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From the Trenches

In Rebtel, Jajag and others should know what they are up against, Russell Shaw writes that “startups who are so wrapped up in their own special offerings should not underestimate the forces they are going up against”.  Russell is riffing off Andy’s Being on the Inside where Andy’s basic point is that the incumbents can make life difficult, or even shut down startups easily enough.

Frankly, you guys are great armchair quarterbacks.

I want to amplify a little bit of what Jeff Pulver just wrote in his remake of Parents Just Don’t Understand.  In the world of a startup each day is a fight for survival.  Each day you wonder whether or not:

  1. The offshore subcontractor you’ve got working for you is going to deliver when he says he will, because you’ve made a big commitment to an important customer.
  2. The employees you’ve worked so hard to recruit are still going to think that what they’re doing is meaningful when a recruiter from a larger firm comes along offering more money.
  3. You can make payroll in another quarter without more investment.

You do crazy things like buying used servers from EBay, without warranties, because it’s 80% cheaper than buying the new ones.  You build your own desks.  You drive 8 hours to a trade show because it’s cheaper than flying, and besides, that gives you some good talk time with the other folks in the company.  You make promises to customers who believe in you without knowing quite whether you can deliver on those or not.  And then you go figure out how to deliver.

You work every night until you fall asleep in your chair in front of the computer.  In fact, we just had a light hearted discussion yesterday about head snappers (the folks who lean back, and then lurch forward when they wake suddenly) versus face planters (those who sleep with their faces on the keys).  The next day you get up and do it all over again.

Worrying about whether a slow moving giant is going to cut off your air is the last thing on your mind.  My fondest hope is that we’re so successful that we can poke one of these guys hard enough in the eye that they want to buy us.  I’m sure that’s the way that RebTel and Jajah are thinking about their businesses too. Get out there, be visible, create a ruckus, build some momentum.  Build your successes day by day, and customer by customer.

Startups are about making choices, and then living with them, and that’s really different from a big company.  When I worked for Microsoft we debated the merits of cable versus DSL, and tried to predict who would win.  In the end, we participated in the GTE DSL trial and bought a piece of a cable company.  As the CEO of iotum, that’s not a luxury I can afford. We have to validate our hypotheses one at a time, not all at once. An example: a couple of weeks ago an old acquaintance asked why we had chosen to focus on building a hosted service instead of an enterprise play.  My answer?  We had to make a choice.  We couldn’t be both.  By being focused though, we can speed ahead of a player trying to execute both plays.

That’s the reality of a startup, Russell.  I just don’t care what these guys are going to do.  They’re not going to get around to what iotum is doing until long after we’ve already succeeded (or failed). 

And you know what?  Hjalmar Winbladh and Roman Scharf have both built successful startups before.  I’m pretty certain that’s the way that they’re thinking too.

{ 2 comments… add one }

  • Alex October 3, 2006, 12:08 pm

    I do not understand this Rebtel and JaJah hype, since you still use your minute plan with the Mobile Operator and it only helps with international calls, even then it is still 60 – 70% more expensive then (( truphone )) (also with truphone you need a dual GSM / WiFi phone – which is the future anyway ) have you ever browsed the web on a WiFi phone, it is a real pleasure

    RESULTS
    (( truphone )) savings on my mobile bill

    I have watched my Vodaphone and Truphone account over the last 3 months. Here are the results

    My Vodaphone bill (Package 500 min) £35 / months would usually in real terms produce a bill of minimum £300 / months (all in) – maximum £450 / months. Since I have a truphone the bill decreased to the following numbers;

    1st month – £120 (Vodaphone) – did not measure the Truphone bill (no billing system, yet) – Savings £180

    2nd months – £120 (Vodaphone) = same no billing system so far – £180 savings, same as 1st months

    3rd months (September) – £85 (Vodaphone) (of which £35 (500 min Package) + £50 for call charges on Vodaphone + £60 truphone (extrapolated) (used £38 in 14 days with calling every day 15 – 20 numbers) = £160

    Total Savings / months – minimum £140 / months — maximum £290 / months

    (I have not yet calculated my savings on the fixed line bill – since the family and I used to pickup the BT landline and called sometimes without prefix numbers) however it is probably another £20 savings.

    I am getting the whole of the company on Truphone at the moment, the savings and the integrated way they make it hapen is just GREAT and pays for the upgrade to a Nokia E60 / 61 with WiFi.

    12:57 PM

  • Alec October 3, 2006, 1:17 pm

    No doubt! I think the only thing limiting Truphone is that it requires a WiFi capable phone. Those phones just aren't that common yet. But they WILL be!

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