I talked to quite a few people at the Startup School event this weekend, and I was surprised to find that almost everyone was working on consumer startups with advertisement as a business model. One startup, Noca, is even forfeiting one of the most lucrative revenue models there is (payment processor fees) to bet on advertising.

I’m not going to criticize this approach but I honestly thought there would be more young entrepreneurs in the Valley interested in emulating companies like Salesforce or 37signals.

It is quite ironic that David Heinemeier Hansson is seen as going against the grain, when his presentation was packed with nothing but grounded advice and a healthy dose of common sense. What’s wrong with the old true and tested way of charging money for your service?

Interestingly, DHH also said that Backback (37signals’ second app after Basecamp), had to be rebranded and relaunched as a “business” application when they realized that the consumer market wasn’t really profitable.

There was maybe one theme missing from the picture though. Building a successful business takes time and hard work. A lot of time and a lot of work, so it was great to meet you all, I have to go back to work now.

The nice thing about being a novice entrepreneur is that you never cease to find new pearls of wisdom about business just about everywhere you look at.

While reading State of Denial, I came accross the following quote regarding how a CEO should allocate his or her time.

“…one third of the time on top priorities, one third on executive placement and development and the final third on evaluating the product or results.”

Had I gone through a MBA this could have sound like old news, but to me, it felt like I had just unearthed the secret rule of time management.

Obviously, I don’t have to worry about finding and managing executive people but even a small independant internet company owner needs to spend time on developing personal relationships with its customers, partners and advisors. The rewritten rule could be:

The entrepreneur’s schedule

• 1/3: Top Priorities
• 1/3: Networking, sales and support
• 1/3: Measuring progress

Let’s just say that I think I get the first one right.

(and vice-versa).

Paul Graham, in an interview on TechCrunch, tells founders to “focus on making something great, instead of worrying about how to make money”. This is the kind of statement that generates a fair deal of controversy because it goes against conventional wisdom. We should all know that the best business model is to charge your customers. Should you fail to focus on that, you are bound to repeat the errors of the great dot-com bubble. This is roughly the argument Russel Beattie makes when he proposes a simple test for a “real” business: “do they take my credit card?”.

Before I join ranks with Paul Graham’s supporters, I would like to make a semantic point. A business model is not a revenue model. A revenue model is a way to generate revenues, like charging your customers or advertising. A sound business model includes other important aspects, such as:

• identifying and reaching out to your market.
• creating value for your users.
• building and maintaining a competitive advantage.
• growing your user base.
• and so on…

The revenue model has little to do with the reasons why a business will eventually succeed or fail. It is just one piece of the puzzle. Once you have managed to put all the other pieces in place, this one will fit right in.

If you guess that one, I’ll buy you a beer.

When it comes to web applications, Richard White’s answer is one.

“You only get one shot to impress people; don’t blow it because they won’t coming back next week to see if you’ve improved.” (link)

This is one of the lessons he draws from the demise of his employer, Kiko. Because of a less than perfect first version, nobody seemed to notice the much improved 2.0 release. With a disappointing adoption rate, the founders eventually lost their motivation and called it quits.

While it seems like a strong argument, I don’t think it is actually the right conclusion.

Whatever your target market may be, your pool of potential customers who have never heard of your service is much larger, by several degrees of magnitude, than the people who actually tried it. You may leave the early adopters unimpressed but if you can learn from them and focus on your next users, then you get another chance to make a good first impression.

So how many times can you make a first impression? About 1,043,000,000 times, which is roughly the number of people using the internet these days.

Welcome to the first post on the Veer West Log.

Veer West is a web technology startup founded in June 2006. Veer West is the next logical step for me, Cédric Savarese, after having created a couple of promising web applications.

I guess that makes me an entrepreneur, but really I am just a guy who enjoys designing and coding. A guy well aware of his inexperience and inadequacies when it comes to growing a business.

But I am not one to be deterred by a challenge. To help me keep my focus I thought I would share with you what it is that I intend to achieve with this company.

Goals are goals only if they are well defined, stated and shared. So here we go:

Long Term Goals (2-5 years)

• Veer West will be a small company with a few employees remotely commuting to a virtual office.
• Veer West revenues will come from recurring fees on web-based applications (they call that software as a service these days).

Short Term Goals (January 2007)

• Profitability
• A group of committed advisors on board
• A marketing plan

I will elaborate on these goals in future posts.