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This is the first internet telephony company to go public. After constant revenue increases over the past couple of years they are still making a loss. The CEO claims their losses equals their marketing expense. The company reported a net loss of $189 million over a period of nine months last year, which is just a staggering amount of money spent on marketing. It will be interesting to see in what direction the company goes from here. If they continue to spend such large amounts on marketing without decreasing their loss, the stock price is bound to go down. Hopefully they have a better strategy for using the money they raise from the IPO besides spending it solely on marketing. At $17 a share it should be an interesting watch the next couple of weeks.
I recently went to a Starup School seminar, which was organized by the Business Association of Stanford Engineering Students. It was an interesting seminar and very useful for people looking to start their own companies. Most of the speakers were from popular Web 2.0 companies like Mark Fletcher of BlogLines, Joshua Schachter of del.icio.us, Catherine Fake of Flickr. Paul Graham (from Y Combinator – a VC which provides seed funding to students who want to venture out on their own) was one of the organizers and has an interesting outlook on startups also spoke at the seminar.
All the speakers drove home a common point – if there is a right time to start a startup then this was it. With falling hardware prices and the numerous opensource options it is easier now than ever before to start something on your own without depending on VC’s. One of the things Paul Graham said which stood out to me was that life is finite and therefore it is better to work extremely hard the first few years of your startup and try and make it succeed (there will be enough time to rest after that) than to work 8 hour day’s for the rest of your life for somebody else. He said startups need to fear the right things – don’t be afraid of the big company who have nothing to loose if their product bombs but be afraid of the smaller companies and startups who are competing with you and have as much to loose as you. Failure is not an option in a startup therefore people in startups are more focused, work harder and are less likely to fail than say a bigger company. There is a more comprehensive list on Paul Graham’s website on the thought process which should go into starting a company and running a startup, I highly recommend it to anyone looking to start something on their own.
Om Mallik (Senior Writer at Business 2.0) stressed on how important it is not to forget that you are in a startup for the money, it’s ok to talk about how much you enjoy doing what you do but at the end of the day it is a business and it is important to generate revenue from it.
Chris Sacca (of Google) who was basically on a PR trip for Google convinced everyone that Google was “the” company to work for. So….if your startup fails go work for Google!