Small Business

Case Study: Facebook


An in-depth look at Facebook, setting up an office for free, obtaining a trademark without a lawyer, impressing venture capitalists, and more

A Case Study: Facebook

He may be a Harvard dropout, but Mark Zuckerberg is now the main character in a Harvard Business School case. His company, Facebook, "had grown from just a few friends programming around a kitchen table to a full-fledged technology business with over 100 employees and 7.4 million users," says Harvard's summary of the case. "Zuckerberg would have to develop an organizational strategy that could allow the company to keep up with its underlying growth metrics, while ensuring Facebook's consumer experience was better than its alternatives." The case is available for anyone interested in combing through the issues, either on paper or electronically, for $6.50 a copy. (Hey, Harvard has to make a living, too.)

Key Tools for Setting Up a New Office in 2007

Ed Sim, managing director of Dawntreader Ventures, an early-stage venture capital firm, advises avoiding an exchange server and instead using GoogleAps for combining e-mail and calendar functionality. For voice communication, he suggests a PC-only VoIP (Voice over Internet Protocol) provider. And for connectivity, "a simple Wi-Fi network in the office can get you simple file-sharing without an IT professional's help."

The big advantage of these approaches, he says, is that they're free. The drawback? They require that you be online. "Since this is a pretty clear problem, my prediction for 2007 is that online apps get better offline, client-like functionality." For details, see Sim's blog, www.beyondvc.com/2006/12/small_business_.html.

Keep Tabs on Your Competitors

An excellent technique for projecting your competitors' growth, or lack thereof, is to keep an eye on their job postings. Two sites that make the task easier by collecting listings from a variety of sites are Indeed (www.indeed.com) and Simply Hired (www.simplyhired.com). These are also useful to entrepreneurial job-hunters trying to keep tabs on favorite early-stage companies.

Consider the Do-It-Yourself Approach for Obtaining a Trademark

Since it's now possible to go through all the steps online—including performing a search for possibly infringing trademarks and filling out the necessary forms—the need to pay a law firm several thousand dollars is ever less compelling, say entrepreneurs who have handled everything themselves. There's even a tutorial to explain the process (see www.uspto.gov/teas/index.html). But first make a decision that a trademark will help you market your product, since pushing ahead on your own for trademark protection will cost about $300 and some hours of your time.

How to Really Impress Venture Capitalists with Your Technology

Venture capitalist Peter Rip of Crosslink Capital tells the story of two startup pitches he heard recently. "One sold the generality of what they could do, telling a big story. The other told a focused story about an existing customer base they were going to serve better. They explicitly avoided in the pitch any mention of where else their technology might apply.…All other things were equal—limited management team, pre-launch, working alpha." The focused story had it way over the big story. "VCs are great at imagining a big future, but most of us want an anchored present."

His advice: "Pick one application, serve one type of customer, and be in that business. Show how you can conquer a specific set of competitors by virtue of the technology, but don't be in the technology business. If you can persuade your investors that the first beachhead is attainable and interesting, you will get credit for subsequent applications and the big, horizontal play." More at Rip's blog, http://earlystagevc.typepad.com/earlystagevc/.

Update: Ohio Judge Backs Raw Milk Farmer

Ohio agriculture officials have taken the toughest stand in the nation against the growing popularity of raw milk (see BusinessWeek.com, 11/9/06, "The Raw Milk Wars Heat Up in Ohio"). But in an appeal of the Ohio Agriculture Dept.'s decision in September to revoke the dairy license of Carol Schmitmeyer because she distributed unpasteurized milk to shareholders of her herd, an Ohio court restored her license. Moreover, the judge sharply rebuked the Agriculture Dept. when he stated, "If the herd share agreement is a circumvention of the law, so is the department's inexact practice of allowing owners and their families, etc., to consume raw milk." The Ohio Agriculture Dept. has 30 days to appeal.

David E. Gumpert covers business/health issues and also writes the biweekly What Entrepreneurs Need to Know column.

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