There's more than one way to start

I'm an Israeli and I live in Tel Aviv. Israel has a very vibrant hi-tech community and startups are a huge industry here with many success stories. Nevertheless, Israel is a very small country. Considering that most of the hi-tech is located around the center of the country, the relevant area is much smaller than, say, the San Francisco Bay Area (for comparison, the Bay Area is about 7000 sq miles and Israel is about 8000 sq miles, more than half is a desert).

When it comes to the community of entrepreneurs and investors in Israel, it actually is a very "small world". Personally, I know several people who were part of successful startups that did commendable exists. People feel that, if they had some conversations with people who made it and heard a lecture from Yossi Vardi (to whom I have the utmost respect) they know what needs to be done. It seems that we've formed some acceptable formula which one should follow in order to succeed. When people meet me and I tell them about my startup they immediately ask how much money did I raise and if I have a patent. There seem to be a consensus around the road to success.

That's why I enjoyed the presentation given by David Heinemeier Hansson (DHH) from 37Signals in the Y-Combinator 2008 Startup School.  I recommend this presentation to anyone in this business. I took some notes, which I included hereunder. It fits perfectly with the way I chose, the way of the MicroISV. Maybe I won't make hundreds of millions of dollars, but I will be working for myself and I'll enjoy what I'm doing while making more than enough money in the process, or at least having a better shot at making money.

I find the presentation very inspiring and entertaining. Highly recommended. I hope that me taking notes won't discourage you from watching it anyway. You'll probably get more insights there.

My notes:

• KISS business model - charge money for your service.
• This is still hard, but the odds are better than trying to build the next facebook/YouTube. We hear about these exits around us and think - "this can happen to me", much like the fear of a plane crash which is rare...
• Million dollars is still a lot of money. It's not that hard to make it and the odds are much better than making a billion dollars.
• For that, you don't need to solve the problems of the world, you can just "open a nice Italian restaurant". Provide a service which does one thing a little better.
• It's hard to sell services to consumers (example from Backpack). Consumers don't easily open their wallet when it comes to internet services (especially with all the freebies around).
• The  "Fortune 5,000,000":
  
  • Essentially, the market segment of small businesses, even 1-5 people. This is the large space between the consumer and the "tiny enterprises".
  • This is an untapped market - many problems waiting to be solved.
  • It's much easier to sell here - people evaluate the product, like it and buy it. No huge investment in red tape, sales reps, etc.
  • Your obligation to the customers paying small amounts is far less binding than to huge customers paying millions (it they call, you'd better answer and do what they say).
  • You can read more about it in this 37Signals post.
• The purpose is to enjoy your life...
  
  • There's a great advantage to not making your company huge (by taking VC money): you can call your own shots.
  • You can create a company which you'll enjoy working at and that's key.
  • Don't plan on working hard for two years and selling out for big bucks and leave the good life. It's not clear how good your life will be.
  • Plan to create a workplace you'd like to work in for the next 20 years.
    
• You can be a small successful business and enjoy your work, like a small Italian restaurants. Don't use Facebook as your role model.
• Crashes the term "viral marketing". Just providing a great service can create a "viral" effect, even if you charge money for it. It's just a new hype over something which has been around for ages. It also contradicts the notion that your have to launch fast to create a "viral effect".
• Having less time is a huge benefit to most people. If you had just 5 hours a day for working you'll focus your time a lot better. You cannot be productive for 14 hours a day.
• Most companies are not built over night. Don't be in a hurry.
• It's never gone get less work. The practices your choose to adopt now will stick with you.
• If you're charging money from your customers, scaling means more users. So scaling problems are a good thing.