business, people, VCs and web 2.0. Oh, and pineapples.

I think the hardest thing with business is people.

When you’re by yourself, you really have no idea about the abilities of your staff. Knowing your limits is, at times, admitting defeat before you start. I’m not saying that everyone should have a pie-in-the-sky dream, but there’s too much worry about not being able to do something through fear and through not actually trying. I guess you do know what you can do – but you’ve no idea what you can’t do. I used to be quite intimidated by technology. Ha.

When you start interacting with other people who your company is paying, you see that there are differences between your expectations and the abilities of other people. Convincing two students (both on a vocational IT course) that they REALLY CAN write web-based apps using LAMP if they try is actually quite a bit of work. It takes time to encourage them, it takes time to support them. It takes a good amount of time to deal with their fear of failure.

I’m not even going to go into the trust issues inherent in involving other people in your vision. Part of the solution for this is a contract, but that’s fraught with it’s own difficulties. And even then you still have to trust people to actually DO the work and, in the end, the law is firmly on the side of the employee. Or maybe that’s just my perception because, frankly, I have trust issues. If you’re starting up, don’t use friendship as the glue that binds everything together. Use contracts. Then everyone knows where they stand.

The blogosphere is abuzz with Web 1.0 Venture Capitalists all trying to think how they are going to be relevant in Web 2.0 where a web based business can start up for pennies a month rather than the vastly inflated amounts in Web 1.0. (I finally figured out what the difference between Web 1.0 and Web 2.0 is. It’s just time. The number refers to which bubble we’re talking about. The Web 1.0 bubble was all about taking businesses, ignoring business plans and tacking the word “online” as a prefix or a suffix. Web 2.0 is all about content and interaction – create the content, get the eyes and the advertising will pay for everything else). Traditional venture capitalists can be relevant but they’re also less important. It’s ironic that it’s taken the BBC so long to televise the VC process. Anyway – VCs can still get a slice of the action – but it’s a smaller slice and it involves them opening up their address book and their existing portfolio rather than opening up the cheque book. To create value in this new world, the VCs need to make themselves into the glue that binds starting businesses together. It seems obvious but sometimes you can’t make it on your own. What are startups looking for these days? A good lawyer. Someone who can take away the pain of payroll. Someone to handle sales tax/VAT. Someone to chase debtors. Someone to deflect creditors. Someone reliable and cheap to host their fledgling web service? A good VC should have some of these services on tap and can therefore add real value. And their portfolio of client companies may allow them to add value and keep all of the value within their own control! Show me a VC that wouldn’t want a slices of many interacting pies?

And if all of this sounds like a lot of work? Try growing a pineapple in your living room.

P.S. BrokeBack Mountain. Great film. Heath Ledger is great in this character role. Jake Gyllenhaal plays a slightly older version of every other role he’s ever played. The scenery is great but completely overshadowed by the character roles and despite the terse dialog from Ledger, he speaks volumes.