Venture Capital & How to Start a Startup

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Paul Graham offers up two very useful articles:

  • How to Start a Startup:
    You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible. Most startups that fail do it because they fail at one of these. A startup that does all three will probably succeed.
  • A Unified Theory of VC Suckage:
    But lately I’ve been learning more about how the VC world works, and a few days ago it hit me that there’s a reason VCs are the way they are. It’s not so much that the business attracts jerks, or even that the power they wield corrupts them. The real problem is the way they’re paid.

    The problem with VC funds is that they’re funds. Like the managers of mutual funds or hedge funds, VCs get paid a percentage of the money they manage. Usually about 2% a year. So they want the fund to be huge: hundreds of millions of dollars, if possible. But that means each partner ends up being responsible for investing a lot of money. And since one person can only manage so many deals, each deal has to be for multiple millions of dollars.

Beatallica: Milwaukee-based parody band & the music wars

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Xeni Jardin:

On the NPR program “Day to Day” today, I report on Beatallica, the Milwaukee-based parody band known for Metallica-infused covers of Beatles songs. As reported previously here on Boing Boing, Sony Music accused them of violating copyright laws, demanded that their webmaster pay “unspecified damages,” and forced the band’s ISP to shut down their website.

Cowen & Sawicky on Tax Reform

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Tyler Cowen & Max Sawicky:

Alan Greenspan has called for a consumption tax and President Bush has toyed with the related idea of a national sales tax. These proposals have some ideal economic properties but the politics don’t work. Consumption taxes are largely invisible; you don’t see what you pay on a yearly tax return but, rather, it is absorbed in the price of goods. Not surprisingly, Western European countries have both consumption taxes and high rates of overall taxation. Flat taxes bring some benefits but wouldn’t drastically lower the costs of our tax code; the biggest difficulty in filing your return is calculating your income.
I recommend starting on the expenditure side. Let’s gradually freeze Social Security benefits in real terms, introduce more market incentives to health care, redo the Medicare prescription-drug bill, and cut discretionary government spending. We should admit more revenue-positive immigrants as well and stop subsidizing the defense of Western Europeans.

Fighting Rivals with Efficiency

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Rick Barrett:

“Right now, the Midwest is awash with old, decrepit manufacturing plants,” Mautner said in an interview. “Some of these are factories with century-old equipment, and they?ve seen few improvements over the years. At the same time, China is building all new facilities, with all new equipment, and they?re consuming about half of the world?s oil, and half of the world?s steel and concrete.”
U.S. companies can?t stop China?s industrial revolution, but they can shield themselves from it a little, Mautner said.

State of the Blogosphere, 2005

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Dave Sifry:

Technorati is now tracking over 7.8 million weblogs, and 937 million links. That’s just about double the number of weblogs tracked in October 2004. In fact, the blogosphere is doubling in size about once every 5 months. It has already done so at this pace four times, which means that in the last 20 months, the blogosphere has increased in size by over 16 times.

Related: Katherine Seelye: Can Papers end the Free Ride Online?

FOIA, Blogshine & Local Politics

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Freeculture.org sponsored blogshine Sunday, a day when news organizations run stories and editorials in support of public access to government information.
The internet has substantially improved citizen’s ability to see who is funding elected officials directly and indirectly.
The Madison City Clerk conveniently posts campaign finance information on their website. I took a quick look at PAC (political action committee) spending on school board races and found this:
Madison School Related PAC’s:

  • Citizens for investing in Madison Schools: apparently setup to support the June, 2003 referendum. Current Board Members Bill Keys and Bill Clingan’s campaigns contributed to this PAC (1000 and 800 respectively), as did Madison Teachers, Inc. (MTI) ($1500). This PAC raised and spent more than $30K in 2002/2003.
  • Get Real, a PAC that supported candidates who were not endorsed by Madison Teachers. Get Real raised and spent less than $1,000. Get Real made small donations to unsuccessful candidates Sam Johnson & Melania Alvarez. This organization’s campaign finance disclosure documents are signed by former Madison School Board member Nancy Harper.
  • Madison Teachers’s Madison Voters raised more than $40K in 2004 and spent about $34K on direct and indirect support of endorsed candidates (Johnny Winston, Jr., Shwaw Vang and Alix Olson – who lost to incumbent Ruth Robarts). MTI Voters July 20, 2004 report [pdf] showed cash on hand of $52K
  • Progressive Dane raised and spent less than $2,000 last year, including small contributions to Johnny Winston, Jr. and Shwaw Vang.

Every active member of the Madison School Board was endorsed by and received direct and indirect support from Madison Teachers, Inc. The only current exception is Ruth Robarts, who, while supported in the past by MTI, was opposed by MTI in her 2004 successful re-election campaign.

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