After almost three weeks without a Quote of the
Week (though my last post did have
a number of “unofficial” quotes in it), it's finally back! And since I've been
discussing the topic of Web 2.0 entrepreneurship quite a lot lately, I thought
it would be a great way to kick off this week with some great quotes from
Paul
Graham–a partner at the venture
(seed-funding) firm Y Combinator and author of
many many great, insightful articles
on the art of “starting up.” 

So here's the QOTW that comes from a brief interview on TechCrunch between Marshall
Kilpatrick and Paul Graham:

Q: Do small investments in very
early stage startups represent a growing trend?

There’s definitely a trend
toward smaller investments, because it costs so much less to
start a startup now. And if you take less money initially, you keep more options
open. Once you’ve taken a VC-scale investment of two or three million
dollars, you give up the option of an early
acquisition.

You’re also under more
pressure to grow fast, which can cause you to make design errors. It may not be
a coincidence that both Flickr and Del.icio.us avoided the usual VC route. Both
had to get a lot of subtle, social things just right. You’re more likely to do
that if you can evolve organically.

Q: What technologies are you most excited about right
now?

There are so many. I
especially like things that take advantage of the power of networks. As Sun used
to say, the network is the computer. Except now it’s the Internet plus the phone
network, not just your local LAN, and that changes
everything.

Frankly, even though I’m
supposed to be an investor, the ideas that excite me most
are not necessarily the ones that make the most money, but the ones that blow
away evil old monopolies. For example, I love collaborative news sites
not so much because they make a lot of money– though they might– but because
they’ve shown what a bad job the “old media” were
doing.

Q: Do you
think most Web 2.0 technologies only appeal to a relatively small
niche?

To me “web 2.0? translates to “web.” And web technologies
don’t appeal only to a small niche. Web-based email services have hundreds of
millions of users. The network (in the broader sense of the Internet plus the
phone networks) pervades everything now.

We’re pretty open about what we think makes
a technology stick. We print it on T-Shirts: “Make
something people want.” If you had to reduce the recipe for a successful startup
to four words, those would probably be the four.

The easiest way to make
something people want is to make something you want. What do you wish existed
that doesn’t? For example, back in the early 90s a friend of mine wrote
some software for converting voice to data so he could talk to his girlfriend in
Taiwan without paying for long-distance phone calls. That would have been a
great project to turn into a startup.

If you’re a little older and/or have some
particular domain expertise, you could try making something that you yourself
don’t want, but you think other people do. This is a much riskier path, though.
Most of the great startups seem to have begun with
something the founders wanted: Google, Yahoo, Apple, even Microsoft.

As you can see, Paul's comments are very much
in line with everything that has been discussed of late in the realm of Web 2.0
startups, such as my last few posts (see: Art of
Startup Success, Web 2.0
Entrepreneurs, and Web 2.0: The
Movie), everything that Jason Fried has talked about in his various
presentations (see QOTW from
7/22), and countless more articles from Biz Week, WSJ, CNN/Money, Cnet and throughout
the blogosphere.

Overall, the key messages that appear to be common
throughout many of these discussions, include: 

1. Don't seek big funding initially; let
the funding seek you later (i.e. start small, dream big).

2. Build it for yourself; not for the
money–create something people want.

3. Aim to build the best product on the
market; not the best marketing for the product.

4. Be flexible and be prepared to adjust
your business plan to market response.

5. JUST DO IT! Build it first, and the
rest will follow–ideas without execution mean
nothing.

Even if you're not thinking about a startup, I
think many of these trends can also be applied to work in general, especially in
this Web 2.0 world. For example, I previously discussed how enterprise
applications have traditionally been designed more for programmers and IT folks
rather than for the “common folk” that use them on a daily basis. Point #2 and
#3 suggests that we really need to be thinking more about what the actual users
want and then make it the best experience for them, rather than–for
example–forcing them to go through a 300 page manual and a 3 day course just to
learn how to use it.

Whatever the case, the interview is a great, short read, with loads of insight from Paul Graham.