I've just stumbled upon a nice article titled "Why you can('t) recruit a technical co-founder". The author makes some solid points about why it's hard to recruit / find a technical co-founder for a startup, but it seemed more common sense than deep introspection.

Idea is nothing, execution is everything

If you've started up your own venture, you know this saying is not just a cliche. Ideas, however great, will get nowhere without execution. On the other hand, solid and above execution can get very far with even below mediocre ideas.

How many times did you see a company in a crowded space or doing something that seems utterly useless, and they seemed to somehow do very well? it happens all the time. Was Facebook hailed as the next big thing when it launched and MySpace was ruling the social world? it didn't. And it wasn't a novel idea - there were many social networks at the time and more getting started everyday. Facebook just out-executed all of its competitors to become the huge success they are today.

I'm not really saying the idea itself is useless (as the headline might suggest), but I am much in agreement with the concept that the idea is a multiplier of execution (summarized neatly by Derek Sivers). A better idea raises the cap on your potential, but without execution to support it it's just a multiple of nothing.

Founders need to be McGyvers

Going back to the article I mentioned at the beginning - technical founders are not different than any other type of founder. All founders must bring something critical to the table. Be it business acumen, marketing, socializing and connections, deep market knowledge - they must be very good at something to start a company. There is no room for "idea men" - all founders must be ready to pull their weight to make their equity worth something.

Furthermore, all founders should be like McGyver (if you don't know who this is, you're missing on a piece of classic TV culture) - they must be extremely adaptable and able to constantly find solutions to problems with very little resources. They need to be able to step outside of their comfort zone and do something they never did before - and do it well. They need to be able to multi-task and be able to switch hats on a dime. One day you're doing your marketing thing and the next day you're setting up servers and another day you're doing customer support or schmoozing at some event (it actually changes more like every hour than every day).

If one of the co-founders can't do this - you have a weak link, and someone will be pulling a heavier load than the other. A healthy co-founder relationship can't be built around one guy doing more than the other(s).

Do you need a technical co-founder or a CTO?

When I hear someone is looking for a technical co-founder, it seems more often than not what they are looking for is a CTO. They are looking for someone to take over the technical aspects of the product, but not really touch the business aspects.

Why am I making this distinction? because founders need to care about and be involved in all the core business decisions. They need to do all the things I've mentioned previously and pull their weight equally in the company. In short - they need to be entrepreneurs and not just brilliant engineers.

If you are looking to fill out a position (technical lead), it doesn't necessarily mean you are looking for a partner. Understanding what you need will help you find the right person by adjusting your expectations and requirements of a potential addition to your team.

Where do you find technical founders?

I am of the opinion that real partnerships happen organically and not through a recruiting process. You either knew your startup partners previously or hit it off after talking about the idea for the venture. And by the way, you should talk about it with anyone who would listen - no NDA's, no secrecy, no patent pending bullshit. If you bought in to the "idea is nothing ..." concept, it should be plainly obvious why.

Discussing your ideas with other smart and knowledgeable people will allow it to grow and evolve. Through criticism and resistance will you be able to sharpen rough edges and bring out something that shines. The other benefit is that you might actually find people who'll be interested in joining! how will you find those without sharing your idea and polishing it so it sounds attractive enough?

So where do you find those technical founder guys? well, like everything else in the startup process, you have to put in the work. Start with your inner circle of friends and acquittance - is there anyone there who might fit the bill and you have a good chemistry with? ask that same circle for recommendations and assistance. Start cruising online portfolios - find someone who seems both technically qualified and with entrepreneurial aspirations - someone who's been involved in other projects / ventures and seems to understand what starting up is all about.

The most important qualities in founders in my opinion is versatility and team chemistry - along with one key expertise. Don't settle for one-trick ponies if you are looking for co-founders - otherwise you are actually looking to fill a position, like I mentioned before.

What do technical founders want?

Technical founders want what every founder wants - to be an equal partner. We want to be involved in the specification process, in the business decisions, with user experience decisions and even marketing. Don't underestimate us just because we come from a technical background - real entrepreneurs will have an opinion on everything. We want to be given authority over technical matters, but also that our partners will not be ignorant of the technologies involved - and we want your input on that as well.

We want to see you working as hard as us and adding as much value as us to the venture. When meeting with a potential technical co-founder, you must be able to clearly transmit what value you are bringing to the team.

But the most important thing - we want to work with good and talented people. Entrepreneurship is a difficult and draining vocation. If you can't get along with and depend on your co-founders - you are not going to make it. Partnering up on a venture is a commitment not unlike a marriage - you need to be able to survive the good and the bad times, work through disagreements and make compromises.

Don't compromise on your co-founders - and don't expect us to do the same. Here's to all you aspiring entrepreneurs out there - may you find your "significant other" and start creating amazing products.

You need a software license when you are selling software

Seems obvious, right? however, many freelance developers do not use any license. Common misconception seems to be that when you develop custom code for a client, he basically owns the code when the job is done. That premise is usually false. While the license given to custom software solutions is usually liberal, allowing changes to source-code (with conditions) - there are many restrictions that apply on the buyer. For example, it's very rare to allow a client to resell your work as his - though without a license, he can certainly do that.

The purpose of a license is to protect your intellectual property (IP) and copyright. While you may intend to allow a client to modify the source code you provide to fit his needs, it does not necessarily mean he can sell it or include it in his other works.

Lets go over some decisions you have to make when writing a software license and explain the legal terms that describe it:

Do you want to allow clients to redistribute your software?

The most basic and critical question. If you answer YES, the license is called a Sublicensable license and it allows license holders (your clients) to resell your code with their own license, as long as that license does not contradict your original license.

Sometimes, an additional condition is added that the software cannot be sold as is and must be included in a greater work to be sublicensed. This condition prevents your client from becoming your competitor and basically selling the same product you are selling. A sublicesnable license should be used when you want to allow clients to sell solutions based on your work - for example, the client wants to sell CMS product that uses a plug-in developed by you.

The opposite of a sublicesnable license is a Personal license. A personal license prohibits license holders from reselling, renting or even allowing use of your code by 3rd parties. This type of license is common when you are selling premade (non-custom) code and want to limit use to the client only. The vast majority of desktop applications are sold under this license.

Do you want to allow clients to modify the source code?

Despite what it may seem, a sublicensable license by itself does not allow clients to modify your code. In order to allow that, the license must include the right to create derivative works. A derivative work is a modified version of your source code.

Having the right to create derivative works in a sublicensable license by itself does not give the client the right to sell modifications (only the original code). In order to allow the sale of a modified version of your source code (either as standalone or as a part of a larger work), the license must include the right to distribute derivative works.

How many sites and servers do you want to allow clients to use  your software on?

This web-oriented clause restricts the client's use of the software to pre-determined number of sites / servers. While more relevant if you are selling a non-custom solution, it can still apply to custom solutions as well. You can also provide the right to use the software on unlimited sites / servers. A common approach is to offer different pricing (mostly for non-custom solutions) depending on the extent of use granted.

Do you want to allow commercial use of your software?

While this condition is true for most custom solutions, there are cases - such as when you are giving a discount to a non-profit - where you want to prohibit commercial use. It is common for off-the-shelf solutions to have a pricing strategy in which the basic product is given for free and commercial versions or extensions are sold for a fee. In order to allow that to happen, commercial use must be covered by the license.

There are basically three main options - royalty free commercial use, non-commercial use and commercial use with conditions. The last one states that commercial use is allowed if certain criteria are met (criteria that you need to decide upon and must be specified in the license).

Do you want to allow clients to sell their license?

Self explanatory. In legal terms - a license that allows license holders to sell their license and their right to use the software to a 3rd party, is called an assignable license. A license that restricts sale of the license is called a non-assignable & non-transferable license.

Do you want to grant your clients an exclusive license?

An exclusive license allows you to sell your software to only one client (granting them exclusivity). This could be a requirement by a client, or your way to insure them that you will not be reselling the custom solution they paid you to develop. In most cases this only applies to custom solutions.

This is just a partial list - there are many more minor restrictions and rights that can be included in a software license. We cover some of those in our licensing guide on binpress, and there even more less common clauses that can be applied. If you want to create a legally termed and binding software license using those conditions, we provide a commercial license generator for registered developers in our marketplace.

If you have any questions regarding any of the topics I covered, I would be happy to elaborate or even pass it on to our attorney. The next time you will be talking to clients about a potential project, be sure to have a ready software license that covers their rights and restrictions. This can save you much anguish and provide you with legal protection in the case that things go south.

How much does it cost to build a website? what does building a website entails? there are no universal answers to those questions.

Client: "Enough talking, let's get down to business. What will 50$ get me?"
Brad: * looks at wrist watch *
Brad: "About 5 more minutes of my time."
Brad Colbow on Time

In fact, there is so much variation, that a recent client told us post-project completion that when he was shopping around for offers from various firms, he got offers between 2000$ and 60,000$. That's a factor of 30 between offers!

He picked us since we conveyed the best value (quality / price) of all offers, even though he had much cheaper offers (we were about midway in the range). All things being equal, all he had was his gut-feeling and our resume to guide him. That is, if we didn't engage in client development.

The client-provider relationship in web development is complicated. Most would-be clients are lay-man, possessing no insight on what goes into every feature and pixel you see on a website. They are also, most likely, unfamiliar with their prospective provider and how to evaluate him - is he a hack? what are the qualities that he brings to table? how can I quantify the value he gives me?

That's where the process we term "Client development" comes in. It involves several activities, most of which are not directly related to web development:

Matching expectations

This is a basic rule of engagement in most business operations, and web-development is not excluded - especially since it is such a misunderstood and technical field.

A lot of clients look at website features and think "that's easy! you just put the thing there and do that...". Well, in the real world things are usually more complicated. What might look simple on the surface could involve a lot of back-end work and a lot of custom integration with various services... and the user interface itself is probably more work than you'd think.

The first thing we try to do is lower expectations to some degree. Our stance is that if it takes any amount of time to design / develop / test, then it will be priced in the proposal. That might sound harsh - but it's the only way to properly evaluate and convey the value of the project.

As I've written in conveying value to clients, creating a transparent and fair price proposal can go a long way to matching up the client's expectations with yours. It should be accompanied by a well written specification document, composed interactively with the client and which is completely understood by him (or her).

Educating clients

To help clients really get a sense of what they are getting in return for their money, it's important to explain some basic terminology and elaborate on the process of web development.

Explaining terms such as usability, user experience, mockups, layouts, client-side / server-side, testing, maintainability, standards and the interactions between them can really shed light on the considerations and work involved in building a website.

This in turn allows clients to better understand the price-stamp put on features, and feel more secure overall in decisions they make since they better understand what is involved.

Knowing when to say "No"

In some cases, clients get over involved in day-to-day decisions, especially in something as tangible as design. The design of a website is very visible which makes it very susceptible to micro-management and over-feedback from clients as they watch it evolve into a finished product. Convincing clients to trust our experience and expertise is imperative.

Another aspect that is constantly under-pressure is scope. Scope-creep is a common yet undesirable side-effect of perfectionism inherent in most of us (including clients). This tendency to think how things could be improved beyond what was originally specified is something that needs to be properly monitored.

This often means just saying a strict "No" to client suggestions and ideas when it's appropriate to do so. If features and requirements change (and they will), they have to come at the expense of some other features deemed less important. The project scope must be maintained.

Selecting clients

Client development is a two way street. Consider for example the following project outline:

US Company looking to develop financial website

Requirements:
Budget 10,000$-25,000$
Maximum Billrate per Man Hour: $6/hour
Minimum Number of Men assigned to Project: 30

We require a well established firm that meets these basic requirements in addition to being able to delivery quality and accuracy in its work.

(This is an actual posting on Elance, in case you were wondering)

In short, this person wants a financial website, but gives no project requirements / specifications or feature list of any kind. Instead, the requirements are that the provider:
A) Has a minimum of 30 men (why gender biased?) assigned to the project, and
B) No one should be paid more than 6$ an hour (which is less than what a register clerk at McDonalds makes)

For this he wants quality and accuracy. Is his expectations unreasonable? might be (I'm voting no).

Even more common is the "work for minor shares" offer in what is probably "the next big thing". Somehow people believe that having an idea by itself is sufficient leverage, and should prompt serious firms into developing their products.

The fact that there's no market for startup ideas suggests there's no demand.
Which means, in the narrow sense of the word, that startup ideas are worthless.
Paul Graham on Ideas for startups

People in the industry seem to agree that execution is the main key for the success of a startup. We do execution (and also concept development, but that's for another article).

The point I'm making is that a good relationship with a client can only be achieved when both sides understand and respect each other. This is not just about money, it's about the value generated by both sides.

What does this mean? it means that in order to get the right clients, we need to be selective ourselves. Clients not only choose us, but we get to choose them as well. For this reason, we should never undercut our price-proposals. We need to believe they represent not only fair, but great value.

It's the client's privilege to agree or disagree, but we want to work with people who understand the value we represent. If they want to pay less, they need to drop features. It's give-and-take and there are no freebies - this is a business after all. Nobody gets rich from web development, the least they could do is get paid on par with the value they represent.

This feeling out process usually happens during the expectation matching phase. If both sides can not bring their expectations to the same level, it's best to part ways and wish each other the best than trying to hammer in a shaky relationship.

It's up to you

Client development is a process that a lot of small businesses and freelancers skip (and sometimes larger firms as well). Whether you put the time and effort to make prospective clients your partners instead of your employers is up to you.

Despite this, the application of those business models in the web arena is still very much experimental, and it's often hard for web businesses to find and implement a model that works well for them.

Got ads?

The most basic misconception about web business models is that you can never go wrong choosing an advertising-based model. If it was really that easy, then everybody would be making mad cash - however, advertising based revenue is actually hard to come by.

In fact, those who can actually make it stick are few and far between (Mike Speiser shows the numbers don't lie). The amount of traffic you need to generate in order to make substantial revenue from online advertising is out of reach for the vast majority of websites.

So when is an advertising model appropriate?

• When generating traffic is the main purpose of your web service. Such sites include all flavors of traditional content sites, social networks, user-generated content sites and the like.
• When your service has the ability to deliver targeted advertising. Targeting advertising at user activity, search criteria and the like, greatly increase the relevancy of ads and thus conversion rates. A little-known company has made targeted advertising its main business to devastating effect.
• Advertising is incorporated as a part of a hybrid model, to subsidize free parts of the service (see below for more details).

The important attribute here is that advertising must target a large enough audience with sufficient relevancy in order to generate significant revenue.

Subscription is king

Subscription business models are nothing new but have been gaining popularity on the web, especially with the proliferation of on-demand online services in which subscription payments often make the most sense.

A subscription-based model is often appropriate when the service / content offered is unique and hard to find elsewhere. For site visitors to shell out even a few dollars, they need to be convinced that they are getting something they can't get elsewhere (since much of the web is available for free). This is doubly true since the process of handing out payments details online is often a barrier by itself.

Whether it's entertainment or productivity, when the value to users is higher than or equal to the monetary cost subscription becomes a very viable model. Niche sites and web services often fall in this category when they provide something of value.

I'd note here that by subscription model I don't necessarily mean just recurring annual subscriptions - there are also milestone-based subscriptions (pay-as-you-go) and feature-based subscriptions (pay-per-feature). Those three types can be mixed together to create many different hybrids, with the common denominator being the "subscribed user" - a person willing to spend money to use the service.

The freemium model

Freemium is a trendy new name for a familiar model - offer basic or limited services for free, and charge for advanced (premium) features. The freemium model is often a derivative of the subscription model, with the basic subscription plan as the free part of it.

Using a freemium model can be very useful for businesses who are counting on long-term users instead of one-time purchases. By getting limited services for free, a user can have a taste of what the web service has to offer thus lowering the barrier of entry. The balance of free to premium is important in creating the right incentive for paying for the premium services (example - basecamp).

One common application of the freemium model is combining the subscription and advertising models, by offering free services that display ads and premium services that are ad-free - this basically allows the site user to decide how he will support the service.

When we are conducting business development with clients I Personally lean mostly to subscription based freemium model, as

The brokers

Brokers are services that bring together buyers and sellers thus creating a marketplace. Revenue is generated by charging usage of the marketplace in a variety of ways:

• Sellers can be charged for being listed by the broker (one time / per listing)
• Buyers can be charged for gaining access to the listing of sellers
• Fee / commission on successful transactions

The best known example of the broker model is Ebay, a giant marketplace that succeeds on the strength of its reputation system and internal policing. A couple of good examples for creative application of the broker model are threadless and crowdspring (which I described in a previous post on web business models).

The partnership, the exit

Partnerships can be the basis of viable business model in certain circumstances - such as affiliates and sponsorships, or can be another part of the whole for others. It is often used as a hybrid with other models (such as advertising or subscription) being the driving force behind revenue.

An extreme case of this model is the outright takeover of the business by another company, often called "an exit". Though some businesses set out with this strategy in mind, its very unpredictable nature makes it very risky without an adequate backup model. I call this strategy the "no-model" model, with businesses basically saying that they'll figure out as they go along, hoping that some giant company will swoop in and end all their problems.

Picking the right one

Deciding on a web business model can be tough for early stage start-ups and traditional offline businesses transitioning to the web. Each model has its pros and cons and the fear of making a mistake can be paralyzing. Sometimes the perfect business model is very obvious but more often than not it's a journey of self discovery for the business.

When we engage in business development with our clients, we usually ask them the following questions:

• What is your target audience?
• How much would you pay for your service?
• Who are your competitors? What is their business model?
• When (or how fast) do you expect web revenue to cover operating expenses?

Those are mostly introductory questions, aimed at helping the business orient itself on what it needs to know to determine its business model.

Analyze, improve, rinse, repeat

Choosing a business model is only the beginning. Constant collection and analysis of related data - such as conversion and churn rates, usage data and statistics - is essential for tweaking and evolving the business model and increasing its chances of success. The process of testing how much customers are willing to pay for services is sometimes called bounding-box pricing.

There are no strict rules for choosing a business model, so don't be afraid to experiment and look for business opportunities in unexpected places. You never know when or where your big break will happen, but if you believe in your product and your team your business model will reveal itself eventually - be prepared for it when it happens.

How much are you worth

As a freelancer and sub-contractor, one of the basic skills I had to develop is conveying value to prospective clients. In order to earn the rates I want to charge, it's important to make the client understand the value he is getting in return.

Clients seeking freelancers are often looking for cheaper rates, as the thinking goes that companies inherently charge more - companies have additional costs that freelancers do not, and those costs are reflected in their rates.

While looking for cheaper rates, clients still expect quality - and those two properties have a very tangible relationship. You can assume higher rates reflect greater quality - however, in software development, quality is an attribute that is hard to explain to non-technical people, and as in every other occupation, higher rates don't necessarily mean higher quality.

My goal when communicating with a prospective client is to convey to him what is the value that I bring to the table. While admittedly my rates are not cheap - I believe they are more than fair, and the value I can give greatly exceeds the monetary compensation I demand for it.

So how can I convince a client that I'm worth what I ask for?

Talking about quality in software development

The following are metrics that are widely accepted as proponents of software quality:

• Maintainability - How easy is it to debug and maintain the source code? How is it to make small changes?
  The cost of maintaining the product over any stretch of time is highly dependent on this. Also, larger development projects will bog down during active development if they are not maintainable.
• Extendability - How easy is it to add functionality and features to the product? This affects the cost of future development, cost that may be larger than the original investment.
• Security - How secure is the product against known and unknown exploits in its domain? This concerns mostly products with online accessibility, which places web products at the highest risk spectrum.
• Domain relevance - How well does the product actually answers the problems it sets to solve? this is a metric that is hard to measure without real users testing the product. However, having plenty of experience in this area can definitely reduce the margin of error.

And another metric that is not software-development specific:

• Professionalism - How much respect does a service provider has for his line of work? how much respect does he have for his clients and how much does he put into his communications with them? how good is he with meeting time schedules and price estimates?

There are many ways in which I try to convey the value I can give in each of those areas -

• By presenting my best work in online profiles with a short summary of the what I reviewed above. (Warning - links are in Hebrew )
• By writing in my blog about issues relevant to those qualities.
• By actively participating in forums and other software development communities.
• By always trying to be transparent and professional in any communication with clients.

The fact that I perform those activities because I enjoy and learn from them is to my advantage.

Those activities are mostly behind the scenes though, cause the next most important step is:

Striving for a face-to-face meeting

My number one goal is to meet clients face-to-face. By putting a face behind the CV and answering any  questions in a professional manner, I increase the chances of a closing a deal tenfold.

I know many freelance developers have a reluctance to meet face-to-face, and are generally shy in such meetings. For the most part I embrace it - I strongly believe that after such a meeting the client will know exactly what value I stand for, and then it will only come down to costs versus value considerations.

Another equally important aspect of the face-to-face meeting is to understand in greater detail the scope and features of the project. Often, a second meeting for specifications only is required. I will write about the specification process in a future article, hopefully.

Creating a transparent and fair cost and scope proposal

When creating the actual price proposal it's important to keep two things in mind:

• Be clear on what's included in the proposal
• Make it obvious how much every part costs separately

Being clear on what's included in the proposal is a no-brainer. It will prevent future misunderstandings and points of contention. To a large degree, this is also influenced by the level of specifications document attached to the proposal (you do have one, don't you?).

Making it obvious how much every part costs is an effective way to translate to a client how much effort will it take to develop specific features. This allows a client to make value considerations - how much a feature is worth to the project versus how much it will cost to develop it, and often allows for compromises that can take a price proposal from the "out of range" zone to the "let's do business" zone.

Allow the client to make his own decisions regarding what features to keep or leave out, but provide your opinion as well. We, as web professionals, have a responsibility of educating our clients with our knowledge and experience in the field. Don't be afraid to influence the client with what you think is best for the project.

Stand behind your pricing

This might be difficult advice in those times of economic strife, however I strongly recommend standing firm beyond your price proposals if you believe them to be fair and thought out. If you represent with conviction that the price proposal stands for your worth, it increases your integrity in the eyes of the client.

Never leave money you believe you are worth on the table. There are other ways to come to terms that all sides can live with, such as trimming down on features and scope or converting some of the cost into shares in the project.

Flashback:

I remember that when I wrote this piece I had just submitted a price proposal for a freelance project at the sum of around 4,000$US. I was pretty sure I had conveyed my value perfectly to the client, though he had argued that the price is unacceptable for him. He wanted to close it at 2,500$, which is a pretty steep cut.

I was caught in a serious dillemma - I was out of the market for a couple of months, living off previous projects income, and it was the height of the financial crisis. Should I take the hit and take the project anyway or stick with my pricing?

I decided to hold firm to my pricing. The client went off to request more price proposals from other developers (with my specifications document - which at the time I was not charging for), but continued to contact me in 2-3 weeks interval, asking whether I'd be willing to come closer to his terms.

In the mean time I started my own web company with two other extremely talented partners, and we went on to close several major projects that make that 4000$ seem a bit disproportional right now. I was recently contacted for a last time by that client, and I was happy to respond that I'm no longer available for his project.

My own moral of this story is that if you follow through with your beliefs and represent your value well, you will eventually get through to the right clients. Clients that refuse to recognise that they need to pay for the quality they want to recieve, are clients that I rather not work with.

Some very well known and successful online entities can be considered as such - Wikipedia in which users contribute knowledge, Digg in which users help others find interesting articles by voting and facebook which is the current golden standard for social networking (in which user generated content - UGC - is a given).

However, those sites are not thought of as having strong business models. Wikipedia, of course, is free. Digg and facebook rely on advertising, which is the fallback business model on the web - conversion is relatively low and you can only count on decent revenue when you reach the size of the aforementioned sites.

As can be guessed from the title of this article, I would like to discuss a couple of sites / services that use UGC as the basis for a viable business model:

Case 1: Threadless

Threadless is an online t-shirt retailer with a twist - the concepts for the t-shirts are submitted by users, voted on by the community and finally hand picked by the staff. A winning design will be printed and sold through the site, and its creator wins a nice sum of 2,500$. That's the basic premise - there are several variations such as contests and reprints, but at its base - its a marketplace for ideas.

Threadless is already an established online brand, existing since 2000. It proves that you can crowd source creativity for fresh product ideas in a way that is both beneficial for the product distributor and the creative contributor. Threadless builds on this premise and succeeds because of their excellent blend of branding, community integration and good service. I have personally purchased at threadless multiple times and I've had nothing but satisfaction and enjoyment from the service.

Threadless currently has revenue in excess of 30$ million, and income of 10$ million annually. Not bad for a startup funded with a 1000$ seed (earned in an online t-shirt content, no less).

Case 2: crowdSPRING

I had just recently discovered crowdSPRING, an online service that mates graphical design talent with design related projects. The concept is to try to improve traditional design projects proceedings for both sides:

- Project requesting parties (called buyers) are guaranteed to get at least 25 different concepts for their needs (be it a logo, website design, print and others), with a money-back guarantee.

- Graphical designers (called creatives) are given a global stage to show their work and generate income. Also, since buyers pay in advance, the winning piece is guaranteed to receive payment - there is no scenario in which a buyer can say he doesn't like anything and walk away.

- crowdSPRING itself takes a small commission on top of the project award money. This is the main business model for the site.

What drives the service is the interaction between buyers and creatives. Creating a project and watching the concepts improve as both sides learn more about the requirements through iteration and communication is a very interesting experience.

We've recently created a logo design project on crowdSPRING, and the reaction has been phenomenal. Though we have a couple of designers on board at Octabox, we felt we needed a fresh approach as we have been too deeply involved for a long time now. There are still 9 days (out of 14) till the project ends, and we already have an incredible amount of entries (over 300).

The process itself was worth the price of admission - through the interaction with the many contributors, we achieved some insights on what we want in a logo and a design direction for our new website.

crowdSPRING is not yet an established entity like Threadless, but it is well on its way to becoming one. Another example of how to crowd source creativity in a win-win situation for all involved.

Web 2.0 as a viable business model

Those two sites are just a small sample of many successful sites / services built on UGC as the driving force. I believe this market is still mainly untapped - there are plenty of possibilities to be explored. Despite that the basic premise is always the same:

- Create a community around a product / service concept
- Allow / encourage the talent within the community to offer their skills to the rest of the community
- Facilitate the interaction between the talent and the community, while trying to interfere as little as possible

What other successful web2.0 business models have you seen?

I recently stumbled upon a presentation by Mike Speiser (on his blog) which promotes the notion that good ideas should be shared. He writes:

Sharing your idea will expose you to diverse feedback on it. Your idea will get pressure tested. You should iterate based on that feedback, staying true to the core idea but improving it using the power of logic.

This is as good advice as you can get. Ideas circulating in your head need to be tested against the real world in order to develop into something useful. You should ignore your instincts to protect it and share it with other people. The risks of someone stealing your idea and beating you to the punch are irrelevant since:

1. If you believe your idea is good, you probably have passion towards it. Others are less likely to experience your enthusiasm since they do not see your vision the way you do, and therefor unlikely to try to develop it themselves.
2. Suppose others do try to develop the idea themselves. It is rare that separate people have the exact same vision regarding an idea, so if you believe your vision is a winner you have nothing to worry about. If you think others have a better vision of your idea, you should try to recruit them into your start-up (!)
3. Competition is good. If others are liking your idea and try to develop it themselves, they are proving to you (and potential investors) that your idea has a market.

The benefits of getting real-world feedback and allowing your idea to nurture and grow far outweigh the danger of losing creative rights over it.

Having said this, a good idea will only take you so far. The single most important asset for a start-up is the team - A strong team can take a mediocre idea into the stratosphere, while a mediocre team will fail with a great idea.

It's that simple - a strong team will win on execution, which is by far the most important factor for start-up success (not all agree on this of course).

Stash your NDA's, start sharing your ideas and recruit talented people. Success is only a few iterations (and an investment from Sequoia Capital) away.

When I sense that a client might be open for developing his idea beyond merely technical implementation, I usually try to involve my partner Adam. Adam is the business and marketing guru at Octabox, and as much as I'd like to think I have plenty to contribute on the side of web business development, when it comes to marketing it's very obvious that I'm no match for Adam. He has a very unique approach to web concepts, and often sees business and marketing 'angles' that others miss, making him a perfect complement to my straightforward and best-practices approach.

Today we had a meeting with just that type of client. A person I met at a previous entrepreneurship event, who has a technical background in algorithms but not much in the web environment has approached me to develop a concept he came up for a web start-up. When he initially approached me, he was doing so on the basis of my reputation as a web developer and not looking for any business development or marketing ideas. I got Adam involved however, and at today's meeting we managed to do a little of everything - technical guidance, business development, marketing strategy - you name it.

They say speakers have "on" and "off" days. Well today Adam had a very "on" day, as he gave his own version of the "make a meaning" speech, daring our client to think outside the box and understand that doing a web startup is different to the traditional avenues he has worked in before. I was barely holding my self from giving him a standing ovation at the end of his rhetorics, as he really made an inspiring and insightful speech delivering a message that was heard loud and clear. He definitely gave our client much to think about, and provided a showcase of what we could contribute as more than just implementors.

Our client now has more questions to answer to himself than he did before he came to to the meeting, but in a good way. We could definitely see a long-term collaboration evolving, as we have with several other web start-ups.

It was good day for being a web entrepreuner, and also for remembering the good karma I have for being surrounded by extremely talented individuals (my other partner is Adam's equivalent in graphic design and concept. Our team is definitely very complete skill wise).

In the end, you are only as good as the people you work with.