Something that took us 12 months to learn...

Don't write any code for your business unless the code directly relates to one or both of the following...

1) It will make you money.

2) It will get you users.

It seems pretty simple but a lot of our time in 2008 was spent creating features that didn't make us money or didn't get us users. It was a learning experience.

And when you have users, you can add a third bullet point.

3) Keep existing users from leaving.

We probably wouldn't have learned any of these lessons if it wasn't for the success of our facebook apps. We then backported that success to make Clutterme.com moderately successful and ramen profitable.

A new funding model between micro and macro

Incubators such as YC and Techstars are great for first time software-based entrepreneurs. Software entrepreneurs with programming backgrounds can work on their idea without cash, running on adrenaline alone to code their site, but they might eventually need introductions for future funding if that's an option.

Venture Capital is great at addressing the long-term funding needs of a small software start-up or the short-term funding needs of a high capital expenditure start-up such as those you would find in the hardware or high HR intensive fields.

In my opinion the sweet spot for a team of 2 software based entrepreneurs is $350K. A small software team could stretch $350K for 18, maybe 24 months. The per annum expenses can be around:

$25k - office space, Internet, Hydro, chairs, travel
$70-$90k - Founders Salaries
$50-$75k - Lawyer fees, accounting fees, outsourcing UI and design.

After 18 months a good software start-up should have a working product, users, and will hopefully be ramen profitable. Almost as importantly, any start-up prime for investment should have momentum going forward in a broad sense.

So how much should be given up, in terms of equity, for this new funding model?

10-30% would be my answer.

Too many file folders...

Alex realized over the weekend that we were approaching 32000 file folders in our root sub-directory. I'm not sure of the technical implications but Alex was frantically working until 4am to find a workaround. Maybe Alex can better explain the significant of 32K folders in a future post.

This is a roundabout way of announcing that we've surpassed 30000 registered users. At our current sign up rate we will hit 100000 sign ups before the end of 2009.