupt my Twittering while I’m talking on my office phone, and then my cellphone rings, in between posting–drafting this post–and posting elsewhere at the same time.

Is it a good way to make money? I’m not really sure how or whether social media makes money, and I just finished posting (elsewhere) on an in-depth analysis of that in MIT Technology that is very much worth reading if you’re curious about that.

With respect to instant media and instant posting and a million interruptions, here’s the text of the instant message exchange about posterous.com this morning . . . my tip of the hat to the good side of instant interruptions.

Paul: http://www.posterous.com/
Paul: very interesting
Tim: OK I just tried it, with an e-mail. Interesting idea . . . I’ll see what happens . . .
Paul: yeah
Paul: it’s pretty impressive
Paul: great interesting and real startups
Paul: tumblr.com, posterous.com, twitter.com
Paul: http://www.newsweek.com/id/145216
Tim: hmm . . . btw, you know I’m on twitter?
Paul: yeah twitter is all the rage
Paul: it’s good to be them
Paul: posterous is going to find vc money in like 5 seconds flat
Tim: I don’t get it . . . why doesn’t posterous want me to register timberry.posterous.com?
Paul: oh it lets you bypass that
Tim: How do they know when I e-mail to them what site name I want to be?
Paul: but you can. you’ll see as soon as they e-mail you back. then it becomes clear.
Paul: The e-mail you got back should make it easy to switch that up to a domain you actually want.
Paul: it’s not so much your next blog–but the next trend in the path to microblogging
Tim: OK getting it now … timstuff.posterous.com
Paul: yeah, it’s clever
Tim: It is cool. You’re right.
Paul: check out what a nice slideshow it made for this post http://paul_8f3xz.posterous.com
Paul: just attaching 5 photos to e-mail and boom
Tim: wow
Paul: yeah that’s slick

So there you have it. Instant blogging, instant gratification, immediate interruptions and maybe VC money as well. I like this 21st century. Or at least I do this instant, until the next interruption changes my mind.

(Note: I posted this earlier on Huffington Post. Repeated here for my readers’ convenience on this blog.)

I’ve talked about this topic on my other blog, Planning Startups Stories. I don’t like the idea of retiring. I love what I do. And I’m 60 years old. But then, I recently changed what I do to focus on blogging, speaking, writing and teaching. And that gave me a new job.

Which made me take a personal interest in Brent Bowers’ New York Times piece about Early Retirees In New Ventures, Mostly for Fun. This is really cool, a great reminder that business–your own business, your startup–is supposed to be more than “just” business; it’s supposed to be new, exciting, challenging and fun.

BusinessWeek just started a new feature profiling new entrepreneurial companies, in a slide show motif, called Fresh Entrepreneurs - Profiling Startups Around the U.S. It strikes me as a nice way to get quick views of what other people are doing. Stories like …

• She quit her consulting job at Bain, hired a designer from Chicago’s International Academy of Design & Technology, pulled $50,000 from personal savings, whipped up some samples, and several months later took her Aphira line to high-end pro shops. Glaspie, a graduate of Northwestern’s Kellogg School of Management, generated $50,000 in sales in 2005. She hopes to hit $1 million next year.
• Efimova, who studied dance in St. Petersburg, opened Russian Pointe in early 2006 after selling ballet shoes as a wholesaler, first in Ann Arbor, Mich., and in the Loop since 2005. Official supplier to the Joffrey Ballet, she opened the retail suite to bring, in her words, “the love of dance, and beauty, to this magical city of Chicago.” The store is lavishly decorated: thick cabernet-colored velvet curtains hang in the windows, and a row of old opera-house chairs runs along the middle of the store. A stage with a large mirror and barre make the store a favorite with little princesses who come for their first fitting. Local ballet schools Ruth Page and Boitsov ensure a steady stream of wannabe Giselles coming through the door. Sales rose from $7,065 in her first month as a retailer to $29,286 in October.
• Forget Boston Market or the prepared-foods section of Jewel or Whole Foods. In Oak Park, there’s the Perfect Dinner, a kitchen that prepares “home-style” take-out and delivered meals. The startup is aimed mostly at “El” riders, who can go online to scope out the shop’s menu of eight to 10 daily entrées and order ahead before exiting Oak Station on the Green Line.
  The business was founded by Karen Gruber, 48, who formerly handled the Kraft cheese account at ad agency J. Walter Thompson, and Jill Haas, 47, a onetime food scientist at Kraft Foods. The Perfect Dinner broke even with $500,000 in revenue last year—the average check is $41—and is looking at 8% to 10% growth this year, Gruber says. The pair, who started the venture with $250,000 from friends, family, and their own savings, is now trying to drum up $700,000 to open two more sites this fall.

It’s a nice treatment, quick and interesting. Recession or not, people are making it with their startups.

There’s trouble in eBay land for entrepreneurs. If you’re already doing business with eBay, you probably know this already. If you’re not there yet, but you’re curious about it or thinking about it, you probably want to click over to eBay Live–So Why Is Everybody So Upset, Anyway? on StartupNation. That post is a collection of videos, with a summary, that highlights the problem very well.

I was shocked to see how things have gone. I was at eBay Live last year, in Boston, and although it seemed a bit slower than the year before in Las Vegas, it was still pretty much hopping. I had to miss the annual eBay sellers’ event this year, and I’ve been busy with other things, so I didn’t realize how bad things have gotten.

(With thanks to Steve King of Small Biz Labs, who posted eBay Sellers Express Their Unhappiness.)

A few months ago I wrote a post about Brent Bowers’ column in The New York Times, following three startups as they–we all hoped–grew and prospered. Last week Bowers revisited the three startups and came back with a fresh and not altogether happy new view of startup reality.

None met all their goals, but Ms. Adler came the closest. She has built her cafe to $8,000 in revenue a week, up from $7,000 six months ago. But that is still $3,000 shy of her projections. She also expects to begin making a profit this summer, an impressive achievement for a new restaurant.

Ms. Ericson, by contrast, has scaled back her ambitions to create a Web clothing store that doubles as a portal to an Internet center for women. She instead has spent most of her time making cold calls to boutique shops to sell her “Mama says” T-shirts.

And Mr. Takle, just back from a trip to India to recruit low-cost legal talent for his property management software company, says that while he remains hopeful, his venture is foundering. “It’s getting dangerously close to needing investors just to survive, which is a bad place to be,” he said.

There’s not a whole lot of good news there, but not a lot of surprise either. Sales are lower than projections, and the three entrepreneurs are troubled, but resolved. Click here for more …

A long time ago when I first quit a good job to start out on my own, a very good friend of mine was shocked.

“You have a family and a mortgage,” he said. That was true. He was amazed at the idea of quitting a job to start out on one’s own. “How can you deal with the risk?”

“It’s not that different,” I answered. “Even in your job, with your salary, you are only as safe as the numbers you bring in.” We were both vice presidents in a market research and planning consulting company. We both ran our groups. “If your numbers turn sour, so does your job.”

The owners couldn’t help that, really, even though it was a small company. You can’t make payroll if you don’t have the revenue.

Things worked out for me, but it’s still a serious question. And to make that more interesting, there’s a new website that measures your job security in that existing day job. Interesting idea, no?

Here’s the link: Job Security Score. Predicts consumer’s income and credit risk

Talk about a high-class problem! How about this one, the sad plight of Craig (Craigslist) Newmark.

Imagine what it might have been like to be Dr. Kleenex. You invent a modern miracle, the cheap paper handkerchief, and suddenly you become the person blamed for America’s disposable culture, praised for a more convenient life, or both.

There never was a Dr. Kleenex, though–the product was created by a team of researchers at Kimberly-Clark laboratories in the 1920s. But there is a real Craig in Craigslist, and lately he is looking at life beyond his little list that happens to be the seventh-most-popular website in the United States.

It is also a site that is deeply tied up with the fate of newspapers–indeed, many in the newspaper industry blame the site’s founder, Craig Newmark, for the downturn in their classified-advertising business.

Then there was that old phrase about crying all the way to the bank. It’s an interesting profile, in The New York Times, called Craig (of the List) Looks Beyond the Web.

How’s this for a startup success story? Avaaz.org started 17 months ago. It now has more than 3.2 million registered active members and last week raised $1.5 million in aid for Burmese cyclone victims in three days. Recognizing some problems with flow of aid through normal channels, founder Ricken Patel connected with Burmese monks to distribute the aid.

How did Avaaz do it? By building a state-of-the-art contact management system that was streamlined exactly to its needs, and then building a network of talented campaigners, translators and a technology team from around the world without needing to have a single office. The end goal is something that’s been done before–an online petition and donation site. But in the back end, both from a team assembly and a technology standpoint, Avaaz has innovated to be built from the ground up as a hyper-international and agile organization that can respond to a world crisis in a matter of hours.

It is an organization with a mission:

a new global Web movement with a simple democratic mission: to close the gap between the world we have, and the world most people everywhere want. Across the world, most people want stronger protections for the environment, greater respect for human rights, and concerted efforts to end poverty, corruption and war.

Not that technology doesn’t require a lot of hard work. Avaaz uses an innovative blast engine to fine-tune e-mail messages with detailed testing. And it was built from the ground up to deal almost simultaneously with five main languages and then very quickly with six others. But a lot of its success has to do with the old-fashioned business of saying the right thing to the right people. Since the beginning, it’s focused its efforts on bringing people together around causes that unite, rather than divide. Recently, global warming and political problems in Burma and Tibet. For example, try its video ads.

The technology used is all LAMP (linux, Apache, PHP and mysql, a strong combination of open-source, readily available software).

And it also takes funding. And in this case, the organization is now funded by its more than 3.2 million members, which is another major achievement. Here’s more of the history:

Avaaz.org was co-founded by Res Publica, a global civic-advocacy group, and Moveon.org, an online community that has pioneered Internet advocacy in the United States. Our co-founding team was also composed of a group of global social entrepreneurs from six countries, including our Executive Director Ricken Patel, Tom Perriello, Tom Pravda, Eli Pariser, Andrea Woodhouse, Jeremy Heimans and David Madden. Avaaz is lucky to have the founding partnership and support of leading activist organizations from around the world, including the Service Employees International Union, a founding partner of Avaaz, GetUp.org.au, and many others.

Here’s another specific number: in its 17 months, Avaaz members have taken 6,345,719 (as I write this) actions. Actions are things like making a donation or signing a petition. Avaaz’s goal is to be member-funded. First it had a campaign that was tremendously successful just getting e-mails, petition, 1.7 million members just on Burma.

As far as I can tell, it depends on whom you ask. Some say it was a life-changing experience. Some say it was exhausting. The startup weekend program gets a few dozen people together for a long weekend, during which they create a new business. In a recent one they ended up pitching Guy Kawasaki when they were done. There was very little sleep, a lot of work, lots of creativity and collaboration, and lots of real thinking about what makes a startup go. Here’s more from the website:

Startup Weekend recruits a highly motivated group of developers, business managers, startup enthusiasts, marketing gurus, graphic artists and more to a 54-hour event that builds communities, companies and projects.

Founded in 2007 by Andrew Hyde, the weekend is a concept of a conference focusing on learning by creating. It is known for its quick decisions, “out of the box” thinking, unique facilitation technique and letting the founders show what they can do. The program has already met with success in Boulder, Toronto, New York, Hamburg, Houston, West Lafayette, Boston, D.C. and more.

If that sounds interesting to you, I suggest you browse to startupweekend.com and take a look. I found the videos alone entertaining enough to make it hard to pull away from that site and get back to work.

Look for Jake Weatherly there

One of the next ones happening is Portland Startup Weekend, here in Oregon, May 23-25. You can use that link to get more information and to register. And our own Jake Weatherly, Palo Alto Software’s star nice person, is already registered and will be there with sleeves rolled up, ready to work. I’m looking forward to getting his feedback, which I intend to share here.

The schedule also includes San Antonio, Texas, May 16-18; Memphis, Tennessee, May 30-June 1; and Ann Arbor, Michigan, June 20 -22.

It’s exactly one year later. That’s just a coincidence, but still, a good lead. Today marks the first official day of the new launch of a new line of business, exactly one year after a new, much younger management team took over.

This post is a special pleasure for me. I’ve posted a lot on this blog about new businesses, successful startups and interesting business ideas. This particular one, unlike all the others, is about my business, Palo Alto Software, and its new line of business, Email Center Pro. Here’s the “why” page from www.emailcenterpro.com:

Not that I expect you to read that page, but I hope it gives you the idea. Like most of the businesses I like, it’s built around a specific problem, and it solves that problem. In this case it’s that problem of managing the shared e-mail addresses like marketing@paloalto.com, info@paloalto.com or help@paloalto.com. Add real-time collaboration to these shared inboxes. What happens when the person who normally answers that e-mail is out sick? How often does an important e-mail get missed because it’s not clear who’s answering it? How often does an important e-mail get answered twice, once apiece by two people, and with two different answers? That’s the need.

Like a lot of good business ideas, this one didn’t just pop out of the vapor. We’ve been using a system like this for four years in Palo Alto Software, because it’s a problem we’ve had. Until about a year ago, it was just our internal software, written originally in Cold Fusion and managed and updated for years. It took a new management team to recognize the product opportunity in it. Then the team rebuilt it from top to bottom, adding security and reliability by using Amazon Web Services and some other cool Web 2.0 technology, on the foundations of long-term use in a real-world setting. Teams were expanded, management structure was changed, and the Web application became a reality. You can sign up for it, for free, at www.emailcenterpro.com.

Obviously I’m biased on this one, but I like to think it’s a good example of how a business moves from one business offering (business plan software) to a new product area with a very similar target user base. And of how a business implements a new idea.