Startup Funding - How to be lean

The other day I read about one of Jason Calacanis 's posts about the lack of liquidity (and funding) coming in the startup space. I never like Calacanis's self promoting rants, but he raises an excellent point. Fred Wilson of Union Square Ventures sums it up nicely. Startups need to "get focused, get better, get leaner, and ultimately to get profitable". The following is from a comment I left on Fred's blog. I got so many comments on it (most via Twitter) that I decided to add it here as its own post. Here are a few ideas that I have used in the past that entrepreneurs can use to stay lean;

1) Don't pay the rate card - Whether it is online advertising, print or other - I was often able to negotiate steep discounts when paying for advertising (example was rate card was $24k I paid $6k / rate card $70k, I paid $10k ... It's all a poker game, when you first inquire, be a little aloof and ask them to keep you in mind when they have remnant inventory.

2) Don't buy CPM, or even only CPC - Make them a vested partner. When I built an affiliate channel, the most successful partners were ones that were revenue shares (they only made money, when they sold a product)

3) Don't waste your money on a meaningless booth at a meaningless tradeshow (I was dumbfounded by some of the companies that had paid for a presence at this years Web 2.0 in NY).

4) Let others do the heavy lifting - A lot of start-ups that I advise bring their social network business plans to my attention for my opinion/comment. They all make the same mistake, in that they are going to create this great social network around a particular niche. Why reinvent the wheel? If you need to be nimble early on, consider leveraging someone else's already existing social network (ie- make your service into a widget for FaceBook, or use Twitter as your member base). Consider that getting a new user to your service will likely eat up the majority of your cash. Save the driving new users to your site for latter when you have the cash.

5) Partner up with non-competing (even better complimentary) start-ups where you can share infrastructure costs. This can be anything from sharing office space, to sharing servers,etc.

6) Realize that your most important asset is not your programming expertise...consider hiring someone with a marketing background (*hint) early on. Most start-ups I speak with have ZERO marketing guys on board of their first 20 hires! A competent marketing person can often pay for themselves 10 fold by bringing you ideas, partnerships,etc that you likely would not have thought of on your own.

That's all the IP I feel like giving away today. If you want to pay me for it, here's what you can do. PLEASE COMMENT and tell me YOUR vision, or if you liked this Digg it. Want to comment away from this blog, send me a Tweet