Dave McClure, our Evening Keynote speaker at the 2009 National Angel Summit in Toronto, was brought to us thanks to our sponsor, Angelsoft.  Speaking on the topic Startup 2.0: A Silicon Valley Story, he provided important insights regarding the current process of company formation and development in the Web 2.0 space, as well as investment processes and criteria for same.  This slidecast will be a vital resource for anyone interested in reporting on, or participating in, the future of Web 2.0 as an investor, innovator, journalist or stakeholder.

The other week I went to the Finance4Founder’s event put on by the Master of 500 Hat’s Dave McClure, Flowtown’s Dan Martell, and Event organizer extraordinaire Cassie Phillips.

Their monthly dinner is an invite only event and here is some more info about the dinner on their website:

ABOUT

Finance4Founders is a group of Silicon Valley geeks, entrepreneurs, & investors dedicated to educating and helping the next generation of internet startups around issues of fund raising, option pools, and term sheets. We meet monthly over dinner to discuss relevant topics in raising capital, working with investors, and compensating great teams.

The co-founders of Finance4Founders are Dave McClure & Dan Martell; organizers also include Cassie Philips & countless others. Finance4Founders draws inspiration from (and plagiarizes liberally) Startup2Startup, Round Zero, Silicon Forum, and numerous other previous & future Silicon Valley geek and entrepreneurial events.

The primary goals of Finance4Founders are:

1. Learn about financing & startups
2. Celebrating success stories
3. Meet promising new geeks & entrepreneurs
4. Eat, drink, & have fun

This month’s dinner was called “Startup Hiring: I’ve hired all my friends – now what?”and featured both Peter Pham of Billshrink.com and Dan Arkind of Jobscore.com Here is a bit on their bio’s from the Finance4Founder’s website:

Peter Pham
As CEO of BillShrink, Peter drives company expansion and is an advocate for customer rights and transparency among service providers. He was previously vice president of business development at Photobucket.com, where he was the fifth employee and was responsible for driving user acquisition, strategic partnerships and corporate development. Photobucket was acquired in 2007 by Fox Interactive Media, a division of News Corporation.

When Peter left in 2008, Photobucket had grown to more than 61M users, making it the #1 photo sharing site and the 38th most visited site in the U.S. Prior to Photobucket, Peter was in the enterprise space for more than 8 years working in sales, marketing, reseller channel development, product and strategy for multiple startups in the fields of mid-range server computing, software as a service, solid state storage and mobilization of enterprise software.
Peter holds a bachelor’s degree in biological sciences and a minor in business management from the University of California, Irvine.

Dan Arkind
Dan is a 14 year veteran of the startup recruiting wars. He has filled every role at venture backed startups from employee 0 to 100, including connecting founders with one another. Dan is currently the CEO of JobScore, an online recruiting solution in use by 50+ Bay Area employers. In 2006 Dan co-founded STIRR, an entrepreneur networking group.

Here are the Dan Arkind’s slides from the event rightfully called “Hiring Hacks”, blog post about the event, and twitter account for Finance4Founders:

Slides from SlideShare: http://www.slideshare.net/danarkind/hiring-hacks-for-founders

Dan Arkind’s Blog post on JobScore about the event
http://blog.jobscore.com/hiring-hacks-for-founders

Also be sure to follow the Finance4Founders twitter account for event updates and great tid bits about financing and startup issues
http://twitter.com/Fin4Founders

Enjoy these photos we took of the Summit emcees, speakers, panellists, award-winners, company presenters and delegates!  Here’s the link to Flickr.

Over the next few days all the great results and accounts of our recent National Angel Summit will be provided in this blog and in our e-newsletter.  For starters, here are links to our keynote speakers’ slide presentations for your further consideration:

• Dave McClure’s Startup 2.0: A Silicon Valley Story
• Dr. Basil Peters’ Selling a Business: A Guide for Angels and Entrepreneurs
• Professor Alan Barrell’s Business Angels and a World Without Borders

We hope you enjoyed their keynote addresses as much as we enjoyed hosting them!  Do provide your feedback and further questions by commenting on this blog entry; alternatively feel free to join us on our LinkedIn group!

We also thank our sponsors for helping us bring these gentlemen to Toronto last week, including Angelsoft and the Department of Foreign Affairs and International Trade (Dave McClure); First Angel Network and the City of Toronto (Dr. Basil Peters); and Deloitte (Professor Alan Barrell).

For immediate release

Reaching For and Recognizing Excellence
National Summit in Toronto Shows Angels Can’t Be Stopped

Toronto, October 22^nd, 2009 – Angel investors, the providers of independent venture capital who help Canada’s growth-oriented startups become our economic champions, gathered in Toronto October 14^th and October 15^th, 2009 for the ninth annual National Angel Summit.

This Summit convened leaders in Canada’s Angel investment community, along with representatives from across the innovation commercialization eco-system. With the help of Angels, entrepreneurs and scholars from across Canada and the globe, the potential of this annual event to boost Canadian investors’ and entrepreneurs’ competitiveness was realized more fully than ever before.

The 2009 National Angel Summit consisted of nine major elements: three keynote speakers; three expert panels; a presentation of five high-growth-potential companies followed by ceremonies recognizing great enterprises and great Angels; and three associated off-site events that gathered policy experts and early-stage entrepreneurs for discussions.

All keynotes’ slide presentations will soon be made available on the NACO website.  As well, video footage of the Summit expert panels and two keynotes will soon be made available on the NACO website.  Media advisories will be issued upon posting of these videos and presentations.

• Dave McClure, Master of 500 Hats, gave a keynote speech titled Startup 2.0: A Silicon Valley Story, with the support of Angelsoft (http://www.angelsoft.net) and Foreign Affairs and International Trade Canada (http://www.dfait-maeci.gc.ca/).
• Dr. Basil Peters, author of Early Exits: Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists), delivered a keynote address titled Selling A Business – A Guide for Angels and Entrepreneurs.  This keynote was supported by First Angel Network (http://www.firstangelnetwork.com) and the City of Toronto (http://www.toronto.ca)
• Professor Alan Barrell, Entrepreneur-in-Residence at Cambridge University’s Centre for Entrepreneurial Learning, conveyed a keynote presentation titled Business Angels and a World Without Borders. This took place with the support of Deloitte (http://en.fast50.ca).
• Three expert panels were convened on the subjects of Angel War Stories: The Highs and the Lows; Co-Investment: Taking It To The Next Level; and Early-Stage Capital: Angels Challenging the Model. Their discussions showed how venture capital and Angel investing are evolving in response to the explosion of start-ups, each requiring less capital for takeoff, and how effective checks and balances within start-ups can protect and promote Angel investments therein.
• The Fast Five Company Presentations were the most captivating hour of this event, in which five competitively-selected Angel-backed companies pitched for capital.  This interval was backed by Gowlings (http://www.gowlings.com) and Sustainable Development Technology Canada (http://www.sdtc.ca), and moderated by Dr. Tony Rahilly, Director-General of the National Research Council’s Industrial Research Assistance Program (http://www.nrc-cnrc.gc.ca/eng/ibp/irap.html).
• RBC’s Top Canadian Angel Capital Company Award was conferred upon the last company to present, RealTech, by vote of investors present (http://www.rbcroyalbank.com/kbi/new.html).
• The 2009 Canadian Angel of the Year award recognized Mike Volker of VANTEC. This award, supported by HKMB Hub International (http://www.hkmb.com), bespeaks the increasing professionalism and accomplishments of Canada’s Angel investment community, and NACO is committed to ensuring that individuals making significant contributions to the development of Angel investing receive the credit they deserve.
• Our invitational policy roundtable was moderated by Dr. Jeff Sohl, Director of the US Centre for Venture Research (http://wsbe.unh.edu/cvr) which provides many statistics on Angel investment.  This roundtable was supported by Industry Canada (http://www.ic.gc.ca/) and hosted by the Ontario Ministry of Economic Development and Trade (http://www.ontariocanada.com/ontcan/1med/en/home_en.jsp).  A white paper will be issued as a result of this discussion.
• A special edition of StartUpDrinks, in association with StartUpNorth.ca, featured Summit keynote speaker Dave McClure and convened Toronto-area entrepreneurs to network and trade war stories with the Master of 500 Hats at the Duke of York pub.
• The first Office Hours event for Toronto-area entrepreneurs was hosted at Espresso Etc.by Chris Fralic of First Round Capital (http://officehours.firstround.com/), who participated as a Summit panellist as well.

“We originally envisioned a condensed Summit, anticipating that support and attendance could decrease in response to the economic downturn.  I am extremely grateful to be able to say that attendance increased, sponsorship held steady, and considerable support was received from a wide variety of organizations to ultimately develop a full two-day agenda for this event,” said Patricia Lorenz, incoming NACO board member and Co-Chair of the National Angel Summit.

“I also want to thank the Ontario Ministry of Research and Innovation, Avrio Ventures (http://www.avrioventures.com/), Business Development Bank of Canada (http://www.bdc.ca/), CNSX (http://www.cnsx.ca/), Cognition LLP (http://www.cognitionllp.com/), Export Development Canada (http://www.edc.ca/), Growthworks (http://www.growthworks.ca/), the Investment Accelerator Fund (http://www.oce-ontario.org/Pages/CInvest.aspx), and the Ontario Venture Capital Fund (http://www.ovcf.com/), whose collective support and participation in the Summit has brought our community to new heights of achievement,” said W. Daniel Mothersill, NACO President and Co-Chair of the National Angel Summit.

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Media Contacts

W. Daniel Mothersill                                                              Bryan Watson
NACO President                                                                      NACO Executive Director
T : 416-581-0009                                                                    T : 416-581-0009
E: dan@angelinvestor.ca E : bwatson@angelinvestor.ca

The NACO thanks its National sponsor, RBC Royal Bank (http://www.rbcroyalbank.com/kbi/index.html) and its Lead sponsors, Deloitte, First Angel Network, and the Ontario Ministry of Economic Development and Trade.

Social networking has generally been discouraged in the workplace, with many corporate IT departments blocking access to sites like Facebook and MySpace (s nws) due to privacy concerns. But these efforts are becoming increasingly futile as our lives continue to converge with social networks, analysts at a Gartner symposium said yesterday. Plus, social networking may even help workers “feel valued, a part of a community, and earn the respect of peers.” Privacy concerns surrounding social networks were brought up at our NewNet Bunker Series, where participants debated whether we should keep our data holed up in walled gardens or leave it open for developers to build upon. (Replay the event and read our live-blogging notes on GigaOM Pro, subscription required.)

While social networking in the office may foster community, there’s also a chance it could lead to better enterprise technology down the road. Investor Dave McClure yesterday declared that he wanted big players like Google (s goog), Microsoft (s msft) and Yahoo (s yhoo) to take his data and use it to build helpful applications. An example of this concept would be the evolution of the Twitter network. The micromessaging site opens up most of its data to developers, who in turn build applications on top of the platform that offer features not found on Twitter.com.

For $79, get more with Social Media in the Enterprise, by Rachel Happe, along with dozens of other reports.

In the same vein, if tech companies were able to glean data on how workers interact with one another on social networks while in the office, this could spur ideas for future enterprise-focused social-networking applications that aim to facilitate communication and increase productivity and efficacy. Some enterprise social-network applications are already popping up, such as Yammer, an enterprise version of Twitter, and both Oracle (s orcl) and IBM (s ibm) have similar offerings called OraTweet and BlueTwit.

“While a job may be regarded as an economic transaction, the human brain thinks of the workplace as a social system,” Gartner analyst Carol Rozwell said yesterday.

And if corporate IT companies still aren’t convinced of the value of social-networking data, they could take a note from the CIA, which invested in a software firm that monitors social media activity on sites like Twitter and YouTube.

For immediate release

Canadian Angel Investors Gather For Growth
National Summit in Toronto Showcases Angels’ Increasing Impact

Toronto, October 7th, 2009 – The National Angel Capital Organization’s (NACO) ninth annual National Angel Summit will take place from October 14th to October 15th, 2009 at the Hilton Toronto. Deploying both their personal capital and their experienced mentorship, Canada’s business Angels are increasingly recognized as the engine of commercialization for our future employers and global champions.

The Summit attracts Angel investors from across Canada and around the world, to share stories and deals, learn, network and build relationships that facilitate investment.

The Summit presents several world-class speakers and panellists, including Dave McClure, manager of the fbFund REV incubator program for Facebook, Accel Partners, and Founders Fund; Professor Alan Barrell, founding Managing Director of the Cambridge Gateway Fund; and Dr. Basil Peters, author of Early Exits: Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists).

In addition, panels convening at the Summit will discuss:

• Angel War Stories: The Highs And The Lows;
• Co-Investment: Taking It To The Next Level;
• Early-Stage Capital: Angels Challenging The Model.

The Summit will also include the Canadian Angel of the Year Awards and the Fast Five Company Presentations, where growth-oriented innovators will pitch for capital investment by the Angels present.

A full agenda and Summit backgrounder release is available at www.angelinvestor.ca.

“People writing the economic history of the current global recession will, I believe, give full credit to those courageous Angels who underwrote and mentored the development of entirely new industries to take the place of declining sectors,” said W. Daniel Mothersill, President, National Angel Capital Organization. “However, this success story depends on the members of our Angel community becoming more organized, formal and professional, even as governments and other organizations involved in commercialization recognize Angel investors and their groups as valuable partners .”

-30-

Media Contacts
W. Daniel Mothersill
NACO President
T : 416-581-0009
E: dan@angelinvestor.ca

Bryan Watson
NACO Executive Director
T : 416-581-0009
E : bwatson@angelinvestor.ca

The NACO thanks its National sponsor, RBC Royal Bank, and its Lead sponsors, Deloitte, First Angel Network, and the Ontario Ministry of Economic Development and Trade.

Moving into the cloud is a fairly new concept for many federal agencies and, as always, pitfalls happen.

GSA’s Dave McClure gave FCB insight into why some challenges might occur when it comes to securing information in the cloud. He said it’s not necessarily about the technology itself, but sometimes has to do more with government processes and culture.

It’s a virtual, rather than physical, control with assurances — and, again, I think some of this has to be worked out with the CIO Council, with OMB on what constitutes a quality review process and certification process when you’re moving information around in very different ways than what we’ve traditionally done.

So, what are these processes that need to be followed? Are they any different than what would be in a normal computing arrangement where you actually touch, feel, inspect and can analyze data on machines right in front of you.

FCB took a look at what the private sector is doing, because security struggles are clearly not just a federal government issue.

One of the biggest issues when dealing with security in the cloud, it seems, is defining what, exactly, a secure cloud constitutes.

An article from CIO.com gets perspective from six IT security practitioners, and each has a unique perspective about what it means to secure your cloud.

Some interesting points:

• Matt Schneider, security consultant and senior Web design architect at Ford Motor Company, is quoted as wondering how concerned the average user is about cloud computing, “Look at Facebook and Twitter. There’s a couple of apps that have been hacked, yet that’s all you hear people talking about lately. If they really cared about security, I think they would just stop using those apps.”
• Terry Woloszyn, CEO/CTO at PerspecSys Inc., “{I}n trying to answer the question of what is and isn’t cloud security, you are trying to establish a taxonomy.”
• Michael Versace, partner, principal research contributor at The Wikibon Project, “Some are making cloud security more difficult to understand than it needs to be. Since security is a risk-based discipline, users need to understand the inherent risks in cloud services and implement the best set of organizational/management/business processes and technology controls to manage risks down to a profitable/acceptable level.”

Of course, these IT gurus are not working for our federal government, but their comments are valid and lead FCB to wonder . . . does operating in the cloud put more onus on the user in terms of security?

The Pew Internet & American Life Project released a survey last month that said about 69 percent of Americans who are online use cloud computing in some fashion or another.

51 percent who have done a cloud computing activity said, for the most part, they use cloud computing for its ease and convienence.

At the same time, however, 90 percent said they would be very concerned if the company that stored their data gave it to another company.

Which brings us back to yesterday’s post about Apps.gov. McClure told the FCB about some of the conditions surrounding apps offered on the site — one of them having to do with companies securing data.

The cloud is constantly evolving and, so too must security measures, it seems.

Something for agencies to keep in mind, we imagine.

FCB has gained some insight into what, exactly, is on Apps.gov and how you might be able to use the tools at your agency.

Dave McClure, Associate Administrator for Citizen Services and Administration at the General Services Administration, gave us some tips — and a lot of explanation — about the site.

On why Apps.gov is important
I think Apps.gov represents the beginning of the federal strategy of moving into the cloud computing environment. It is a beginning step. It’s not the complete solution. The idea is to put largely already available cloud software services up in an organized way on a portal that agencies can get quick access to, and cut through a difficult — and, instead, go through an easy — procurement process to bring those kinds of capabilities on board.

So, it’s largely focused right now on simple applications and we do have our terms of service posted for our social media apps that have gone through some vetting with government requirements for social media tools. Those are shown on the Web site, as well. Those are absolutely free products, as long as the agencies have come to a terms of agreement with the provider.

On some of the barriers of cloud computing
Well, it’s a relatively new area for the government. It actually is for everyone — not just government. There’s still, of course, concerns about security and protection of information in a cloud environment. There are, certainly, concerns about reconstitution of data — if I want to pick it up and move it somewhere else. The biggest issues beyond those technical things are cultural. Letting go of control of equipment and resources, and, instead, buying IT capability as a service. That’s a big culture shift for government.

I think a lot of it’s just control revolving around uncertainty of how this actually operates. One of the biggest issues is, honestly, what is cloud computing? It’s almost like getting economists together and asking what’s the state of the economy? You’re going to get different answers because there are different models, there are different ways of approaching cloud just within government, a hybrid between government and private sector, or pure public clouds. So, some of it stems from the confusion of what this really means and what it is. The other is just fear of the unknown. We’ve never been in this environment — what does it really mean to operate data that I’m accountable for and results that I’m being monitored for in an environment that I don’t have day to day control over.

On who’s responsible for security in the cloud
The short answer is, the assurances are still lie with the purchaser — with the agency. They have to make sure that FISMA requirements are being met. That NIST requirements are being met. The same certification processes have been adhered to by their provider. So you’re not letting go of security, you’re turning it into an exercise where you’re sure your provider is providing that level of security that’s necessary for the type of data that you’re processing and disseminating.

So, the onus doesn’t go away for the agency, but what it does mean is — how do I look inside a visualized data center to make sure that it’s being done? Who audits — who controls whether that certification is real? I think that’s some of the issues that we’re dealing with — is making sure that the standards are being met and that there’s concrete evidence that the data’s actually being protected.

On how cloud computing can save money
I think that’s an area of great interest — is the infrastructure space. We know that the greatest percentage of IT money in the government is spent on operations and maintenance of applications, particularly the hardware in the telecom and infrastructure side.

So, if we’re going to save significantly, we’ve got to reduce costs in those areas. That’s an area where cloud computing has already demonstrated that it can make a difference. Here at GSA, for example, USA.gov is being operated in a cloud environment and has been since May of this year. Already, we can point to tremendous cost savings and much more efficiency in terms of updating the site, flexibility if we need more computing capacity from spikes in user demand — a much more simplified setup from an operational perspective.

We still have a role to play.

We do still monitor what happens with the information. We still do have control over the content management systems, per se, in the application space. Not everything’s been completely turned over to a cloud provider, but the fact that we’re not running servers, we’re not actually doing the operations and maintenance on hardware frees up our developer and engineering time for thinking about next generation applications that we need to be doing to make that site cutting edge.

On how Apps.gov works with vendors
Each of the media providers have what they normally would call terms of service agreements. It’s what you’re clicking on when you’re at home on your own computer and you pull up a nice piece of interesting software. You say, hey I’d like to run that! But before you’re allowed access to it, or if it’s being run off of their server, or, alternatively, if you even downloaded it, you notice you always get that agreement that comes up. You’re asked to say, I accept this.

That’s essentially what a term of service agreement is. You’re agreeing to the terms and conditions on the use and placement of that software in your computer. So, what we’ve done with the terms of service agreements with media providers is to say, there’s certain things that we want you to adhere to if these products are used in the government space.

One, we don’t want your site loading up with advertising.

Two, we don’t want you collecting cookies that devolves personal identification information to you so that you can track someone. We want any legal matters — if there’s ever a dispute involving this software — done in a federal court, not a state court or a court that you the provider chooses because this is a federal application.

So that’s what the terms of service have carefully done — is to negotiate with the new media providers and say these are the special conditions that we want the application to abide by if it’s going to be used in a government environment. It’s basically a minimal set of agreements. Now, each agency — we suggest they take that and implement it as is, or to add to that other conditions they want. That’s what’s up on the Web site.

There are approximately 26 social media tools that have gone through that vetting process that we and agencies have vetted that meet the conditions for government use. There’s another 20 or 30 or so in the queue that we’re going through now and doing the same thing.

On what the future holds
Well, hopefully, you will find very fast more applications loading up for the software-as-a-service area in the business apps, productivity apps side, where those icons are. You should see a growing list of social media tools as more of these agreements are negotiated. The more new and exciting thing that you’ll see coming in the future is, we’re moving into the infrastructure-as-a-service space, where servers, hosting services and even hardware — infrastructure for processing — can be bought as a service through the storefront. So, that’s where we’re moving. Into the infrastructure provisioning, and eventually into platform provisioning after that.

To learn more about this interview, click here.

We call it ‘GITSS’, but the real name of the show is Government IT Solutions Spotlight.

Federal News Radio’s own Chris Dorobek is joined by WTOP’s Adam Tuss to talk about all sorts of issues surrounding IT every Tuesday at 10 a.m.

Which, of course, inevitably brings us to the cloud.

This week, Chris and Adam talk about Nebula with Chris Kemp, CIO at NASA’s Ames Research Center in Silicon Valley.

If you don’t know anything about Nebula — NASA’s cloud platform — I urge you to listen. This is a fascinating interview about how a federal agency is using open source to work in a 2.0 world.

Also, I wanted to highlight a story published on our site last week by Internet Editor Emily Jarvis.

The Daily Debrief talked a lot about the cloud last week, and Emily took two excellent interviews — one with GSA’s Casey Coleman and Dave McClure; and one with Alan Murphy of F5 Networks — to discuss the new site apps.gov, among other things.

To fully understand the changes that Apps.gov brings to cloud computing, it is first important to have the most up to date version of what the cloud is and what it is supposed to do.

NIST defines cloud computing as “a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This cloud model promotes availability and is composed of five essential characteristics, three service models, and four deployment models.”

Apps.gov is just the most recent development to the cloud. The website is the federal government’s cloud computing storefront.

I urge you to read more here.

This afternoon on the Daily Debrief, hosts Chris Dorobek and Amy Morris talked a lot about the cloud.

In the 3 p.m. hour, they talked with Teresa Carlson of Microsoft Federal.

In the 5 p.m. hour GSA’s Dave McClure and Casey Coleman joined the Daily Debrief in studio!

You can read all about both interviews by going to the Daily Debrief blog page.

Twelve weeks after the start of Facebook’s new incubator-style fbFund program, the 18 startups in this year’s class showed off the fruits of their labor to VCs and Facebook execs in a bid to get more funding at today’s fbFund Demo Day. In addition to participating in the 10-week Y Combinator-like fbFund Rev program headed by Dave McClure, Facebook and its two venture investors, Founders Fund and Accel Partners, have already made equity investments in the startups. Previously, fbFund’s model included the distribution of grants ranging from $25,000-$250,000.

Five fbFund startups are already breaking even and an additional three of them are on track to do so by the end of this year. This shows that Facebook is “not just about growth and distribution, but it’s also about making money,” said McClure.

But which of the 18 startups will really be the next big thing on the Facebook platform and Facebook Connect? In January, wedding site network The Knot (s knot) acquired former fbFund winner WedSnap — but that’s an anomaly when it comes to fbFund finalists. As we see firsthand all the time here in the Valley, not every good idea is met with success. We were able to speak to a few of the fbFund startups earlier this summer; below are the ones that piqued our interest, along with what some of the VCs at today’s Demo Day thought of them.

Thread

Summary: The site puts together potential dating matches for you by leveraging Facebook’s social graph. Using Thread, you can view your Facebook friends’ single friends’ profiles — and ask your mutual friends to introduce you.

Notable: In terms of funding, Thread.com is off to a good start. The startup said today that it’s received $1.2 million in funding from Sequoia Capital, First Round Capital, Founders Fund and Ron Conway.

One VC’s Take: “It’s like LinkedIn for dating; it makes perfect sense,” said K9 Ventures’ Manu Kumar. “I’m surprised the incumbents (in the dating space) haven’t done this already.”

Gameyola

Summary: Gameyola’s Facebook app hosts developers’ Flash games and helps to monetize them by providing virtual goods for players to buy.

Notable: Social gaming companies Zynga and Playfish have enjoyed lucrative success on Facebook, proving people will pony up wads of cash for virtual goods to give themselves a better chance of winning social games. And Gameyola’s co-founder Nicolas Kokkalis already developed a popular application on Facebook, Best Match.

One VC’s Take: “I’m skeptical,” said Eric Tilenius of Tilenius Investments. “It’s potentially a lucrative space, but a casual game has to be specifically designed for a social environment.” Zynga and Playfish are successful because the two social gaming companies design their games from the ground up for social networks, according to Tilenius, and he isn’t sure whether the process of hosting games and monetizing them can be done under the same roof.

DropPlay

Summary: DropPlay launched its eponymous music service site earlier this year, but developed and  released a Facebook app it’s been working on during the fbFund program called Friend Radio. Using the information people list in the music section of their profiles, Friend Radio shows you songs from artists your Facebook friends say they like. It also provides a link that directs you to iTunes in case you want to purchase the song. “Ever since the mix tape, friends have been the best way to explore new music,” said DropPlay CEO Chris Turitzen.

Notable: Music applications are hot right now. Look no further than MySpace’s (s nws) purchase of iLike and the buzz around Spotify’s upcoming iPhone app for proof. Two months since Friend Radio’s inception, it has 20,000 active users.

One VC’s Take: “It seemed cool; I’m going to try it out,” said Venrock’s Dev Khare, a Pandora fan, though he noted that the interactive radio space is crowded, which could present a problem for the startup.

RentMineOnline

Summary: RentMineOnline’s site lets property managers and residents refer a property to others over social networks such as Twitter, MySpace and of course, Facebook. Gift cards and other cash rewards are used as incentives. People can log into the site using Facebook Connect.

Notable: Though referring property isn’t exactly a hot app trend, RentMineOnline CEO Ed Spiegel said the year-old company has been profitable for the last five months, so the site is clearly gaining traction.

One VC’s Take: “It’s great to do referrals through social networks since it’s normally done through a blind process,” said Union Square Ventures’ Andrew Parker. “RentMeMine’s (financial) trajectory looks terrific.”

Happy Birthday to us — we are three years old!

It seems like only yesterday that I was sitting at the Starbucks near my old office with my friends Nitin Borwankar and Dave McClure, along with ace web designer Mike Rundle (via phone), plotting the design of a new GigaOM. I was making plans to leave the job I loved at Business 2.0 in order to turn my blog into a company. But while I wanted to launch this new company on Independence Day, July 4th, my plans leaked, and three years ago today, GigaOM went from being my blog to being my startup.

I had never founded a startup before, so I didn’t know what was in store for me. There was a lot of optimism, hope and excitement: I was and still am trying to figure out the future of media. And while the destination was (and still is) unknown, the promise I made to myself was that not only would I strive to build a company that would be my pride and joy, but I would be sure to enjoy myself along the way. And that is only possible if you surround yourself with a great team, made up not only of professionals, but of great people with great values. That principle has been the guiding force for our company. Since those early days, while much has changed, our ethos and vision remain the same.

We are a much bigger group. We are highly distributed. We have seen some friends leave and new friends join. We’ve survived some troubling times. Most importantly, we have grown both as a company and as a collective group — we have done it together, as a team. And I have learned the most important lesson that an entrepreneur can: Empower people, and in turn they will reward you with great things. So while letting go has been hard, it’s also been the best part of these past three years.

Back when I was in college, as a chemistry student, I came to appreciate the atom more than anything else in the world. Atoms, when bonded with other atoms, form molecules. Some of these bonds are magical and the molecules can, in turn, be magical things. Startups are essentially the same. Atoms are the individual people; the company is the molecule. And that’s what makes our journey into the future — some of it predictable and a little bit of it unknown — so enjoyable. Three years into the opportunity of a lifetime, I still have a spring in my step as I leave my apartment, for I can’t wait to be with each one of my team members.

But most importantly, I can’t wait to be with our community. This week, for the first time in a long time, I took a break from all the brouhaha of Silicon Valley to spend a couple of peaceful days in lovely Wyoming. The majestic beauty of the mountains, however, couldn’t stop me from thinking about you, our readers. There are many more of you today then there were three years ago. I don’t know all of you by name, but everything you say, I listen to, and every time you teach, I learn. And I know I speak for our entire team when I say — thank you, readers, for rewarding us with your time and attention.

As a business, we are executing our plan. GigaOM has grown to become a network of awesome blogs: WebWorkerDaily, NewTeeVee, OStatic, Earth2Tech, jkOnTheRun and TheAppleBlog. We now host four industry-leading events every year: Structure, NewTeeVeeLive, Mobilize and GreenNet. We recently launched a subscription-only research community, GigaOM Pro. We have syndication partnerships with The New York Times; CNNMoney and Fortune; BusinessWeek; and Salon. And we have some more new tricks up our sleeve, too.

As a long-time blogger, I have seen a lot of changes take place in the media marketplace — the emergence of Twitter, for example. Twitter is the ultimate expression of the continuous democratization of news. With it, both the distribution and discovery of content on the Internet have changed. But as I’ve written in the past, there is also a desperate need for context. It’s made me think and rethink the value of not just our blog but blogging in general. Over the past three years, we have evolved from a news-chasing entity into a technology insights company. From our blog posts to our research, we work hard (sometimes we stumble) to step away from providing commodity information to instead provide analysis and context to the relevant news of the day. The launch of GigaOM Pro is part of this evolution into an insights-based company. Over the next few months, you are going to see us make efforts to provide even deeper and at the same time, wider insights. So stay tuned.

Before I go, a big word of thanks to all the dear readers and friends who have encouraged us along on this breathtaking journey. I want to take a moment to thank my entire team for their hard work, dedication and love. To our investors — thanks, guys, for believing that a first-time entrepreneur can bring about change.

Now it’s time to get back to work.

What the tweet is going on:  

#140tc just wrapped in Mountain View
#140conf is coming up in NYC, and
#TWTRCON is today in SF, Hotel Nikko, 222 Mason/O’Farrell

Everything you ever wanted to know about Twitter. 

7:30, Breakfast

8, Twitter for Dummies

9, Marketing at the Speed of Twitter – Guy Kawasaki, Virgin, Suns, Intuit, PR Newswire

10, Great Customer Service – Rafe Needleman, CNet, 

11, Your Brand is a Person, I’m a Business-Man! – MC Hammer, Adventure Girl

12, UGC Lunch

1, Tweeting for $$$ – KogiBBQ, Carl’s Jr, Dell Outlet

2, Twitterville Tales, Shel Israel

3, Twitter policy, do businesses need one? Brian Solis, eBay, Cisco

4, The Future of Twitter, Steve Rubel, Edelman Digital

5, Beyond the Hype – Kara Swisher, Paul Saffo, Dave McClure, Founders, Jeremiah Owyang, Forrester

5:30-7, Art@TWTRCON party

Metering can be a scary topic. Nobody likes to think they have to pay for usage – we want an unending supply. Take TWC for example; plans to launch consumption based billing were thwarted to the delight of many of its subscribers (including me). 

The whole process seemed to be a little reactionary as TWC fights to maintain (arbitrary) video and data product distinction. They don’t want videos of shows to be streamed over the Internet. Even if that wasn’t accurate, that was the perception.  Metering, in and of itself was not the culprit. As Will Richmond points out in his blog, it was with lack of trust that the public reacted. What lessons can we apply to the API world? 

1. Bake your business model into your API. There should be no free rides from the outset. This is the position that Dave McClure has educated many API’s channel managers on. If you give something away, it is very difficult to levy a fee to it later.
2. Think about API tiers as you do product tiers. Perhaps for one market, it makes sense to give some functionality for free and charge for additional depth of information. Take a look at Hoovers API (HAPI) description, they offer the full breadth of records, but “throttle” the depth.
3. Think about your partners clients needs. In a recent meeting with a CEO of a social media company, I learned the entire product was run on Amazon’s EC2. I asked, “what if you have a spike – how does that affect your OPEX?” He said that they plan on spikes from time to time but the overall cost is so low, it is okay. Your API should be flexible enough for cloud computing – adding more capacity on demand can be a feature that you market.

Be clear and transparent in your API. Metering can be acceptable if you provide a clear framework that aligns to your business model. Reporting of the usage (to the client) is the next step. 

Image courtesy of B Tal used under Creative Commons

See link to post on TechCrunch, included below. I’d like to hear what you think. One of my three title choices? All of the above? Or create your own.

(Thanks to Dave McClure for sharing this link.)

**

A.P. Exec Doesn’t Know It Has A YouTube Channel: Threatens Affiliate For Embedding Videos by Erick Schonfeld on April 8, 2009

http://www.techcrunch.com/2009/04/08/ap-exec-doesnt-know-it-has-a-youtube-channel-threatens-affiliate-for-embedding-videos/

Here are two links to posts covering Y Comb Demo Day. Our own discussion is  coming soon!

Presenter List, in no apparent order: This is 14 of the “Sweetest Sixteen”; two remain in stealth mode.

Wattvision

Voxli

Foodoro

AirBnB

remail

Skysheet

Cloudkick

Divvyshot

Heyzap

Nambii

Echodio

Picurio

Propable

thesixtyone

 **

 On TechCrunch:
http://www.techcrunch.com/2009/03/18/y-combinator-demo-day-spring-2009

On CNET:
http://news.cnet.com/8301-17939_109-10199730-2.html
**

I found out about this Angel Investing conference, http://angelconf.org/, the day after the event ended. It was put on by Ycombinator and the conference was about:

Learn about Angel Investing from the Experts

Have you thought about investing in startups, but didn’t know how? You’re not alone. Investing in startups seems mysterious and difficult. How much are you supposed to invest? What legal agreements do you need? Where do you find startups to invest in? How do you pick winners?

AngelConf was designed to answer these questions. Silicon Valley’s most prominent angels have generously agreed to spend an afternoon explaining the secrets of angel investing, from mundane matters like deal terms to questions we all still wonder about, like how to tell which startups will succeed.

The event is free. Please join us!
[Source: angelconf.org]

I was really bummed I just missed the event. With so much entrepreneurial activity going on in San Luis Obispo right now and tentative talks about an informal Angel Group here in town going on, this would have been a perfect event.

But luckily the good people at Justin.tv posted the video of the whole conference online for the world to see for free! Here is part one of the video

The video features Ron Conway, Dave McClure, Paul Buchheit, Andrea Zurek, Paul Graham, and Naval Ravikant.

This video is PERFECT for all cashed out entrepreneurs, especially in San Luis Obispo, thinking about Angel investing but don’t know where to begin and entrepreneurs trying to understand Angel investing and what they are looking for. Below are some selected quotes from each of the speakers sections

Ron Conway

“Why do I like [Angel Investing]? Why have I made 500 angel investments? I don’t like it because its fun. It’s to much work to be fun but I love it because it’s interesting. That is why I angel invest”

“It is hugely interesting to talk to entrepreneurs who are literally telling you the future. Entrepreneurs have crystal balls in there brain that I love reaching in and having them predict the future.”

“The other satisfaction is I get out of it is to watch great companies grow from a seed to a large company, and there is a huge amount of satisfaction out of that. And you learn from the failures as well.”

Attributes that he thinks make a successful angel investor. One who is willing to spend time on it, one who is going to have specific value to add to startups which in turn get you into great deals, be patient, invest in as many [startups] as much as you can, develop a portfolio of companies and be patient, 1/3 of them will go out of business, failure is part of angel investing it is part of the learning process, its as interesting as watching the winners, in your portfolio 1/3 of the startups will loose, 1/3 money back, 1/3 wins..

“Great deal flow + Great due diligence = A great portfolio. Out of that portfolio one of those companies will be a hit.”

“You need to build a referral network of entrepreneurs you invested in and added value to. Don’t kid yourself if you screw one entrepreneur you’re probably screwed for life, because entrepreneurs all talk to each other. Your reputation as an angel is very important.”

“If you are leading a syndicate you need to find other angels to invest in that syndicate the entrepreneur will be very thankful for that. You got to remember that when the company gets traction you the lead angel have got to take that company up to sand hill road and make the introductions to VC’s to get them funded.”

Dave McClure

“Do it [angel invest] for selfish reasons, I hope you are giving back to the entrepreneur but, I would hope that you are desperately interested in that field (industry) and you have something to give back”

“How can you make sure your adding value to the company and how can you make sure to get a good return on your investment, part of your strategy for returns is to identify your area of expertise and promoting that and making sure that’s the thing your giving back”

“It’s important to have a horizontal or vertical category to focus in”

One thing that is important is startup metric and for more information check out his presentation on this topic http://www.slideshare.net/dmc500hats/numbers-not-napkins-simple-startup-metrics-presentation

“In response to diligence and terms Invest in deals where there are other Angels who have done this before and learn from them to get started”

“Your job [as an angel] between the moment you invest before they get to break even or the next funding stage is to make sure they get to that next milestone. Understanding what their [the entrepreneurs] objectives are and whether you think they can get to break-even or weather they need downstream investors to reach break-even making sure you get to the next millstone is what you need to do as an Angel investor. “

Paul Buchheit

He was self described as “The lazy angel” because he is the current CEO of FriendFeed and has limited time.

“Have to keep everything really simple, can’t obsess over every detail and contact”

“You should avoid founders who are going to get caught up on every little detail also. As a startup there are big existential threats, you can’t spend time worrying about details like .5%”

“Asking to sign an NDA is an indicator that the founders have no idea what they are doing”

“Paul has standard docs that he prefers to use in an angel deal but if a more experienced investor has his own terms Paul just accepts whatever their terms are.”

“There are a few basic protections and deal will have like 1x liquidation preference, you get paid back before entrepreneur gets their money”

“As an angel you don’t have a huge amount of leverage, so you rely on the founders to take care of you”

“Why do you want to invest in startups? Obvious answer is you want to make money, but don’t count on making money. You have to used to the idea that all the money you invest will disappear, its good to have low expectations”

“The other reason [to angel invest] is because of the learning experience. If you rephrase everything as a learning experience then it kind of becomes a no loose situation because even if you loose all your money and everything becomes a huge disaster it was a great learning experience. You can learn a lot from startups, and their variety of situations.”

“[Angel investing] is high volatility [endeavor] so you want to invest in a lot of startups; you just need to get started. Instead of [waiting for] the perfect [startup] you just need to get the ball rolling.

Page Mailliard and Carolynn Levy

“The most import thing to ask yourself is why am I excited about this business? What is the real reason I am investing in this? Understand what your are walking into even if you do still want to invest.”

“You want to know. Who are the customers? Do they have contacts with them? If they do have a contract what are the provisions in it?”

“Have the founders been successful before? Do they have a non-compete agreements with there last companies?”

“Is there a missing founder? A lot of times it doesn’t work out between the original founding team and someone decides to leave. And that’s fine but you want know that because what you don’t want to happen is that founder comes back saying he owns a piece of that company. Want to make sure that missing founder signed a release.

Important to let the legal team know of any gut feeling issues because if a person is dishonest it will show up again and you can track that.”

“How do I invest and how do I protect myself? Open source documents, fair to company and protect the Angels.”

http://ycombinator.com/seriesaa.html here is the link to these documents which include a

1x liquidation preference

Preferred stock includes a class vote in the case of a change of control or merger

Angel investor’s right to participate in future rounds of financing

“[The documents are] less complicated than VC agreements, designed to cut down on time and legal fees”
Paul Graham posted his speech on his website http://www.paulgraham.com/angelinvesting.html

Naval Ravikant posted his speech on Venture Hacks

http://venturehacks.com/articles/angel

This is a quickie post but there a few blogs that I’ve been reading for a while that I absolutely love and wanted to share them.

• Rick Segal’s Blog (The Post Money Value): Rick is a Canadian VC with a great sense of humor and you can tell that the way he blogs is the way he acts in person – very authentic.  I can’t prove that because I haven’t met Rick, but judging by how  he writes I wouldn’t be surprised if he’s a good guy to grab a beer with.
• Dave McClure’s Blog (Master of 500 Hats): This blog is hilarious, irreverent, and incredibly informative if you’re building any kind of web startup.  There are not many things on the Internet that make me laugh out loud and this blog is one of them.  Where else can you read about tactics for acquiring users and the world’s oldest profession in a single blog post?  I thought so!
• Seth Godin’s Blog:  I know, I’m Captain Obvious to point out Seth’s blog, considering he is one of the most well-known bloggers out there.  Still, I feel like I need to spread the word.

Thanks Dave McClure again,  for the  pretty much sametime referral to www.paulgraham.com.

Needs no introduction. Concisely, it’s: Startups. 13 sentences.

While I would have made it 12, I’ll keep it unadulterated out of respect to its author. Read on. Here’s Graham’s post. The link is below the reprint.

** 

One of the things I always tell startups is a principle I learned from Paul Buchheit: it’s better to make a few people really happy than to make a lot of people semi-happy. I was saying recently to a reporter that if I could only tell startups 10 things, this would be one of them. Then I thought: what would the other 9 be?

When I made the list there turned out to be 13:

1. Pick good cofounders.

Cofounders are for a startup what location is for real estate. You can change anything about a house except where it is. In a startup you can change your idea easily, but changing your cofounders is hard. [1] And the success of a startup is almost always a function of its founders.

2. Launch fast.

The reason to launch fast is not so much that it’s critical to get your product to market early, but that you haven’t really started working on it till you’ve launched. Launching teaches you what you should have been building. Till you know that you’re wasting your time. So the main value of whatever you launch with is as a pretext for engaging users.

3. Let your idea evolve.

This is the second half of launching fast. Launch fast and iterate. It’s a big mistake to treat a startup as if it were merely a matter of implementing some brilliant initial idea. As in an essay, most of the ideas appear in the implementing.

4. Understand your users.

You can envision the wealth created by a startup as a rectangle, where one side is the number of users and the other is how much you improve their lives. [2] The second dimension is the one you have most control over. And indeed, the growth in the first will be driven by how well you do in the second. As in science, the hard part is not answering questions but asking them: the hard part is seeing something new that users lack. The better you understand them the better the odds of doing that. That’s why so many successful startups make something the founders needed.

5. Better to make a few users love you than a lot ambivalent.

Ideally you want to make large numbers of users love you, but you can’t expect to hit that right away. Initially you have to choose between satisfying all the needs of a subset of potential users, or satisfying a subset of the needs of all potential users. Take the first. It’s easier to expand userwise than satisfactionwise. And perhaps more importantly, it’s harder to lie to yourself. If you think you’re 85% of the way to a great product, how do you know it’s not 70%? Or 10%? Whereas it’s easy to know how many users you have.

6. Offer surprisingly good customer service.

Customers are used to being maltreated. Most of the companies they deal with are quasi-monopolies that get away with atrocious customer service. Your own ideas about what’s possible have been unconsciously lowered by such experiences. Try making your customer service not merely good, but surprisingly good. Go out of your way to make people happy. They’ll be overwhelmed; you’ll see. In the earliest stages of a startup, it pays to offer customer service on a level that wouldn’t scale, because it’s a way of learning about your users.

7. You make what you measure.

I learned this one from Joe Kraus. [3] Merely measuring something has an uncanny tendency to improve it. If you want to make your user numbers go up, put a big piece of paper on your wall and every day plot the number of users. You’ll be delighted when it goes up and disappointed when it goes down. Pretty soon you’ll start noticing what makes the number go up, and you’ll start to do more of that. Corollary: be careful what you measure.

8. Spend little.

I can’t emphasize how important it is for a startup to be cheap. Most startups fail before they make something people want, and the most common form of failure is running out of money. So being cheap is (almost) interchangeable with iterating rapidly. [4] But it’s more than that. A culture of cheapness keeps companies young in something like the way exercise keeps people young.

9. Get ramen profitable.

“Ramen profitable” means a startup makes just enough to pay the founders’ living expenses. It’s not rapid prototyping for business models (though it can be), but more a way of hacking the investment process. Once you cross over into ramen profitable, it completely changes your relationship with investors. It’s also great for morale.

10. Avoid distractions.

Nothing kills startups like distractions. The worst type are those that pay money: day jobs, consulting, profitable side-projects. The startup may have more long-term potential, but you’ll always interrupt working on it to answer calls from people paying you now. Paradoxically, fundraising is this type of distraction, so try to minimize that too.

11. Don’t get demoralized.

Though the immediate cause of death in a startup tends to be running out of money, the underlying cause is usually lack of focus. Either the company is run by stupid people (which can’t be fixed with advice) or the people are smart but got demoralized. Starting a startup is a huge moral weight. Understand this and make a conscious effort not to be ground down by it, just as you’d be careful to bend at the knees when picking up a heavy box.

12. Don’t give up.

Even if you get demoralized, don’t give up. You can get surprisingly far by just not giving up. This isn’t true in all fields. There are a lot of people who couldn’t become good mathematicians no matter how long they persisted. But startups aren’t like that. Sheer effort is usually enough, so long as you keep morphing your idea.

13. Deals fall through.

One of the most useful skills we learned from Viaweb was not getting our hopes up. We probably had 20 deals of various types fall through. After the first 10 or so we learned to treat deals as background processes that we should ignore till they terminated. It’s very dangerous to morale to start to depend on deals closing, not just because they so often don’t, but because it makes them less likely to.

Having gotten it down to 13 sentences, I asked myself which I’d choose if I could only keep one.

Understand your users. That’s the key. The essential task in a startup is to create wealth; the dimension of wealth you have most control over is how much you improve users’ lives; and the hardest part of that is knowing what to make for them. Once you know what to make, it’s mere effort to make it, and most decent hackers are capable of that.

Understanding your users is part of half the principles in this list. That’s the reason to launch early, to understand your users. Evolving your idea is the embodiment of understanding your users. Understanding your users well will tend to push you toward making something that makes a few people deeply happy. The most important reason for having surprisingly good customer service is that it helps you understand your users. And understanding your users will even ensure your morale, because when everything else is collapsing around you, having just ten users who love you will keep you going.

(Foot)Notes

[1] Strictly speaking it’s impossible without a time machine.

[2] In practice it’s more like a ragged comb

[3] Joe thinks one of the founders of Hewlett Packard said it first, but he doesn’t remember which.

[4] They’d be interchangeable if markets stood still. Since they don’t, working twice as fast is better than having twice as much time

http://www.paulgraham.com/13sentences.html 02.2009

Thanks to Dave McClure for this post; see below the double asterisk.

It is for companies of pre-ThreePoint stage and post ThreePoint vintage year.

But that stage thing, early on, is often less formal. More importantly, the next Y Comb  incubative cycle (I know, they are not an incubator per se, but read on!) is in Mountain View, California. Local to us, rather than Boston (a place we love and visit often, but not local like MV.)  

So here we are, read on. The dinners are cool, by the way. Please comment or email inquiries@threepointnetworks.com if you have interest.  ThreePoint receives no fee for referral; we simply want to engage more great ideas to Y Comb.

**

Y Combinator is now accepting applications for the summer 2009 funding cycle. It will take place in Mountain View, CA from June through August 2009. (Note that the summer cycle now takes place in the Bay Area rather than in Boston as it had in the past.)

If you want to apply, please submit your application online by 10 pm PST on March 18, 2009. Groups that submit early have an advantage because we have more time to read their applications.

On March 30 we’ll invite the groups that seem most promising to meet us in Mountain View on the weekend of April 17-19. We’ll reimburse up to $600 per group for travel expenses.

We’ll decide who to fund that weekend. Yes, decisions will include the amount we’ll invest and the percent of the company we’d want for it. We usually invest $5000 + $5000n, where n is the number of participating founders (i.e. 2 founders get $15,000, 3 get $20,000), in return for between 2% and 10% of the company. The median is 6%.

If you accept our offer, we’ll write you a check immediately for as much as you need to cover your initial expenses.

If we invest in you, your group is expected to move to the Bay Area for June through August 2009. (You can of course leave afterward if you want, but it’s a good place for a startup to be.)

After you’re accepted, we’ll set up all your company paperwork for you, including getting you incorporated.

Once your company exists, we’ll write a check to it for the rest of the money. You can spend the money however you want.

Y Combinator is not an incubator. We have space you can use if you need to, but we expect you to work out of wherever you find to live. It is no coincidence that so many successful startups have started this way; it’s the ideal setup for the initial phase.

From June through August we’ll have dinners every Tuesday for all the founders. At each dinner we’ll invite an expert in some aspect of startups to speak.

Throughout the 3 months we have regular office hours for startups who want to talk about what they’re building, or get advice in dealing with investors. We also have occasional open houses at YC on Thursday afternoons.

You’re encouraged to ask the founders of other YC-funded companies for help. There are now about 300 of them, and they’re usually very willing to give advice or make introductions.

About 10 weeks in, we’ll organize a pair of investor days at which you can present to later stage investors. You can of course seek additional funding from any investor whenever you want.

YC doesn’t really end after three months; only the dinners do. We continue to give advice and make introductions as long as founders need—and so does the informal network of YC-funded companies.

How do we choose who to fund? The people in your group are what matter most to us. We look for brains, motivation, and a sense of design. Experience is helpful but not critical.

Your idea is important too, but mainly as evidence that you can have good ideas. Most successful startups change their idea substantially.

We’re more likely to fund people we know are smart from their submissions and comments on Hacker News. In fact, that was one of the main reasons we wrote it: so that we could get to know people before they applied.

The ideal company would have two or three founders. We’ll consider those with four or five. We’re reluctant to accept one-person companies, though we have funded a couple.

We don’t expect you to have a formal business plan yet. All you have to do is fill out our application.

$5000 + $5000n is not a lot, but it turns out to be enough. It will cover at least 4 months’ living expenses, and that is enough time to build something nontrivial. It’s in your interest to take little money in the earliest stages, because you give up less control for it.

The original motivation for Y Combinator was benevolent, but this is not a charity. If our investments pay off, we can invest in more startups, and if they don’t, we can’t keep doing this indefinitely. So we’re looking for startups we think will succeed.

**

Got it?