

How to save money running a startup - pjharrin
http://calacanis.com/2008/03/07/how-to-save-money-running-a-startup-17-really-good-tips/

======
maxklein
To save money running a startup, follow these tips:

1\. Hire a competent but old programmer who has debt, and a wife and kids. Pay
him well.

2\. Hire a bunch of interns to work on your code. Pay them badly.

3\. Let the interns do the unimportant stuff, under the control of the old
guy.

4\. When the mission critical parts of your software come, for example design
or scaling issues, bring in freelance consultants to help you do this

5\. Hire lit major students to write a bunch of content for you. They are
cheap and good at writing.

6\. Release upgrades often and publicize each release as much as you can. You
don't need PR.

7\. Fire anyone who believes he is a rockstar, knows the best way of doing
something and insists it has to be done that way, or somehow thinks he is owed
something

8\. Get small offices. Make your workers work short hours, so they have time
to do stuff at home, and so that they stay with your company because of the
amount of freetime available

9\. Make your team friendly. If there is a socially akward or shy guy who does
not relate with the other members of the team, fire him

10\. Get a guy whose job is to manage outsourced projects. Outsource as much
as you can and hold this guy directly responsible for the results

11\. Don't go to conferences, don't stay in hotels. Spend to promote your
product, not to promote yourself.

12\. Take the money you make and put it back in company development. Keep the
teams small and unified as you grow.

13\. Spend your ad money on measurable ads like adsense etc. No expensive
placement ads. You can optmize then

14\. Hire people on freelancer contracts. You can save on their benefits as
well as the management costs for doing their taxes

15\. Take the guys in the startup to strip clubs. Get them laid.

You wanted to save money, right? If you do the above, you don't need aeron
chairs to keep your team happy, productive and cheap. However, it's unsexy,
and some people will look down on you.

~~~
mkn
_1\. Hire a competent but old programmer who has debt, and a wife and kids.
Pay him well._

It's actionable age discrimination, but go ahead. You gotta break some eggs if
you want to make an omelette.

 _9\. Make your team friendly. If there is a socially akward or shy guy who
does not relate with the other members of the team, fire him_

It's actionable discrimination and a shitty thing to do to an otherwise
valuable but shy person, but he's too shy to bring this to your attention or
to hire a lawyer, so it's a win-win. (Again, eggs->omelette.)

 _12\. Take the money you make and put it back in company development. Keep
the teams small and unified as you grow._

Also, breathe air, drink water, and eat food.

 _15\. Take the guys in the startup to strip clubs. Get them laid._

Again, actionable sexual harassment, but you're a nouveau web entrepreneur and
therefore not concerned about things like legal liabilities. Let IBM,
Microsoft, and other old school outfits worry about things like that. Besides,
you're saving so much money by doing this that you can afford the suit.

I feel like I've fallen victim to a motivational seminar version of Poe's law.

~~~
HeyLaughingBoy
<blockquote>9\. Make your team friendly. If there is a socially akward or shy
guy who does not relate with the other members of the team, fire him

It's actionable discrimination and a shitty thing to do to an otherwise
valuable but shy person, but he's too shy to bring this to your attention or
to hire a lawyer, so it's a win-win. (Again, eggs->omelette.)</blockquote>

I don't see anything actionable here unless he's a member of a protected class
and can claim that's why it was done. Being shy is not protected. For that
matter, it's not a shitty thing to do: he's bringing down the team. Sucks to
be him, but if he's affecting productivity, out he goes.

~~~
mkn
Not to quibble, but there are disorders like Asperger's syndrome, social
anxiety disorder, clinical depression, and so on. Many of these would qualify
the person as handicapped and therefore a member of a protected class. If
there's even a doubt, you might have to settle out to avoid legal fees or a
potential defeat in court. Besides, reasonable accommodations are, by
definition, reasonable. Maybe he/she can be one of the people that works odd
hours to avoid others?

 _he's bringing down the team. Sucks to be him, but if he's affecting
productivity, out he goes._

There was no mention of a productivity hit. We have to take the OP at his word
that he/she meant, "If somebody isn't suave or outgoing enough, fire that
person." I think I'd rather educate my team about diversity, tolerance, and
respect than fire technically competent people who happen to like to keep
their doors closed. If you have a team that requires all others to be social
sophisticates and can't function in the face of shyness, then this is your
second biggest problem after handling the inevitable discrimination suit for
firing Joe Shy. Also, if I worked with me, I'd probably want some alone time,
too.

There are just so many things wrong with point (9) that it's hard to get them
all out. Here goes:

1) Team managers, unless highly skilled (and sometimes even then) don't always
understand the factors that make their teams function/fail.

2) The aforementioned possible legal liability of insisting on a team of
suaves.

3) The inadvisability of insisting on a team of suaves.

4) The presupposition that the person who is awkward/shy is the problem. Maybe
(the hypothetical) you and your team are a gang of unproductive dicks?

5) Maybe you're productive dicks but it will never scale?

6) The whiny intolerance of anyone who's not having absolutely the easiest
time of things.

7) The fact that none of this has ever been an issue on any team I've ever
worked on?

8) The insipid notion that it's a zero sum game or that the only thing is the
productivity or that you can improve productivity with misguided social
engineering.

I could go on. I think that what it really comes down to is that I'd rather be
the guy who succeeds by helping others succeed. Entrepreneurship is as much
about finding value where others can't as it is about creating new value. That
includes finding it in employees who are less than socially perfect.

~~~
wheels
_I think I'd rather educate my team about diversity, tolerance, and respect._

Sounds nice in theory, but in a startup you don't get points for being swell.
The team needs to click, and if there are people that don't fit with the group
dynamic socially, then that's already something working against you.

Fortunately the scene itself is pretty diverse. There are enough different
sorts of founders out there that hire people like them that there's a place
for shy and outgoing people to find a place to do their thing. I think the
fallacy that kicked this off was that all founders are socialites. But if
you've got founders that are socialites, they'll probably do better off with a
team that is too.

For the record, I had one job that I didn't get because I would have slowed
the rest of the team down (in that case it was because the rest of the team
was German and I wasn't yet fluent in German). They were right not to hire me.
They may have ended up hiring someone less qualified than me, but that made
their team more cohesive.

------
nailer
"1. Buy Macintosh computers, save money on an IT department"

# tail -f /var/log/messages

Oct 15 15:45:47 mike-laptop Bullshit detected.

~~~
babo
I'm sorry to say but for development a Linux machine is way more productive.

~~~
dmix
Expect for the learning how to use and set up Linux part, I would agree with
you. I would say it takes about 10x longer for an amateur to become
comfortable with Linux then OSX, which is a serious weak point in the
productivity area.

~~~
wheels
If you're hiring amateur developers at your startup, then you're doing
something wrong. If you're forcing experienced developers to use a particular
OS because you read in some dumb blog post that it was a good idea, you're
doing something wrong.

Really, I think on a small team, the best OS choice is the one that people
know. There are very few cases where I can see OS dogmatism as being worth
spending brain cycles on in an early-phase startup. If you're still small
enough to all be eating at the same lunch table, you're also small enough that
you don't need an IT policy.

------
sfg
I find the idea of doing meetings over lunch horrible. The point of lunch is
to switch off and recharge so that you can get going again in the afternoon.

Plus having an hour to recharge is more effective than 30 minutes. You may
save 100 hours a year on lunch, but what do you lose in productivity and
morale?

~~~
lacker
Maybe you're thinking of the boring sort of meeting that has an agenda and 20
people there. Just eat lunch with people you work with and talk about work
stuff.

~~~
nailer
I don't want to eat lunch with the people I work with. Go out for a beer
afterward if I feel like it, sure, but during lunch, give me solitude, sun and
a newspaper.

------
run4yourlives
If he's trying to save money, why is he using the word "buy" so much?

~~~
wheels
Definitely agreed. "Learn to think cheap." has been important for us. "Money
saving tips" that include Areon chairs and a several thousand dollar expresso
machine are retarded. My co-founder wanted an external monitor for his laptop
... so he picked one up a 19" CRT for 5€ on eBay. We like expresso, so we have
a 15€ coffee grinder and a 25€ mocha pot that goes on the stove. This isn't
rocket science.

~~~
swdesignguy
"so he picked one up a 19" CRT for 5€ on eBay."

Depending on what you do, a good monitor can actually help you earn money by
making you either more efficient or enjoy your work more.

~~~
wheels
So can Areon chairs. That doesn't mean that they're the most effective use of
money. Really, this is a list of motivational tips, not money saving tips.

But even there, the sort of people I'd like to hire are much more excited
about hard problems than fancy office accessories.

------
johnrob
What I like about these tips is that they are mostly about buying things that
are one-time costs, and avoiding the recurring costs.

------
hs
the list mostly consists of 'spend/buy this and that (mac, 2nd monitor, aeron,
espresso machine, etc) to save more money further'

those seem to be in direct opposition to the epitome of startup: steve wozniak

"All the best things that I did at Apple came from (a) not having money and
(b) not having done it before"

~~~
vlad
I think this quote is misapplied to the original post. He didn't have enough
money to get to the next level and do things that in fact were expensive, like
get access to million dollar machines (once he went to college, he did get
access to a mainframe, and ran up the bill so much he never went back until he
started Apple, and only went back after Apple became a success.)

Therefore, I think a modern-day Steve from Silicon Valley would in fact have
at least two monitors. If he could get parts at 11 and 13 to build a ham radio
and computer, he could also find or build some lcd monitors in this day and
age.

I think Waz wanted to learn about everything, and at some point money would
stop anyone, and cause them to re-create things in their own room. But I'm
sure he would either have monitors or assemble them. For a lot of people right
now who concentrate on software, though, it is cheaper to buy monitors
outright.

Steve was a hardware guy. If you're a software guy, write your own software.
But you will need to spend a lot of time on your butt to program, and I think
that is what the post is getting at.

Also, while a design for a circuit might lose value (besides the learning
experience), monitors, desks, and chairs will be used for many, many years.

------
Prrometheus
I am in grad school and need to live frugally so tomorrow I am buying a $4,000
espresso machine.

~~~
Retric
A 4k espresso machine is not for one person. If you have 20 people they might
spend around that much a month at Starbucks. (10$/day) But I still think it's
a perk and has little to do with saving the company money in the short term.

------
mixmax
I think there are a lot of weak points in the article.

\- Outsource all HR, he even calls it a no-brainer. To me outsourcing the
well-being of your employees, probably the most important asset you've got is
downright stupid.

\- All this talk about saving five minutes by having in-house great coffee
instead of lettin gpeople fo to Starbucks, having meetings over lunch, etc.
misses an important point and tells me that this guy has no idea how to deal
with human beings. Your employees don't go to Starbucks just to get a coffee,
they go to get a break, to ponder over a problem, have an informal meeeting,
or something else. It's not about the coffe. Same with lunch. People need
breaks, particularly people that make their money by thinking. I read a post
by Joel Spolsky where he claims that he probably works around 4 hours a day,
the rest of the time he just goofs around trying to get his thoughts together,
thinking over a problem, etc. And he seems pretty productive. People aren't
machines - if you treat them as such expect results thereafter.

Jeez...

~~~
fallentimes
I think by outsource HR he meant all the documents/401k/tps stuff, not the
actual hiring & interviewing. Calacanis has mentioned before that he
personally interviews everyone. This obviously could have changed.

------
notphilatall
The last comment shows me how out of touch Calacanis really is:

"Outsource to middle America: There are tons of brilliant people living
between San Francisco, Los Angeles, and New York who don’t live in a $4,000
one bedroom apartment and pay $8 to dry clean a shirt–hire them!"

Hardly anyone pays $4,000 for a one-bedroom in SF, and if they are they're not
working for a startup (or shouldn't be). For reference, I pay $1k in rent and
have my own room and a backyard in SF.

Also, you _need_ to be in the same locale as your colleagues. especially in an
early stage startup. You need to see people's facial expressions during
brainstorming sessions and after idea pitches. You need to read their moods
and work with them on a personal, in-person level.

I've worked with outsourced teams in India and the Ukraine, despite the
talents of my foreign colleagues things NEVER went as smoothly / quickly as
they would have locally. Especially with a fast moving early stage startup,
that's of the essence.

------
noonespecial
Disagree on the phones. Buy a pc, a digium card and a few lines and spend a
weekend setting up asterisk. It does not instill me with a lot of confidence
when I call a business and get some guys garbled sounding cell phone voicemail
instead of "Thanks for calling X...." and being able to dial a real extension.
(Even if said extension just forwards to his cell.)

------
jsstrayer
Billions of dollars could be saved by businesses everywhere if they were to
migrate away from Microsoft products. It is a fact that Individuals and
Businesses alike pay Billions of dollars in Microsoft Software Licensing and
Computer Security alone. Clear and viable alternatives exist today in what is
termed "Open Source Software". A number of viable alternatives exist under the
generic name "linux" in which the expense is optional or "Free". For those
individual users requiring additional assistance the optional support License
average around $80 U.S. currency. Linux is an extremely "User Friendly"
Operating System which by itself is not only easy to install, use and Update,
it comes complete with "Open Source" Microsoft Compatible Desktop Utilities to
replace those commonly used and relatively expensive applications such as
MSWord and MSExcel Word Processing and Spreadsheet applications. In addition
to these, a complete array (literally thousands)of readily available, easy to
locate, install, use, update or even un-install just by selecting / de-
selecting a check box!And most are equally functional to their commercial
counterparts!. Applications such as Games, Educational Applications, highly
useful Computer Utilities and Internet Applications exist TODAY. Not only is
Linux easy to use, is well known as being invulnerable to attack by Computer
Viruses. The fact that additional Billions of dollars are spent on System
Security as a result of these omnipresent and dangerous Computer Viruses
should be enough for the average PC user and business owner alike to see the
value at hand. In just minutes, any computer system can be converted to the
Linux Operating System by even the least savvy Computer user. As if we need
any additional reasons to switch, Linux will outperform Windows which is like
going out and buying a faster computer, without actually going anywhere! Do
yourself and your pocketbook a huge favor by converting to any of the number
of Open-Source Linux Operating Systems. I personally recommend "UBUNTU Linux"
for any user. Not only will you have a Desktop Operating System that is much
faster and easy to use, you will have removed that "Virus Target" from your PC
as well....

------
sgupta
I feel like this taints his motives. Prior to this post employees might have
felt that Calcanis really cared about them.

"Working at Mahalo is sweet. We get Aeron chairs, 2 monitors, free food, free
coffee, and free sodas."

It's still a sweet deal, but it just doesn't feel as nice when you learn that
he was doing these things more for the bottom line.

~~~
johns
Those things aren't mutually exclusive, they're actually quite complimentary.
Nice working environment = happy, more productive employees = better for the
bottom line.

Also, I wouldn't want any employee working for me that thinks to themselves,
"Gee, I thought this company was being good to me but it turns out they're
trying to make money." It's the whole point.

------
sfphotoarts
Most of these make sense, but I don't really see how a 2nd monitor can save
half hour a day. Also the $3000 espresso machine might be a little expensive
when you can get one for $500 that's pretty decent.

~~~
lacker
I would say that's an underestimate of the value of a 2nd monitor. If you're a
programmer, get a second monitor if you have to buy itself. It's worth it.

~~~
acgourley
I think it depends on the OS. OSX does a good job letting one monitor
effectively host several applications. I find that harder to do in windows and
the linux desktops I have tried.

Of course, OSX still needs a lot of pixels to do its job, so a single laptop
screen won't really help. At my current job I have a large second monitor for
my MPB and find myself hardly using the laptop screen for anything.

~~~
hs
In Linux/BSD/Unix, it depends more on the window manager
(dwm/wmii/ion3/ratpoison/etc nullify the need of 2nd monitor)

I guess the 2 monitor programmers are windows guys (nothing wrong with that)
... and then they migrate to osx/linux, bringing the bad habits and polluting
osx/linux over time

your second monitor for MBP, is it used for extending the view for osx, or
it's just a cloned view of the laptop screen (let's say via external monitor
cable)?

if it's a cloned view, vnc is an old and reliable technique that works
regardless of cpu/os used (you can control powerpc mac, intel mac, windows,
linux, bsd machines ... in one box)

dual/multi-boot and parallel guys, try to beat that! :D

~~~
lacker
Ratpoison hardly nullifies the need for a second monitor. It's all about
screen real estate. You're working on a tough programming problem, you want a
few different files of code, a browser open to some documentation, and some
extra emacs (in my case) buffers and/or terminals for various errands. You
just want it all to be visible at once. It's much easier to just keep
everything there rather than "put it away" somewhere that's not visible. This
is true regardless of your window manager.

------
jamiequint
Don’t buy a phone system. Savings? At least $500 a year per person..

Uh, maybe if you've never heard of VOIP. $39.95/mo for an entire company plus
$0.03/minute.

------
fallentimes
I know 95% of what Calacanis writes is garbage or just promoting
himself/Mahahlo, but these were some great tips.

------
pjharrin
Yea, I'm curious as to what he would add to this list for running a startup in
a recession

