The founder of Flickr tells the story of entrepreneurship: chinalabs.com)

Source: Internet
Author: User

By Kevin Allison, Financial Times)

For most Internet entrepreneurs, a well-recognized and even some exciting step in the entrepreneurial process is to explain why a certain idea should be funded by a venture capitalist in Silicon Valley.

However, this is not the style of action between Stewart Butterfield, founder of Flickr, And Caterina Fake. Flickr provides the photo sharing service, which was acquired by Yahoo last year and is said to be priced at $30 million. The couple didn't need a penny of venture capital during their startup, and they explained the reason without reservation.

"I saw a lot of companies that introduced venture capital in the beginning of the 21st century in a dilemma," fike said. In the Internet bubble age, she lives in San Francisco. "I saw a lot of companies go bankrupt and shut down, and also saw many startups grow too fast. There is something unreasonable about the idea of introducing funds and having to spend it ."

The benefits of maintaining a small scale are obvious for the two co-founders of Flickr. The company was in a balance of payments when they agreed to sell the company to Yahoo. Butfield and fike decided to keep the vast majority of their shares intact for sale, rather than accepting the risky capital they do not need at the cost of dilution of their shares.

The story of Flickr shows that young internet companies have an increasingly strong preference to act independently. A few years ago, this independent route was almost unimaginable. By the end of 1990s, fixed costs for servers, storage devices, and software were high, meaning that most startups had no choice but to seek help from venture capital to help their businesses get started.

However, although some technological fields such as semiconductors and mobile technology will still need to rely on external investment, however, self-funded start-ups are taking full advantage of broader technological and business changes, which lowers the entry threshold for aspiring entrepreneurs.

First, the declining hardware costs mean that many Internet companies "no longer need venture capital, but they need very little capital ". Fike said that the help of venture capitalists poses a risk to young companies, that is, they have to find ways to spend money on things they might not need-a trend that causes many companies to get stuck in the bubble.

In the case of Flickr, the only round of investment from friends, family members and several well-known angel investors in Silicon Valley is enough to help the company cope with rising capital expenditures.

"If we start a business a few years ago, we may need millions of dollars," he said ."

Five years ago, he said, a server with several hundred GB of storage capacity (one of the many devices used to process users' photos) would spend around $0.25 million on Flickr. Today, "you can get a storage capacity of up to thousands of GB at a price of $5000 ".

Second, entrepreneurs have learned from the network's prosperity and failure. Sascha Lewis, co-founder of online affairs weekly flavorpill, said he and his co-founder Mark Mangan were willing to consider starting a small scale.

"During the network boom, all our attention was focused on increasing and expanding our market share to achieve exponential growth," he said. A lot of pressure-I think it's just like the sky is falling down ."

The company was founded six years ago in New York, a two-person project designed to record anecdotes. Now it has published Business in five cities on two continents-and it employs only eight full-time employees.

Lewis said: "We want to concentrate. We know that we have a good product and a brand we want to build ." Because of the small administrative costs required and the absence of venture capital for help, there is no obligation to external directors, and the founders of flavorpill can develop the website at their own pace. They spent a year and a half working on flavorpill pages to attract their audiences before getting in touch with advertisers.

Their patience is rewarded. Currently, about 0.3 million people around the world read flavorpill publications every week. Another rival with similar geographic coverage, dailycandy, recently announced that it is about to be sold, with rumors that its price has reached $0.1 billion.

Third, the popularization of open-source network construction modules such as MySQL and PHP makes it easier for entrepreneurs to establish complex websites and services.

Andy Baio was an employee of a financial company in Southern California when Yahoo bought the social network and event plan website upcoming.org. Upcoming is a website developed in his spare time using a free open-source network tool. "Free Software makes it easy for amateurs to try," he said. "The only thing you spend every day is your free time ."

Bayo had no intention of turning it into a certain type of business when it founded upcoming. Therefore, Bayo was surprised when the company began to receive attention from venture capitalists at a conference in San Francisco last year. "We started to get a lot of attention and some media reports, but Venture capitalists wanted to take a big part," Bayo said. "I am doing this out of interest. Therefore, that is not attractive to me."

Paul Graham, a software engineer and founder of ycombinator, said there was a faster transfer trend among entrepreneurs and it also promoted the independence of startups. "For many of these people, they choose to either be acquired or introduce venture capital," he said. Ycombinator is a company that provides seed funding to tech startups.

For many companies, the second option is still attractive. Steve domenik, partner of sevin Rosen funds, said: "As far as I know, venture capital transactions continue to work ." Sevin Rosen is a venture capital company dedicated to early investments.

However, butfield of Flickr pointed out that there are various risks in expanding the business scale with venture capital. "There may be another 9/11 event, or companies like Google, Yahoo, or AOL will realize that they need to develop a photo service business that is comparable to that of Flickr ."

Finally, the independent model has been promoted by the Internet Society. Since the bursting of the network bubble, various entrepreneurial ideas have been discussed, evaluated, and promoted by a close group of influential blogs.

Personal blog, Digg, and Del. icio. web page collectors such as us, and influential blog communities such as Slashdot and metafilter, it provides a platform for the spread of excellent ideas-in stark contrast to the high billboards and sponsorship transactions in the age of the network bubble.

Bayo said: "Now there is such an idea. If you are doing something cool, if it is indeed an interesting, innovative, and exciting idea, then it will find the audience."

Companies like Flickr are deeply influenced by the blog world. Fike said that the overwhelming budget of Flickr forces it to develop as many blog-related features as possible.

"At the very beginning, we believed in 'children of the neighbory'," she said. "The less money you have, the more creative you are ."

 

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