A good post on motivation and entrepreneurship: On Having Balls Part 2: Staying Hungry.

And that is the natural, first-instinct way to address the problem. "Well, maybe we can pay them more to make them happy."

It never works. At least not here in Silicon Valley. Engineers at HOTorNOT last year were making 2-3x normal salaries, yet they were not happy... and we really couldn't expect them to be. After all, the only people we trusted with our baby were people like us.. and god knows I wouldn't have stayed here for a high salary. At their age (23), I wanted risk and potential reward, not a steady job. I make a big deal of telling people that when I finished my MBA at 25, I turned down a job that was gonna pay me about $180k in the first year.. despite the fact that I was $50k in debt.. to instead earn no paycheck and give entrepreneurship a go. These are the type of people you trust to continue running your site in "high profit margin" mode. Big company types won't do.

Jessica Livingston from Y Combinator who's been primarily know for organizing Startup School, has put together a book of interviews with tech startup founders. I've already ordered it and eagerly await its arrival. Buy the book from Amazon here.

Founders at Work is a collection of interviews with founders of famous technology companies about what happened in the very earliest days. These people are celebrities now. What was it like when they were just a couple friends with an idea? Founders like Steve Wozniak (Apple), Caterina Fake (Flickr), Mitch Kapor (Lotus), Max Levchin (PayPal), and Sabeer Bhatia (Hotmail) tell you in their own words about their surprising and often very funny discoveries as they learned how to build a company.

Interviews in Founders at Work include:

David Heinemeier Hansson
Partner, 37signals and creator of Ruby on Rails

Charles Geschke
Founder of Adobe

Ron Gruner
Founder of Alliant Computer and Shareholder.com

Steve Wozniak
Founder of Apple

Click to read more ...

I love that Stanford University Entrepreneurial Thought Leaders Podcast. Listen to just one and you'll quickly see why it's the most popular iTunes podcast on technology startups and entrepreneurship.

Greg Ballard, CEO of Glu Mobile, was one I've listened to more than once in the last month. Interestingly, he was CEO of MyFamily for a while. While Greg touched on a number of topics of interest, there was this gem on 'disagree and commit'.

Disagree & Commit

Startups, almost by definition, are a stressful place for interpersonal relationships. Low pay and long hours are hopefully made up for by your ability to have input and make a difference. Arguments and disagreements are just part of the deal. Hopefully there is a process where a decision is finally made and everyone gets on board. (It's been referred to as totalitarianism with input.)

There is an important element in any management situation, the ability to disagree but commit. 

The failure to be able to disagree and commit is possibly the most corrosive and common situation that any business faces internally. Someone who can not commit to a course he doesn't agree with becomes a leper, infecting your business and management team. Greg describes what he sees as the highest quality as anyone in business can have as the ability to 'disagree but commit'.

I've been in any number of situations where I've seen this failure to disagree and commit in action. Advertising agency's are rife with creatives who love to gripe about account reps and clients. Doctors staffs discuss stupid patients, but are just as likely to criticize the physician they're working for. It's a lot easier to give lip service to agreement or get overruled and stand your ground. Hey, when it doesn't work out you can give them the old 'I know that wasn't going to work'.

If you can build a team in which disagreements can be frank, even harsh, but where once a decision is made the team can get behind it and implement without reservation, then you actually have a team.

DropSend posts it's own sell.

 
I've actually been using dropsend for most of a year not knowing they were just a tiny web app out of a basement. It'll be interesting to see who might buy them.

Dropsend is one of the apps that allow you to send huge (up to 1 gig) files through your email. It's worked for me.

Why Barenaked App?

Barenaked App is the online diary of the building of our second web app, Amigo.

Well, we’re not Porsche, or Microsoft but we figured that size shouldn’t matter when it comes to letting everyone in on the hows and whys of product creation. And so Barenaked App was born - a place to document the planning, design, coding and marketing of our second web app.

So how bare will we get? The answer is, down to the pants (or underpants if you’re not English). We will be revealing all of our costings, the reasons behind our decisions, why we chose to work with the people we did and of course the embarrassing mistakes we made along the way.

Here's a shot of their growing income:

The discussion in the comments is particularly interesting. If anyone needs a new company you'd better jump on the train.

From Charles River Funding: QuickStart Seed Funding

Charles River Funding (Boston & Silicon Valley) is launching a new program looking to move them down the food chain and get into companies while the gettin's good. Read the NY Times article: Venture Firm Is Giving Loans A Try. (registration required)

Here is how the loan works:

Redeye VC thinks the move is to address exit trouble:

It also is a recognition of some of the challenges that larger venture funds face.  Take a hypothetical traditional $400M VC firm.  In order to achieve a 20% IRR, the fund must return 3x their initial capital over a 6 year term -- or $1.2B.  Now say this hypothetical VC firm typically owns 20% of their portfolio companies at exit (an industry average).  That means that at exit their portfolio needs to create $6 Billion dollars worth of market value (ie, $1.2B / 20%).  Assuming that their average investment size is $20M, that means that they invest in 20 companies -- this assumes an average exit valuation of $300M PER COMPANY.  Given the tight IPO Market and an average M&A exit value of less approximately $150M, this math creates some real challenges.

From VentureBeat

The advantage of a seed round is that it done as a “convertible” loan, which means the $250,000 is essentially a no-strings-attached loan to an entrepreneur. There is no equity stake claim by the investor at the time, which is good for the entrepreneur, who can see how good his idea is first. If the idea gains traction, he can raise money in the series A and negotiate a high valuation for his company. If he can command a $5 million valuation, for example, the investor’s $250,000 seed money converts into only 5 percent of the company.

Zachary  says he sees too many entrepreneurs giving away between 10 to 20 percent of their company in the seed round. They have fewer shares to give to employees, and they’re less attractive to venture capitalists.

There is almost no liability for the entrepreneurs, because the loan is made to a corporation formed around the entrepreneur. If the company fails, the company goes away, and the founders aren’t liable. “We’re all big boys,” says Tai, explaining that CRV doesn’t mind when this happens. “We go into this with eyes wide open.”

Fred Wilson of Union Square shares his analysis

I think that's a very fair deal. The loan is structured very similarly to what some angels are doing these days (loans that convert at a discount) and Charles River gets to take up to half of the round on the same terms as the other new investor.

Read the first bullet: There's also no personal liability. Something that Utah investors could take note of. 

Paul Graham writes insightful essays on... 

• How to Start a Startup.
  Build something users love, and spend less than you make.
• Hiring is Obsolete.
  The market is a lot more discerning than any employer.
• How to Make Wealth.
  To get rich you need to get yourself in a situation with two things, measurement and leverage.
• Ideas for Startups.
  The initial idea is not a blueprint, but a question.
• Why Smart People Have Bad Ideas.
  A hacker who has learned what to make, and not just how to make, is extraordinarily powerful.
• The Hardest Lessons for Startups to Learn
  Some things about startups are kind of counterintuitive.
• How to Fund a Startup.
  Venture funding works like gears.
• How to Present to Investors.
  Explain what you're doing and why users will want it.
• The Venture Capital Squeeze.
  Why not let the founders have that first million, or at least half million?
• The Other Road Ahead.
  You may not believe it, but I promise you, Microsoft is scared of you.
• What Business Can Learn from Open Source.
  There may be more pain in your own company, but it won't hurt as much.
• What the Bubble Got Right.
  Even a small increase in the rate at which good ideas win would be a momentous change.
• A Unified Theory of VC Suckage.
  If you're not one of the very top funds, you're condemned to be the bad guys.
  

Why will Silicon Valley rule the start-up universe? Because they're already there.

From the New York Times comes an article on location awareness in VC backed startups. 

Los Angeles area also has a pool of talented engineers (working at aerospace companies like Lockheed, Northrop and Hughes) and great universities (notably Caltech and U.C.L.A.) and plenty of money to invest. “But in Los Angeles,” he said, “people are scattered across a wide area; everything is more spread out.”

It’s harder for entrepreneurs to meet with one another and with investors, he added. And that means connections take longer, deals move slowly, fewer companies are formed. “Like a gas, entrepreneurship is hotter when compressed.” he said.

Sequoia makes its preference for the 20-minute rule almost explicit, telling applicants whose companies are at the “seed stage” (receiving less than $1 million) or “early stage” ($1 million to $10 million) that “it is helpful if the company is close to our offices” because they “require very frequent contact.”

And more on startups as a priority:

“In New York, it would be extremely difficult to find a law firm willing to defer the first $20,000 of your legal fees,” Mr. Sternberg said. “Here, we got that. It’s a pretty standard thing in Silicon Valley.”

... He did end up needing Silicon Valley for something else: technical talent that would be willing to accept equity in place of any salary. Six weeks ago, he moved to Silicon Valley to recruit more people like his chief technical officer, who has been working full time since Jan. 1 for equity only.

“Elsewhere, if people in a large organization think you have potential, they offer you a job, trying to save you from the uncertainties of a start-up,” said Mr. Sengupta, who himself has worked at Oracle, Microsoft and General Motors. “In Silicon Valley, they say, ‘Can I join you?’ ”

Mr. Sengupta now has six “employees” working for BeyondCore without salaries. Only in Silicon Valley, he said, do “people have confidence that if you act on great ideas, the money will come.”