In Silicon Valley, there is no more pejorative term than “lifestyle business.” It’s usually applied to companies that do well enough to earn their founders and employees a living—sometimes a very good living—but that will never make anyone mega-rich. Venture capital partners, who have to weed out all but the fastest-growing companies if they’re to have any hope of making the Forbes Midas List, often dismiss these less meteoric players with a phrase like “It’s probably a nice lifestyle business, but it just won’t move the needle for my fund.” Even many startuppers, who often work insane hours on the assumption that their options will turn to gold when their company is acquired or goes public, seem to reserve special pity for lifestyle entrepreneurs who haven’t won Sand Hill Road money and aren’t perpetually “killing it” or “crushing it” in the way Silicon Valley culture demands.

Well, I visited a Web company recently that occupies a lovely cottage near downtown Palo Alto, has grown to 12 employees without raising a dime in outside funding, and attracts 30 million unique visitors a month to its website. For comparison’s sake, that’s more traffic than Groupon, the New York Times, Match.com, Zynga, or Yelp can boast. If that’s a lifestyle business, then I’ll have what they’re having.

WikiHow founder and CEO Jack Herrick

The company is wikiHow, which, as the name implies, is a crowdsourced encyclopedia of instructional articles on everything from how to kiss to how to perform CPR on a dog. (As it turns out, those are pretty much the same thing.) It was founded in 2005 by a former management consultant, serial entrepreneur, and rock climber named Jack Herrick. If I were making a list of unsung heroes around Silicon Valley, I’d nominate Herrick for his success building a huge media property without help from the venture industry, and for assembling an amazing online resource for readers without polluting it with acres of advertising. One hundred percent of the company’s revenue comes from unobtrusive Google AdSense text ads, which makes wikiHow one of the many companies that owe their existence to the search and advertising giant; more on that below.

“I hate the term, but yeah, that’s what we are, a lifestyle company,” Herrick confessed to me in a recent interview. “Somebody needs to create a better word. I think it should be ‘awesome company.’ One of the reasons I have the best job in the world is that we are not venture financed. It just gives us so many more degrees of freedom. We can decide not to have a sales force, we can decide we don’t need to grow revenue 100 percent this year. We can figure out what is the most important thing in our mission, and focus on that.”

The mission at wikiHow is simple, and as breathtaking in its ambition as Google’s: “We want to cover everything and have it be universally good,” Herrick says. And the site has made impressive progress in that direction. It features more than 129,000 user-contributed articles in seven languages. Obviously, it’s not nearly as comprehensive as Wikipedia, which has 3.8 million articles in 282 languages. But you won’t find Wikipedia articles on such indisputably helpful subjects as How to Deliver a Baby, How to Remove Odors from Your Car, and How to Accept Criticism with Grace and Appreciation. If there’s anything Web audiences seem to love more than seeking advice, it’s giving it—and wikiHow taps both impulses with more sincerity, and far less junk, than any other how-to site I’ve seen.

Back in July, just days before its acquisition by Autodesk, I profiled a maker-focused how-to site called Instructables. I called it “the rare crowdsourced site that actually turns a profit,” which brought an e-mail rejoinder from Josh Hannah, a friend and former business partner of Herrick’s who now works at venture firm Matrix Partners. Hannah called wikiHow “the even more rare profitable crowdsourced site that has 5x the traffic.” That might be a bit of an exaggeration: WikiHow’s U.S.-only traffic is only … Next Page »

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If you just read the headlines and watch the reality shows, the life of a tech entrepreneur probably sounds something like this: Work hard, play hard, raise tons of money, change the world, retire early. It’s a swashbuckling, mile-a-minute joyride filled with the best and the brightest.

Except when it’s not. The flip side of that wide-open adventure and hard-charging culture can be an extreme sense of loneliness when things don’t work out—a spiral of dread and depression that can be fatal, as Cheezburger Network CEO Ben Huh told us this week.

In a remarkably personal blog post, Huh tells how the failure of his dot-com bubble-era company Raydium left him stuck in a dark, depressed place, face-to-face with thoughts of suicide.

“Was I not meant to be an entrepreneur? Will I never get to pursue my dreams again?” Huh wrote. ”I spent a week in my room with the lights off and cut off from the world, thinking of the best way to exit this failure. Death was a good option—and it got better by the day.

“I don’t remember why I left my room. The most meaningful act I performed on my long climb out was to leave that room. It was the best decision I made in my life. … It wasn’t for several months that death no longer became an option, but leaving that room and dealing with reality was the best antidote to a make-belief world where life just wasn’t worth it.”

Huh was moved to write about his experience from years ago by the recent death of Ilya Zhitomirskiy, the 22-year-old co-founder of social networking startup Diaspora. While no official cause of death was given at the time, The New York Times reported that “friends and associates of Mr. Zhitomirskiy said there were indications of suicide.”

I talked with Huh Wednesday afternoon—he was in New York attending a conference—to learn more about why he wanted to make such a personal topic extremely public. Huh said that, months before Zhitomirskiy’s death, he had spoken with another Diaspora co-founder about the startup’s struggles.

“It was very clear to me that they were struggling. They were struggling at a fundamental, conceptual level of who they were,” Huh says.

He also notes that the loneliness may have been compounded by the fact that Diaspora raised seed money through Kickstarter, the online crowd-funding platform—which meant they were fully in charge, but also didn’t have a venture capitalist or angel investor who could provide close guidance. “Even thought they were loved by so many people, they were really, truly alone.”

“When I read about Ilya’s death, it was one of those things where even before the reports come out that they suspect it was suicide, you just kind of know,” Huh says.

As an entrepreneur who’d been through the dark times, Huh says he wanted other young people who might be in a similar position that there was a way out—to break the sadistic comfort that depression can provide, find something to do, and get on with your life.

That can be extremely difficult in the startup world, where your company or product is more than a 24-7 job: “It’s everything that you are,” Huh says. “When that falls apart—that’s the only purpose for living.”

And for all the talk of prizing failure, learning from mistakes, iterating, and moving on, Huh says, the entrepreneurial culture doesn’t do enough—at least publicly—to confront the obvious dark sides of crashing and burning along the way.

“For a culture that supposedly embraces fast failures and pivots, we don’t talk about the psychological and emotional effects of those failures,” Huh says. “We’ve actually come up with a safety word for failures, called ‘pivot.’ We’ve kind of swept it under the rug.”

His tale is one of renewal and redemption in the end. As Huh eloquently writes, surviving his depression left him with the perspective and strength to handle another failure, should it come his way. “Nine years after I left that room, I would call Brad Feld to invest $30 million in my odd-ball company. Before I picked up the phone, I thought long and hard about losing that money—every single penny of it. And I was OK with it.”

Huh does worry about some negative effects of laying some very deep, personal moments out in public. “Is an investor going to say no because of what I went through? Will this divert the attention of what I do to this topic?” he asks. “As the CEO and founder, the thing I’m most focused on is the welfare of my company and employees.”

A day after the post went up, however, the positive responses were flowing in. Huh says people who read the post were sending thanks for his story to the Cheezburger Twitter account, with some saying they also had struggled with depression.

Entrepreneur Dan Shapiro, now at Google after its acquisition of Sparkbuy, was among the people giving Huh public kudos for sharing his tale.

“Building a startup is about the highest of highs and the lowest of lows. The problem is that while people shout about the highs from atop the tallest mountains (or TechCrunch), the lows are suffered in private,” Shapiro told me in a follow-up email. “It’s a feat of profound courage to share your darkest moments. With more brave truth-tellers like Ben, perhaps we can avoid tragedies like what befell poor Ilya.”

“Part of me felt like so many people struggle with this,” Huh says. “I feel good that I wrote it.”

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Life is not good when you lose your notes from one of the best keynotes you’ve seen in a while. In fact, life kind of sucks. Nevertheless, I will recount my top five takeaways from Bert Jacobs, the co-founder and CEO of Life Is Good, the Boston-based apparel maker and retail brand. He spoke at last night’s MassChallenge awards gala, wearing a T-shirt and cap, and throwing Frisbees into the audience over great distances.

Maybe it’s better that I don’t have my notes to fall back on. Jacobs said a lot of entertaining, inspiring stuff over the course of the story of his company, but what I can remember now is ultimately what will stick with me (and others, I imagine):

1. “Life was good” even when Jacobs and his brother (and co-founder) John were living out of a van for weeks at a time, hawking T-shirts on the road. That was in the early ‘90s. Life was good because they were pursuing their dream and believed in what they were doing, despite the hardships and not selling much.

2. “People will give you the answers if you listen.” The Jacobs brothers went with their signature stick-figure smiley “Jake” design (see image above) in 1994 after it resonated with a bunch of their friends. The design turned out to have incredibly broad commercial appeal. So listen to people, don’t just talk all the time, he said. The best ideas will usually come from other people.

3. “Do what’s in your heart.” That sounds obvious, but it can be hard when you’re worried about getting customers and making money every day. Jacobs found that organizing benefit events for children and worthy causes have come back to help his company a hundred-fold.

4. “All our culture needs is a little leadership and an opportunity.” Life Is Good exists in part to counteract what Jacobs sees as rampant negativity in popular culture and the media (who, us?). He wants the brand to stand for all that is positive and optimistic in the world. And really, that’s why he is so inspiring to the startup community and especially to entrepreneurs, who must believe in their business against all odds.

5. “We do what we like, and we like what we do.” This is pretty much the motto of Life Is Good. The company has grown to $100 million in annual revenue and has no plans to go public or be acquired, Jacobs said. Rather, the firm is trying to go global, take risks in new product areas, and become a billion-dollar business. (Though Jacobs said, “I don’t even know what 100 million is. After my brother and I got new mountain bikes, we didn’t know what to do.”)

Overall, a really fun talk, and perfect for the evening. A broader theme I’ve been noticing is that entrepreneurs never know what they’re doing from the start. Really, nobody knows. The successful ones figure it out over time, with a little help. But each journey is different. So startups, keep fighting out there…

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I had the pleasure of sitting down with David Hauser recently to talk about his Boston-area company, the Grasshopper Group.

David is the CTO of the company and co-founded it with Siamak Taghaddos in 2003 when they were both students at Babson College. From its beginnings as a virtual phone system, the Grasshopper Group is now the parent company of multiple Web-based products all focused around the company’s core purpose of empowering entrepreneurs. Grasshopper employs about 50 people, continues to grow, and has never raised any capital from VCs.

The first part of our conversation (see video on YouTube) was focused on the origins of the company. How did two college students decide to start a telecom company out of their dorm room? As is often the case, it originated from an authentic need that the founders encountered through their own experiences as entrepreneurs.

We also talked about mentorship and role models. Grasshopper was started in the tech doldrums. David and Siamak admit to having very few role models in the ecosystem to look up to. During this part of the talk, David gives excellent advice on being bold and resourceful about seeking people out and sharing your story to get people (partners, customers, and mentors) to become advocates of your cause.

But the real magic of the Grasshopper story is the way the entire company is anchored around a core purpose and core values. As David says, “We are not just selling some stupid phone system.” Everyone in the company and everything they do is anchored by a vision of supporting 1 million entrepreneurs with products they love that help them achieve their passion, he says.

Vision and values are pretty soft stuff. Many great companies have value statements that don’t mean much (most employees couldn’t recite them if asked) and many startups want to stand for something, but fail in the process. What you hear from David is the way the vision and values of the company permeate through all aspects of the company. For example:

• Establishing culture and maintaining culture as a company scales
• Raising (or not raising) money
• Sending dead insects to 5000 thought leaders
• Staying creative in PR and Marketing
• Searching for companies to start

The whole interview is really meaty, but if you only have 5-10 minutes, watch the second segment, below, where this is all discussed. Also, you can keep up with David by following him on Twitter or checking out some of his presentations on entrepreneurship and Culture, Purpose, and Values.

Thanks to Xconomy for helping to make this interview happen, and to Sean O’Connor who helped me significantly upgrade the production quality of these videos.

[Editor's note: Rob Go blogs at www.robgo.org.]

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As we come down the home stretch of 2010, I wanted to take another look back at our most recent Boston event—“5×5: Five Cities, Five Big Tech Ideas.”

Not at the program or the public discussion, which I already summarized briefly here, but at some of the side discussions that were caught on camera. One of our event sponsors, Turnstone, took aside some of the 5×5 participants—entrepreneurs and startup experts—and asked them questions about their experience in building their businesses. Here’s the link to the videos.

And here are a few highlights from the entrepreneur interviews (you should watch them, they’re brief and to the point):

—What was the best business advice you’ve ever received?

Craig Labovitz, chief scientist at Arbor Networks: “Be careful about accepting advice. When you’re doing a startup, you’re going against the grain, you’re trying things that haven’t been done before. You really have to trust your own instincts and your own technical knowledge.”

Sarah McIlroy, CEO of FashionPlaytes: “Network, talk to every single person you know, and take every meeting that comes your way.”

—What was the biggest mistake you made, or lesson learned, along the way?

Dug Song, co-founder of Arbor Networks (now with his new startup, Duo Security, in Michigan): “To think that we had to have exactly the right idea before we approached a customer. I think many times customers know what they want, or at least have some idea what their need is, and can be pretty explicit about that, versus us having to guess at what a market opportunity might be.”

Bettina Hein, CEO of Pixability: “I thought we would be selling to families and now we sell to small businesses. So along the long journey that you go on as an entrepreneur, you always have to be flexible and pivot when it’s necessary.”

—How do you stay current?

Ken Zolot, entrepreneurship expert and senior lecturer at MIT: “I have access to a pipeline of great students and great ideas, and hearing who they talk to, who they’re pitching to, and who they’re partnering with, gives me a good sense. So the advice I would give to people who want to stay current is to find a source of innovation at the earliest stage—young people working on new ideas, university inventors—and try to stay connected to that source.”

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If you are an entrepreneur and you haven’t heard the phrase above, then you probably got one of the following: “why don’t you come back when you have more traction;” “this just isn’t for us;” or (my least favorite), “this looks like a solid double…we only take home runs.”

I do some work for LaunchCapital, a seed stage venture fund headquartered in Cambridge, MA, and have had to break the news to some entrepreneurs. It is not easy to say “no,” and it can be even more difficult to give candid feedback. After all, you risk sounding arrogant and it can invite unwanted debate from an entrepreneur who is (understandably) passionate about his or her company.

I have also had the opportunity to work with several early stage ventures to help with fundraising. When I start working with a company, I state the obvious: “the only certainty ahead is rejection.” The danger is that a) you will get dejected and quit or b) you will miss key opportunities to pick up value during the fundraising process. Below are some suggestions to avoid these pitfalls.

Stay Positive

Every day you read sites like Xconomy.com that run stories like this: an alternative energy firm (not yours) raised $8M from a big name VC (who wouldn’t take your call), to pursue the market opportunity that you identified (almost a year ago now). Yet, you never read about the hundreds of companies that do not get funded or that raise less than they want to. According to the Entrepreneur’s Census (www.bit.ly/entrecensus), a not-for-profit study that I founded last year, 70 percent of respondents raised less funding than hoped. In the face of long odds and many rejections, it is vital to remain upbeat. Here are some suggestions:

• Team up: find another entrepreneur who is in the process of raising capital. Share war stories and information about investors. Make introductions for one another. Lend an ear.

• Measure progress in a form other than dollars raised. Create a simple model where you can mark progress on each potential investor from introduction, to first meeting, second meeting, due diligence, to funding. Seeing things move on the scoreboard will help.

• Make yourself accountable to someone you admire. Get a mentor and schedule regular calls. It’s always harder to give in when you have to admit as much to someone you respect.

• Set goals and write them down. Beyond just a fundraising goal, write down how many investors you want to meet each week.

Understand why you got rejected

With a game plan and a support mechanism in place, it will be much easier to positively process rejection. You may be relieved to find out … Next Page »

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Was there a summer slowdown this year in the tech-business world? I’m not so sure (and neither are some other observers). In any case, let’s get ready for the craziness that is fall news and events in our industries. Here are three blog posts from around the Web—and around the country—that you might have missed over the holiday weekend:

—How to read a patent in 60 seconds, from Dan Shapiro in Seattle. Shapiro is a former Microsoft and RealNetworks guy who co-founded Ontela (now Photobucket) and is deeply plugged into the mobile and Internet startup sectors. I won’t steal his thunder, but let’s just say this is the kind of insight that tech entrepreneurs and investors can really use to save time, especially in this litigious day and age.

—How to ensure your e-mails are mobile friendly, from Shannon Suetos, a San Diego-based telemarketing expert, by way of BostInnovation.com. A good reminder that more and more techie types are reading their e-mail on mobile phones. Suetos gives five tips that are useful for dealing with images, newsletters, and regular old text. My favorite: “Not everyone has an iPhone.” Hear, hear.

—How stuff-sharing websites can save the planet, from Katie Fehrenbacher at GigaOm and Earth2Tech. This piece takes a considered look at how the trend of Internet sharing of “stuff” could help the world’s growing population manage its limited supply of energy, water, food, and goods. Fehrenbacher references the expansion of companies like Zipcar and Zimride in car-sharing (I’d add another “Z” company, Zebigo), and Airbnb in peer-to-peer apartment rentals. “When it comes to energy efficiency and sustainably managing resources, bits will be the answer to effectively allocating atoms,” she writes.

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If you know me, or have followed some of my increasingly sporadic posts or tweets, you know I love sports. Few people know, though, that I was a physical education major in college—part of a double major with psychology, it being the mind-and-body ’70s. I was either going to be a basketball coach or a journalist.

Obviously, I chose journalism. But it won’t surprise anyone to learn that I took notice when John Wooden died last Friday. He was the greatest basketball coach in history, everyone says, citing his 10 national championships at UCLA, including seven in a row. But to the extent that’s true, folks are citing the wrong reason—and Wooden would have been the first to agree with me.

Being a great basketball coach has nothing to do with how many championships you win or your win-loss record. It has to do with how well you coached. Did you make the best of the situation you were given? Did you help those you coached get better and make the best of their abilities? Did you help your players learn the core values of hard work and teamwork that serve them well in life and in their dealings with others? Wooden happened to be a great coach by conventional yardsticks. But his true greatness came from his ability to help players fulfill their potential, and from the lessons he taught them about life. As one person (a former player I didn’t recognize, I am guessing) in this ESPN video says, “He might have been more like a Methodist minister than a basketball coach.”

Along the way, Wooden uttered many platitudes and pithy sayings that expressed his philosophy. After he died, I found myself digging them up and poring through them. I couldn’t help but see them as relating incredibly well to entrepreneurship and innovation, although of course they relate to life in general. So I’m sharing my favorites here:

—”Failing to prepare is preparing to fail.”

—”Never mistake activity for achievement.”

—”Be quick, but don’t hurry.”

—”Success is never final. Failure is never fatal. It’s courage that counts.”

—”Failure is not fatal, but failure to change might be.”

—”It’s about what is correct, not who is correct.”

—”Things turn out best for people who make the best of the way things turn out.”

—”It isn’t what you do, but how you do it.”

—”Happiness begins when selfishness ends.”

—”Sports do not build character, they reveal it.”

—”You can’t live a perfect day without doing something for someone who will never be able to repay you.”

I’m sure there will be a John Wooden sayings book coming out. I hope they give the proceeds to a good cause.

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Ron Wiener is best known these days as the founding CEO (now chairman) of Earth Class Mail, a Seattle-based software firm that digitizes postal mail for companies. He is a successful and outspoken entrepreneur who has run five investor-backed tech companies in the past 20 years—besides Earth Class Mail, he was previously CEO of Azure Technology (San Jose, CA), JetStream (Hillsboro, OR), PrintBid.com (Portland, OR), and SnapNames.com (Portland, OR).

Wiener stepped down as chief executive of Earth Class Mail in June of this year, and has been spending more time on the investment side of things. He runs Venture Mechanics, a Seattle-based venture firm focused on advising, funding, and incubating tech startups in the Pacific Northwest.

I recently sat down with Wiener to chat about his investment themes and his advice for tech entrepreneurs. It’s still a little too early to say much about what he’s incubating at Venture Mechanics, but he did share some general tips on getting startups off the ground, and surviving, in the current climate—three of the key ones are below. We’ll have much more from Wiener another time; in the interim, I’d recommend that any interested entrepreneurs go see him speak, or read his startup fundraising advice at places like Keiretsu Forum. (He’s pretty inspirational when he talks about the “entrepreneurial seizure” and the “orgasmic” feeling of starting your own company.)

Meanwhile, here are those tips from Wiener that I mentioned, three points of advice that stood out to me as either a little unconventional, or just plain solid thinking that entrepreneurs should hear:

—Wait as long as you can. Don’t rush into entrepreneurship before you’ve served a sufficient apprenticeship in a business of the same size and speed, Wiener says. Plan thoroughly before plunging ahead. Many entrepreneurs rush off to build their businesses as soon as they have their idea. This advice fits into the category of “learn from others as much as possible,” Wiener says.

—“Do what you love and the rest will follow” is horrible advice for starting a business. Instead, Wiener advises that you figure out first what will be loved by markets and investors, and pursue that. But he emphasizes that this advice “really only applies to the entrepreneur who is dreaming of building a ‘fast company,’ as opposed to a small business.” (I would be interested to hear what entrepreneurs have to say about this. I would guess that most think love is a necessary, but not sufficient, condition for startup success. But you have to start somewhere.)

—Be prepared to deal with ups and downs—especially downs. “It’s virtually impossible to start a company and not go through a down cycle,” Wiener says. That could mean the climate for raising capital goes south, paying customers leave, or you make strategic errors. Wiener recommends you have a contingency plan for everything you can think of that could go wrong—and then work it out with the management team ahead of time.

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If you really want to keep your finger on the pulse of the Seattle business scene, go get your shoes shined. That’s the advice Todd Dean gave me recently. Dean is president of Keiretsu Forum Seattle/Northwest, the local chapter of the world’s largest angel investor community. He took me to see a couple of the top shoeshiners in town. Even though I don’t really own shoes worthy of a shine, I hope to become a regular customer and soak up their wisdom. You might call them shoeshiners. I call them oracles.

Morgan Perkins runs the family shoeshine business at Nordstrom downtown. Their clientele includes lawyers, judges, investors, business people, and, that morning, the superintendent of Seattle public schools. Perkins has been a fixture at Nordstrom since 1974. Perkins, who is African-American, came up as a railroad porter from Salt Lake City in an era of Jim Crow laws, and he has seen it all. For the past 35 years, while he and his family have shined customers’ shoes, they’ve told him things—about business, jobs, the economy, whatever’s on their mind. (See this profile in the P-I for more on the Perkins family.)

“People want five minutes of peace, they want to relax,” said Morgan’s wife, Patricia, as she meticulously gave new life to my dress shoes.

I asked how their shoeshine business has been doing during the recession. Sunny, the Perkins’ daughter, was working next to us. She said business has actually improved. Instead of buying new shoes, people are keeping their old shoes longer, she said, and they need to be polished. Especially for all those job-seekers out there. (The familiar refrain of doing more with less, among techies and non-techies alike.) Her customer, sitting next to me, was a former Washington Mutual employee who just got a job running security for the Sound Transit light rail system in Seattle.

Mr. Perkins had some sage advice for entrepreneurs and startups. “What I’ve learned in my life is, people do things for people they like,” he said. “It doesn’t matter whether you’re selling cars, shining shoes, or you’re the head of this company. If your initial meeting with that person is not positive—it only takes the speed of light for me to figure out if I’m going to like you. And that’s the whole idea right there.”

As Perkins explains, it’s all about building a sincere relationship with customers. “When a person comes into contact with you, it is your duty to create a situation where that person’s going to like you. And that’s not really hard. We want to like other people,” he said. “When I stand here at the door, it’s a smile, ‘Hello sir, how are you doing today?’ And I got you. I’ve seen it happen so many times, a person comes with her husband, I’ll catch the eye of the wife, and he’s looking down. Wife will look down at his shoes, they look at each other, and here he comes. See what I’m saying?”

“You develop a relationship that way,” Perkins continued. “You have to always recognize another’s presence on the face of the earth, no matter what your station in life is. That’s what I’ve always … Next Page »

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Have you ever talked to someone who really knows technology, and really knows how to sell it? It’s a potent combination. I got that feeling from Luis Salazar, the chief marketing officer of Bellevue, WA-based GMI, an international market research firm. Salazar moonlights as an entrepreneur-in-residence (EIR) at Voyager Capital in Seattle, where he advises Voyager’s portfolio companies and helps evaluate new investments in terms of their go-to-market and monetization strategies. (He’s Voyager’s sole EIR.)

Salazar spent 11 years at Microsoft, starting in Venezuela in 1997 and progressing to become general manager for marketing in Redmond, WA, and co-founder of Microsoft Office Live. He left in October, and has been working with Voyager since last spring. As an advisor, he specializes in the consumer side of Internet companies, and one of his guiding themes is that online market research and online advertising are one and the same. For example, as an avid photographer, Salazar says companies like Canon need to put ads in front of him—but they also need to know his product preferences so they can develop a better camera. Marketing and advertising should help each other.

But the problem is how to get the right survey to the right sample of people. That’s where technology comes into play, and that’s where Salazar thinks Web 2.0 software—everything from user-generated content to targeted ads—will have its greatest impact. In particular, he sees Web 2.0 starting to reinvent health care, online market research, and energy management.

We didn’t get into all those details yet, but I asked Salazar to pull out his top lessons in marketing and product strategy from his career. He responded with three:

1. “The product is the go-to-market.” It sounds obvious, but companies often forget the most important thing is make a good product and retain customers. A big part of that is “getting marketing more involved in product engineering,” Salazar says. “Marketing and engineering are so entwined…You need to code in such a way as to engage ad networks.” As opposed to the common view (especially among engineers) that marketing is just promotion.

2. “Design does not equal user experience.” Don’t forget that the user experience is very subjective, he says. “It’s not how it looks, it’s how it works.” Sometimes just the wording of a phrase in the click-to-buy box, or the color, or where you put something on the page, can have a big effect on sales. The key is to find out what that effect is, and build it into the design.

3. But perhaps the best advice Salazar had is what he told his 11-year-old son, whom he helped start a bookmarks business to pay for a Nintendo Wii. (His son has already learned the ropes of Google ads, print ads, radio promotion, and price points, and now donates his proceeds to United Way.) “It doesn’t matter what you do in life as long as you do what you love. The money will come.”

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Think the super-rich don’t have problems? Try fending off friends and relatives who always want to borrow money, or raising spoiled brats who don’t take responsibility for their actions. Not to mention the more obvious financial questions of how to manage such hefty portfolios—especially in economic times like these. (Granted, some of this might be viewed as insensitive at a time when local food banks are running out of food.)

Enter Tiger 21, an exclusive network for the very wealthy that is opening in Seattle this month. Its goal is to provide a support group for people of high net worth to talk about their investments, portfolios, and problems. Local entrepreneur and investor Andy Sack of Founder’s Co-op will be chairing the Seattle chapter of the national group. Last month, I sat down with Sack and Lewis Haskell, the managing director who runs Tiger 21 west of the Mississippi. I’m a little under-qualified to speak on the problems of the wealthy, but Sack and Haskell filled me in nicely.

First, some background. Tiger 21 was founded in New York in 1999 by Michael Sonnenfeldt. Sonnenfeldt had recently sold his interest in Emmes & Company, a real estate holdings company, for tens of millions, and was looking to build a safe haven for people in similar circumstances to meet and talk. The confidential network has grown into a big business. Besides New York, Tiger 21 has existing chapters in some of the country’s wealthiest places—San Francisco, San Diego, Los Angeles, Dallas, and Miami. It has about 170 members who have an average net worth between $30 million and $50 million.

And that’s the catch: to join Tiger 21, you have to have at least $10 million, exclusive of houses, cars, and other properties (how they verify this, I’m not sure). And it costs $30,000 a year to be a member. All members sign confidentiality agreements.

Sack’s connection with the group is through its founder. Back at MIT around 15 years ago, Sonnenfeldt was Sack’s mentor at the Sloan School of Management, and the two have invested together. Seattle brings some unique challenges to the very wealthy, Sack says. They might be overexposed because the community is relatively small. “The network of support is not as high, or as sophisticated, in Seattle,” he adds.

With the likes of Bill Gates, Paul Allen, Nathan Myhrvold, Steve Ballmer, Jeff Bezos, Howard Schultz, Craig McCaw, and Jim Jannard (founder of Oakley eyewear) in the area, you’d think Washington state would have such a support network in place already. But what Tiger 21 provides that other wealthy social networks don’t is a focus on members sharing how they manage their financial lives, says Haskell.

As for its future Seattle members, Sack and Haskell have been recruiting for about 10 openings. I’m guessing they’re not taking unsolicited applications. Sack says members have to have an interest in learning, and be willing to be open with their peers. And, he added, “There’s a ‘no asshole’ rule.”

Stay tuned for what goes on behind Tiger 21′s closed doors in Part 2—Eds.

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A few weeks ago we ran a story called How to Handle the Downturn: Xconomy’s Top 9 List of Top 10 Lists. We’d been combing the Web looking for an even ten Top 10 advice lists—but came up one short.

Since that time, the advice has continued to flow. One list of particular note, from Glenn Kelman, CEO of Seattle-based online real estate startup Redfin, ran on Sunday in TechCrunch. Called The First-Time CEO’s Recession Survival Guide, it was by far the best of several advice lists we have seen since our original article came out. But there were a few other good ones as well, prompting us to expand our own list, adding Kelman’s survival guide and two other items we like.

You can find our first nine Top 10 Lists here.

Here are our three new lists (note: we are a bit loose in our definition of what constitutes a “list,” and generally look for anything that involves laying out good advice in whatever form):

10). The First-Time CEO’s Recession Survival Guide (Glenn Kelman, CEO of Redfin, writing in TechCrunch)

Favorite item: Compete With Your Successor (Excerpt: “I often think about what my replacement will do after I’m fired… Worst of all, she’ll get credit for turning Redfin into a successful, thriving business. I think, “I hate her! I hate her!” And then I try to be her.)

11). ‘Your Performance Has Come Up Short’ (Matt Villano, New York Times)

Favorite question (This article takes the form of a Q&A advice column): For the first time in your career, your boss has given you a negative performance review. How should you react?

12). 5 Tips For Vetting a Business Partner—Online (Aruni Gunasegaram Found/Read)
Favorite item: They must be smarter than you are in their respective area of expertise.

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Last week Wade offered some fantastic tips on how to recruit employees in the midst of what’s shaping up to be a major staffing crunch at local information-technology firms. And it got me thinking about something that Xconomist Bill Aulet told me a few weeks ago during a power lunch at Aceituna, over near the Genzyme HQ. We were discussing Xconomy’s own plans for a couple new hires, and Bill chimed in with some telling insights on what firms, especially startups where each new employee is critical, should look for—and avoid.

Bill spoke to some truths we all know—and he was quick to note that these weren’t just his, but “came from working with others and thinking about this here at MIT.” But he had a nice way of framing things that beautifully put in perspective the challenge of figuring out if a candidate is the right fit for a company. He grabbed a napkin and sketched out a rectangle divided into four quadrants, with “values” (meaning how well the candidate’s values align with the company’s) on the X axis and “contribution” (essentially, how productive the person is) on the Y axis. Like this:

Now, a couple things are obvious. A home run is an employee in the upper right—the high contributor whose values align perfectly with those of the company. Just as clear is the lower left—you don’t want that person. If you make a mistake and a new hire falls in this category, it’s an easy workforce-reduction decision. But what was really interesting to me was Bill’s take on the remaining two quadrants.

Let’s start with the lower right, the low contributor who believes in the company and shares its values. I was expecting a tough, cut-bait attitude on this—but Bill explained that such employees can indeed be valuable, if they don’t cost too much and if you can take the effort to channel them into productive work at which they can do well. His essential message: don’t give up on them right away.

Now to the upper left. A talented, high-contributing person who might well be in it mainly for themselves and in any case whose values are not the company’s values. Bill’s message here was adamant—don’t hire them, and if you do, get rid of them and fast. “This person is like poison,” he said, or words to that effect.

Here’s the dilemma, though, says Bill. This brand of high contributor can seem great. “People are closing sales and doing all kinds of things,” he says. The problem is, they have a bad attitude. They might cut corners the company doesn’t want to cut. They might not be forthright. Maybe they undermine company decisions. Whatever the specifics, it means big trouble. As Bill puts it, “That is the most dangerous person, because you think you need them—they have a stranglehold.”

You have to move quickly to shed this type of person, he says. “The deeper they grow roots in the organization, the more disruptive, the more devastating, to take them out. And if they’re there for a while people tend to think their values are the values of the organization—and everything else atrophies.”

All in all, Bill says, it’s the sort of decision that can make or break a company. “The moment you cut corners on values at the top is the day they become meaningless and you have lost your potential ethical compass. Your chances of being a high-performance organization are nil.”

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Editor’s note: Three weeks ago, John Abele, a co-founder of Boston Scientific, wrote Getting Disruptive Ideas to Market, one of our most popular posts so far. One point he made was that:

“marketing and funding folk will be pushing hard for you to get some big name scientific and other advisors on the masthead for credibility purposes. Yes, a few may be valuable, but remember, these are people who are already famous. They have nothing to gain…Finding the unknown younger scientist, engineer, or physician who has the capabilities and desire is much more important.”

A number of readers asked for the checklist of physician’s attributes John mentioned that Boston Scientific used to pick its advisors, who would then help the company test and improve its devices. One reader even asked if the list applied to other industries. We pinged John to follow-up. Here’s his response:

Here’s the list, and a little bit more. And of course they apply to different industries, although the specific criteria may change to varying degrees. The most important principle is what makes an individual credible to various audiences.

I used to give this list to people we were considering and ask them to rate themselves on each parameter…on a scale of 1 to 5. It had a powerful influence on the dynamic of our discussions. We want people who tell us the good and the bad, and the implications of both.

Editor again: John sent along a PowerPoint containing the list, and “a little bit more.” You can find it here.

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Boston University recently announced plans to enhance its technology transfer efforts. I have worked constructively with BU’s Office of Technology Development on a number of start-ups, including Afferent Corporation, a medical device company based in Providence, RI, and applaud the plans for expansion. As BU and other universities ramp up their efforts to commercialize technology, I have a couple suggestions to offer.

First, it is critical for universities to reach out to experienced entrepreneurs, who can act as advisors, teachers, and management leaders in new startups. While novel technology typically serves as the catalyst for a new venture, it is usually not the most important element of the venture (even though founding scientists, like myself, would like to think otherwise). The management team is the most critical element for a new start-up, and we academic scientists typically do not have the skills, experience, time, or focus to serve in such a capacity.

Universities need to find ways to get entrepreneurs involved with their academic communities. This could be through advisory committees, adjunct faculty positions, and entrepreneur-in-residence programs. These interactions would enhance the educational experiences of science, engineering, and business students, and substantially enhance technology-transfer efforts.

Additionally, universities should consider evaluating their IP portfolios as collective opportunities, and not simply as isolated cases arising from faculty laboratories. Too often university start-ups are one-trick ponies based on a new technology coming out of a professor’s lab. Academia encourages research independence, which leads to silos.

Tech transfer offices need to break out of this mold, and consider how different technologies can be combined to create strong, exciting new companies. Professor egos will need to be massaged, and the founding scientists will need to divvy up the founders’ equity, but in many instances these integrated efforts could enhance chances for success.

Along similar lines, universities should look to other universities, and consider creative ways in which their technologies could be combined in start-ups or existing, young companies. We need to establish new mechanisms that can facilitate these types of interactions and relationships.

Jim Collins is a University Professor, Professor of Biomedical Engineering, and Co-Director of the Center for BioDynamics at Boston University. A 2003 MacArthur fellow, he is a scientific co-founder and chair of the scientific advisory board of both Cellicon Biotechnologies and Afferent.

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I’m interested in how one takes inventions to scale. Obviously, that is what Boston Scientific was all about. How do you get a disruptive idea, in particular, into the marketplace? In my opinion, people frequently take the wrong approach.

Disruptive ideas are very threatening to the establishment, or whoever owned that marketspace before. They may be products or technology like the iPOD (catheter surgery in the case of BSC), or they can be processes or services like Amazon or eBay. Or they can be social ideas like a bike path into the city. They can lead to dramatic changes in the field to which the idea applies. That can mean different people will use and control it. And it will be used differently with a different infrastructure and in different locations. There will be economic implications with winners and losers. And the idea will influence many others indirectly.

So how do you overcome the resistance of the establishment (surgeons in the case of BSC, but it could be academia, professional societies, big companies, the government, etc.)? Hire PR? Most of the PR and advertising guys are great if the idea is accepted, lousy if the idea is not accepted. Your goal is to get it accepted. And that to me is the fun part of business. New ideas grow best with viral approaches and that’s all about relationships and reputation.

Don’t go after the biggest idea first.
A disruptive technology can have many applications. If you get funding for it, the funders will want to go after the biggest application first in order to justify the investment. That’s a dumb thing to do, because new ideas and technologies evolve. They grow like a plant as more and more is learned. And there will be lots of problems early on. If you go for the biggest application first, you will create unmeetable expectations which will arm the establishment with more arguments to destroy you. And even mini-failures will be hard to recover from. Pick an application that is smaller and you can more easily find, or create, champions who will become disciples. Their expectations will be more modest. They will be more forgiving when things don’t go right. Over time they will become your unpaid sales force and your R&D department. You won’t just be creating a product and customers, you will be creating a movement.

And you’ve got to be patient. It took us (BSC) over 20 years to help get the Less Invasive Surgery business going. The ATM for banks took well over a decade to catch on. You can not only be too early for the market because your technology isn’t finished, but too early for the market because customers aren’t ready for it—which means the establishment is going to pull every trick in the book to dismiss you.

At BSC, we took our disruptive catheter technologies and went for smaller niche markets. These smaller markets (for example pediatric cardiology) allowed us to experiment. Our customers developed new applications. They suggested modifications. They came up with great accessories to extend the use and improve the results of the procedures for which the products were designed. I used to even make “care packages” for some inventor docs that would contain special wires, tubing, molds, heat guns, shrink tubing, etc, so they could make prototypes themselves. They loved it. We had friends for life, and gained a few good product ideas as well.

There are lots of other examples of technologies that have enormous applications, where it was, or is, important to debug them first. By doing so, you will not only be learning more about the technology, but also the marketing and communication strategies that you may want to follow if in fact it does become super big. By going after smaller markets first, you can evolve, define, and develop more IP. You can do an awful lot of things that will increase the likelihood of a successful attack on the big market when you get there.

Build in-depth knowledge and trust it in hard times.
If it really is a new idea, you will not only be developing the product(s), you will be developing the language and the science behind it—the ontology and taxonomy for talking about it. It’s hard, but when you get there you will have created that market—and you will own it.

The marketing and funding folk will be pushing hard for you to get some big name scientific and other advisors on the masthead for credibility purposes. Yes, a few may be valuable, but remember, these are people who are already famous. They have nothing to gain (except money, of course, and that can sometimes be a bad motivator) and everything to lose. Finding the unknown younger scientist, engineer, or physician who has the capabilities and desire is much more important. They have everything to gain and nothing to lose. I’ll put my bet on the motivated entrepreneurial type every time. I have a checklist of attributes that we used to pick physicians. Ask me if you’re interested. [Editor's note: John was getting so many requests for the list that we posted it here.]

Focus.
Traditional business experts will always say you’ve got to focus in order to apply your limited resources effectively. But if you’re dealing with a truly new idea, that may be the wrong thing to do because you don’t yet know where the best spot to focus is. You’ve got to be able to say, ‘It doesn’t look like it from the outside, but in fact we are focusing. We are taking little pieces of many markets and leveraging the daylights out of it, in order to create a new market.’ If your customers are your partners, and they should be, they can help you make the right decisions.

Always build your credibility and reputation.
Who do you trust more; someone who is selling you something which you’ve never heard of before, or someone who is selling something familiar from a well-known company? Everything else being equal, with most people, the affiliation with the well-known brand and organization is a reputational asset. So it’s critical to earn the respect and trust of both your customers and the community members, including competitors, of the field you will be working with.

General Georges Doriot, founder of American Research and Development and considered one of the fathers of venture capital, was a charmer and had an enormous Rolodex. He told me that it was his most valuable asset. He was a generous person, a mentor to many and always doing favors for people. But that generosity had an enlightened self-interest to it. The Rolodex represented his relationships and the personal credibility and reputation that went along with it. That was his most important investment.

I think people sometimes get so caught up in the competition of financial results that they forget that the thing that’s going to give them the best likelihood of success in the future is the relationship metrics.

This is all common sense, of course, and pretty obvious. But it’s amazing how often we forget the obvious.

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