Webstock’s cool – and has a host of awesome and famous foreign and local speakers. In their own words:

Webstock 2011 will be the mostest bestest scientifically proven amazingest conference ever. In the history of the world. Fact.

Register Now!

The Allaboutthestory.com Media Scholar will get to attend Webstock 2011 (value $1195), interview big names from overseas tech companies (value: priceless), write at least 3 articles from the event (with career enhancing national and international interest in the topics and people) and swan up to the Onyas on Saturday night (Value $150, bring a camera for glamour and alcohol – always an entertaining mix)

You’ll need to prove your worth, writing:

• Why you would like to attend Webstock 2011
• Which speaker you most want to interview – and why
• Which publication you write for, or intend to pitch any Webstock-related stories to
• How the scholarship would help you in your career
• Why you’re the right person for the scholarship

You are a writer – so this stuff should be easy right? Email it to Julie Starr – julie@allaboutthestory.com – by January 30, 2011. More over at her blog

AllAboutTheStory matches work from quality writers with editors. It was founded by Julie Starr, who is assisted by a cast of co-owners including Rowan, Koz, and Amnon, Joshia Vial and Ensipral, Natalie from Decisive Flow and myself. We think it is almost as cool as Webstock, so if you are an editor or writer – head on over.

Yet another classic Stanford undergraduate story. Google releases Google Instant, and so Feross Aboukhadijeh creates YouTube instant.

Try it.

Very shortly afterward Feross received a tweet from YouTube CEO Chad Hurley offering him a job. That’s smart – other students have stuck it out and formed companies – like Google itself.

More on Venturebeat

To work like it is intended YouTube Instant requires a high speed connection and an essentially unlimited data plan. That’s because it downloads the best guess video as you type. It’s not going to help much to cache locally – YouTube instant lets the long tail of videos get exposed.

Can we imagine this being created in New Zealand? It’s got to be tough, especially when looking at YouTube at night. At the moment, when high speed, always on and unlimited broadband isn’t yet a reality, it’s difficult to see how NZ developers can break through to the world.

Unfortunately for author Marty Neumeier he picked one bad example – a hazard when you write any business book to be sure:

So when my local bank bought a fifty foot outdoor poster emblazoned with the tagline “Nice. Since 1878,” they’d have been better off putting their money in a savings account.

…Citibank positioned their bank as the anti-bank with the tagline “Live Richly,” and headlines such as “For a guaranteed return on investment, try buying flowers”

Ouch. Citibank has since hit the wall hard, and a “nice” bank is very hard to find these days – especially in the USA.

Citi’s greed-oriented slogan was always bad – not just now, but when the book was published in 2007. Who wants to bank with someone that is encouraging its customers to blow money? It’s not a good look, and it was a pointer to gaps in the values of Citibank – gaps that ultimately resulted in the collapse.

It’s a lesson we can all learn from – being different and being good is not nearly as important as doing business in the right way and for the right reasons.

Incidentally – the Zagbook website is well worth a look – a great example of book promotion. It’s missing the vital component though – the ability to interact with the author.

It’s a new annual award organisation and created by the Liz Dengate Thrush Foundation. The purpose of the foundation is:

… to award funding grants for use in practical educational advancement of individuals in Internet entrepreneurship.

I have no idea how they turned that purpose into an awards evening.

They clearly have money – after all they managed to get Vint Cerf out to give the headline talk at the awards. He’s a very impressive and interesting guy, but I suspect not the best person to talk about Internet entrepreneurship for individuals in New Zealand. I also suspect that the other speaker, Minister of Internal Affairs Hon. Nathan Guy, was out of his field somewhat.

However there are plenty of other organisations and people doing great work in promoting and improving internet entrepreneurship in NZ. Why not support them?

Start with Webstock – an organisation that struggles to make money, but that has put NZ at the center of the map of internet coolness.

Let’s add Nat Torkington who, with O’Reilly media, bought FOO camp to Warkworth (the first ones out of the USA) and has managed to get a few lucky souls (including lucky me) over to the original FOO camp in Sebastapol, California. FOO is free – paid for by sponsors in NZ, and there are also several free unaffiliated BAA camps which do a great job of getting people together in common cause.

I could go on.

It now seems that we have two new award evenings, with the super cool and connected Webstockers launching the Onyas at about the same time. Actually they were originally scheduled for the same night as the NZ Internet Industry Awards, but the Webstockers graciously deferred their Onyas evening to the Webstock event next year (a smart move).

The Onyas promote themselves as the Web Industry awards – giving awards to those that create by building, designing, writing, coding and so forth. They focus on the website and content rather than the businesses behind them.

So why not combine these awards? The NZ Internet Industry Awards need a healthy dose of Webstock coolness and industry connectedness, while the Onyas could use some financial and political backing, and could easily add the existing NZIIA categories.

So I’d love for someone from the Liz Dengate Thrush foundation to get in touch with someone from Webstock. The goals of the two organisations are aligned, with both parties wanting to educate people and both parties wanting a thriving internet entrepreneur community in New Zealand. Let’s make that happen.

Finally, I have to say that the foundation’s website has done a poor job of telling us who Liz was, why the internet was important to her and what she really stood for. The “About Liz” page reads like excerpts from a c.v. and could be so much better. If you are listening-  please re-write the page, and also make it linkable from a top tab rather than buried in the secondary tabs. And think about using the Foundation’s monies more like the MacArthur and Ford Foundations -  supporting key organisations and people that are driving towards the goals you desire rather than by putting on your own new events.

Meanwhile only 17% (14,500) of the mySky HDi subscribers have paid $10 a month for access to the HD channels – so clearly the HD channel proposition is not very strong.

Despite this, and somewhat surprisingly during a recession, Sky’s churn rate decreased from 14.9 to 14% for the year.

Or maybe that’s not surprising. My Sky bill is on some sort of manual paper process and as I completely fail at this sort of thing I’ve been receiving a series of calls from Sky credit people. The calls go something like

“Hi it’s so and so from Sky – we’d just like to remind you that your bill is overdue”

“Uhh – thanks”

and that’s it. No – “pay it now or we will disconnect” or “would you like to pay it now using your credit card” or even “when are you going to pay it?“. They just call, tell me I am late and then go away. This went on for some months (I’ve since paid the bills)

It’s like Sky have decided not to churn anybody – especially those with a mySky box.

They do show in their annual report that bad debt went up from $3.3m to $5.2m, but it seems that their definition of bad debt is pretty lax. A note to their annual report states:

A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

That means if I’m not asked the question “when can you pay?” then no “objective evidence” of my ability to pay is collected – and Sky doesn’t have to write down my debt. Of course I’m just a single data point, but there is some evidence from the accounts. Does this easy credit translate into the higher receivables (up $6m) and lower cash (down $4m)? If so it means higher profits as less debt is written off.

On the other hand are Sky being very smart here – recognising that times could be tough for their clients, and thinking in the long term? By being soft on credit now Sky customers will more likely keep their system through the tough times and get back on track when times are good. That’s clever thinking.

The other week I wanted to go on a motorbike trip, but as it was going to be two-up I needed a bit more luggage than my Givi top case. I have a couple of old aluminium side cases rolling around from South America days, but they are designed to fit onto my old BMW F650 – a bike which is now sold.

Here they are getting a clean in Salta by the pension proprietress after a dusty run from Chile. Note the lack of a chain guard – which are notoriously useless on these bikes, and the lack of which didn’t affect anything when eventually I did throw a chain.

However fitting those boxy side cases to my current bike – a BMW R1200GSA was going to be problematic – in particular as one side of the BMW racks is sharply curved around the exhaust.

I went into the local BMW shop to see whether they had any BMW boxes – and to have a giggle at the prices. Actually it’s the former BMW franchise, though they still do BMW service and supply parts. The bloke in parts searched online and found the side cases for the bike – but one side was $1200 and in Auckland and the other side was $1800 and was going to have to be shipped from Germany.

Welcome to BMW pricing. Giggle factor 9.

Given that it was Thursday, and I really wanted the boxes for the weekend (or bust), shipping from Germany (let alone the price) wasn’t going to work. I also pondered why BMW’s warehouse in Auckland apparently had several left hand cases and no right hand ones.

Not to worry – it turns out that the workshop over the road was full of smart people that could make me a bracket for the old boxes. That would be a much cheaper option.

Sadly they were wildly busy, and unable to fabricate the rack for some time. That’s good news for their business, but still left me without luggage for the trip to the South Island.

I was left with one option – Auckland’s Experience BMW. I’d originally purchased my motorcycle from them and so I made a quick phone call to them to see whether they had any in there store.

They didn’t, but the parts guy searched online, and found that there were actually several of each in the Auckland warehouse. The price was $1200 apiece. He also thought that price was pretty outrageous, and sadly told me that I would also need to get locks for the boxes at a couple of hundred bucks. However for me the killer factor was whether we could get the boxes to Wellington in time – if he could not I wasn’t really interested. It was getting late on Thursday afternoon (I really am a demanding customer) but he said that he could make it happen. He offered to go to the BMW warehouse himself, bring the boxes and locks back, get the locks put on to the boxes and then ship them to me in Wellington. This wasn’t after pushing – I asked and he just said ‘no problem – here is what I will do’. He also, after I asked nicely, dropped the price and threw in the shipping as well.

It was all too easy – so we had a deal.

The next day I was a bit concerned that the boxes were not going to arrive – but nearing 3pm I checked the door – and lo and behold:

They had arrived – and everything inside was already set up.
Don’t they look pretty, in a practical Teutonic way?

The easily clicked on to the bike.

and of course they worked perfectly.

They are a very high quality bit of kit – though I didn’t test out whether the speed recommendation is correct or not. I think I can safely say that they are adequate for my needs. (The one on the left)

It’s a boring story really – I had a requirement, Experience BMW met it, made everything easy for me and so we had a deal.

When I purchased my motorcycle from them a few years back it was a very similar situation.

It was a Wednesday afternoon before a long weekend, a deal was struck on the phone conditional on them getting the bike to me the next day. Experience BMW hauled the bike out of customs, clicked everything together in the workshop, got it registered and warranted and had it ready for me to ride out of Auckland on the Thursday afternoon. Magic.

But why did I buy the bike from them and not from the local dealer? There were three reasons.

The first was that they were the only ones with a decent website and contact us form – which I used to ask whether the bike was coming in while I was travelling in Europe and thinking of upgrading. The lesson? Make sure your website is easy to use and customers can easily contact you. Reply when they do (we had an email exchange)

The second was that they could supply in a hurry – turns out they had placed me on the waiting list – and I got the first one on the road in the country (allegedly – a colleague also contends he had the first one). The lesson? Don’t make customers wait.

The third reason was the main one. When my F650GS arrived from South America a couple of years before this Experience BMW, which had just opened, lent me a chain guard to ensure that it passed its first warrant of fitness. That act of kindness (let’s call it customer service) to a BMW customer, but not their customer, eventually earned them over $35,000 in business. The lesson? Never miss an opportunity to deliver great customer service – no matter who it is.

The chain guard was a great BMW customer service moment, but frankly was one that by then I almost expected from BMW. After motorcycling in so many countries I was used to be treated almost like royalty when I turned up, dusty, battered and in desperate need of a service at a BMW dealer. Not for me the “appointment next week”, but space was usually cleared almost immediately in the workshop and mechanics put other bikes on hold to do a pit stop for the traveller. Other customers would gather around and enjoy the moment – they were quite happy to have their bikes on hold while they caught up with the latest crazy loon and laughed at his battered machine.

I have similar stories about buying bikes from BMW motorcycle shops in Durban, Perth, London (x2) and in Maryland, USA. I doubt that the company knows how much money I have spent on their machines over the years, they have managed to take over, probably, 80% of the money I have ever spent on vehicles.

BMW motorcycles feels like a global company, and are delivering a consistent brand experience across the world. That means when it comes time to buy the decision is easy.

How does your company compare?

Let’s start with a caveat – the sample size is 824 people from 29 states in the USA, but there is no information on how this sample was selected. We should probably therefore assume that the sample has bias, but see what we can learn anyway. (It’s actually really hard to remove bias from surveys, and if they had done this properly then they would probably say so)

The report is pretty, but pretty short, and has 6 findings:

· Consumers are researching more and are spending less.
· Shoppers don’t necessarily realize where they buy.
· Amazon and eBay contribute to 70 percent of purchases.
· On-site purchases are driven by value enhancers, security features.
· Search is integral to the purchase decision.
· Comparison shopping engines can’t be ignored

The most interesting one to me is “Shoppers don’t necessarily realize where they buy.” This was a big outcome, but it was inferred from, well not much:

When asked where in the past six months they had purchased a product online, 17 percent believed they had actually purchased a product from a major search engine.
And when it came to comparison shopping engines, seven percent believed they had purchased a product from Shopping.com, Shopzilla, NexTag or PriceGrabber.

They drew big conclusions – perhaps a bit too big but definitely worth thinking about.

We believe this highlights a persistent trend in multi-channel retailing – shoppers don’t necessarily realize where they buy their products, but they will definitely use all the tools at their disposal to locate the deals they want.

Furthermore, just because consumers are able to use tools like comparison shopping engines to find deals, it doesn’t necessarily mean these individuals are aware of the sites they’re using.

With consumers laser-focused on the lowest possible prices and best deals available when they are ready to make a purchase, it continues to be imperative for online retailers to have a strong presence on as many channels as possible (search engines, comparison shopping engines, marketplaces, online storefront, affiliates, email).

There were three interesting charts in the report: Americans spend a lot of money online each month:

It’s clear that stores should offer free shipping – it is cheaper, much simpler for buyers to understand – and it works:

Amazon rules the roost in the USA – and eBay’s woes continue.

I even praised writer Chis Keall, who writes for (but I understand is not employed by Chris tells me he is, in fact, employed by NBR – my apologies) the NBR for his handling of the Vodafone/Telecom suit over filtering of their 3G networks.

NBR in turn praised Chris by placing a one page advertisement on page 14 of the June 19th edition. They even quoted me, “technology commentator, Lance Wiggs” from that very post:  The XT network debacle – Winners and Losers. Quoting bloggers – whatever next?

Why is this relevant?

Yesterday we heard that NBR has decided to make about 20% of their website subscription only, charging an impressive $298 per year for the privilege. (The oft-quoted $89 is for six months, and an introductory rate only)

This is a troubling decision on a number of levels. Let’s look at NBR’s letter, and then at why NBR has made this move.

There has been endless discussion for a number of years about the crazy model adopted by newspapers in most parts of the free world in which they pay the enormous costs of running professional newsrooms only to give their content away free – while at the same time slashing newsroom numbers to save money as circulation and advertising revenues fall.

Clearly the model is changing – but there is an answer, and it is ably provided by NBR.co.nz’s competitor – interest.co.nz. They keep the overheads to a minimum, use modern technology to eliminate the archaic newsroom practices and deliver timely, high quality and original content with great journalism and analytics. NBR may or may not have changed their newsroom practices to reflect the modern era – but until they do so they will struggle to be profitable. The process of getting news, from finding the facts through to publishing on the web or in print should be simple these days. Ask Idealog about print, and I refer again to interest.co.nz for how to do it for the web.

And to add to the madness it has been the aggregators that have profited the most from the supply of that free news copy.

This is an indication that the NBR leaders don’t really understand the current news internet business model. The aggregators, such as google news, are driving traffic to the NBR site, and without them the NBR would be even worse of than it is. By locking them out of the subscription area NBR will dramatically reduce their ability to make their compelling, orginal and timely content available to the world. The writers behind the wall will lose relevance, and the newspaper itself will diminish.

Google News does not host advertisements on their home page (in NZ), so all they are doing is directing traffic to the best original content. If NBR has the best, fastest and highest quality content, then they will derive more traffic.

Speaking of traffic – here is how NBR is going – as you can see they have been growing steadily.

I’m afraid to think about how this chart will look over the next few months.

Worse still the model has spawned a huge band of amateur, untrained, unqualified bloggers who have swarmed over the internet pouring out columns of unsubstantiated “facts” and hysterical opinion.

Beautiful phrasing, and guaranteed to get the aforementioned bloggers going. Cactus Kate, Whale Oil, and Julie Starr have plenty of commentary. I wonder, given Whale Oil’s profile in the SST last Sunday, whether there is a bit of emotional decision making happening here.

Meanwhile Whale Oil isn’t helping the NBR team to make rational choices when he wrote “Oh really Barry “Fucking” Colman? It is stuck in the mud old f**kers like you that are harming the media industry.”

Whale Oil’s colic words reflect rather sharply the impact that the NBR letter has on bloggers, and it is again an indictment on NBR’s understanding of how the internet works. Bloggers drive traffic to the NBR site – not a lot per blogger, but there are plenty of bloggers out there. Bloggers also pick up on great reporting, such as Chris Keall’s articles on Vodafone, add commentary and thus increase the reach and relevance of the source.

Most of these “citizen journalists” don’t have access to decision makers and are infamous for their biased and inaccurate reporting on almost any subject under the sun (while invariably criticising professional news coverage whose original material they depend on to base their diatribes).

Many bloggers have no advertisements, and all but one or two make a trivial amount of money. However all have access to the internet, all bring their own distinct background – often highly experienced – and all can find their own facts on the internet. A great blogger will parse the facts and opinions, add their own perspective and write compelling original content.

Meanwhile while some larger bloggers do have access to key decsion makers, and write well if not better than any newspaper journalists. They are the new competition. Sure many are biased but at least they are honest in their bias, often naming their site to reflect that.

But every newspaper has bias, particularly a business paper like the NBR. There is nothing wrong with that – I find, for example, that the WSJ content is superb, but their editorials are laughably right wingnut.

It is only a matter of time before the model collapses. The alternative is newsrooms decimated to the point of processing public relations handouts or unedited government propaganda from their fully staffed team of spin doctors.

Yes – the model will collapse – we can no longer afford the expansive, expensive and Byzantine daily processes  required in the cycle from writing to reading. Interest.co.nz is one model that has changed the approach – and there are plenty of others out there to replicate. I very much wonder whether NBR is facing legacy issues with cumbersome technology and processes, and that these are making costs unsustainable. The coming disruption to the newspaper and magazine industry means that the NBR along with Fairfax and APN will at some stage need to throw the old rulebook out.

Overseas the Wall Street Journal and The Australian Financial Review have successfully instigated subscriber paid policies for premium content and legendary publisher Rupert Murdoch has promised the days of the internet’s “free lunch” news service from his newspapers is about to end.

These are great examples, and yet don’t make the point.

I pay the WSJ US$151 per year, and for that I get the world’s best source for global market news. It’s often the fastest, almost always amongst the best written and the analysis is superb. They are also, well, the Wall Street Journal, and the paper of record that everyone who is anyone in finance and business has to read. It’s no wonder they are successful online.

The AFR offers little – their website is unusable and their prices, at AU$1308 per year are not even close to passing the giggle test. Their content is blocked off from the rest of the web, and, well nobody really cares about them except for The Australian, which has picked up the traffic.

Murdoch’s News Corp owns the WSJ, and as a paper of record he has the ability to charge a price – but note the price that he charges are low in relation to the quantity and quality of content, and the market dominance of Dow Jones.

The NYTimes, also a paper of record, failed in its attempts at a paid model – all it did was to hide their most insightful writers and opinion formers behind the wall and reduce the influence, traffic and relevance of the newspaper. I would compare NBR’s approach to this, though NBR is a niche paper with circulation of 10,000 and daily unique browsers that has just risen over 7,000.

At $298 NBR’s price for 20% of their content is laughably high – and I question what percentage of those 7000 daily browsers (let’s say 5000 people) will actually convert. It will probably be over 1% (50) but almost surely under 10% (500). Even 50 people at $400 per year is only $20,000 – which is a handful of advertisements worth of income. Wouldn’t it be better to keep the readership growth and concentrate on selling the advertisements?

Overall this makes the website less attractive, makes marginal revenue and most of all it is hiding the decent content that differentiates NBR from other sites.

Why is this happening?

Our move to Subscriber Only Content has been driven by our belief that laying off journalists as a cost-cutting tactic is a route to oblivion for newspapers. I know there have been previous attempts by New Zealand publishers to charge for their news and these have failed and left them so far scared to attempt new initiatives.

Colman seems to believe that laying off journos is the only alternative. As I mentioned above, I suggest he look to his other costs first – keep the journalists but redesign the processes so that much less cost and time stands between writer and page.

But that’s not the real story here. The answer to why NBR is instigating pricing lies back in that one page self-congratulatory advertisement above.

NBR isn’t selling enough advertising.

I suspect that the one page ad was a bit last minute – as neither Bill Bennett (who was quoted far more extensively than me) nor myself were contacted by the paper. Was the page was kept aside for a paid advertisement, with the NBR sales team unable to sell it? Is the number of advertisements and the amount paid per advertisement falling? The answer to that second question is almost certainly yes – these are tough times.

Meanwhile back in 2006 NBR had circulation of 12,394 (to Sept-06), while the latest figures show circulation of just 10,772 to Dec 2008 – a 13% drop. I strongly suspect that NBR has seen circulation continue to drop, and sharply, in calendar year 2009.

It’s not hard to see why – the cover price is astonishing – $9.50 per copy at the news stands, and an annual subscription will set you back $456. That doesn’t, by the way, appear to include the $298 in annual fees to access the website, so NBR is asking you for an outrageous $756 per year, or $14.50 per week.

As they so able report, there is a recession on, and every item is being looked at by individuals and businesses. Even I struggled (and failed) to justify subscribing to the NBR paper.

So let’s recap.

1. Subscriptions are down – and the price is far too high
2. Advertising volume is probably down due to the recession and drop in circulation
3. Costs appear to be high (a wild guess based on inference from Coleman’s letter)

Therefore NBR is most likely facing some significant financial issues – they need to turn the profit situation around, and probably need to do it fast.

Meanwhile Whale Oil and the like have made NBR leaders angry, and compounded with a narrow understanding of the internet news space, the decision was made to start charging for content.

It’s really sad – NBR’s website was going from strength to strength and their writing was becoming more relevant. I for one will miss them.

Here is my take on what the media players could do – it’s unconsidered free advice

Fairfax and APN: Hire Chris Keall and any other top flight journalists, create longer more analytical business articles, published in HOS, The Business Herald, SST, The Independent and on NZHerald/Stuff.

Interest.co.nz: Extend into NBR’s space – grabbing 2 or 3 top journalists from NBR

NBR: Reduce production (not journalism) costs sharply, make the website free again and ramp up advertising sales efforts. Consider dropping the cover price of the newspaper and definitely offer crisper deals for subscribers. Oh – and hire Chris Keall properly.<Turns out Chris is already hired – my apologies>

Readers: Don’t subscribe to the NBR’s newspaper (too expensive) and definately do not subscribe to NBR’s website. Keep reading blogs though.

It’s administered by the Inland Revenue Service – who do their best to help with compliance, but have a reputation for being inefficient.

How inefficient?

Well – these pictures are of most of the 26 identical letters that arrived for me en-masse yesterday. They are all from the IRS, all posted from inside New Zealand via airmail and all ask for my latest address details.

The letters are truly identical – the letter number, dates, codes and so forth. The envelopes are the same but the stamps are stuck on with what seems to be a less than machine perfect process.

The fact that I received them indicates to me that those address details are just fine.

I last lived in the USA in 2001, and am not a US citizen.

We were trying to answer the question of how to make sure to make money from your business, and so we started with the bigger question:

Why do we start businesses?

It took a little while before my favorite answer came back – which is “to change the world“. My next favorites were variations on to “fix a frustration” or “solve a problem” and I was also really pleased to hear “to have fun”, which has to be included in any business.

It was a trick question of course, given the title of the session, and naturally we heard pretty early on that we start businesses “to make money”, or “to get financial freedom”. That may be so, but unless we want to fix a problem, change the world or create something cool then the money will be a distant dream.

Final kudos for the most honest answer, which was “because we can’t find a job”, or, as I put it, “because we are unemployable.”

The next question was What are the things you need to make sure you make money?

The answer was to make sure your company makes money, and to make sure you make money out of your company. We didn’t really get to the second part of that, but the first part created some good discussion.

The first answer from the group was a goodie – “Don’t spend money”. That’s directionally correct but first of all you do need to actually earn some. Indeed the answer to this question is simple – “earn more than you spend“

Above all you want to earn excess money – so called economic rent, whereby you have an ‘unfair’ advantage over competitors. You do this in a number of ways, but I like thinking of Microsoft and Apple as exemplars of the art of being able to charge more than a ‘market’ price. Microsoft does it through it’s market domination – the network effect, owning standards, first mover advantage with Word, cutting the right deal with IBM and so on – the list is legion. Apple does many of the same things, but adds a product development process and company that keeps delivering stunning products well before their competitors.

But back to costs. While you do need to invest, I’ve always felt that the golden rule is to treat any money the company has as you would your own. That doesn’t mean you should spend it all on taxis, beer and dinners, but to watch every penny.

That means no fancy office or chairs – but use your kitchen table or a succession of cafes. It means no high salaries, but working full time while you develop at nights and in weekends.

It means being stingy about everything that isn’t core to the success of the business – and pay with equity wherever you can.

Once you are full time then you will need to pay yourself, but make sure the business can support it and pay yourself the bare minimum to live. As the company becomes more solid start paying others and gradually move the salaries up to a fair wage for each role. Don’t overpay yourself as there are other shareholders that have a right to the profit stream.

It is important that you bring the right people with you. You’ll need  mix of skills and experience to succeed – and you probably don’t have all of those yourself. Even if you do, as you grow you’ll need help. So bring others in early, give them shares in the company and then each person can do the things they enjoy, that they are good at and that they are willing to do for fun and equity rather than cash.

Ultimately it’s much more fun making money with a group than on your own, and you can each own a fair share of the business and enjoy the success. The share should reflect the value of each person’s input into the business, be it in time, expertise, money or access to things that can make a difference.

You do need to protect your shareholding though the investment rounds. This means messing with contracts and clauses one you get investment, but get it right and keep it simple. Make sure there is approximate balance between inputs and shareholdings – and don’t be afraid to tweak early to avoid conflict later.

Avoid investments that come with too many strings, and especially avoid investments that ask you to pay the investors high fees for things like office space, advice, directors fees and so on before you can really afford them.

When it is time to exit you want to sell to the company or person that has the most to gain by buying you. You could be encroaching upon their space, or they may have a distribution network that can massively increase your sales and so your company value. You should always know who these potential purchasers are, and get to know them well before time.

Once you have had a serious offer then you are ‘in play’, and you want to try to create an auction situation where purchasers are bidding against each other. Hopefully you have a decent board and are getting good advice.

Finally at each stage, and you are investing by stage right, don’t be afraid to decide to stop. Not everyone creates Microsoft every time, and so it’s vital to recognise when the effort isn’t matching the potential reward and to exit gracefully. There are plenty more opportunities out there.