
Six Months Later, Three Start-Ups Find Their Goals Are Elusive - epi0Bauqu
http://www.nytimes.com/2008/06/12/business/smallbusiness/12hunt.html?partner=rssnyt&emc=rss
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tom
I know we've seriously beaten this dead horse, but where is the line between
"new business" and "start-up" these days. It would seem to me that everything
is being called a "start-up", when in fact, many are just new businesses. I
would not call either the bakery or the t-shirt company a start-up, as they
are not using technology to take a novel approach to an existing market (or
create a new market), nor is the technology really that central to what they
are trying to do. One is hoping to set up an online store (hard in the
"specialty / gourmet" food world) and the other is trying to market a t-shirt
line. These are new businesses, not start-ups (by my definition).

The RentingYourHome guy is definitely a start-up and I feel for him as he
seems to be hitting all the standard challenges (too little cash, co-founder
leaving, trouble getting/keeping customers). This actually seems like it could
be a compelling service, but the actual property owners are a hard group to
reach (ie: they are not all farting around online all day) and convincing them
that they can do it all online feels like a very, very tough task.

~~~
BenS
Apologies for my ignorance, but is there a link to the extended distinction
between startup and new business? I don't quite see how the two are all that
distinct, or why the distinction is useful?

~~~
brianlash
It's been my take that "startup" connotes something entrepreneurial, where
"new business" (or "small business") connotes the start of something that's
been done before.

That's a meaningful distinction to make because it involves different skills,
a different assumption of risk, and a different level of tenacity needed to be
successful in one or the other.

So startup = selling something different. It's about pitching people your
idea, and positioning a product creatively in the market. New business is
about being seen (e.g. consider starting a franchise pizza shop and
advertising on local TV/in print). It's "new" because people didn't know it
was there before. But it's not "startup" for lack of its differentiation along
the lines of _how_ that something is sold.

I like this defition because it permits that a new company that sells the same
old product (e.g. Threadless and their tees) may be called a startup for its
ability to creatively position their products.

Exactly when a company transitions from "startup" to "going conern" is another
question.

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babul
Many universities and organisations in India are gearing towards outsourcing
legal talent based on UK/US law and it seems only a matter of time before we
see a boom in this area.

This is occurring in both ends of the market from the personal-injury no-win-
no-fee farms to the high-end specialist areas e.g. trademark law, intellectual
property, copyright law, patents, company law etc.

Initially, outsourced legal may start out as something that sucks (and
initially do low-level/menial work), but over time will improve with each
iteration/cycle to the point where legal outsourcing in India will be able to
match its technology outsourcing model and actually be a viable option for
US/UK companies.

For many years I have thought a country like India is very well suited to
outsource many service-based models in fields other than I.T. which require
little physical asset (i.e. hardware and manufacturing cost) and rely more on
intellectual talent and in this respect I think the guy may been on to
something with the legal services aspect.

However, as is a common reason for startup failure, his timing may be off. It
seems the markets in the US/UK are not ready _just yet_. Just my $0.0000002.

~~~
supahfly_remix
That's an interesting point. Are there legal impediments in place that prevent
such outsourcing? I don't know the law on this. The American Bar Association
is a very power organization, with the added detail that their members also
happen to write the laws in this country.

~~~
babul
Not that I know of. In the US/UK you need to be a member of the bar/law-
society to practice as a lawyer/solicitor (i.e. represent clients) but there
is no reason why the actual work itself cannot be outsourced.

In fact most of the menial work in many law firms are done by juniors (new
graduates) or legal-executives ("executives" being people who have little or
no law qualification but are able to do the work).

In my old firm (<http://www.lawdit.co.uk>), which I setup years ago with my
friends, this was and still is the case in many ways.

I have seen the internals of many other leading firms (Allen & Overy, Ashurst,
etc.) that also do this.

Hence, regardless of how powerful the legal lobby against an uptake of such
outsource practice, I dare say, the bottom-line and almighty dollar will win
in many cases.

After all, if you are getting the same/better quality at a lower cost and
faster turn-around (3 people working on a task instead of 1) what would you
do?

The precedents have already been set in other fields/industries so I expect it
will not cause as much furore as one might imagine and will probably start
with the thin end of the wedge i.e. no-win-no-fee farms.

Time will tell :)

~~~
supahfly_remix
Is a bar-member lawyer responsible for supervising the outsourced work? Can he
be disbarred if something is done improperly?

As an example, for outsourcing of public works projects, a professional
engineer (PE) must supervise the project and is ultimately responsible for the
project. That is to say, he would lose his license if the project were deemed
injurious to the public, etc.

~~~
babul
Yes. Possibly, depends on what is done and went wrong.

In U.S. we have a few people from Florida Bar who do most U.S. related
clients.

Most work undertaken in our U.K. offices with the usual pre/post reviews by
the senior legal team/section-head to ensure accuracy, consistency, competency
etc. but most of the menial tasks can be done by others.

Everyone gains: juniors acquire skills and experience, seniors save time and
can focus on other tasks.

Of course no work is passed until signed off etc. etc.

Legal businesses in U.K. are continously audited by Law Society and other
auditors/regulatory bodies so everything conforms to set standards, hence
nothing to worry about for clients in these respects etc.

Hope that helps :)

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mynameishere
_She has built her cafe to $8,000 in revenue a week_

= 416,000/year revenue.

Whole different world, I guess. It's completely possible to have an online
business for a few $1000/year in costs. And yet this woman isn't turning a
profit yet on nearly 1/2 a million in revenue.

~~~
sah
I found this interesting, too. Margins should be huge in the cafe business,
right? So it must be rent and employees that are costing her so much. I still
would have expected a cafe to be profitable with that kind of revenue.

~~~
tom
Margins are not huge for this sort of business. This am on NPR they were
talking with a baker who said that his flour costs had tripled in the past
year, his egg costs had doubled, and all of his supplies now had "fuel
surcharges" tacked on. While margins might have been comfortable in the past,
they certainly aren't now. These folks are between a rock and a hard place and
have had to absorb much of these costs in their margins.

People think you have to be crazy to start a start-up these days. No even
close, but you would have to be crazy to start a bakery now!

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cubix
"... Janet Portman, a lawyer and an expert in landlord-tenant law ... said her
doubts about the viability of Mr. Takle’s business model remain."

Her concerns seemed a little strange to me. How is his model fundamentally
different from a traditional property management company, or perhaps it's
closer to the software companies that support that industry already? Both
models are well established. Some Web-based conflation of the two sounds
viable to me. He also offers a tenant screening service, which already exists
as well.

“His jaunt to India to look for legal assistance is further evidence of his
failure to understand the complexities of the legal world he was wading into.”

Where's the complexity? I owned a rental property for a few years, and apart
from the initial purchase and subsequent sale, I never needed a lawyer. Of
course, you could get sued, but that's hardly routine.

My biggest concern would be that I believe there's already a fair bit of
competition in this space, at least for the individual services that he's
packaging together.

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edw519
_Whatever happens, Mr. Foley added, “she’ll have gained a better business
education than she could at the Culinary Institute of America and the Harvard
Business School combined.”_

Another great example of choosing a start-up over more formal education. If
all else fails, you got the education anyway.

~~~
dmix
I couldn't agree with that more. College has a great social life and allows
you to mature. But starting a site on the side tought me more then 3 years of
school.

But one thing that bothers me, shown by this article, is why everyones
uninspired first business idea is either selling t-shirts or restaurants?
Probably the worst two industries to chose with their low barriers of entry.

~~~
imp
A social networking website probably has a lot lower barrier to entry than a
restaurant does.

~~~
dmix
Yeah, I've come to realize that most ad supported social sites are very high
risk.

Social networks are not very hard to build but depend on a very large scale of
users. On the other hand restaurants are more expensive to start and maintain
but can survive off a smaller market. Both are saturated with competition and
have low margins.

~~~
whacked_new
Restaurants have a far higher barrier of entry: interior design, inventory
management, supply chain, quality control, staffing, just to name a few
headaches. That's not even calling into question your competence (assuming you
are the chief operator).

~~~
dmix
Barriers to entry includes more then start-up costs. A restaurant can open up
on a busy street and advertise in local newspapers to get a sustainable
customer base. The marketing and PR costs for a social network are much much
higher. They would need at least 100,000 users to A) provide value as a social
network and B) make revenue from PPC ads.

