Come for the Ride…

If there’s anything watching the news has taught me, it’s that excessive spending and uncontrolled growth will ultimately lead to a big crash.  Sure, when the times are good and your customers are paying for your R&D, growth or fancy company retreats, more = better.  However, during the tough times when most people are double clipping their cash to make sure it stays in their pocket, have excess fat on your operations could cost ya in the long run and chances are the government will not bail YOU out.

Since our operations for the most part is still pretty compact, I’ve been pushing the team to focus on trimming the fat in our technology.  When you face a scaling issue with your website, there are a couple of options available to help relieve the issues:

1. You can simply buy more machines to scale up if you can afford the cost.
2. You can tweak your code and squeeze more out of your existing infrastructure.  This one costs money and time as well but the improvements will help you exponentially as you scale up buying more machines.

Of course, both are really valid ways to grow - but if you do 1 without at least attempting 2, then you’re setting yourself up for bloat and wasted expenses.

In the case of EasyAutoSales - our monthly AWS costs for processing and storing images are getting close to  $1,000 a month. For a service that is supposed to the cheaper solution, it either means we’re growing well beyond our initial expectations or that we need to tweak the setup to work faster so we can save some dough.  Luckily for us, our problems are a combination of both growth and some bloat, the latter which we can fix.

In addition to tweaking some processes to make sure everything runs smoother and faster, we also found that Amazon now offers a cheaper mid-sized EC2 where it offers more computing power at half the price.  I guess Amazon realized that many are using EC2 for computing and not necessarily storage for a website and have decided to offer this new service to respond to the usage patterns.  By making code changes and instance changes, we expect to save a significant amount of money, possibly up to 25-30% of our monthly bill with Amazon.

With that said, what have you done with your startup this month to curb expenses?

As an avid automobile enthusiast, as well as entrepeneaur, it’s always interesting to find a parallel between my hobbies and my businesses. Such is the case when I got this month’s copy of SportsCar magazine. SportsCar magazine is the official club magazine of the SCCA (Sports Car Club of America). This month, an article by Randy Pobst (a well known professional racer) caught my attention in his column. “Planning Your Races” (as he calls this article) talks all about “reducing” risk over the course of the race in order to finish as well as possible. Consistant high finishes are key when you’re chasing a racing championship. This is very similar to trying to become the market leader in a given market. Making high cost, high risk moves can give you a huge payout, but more often times than not you will “end up next to the other guy in the gravel trap”, as Randy puts it.

One of the more important concepts in the article deals with the concept of watching your competitors (for a few laps) to determine what their strengths and weaknesses are. If you go in with your hair on fire trying to make passes without knowing your competitor, you might inadvertently subject yourself to risk that might be avoided by a lap or two of research. Watching, listening and planning is key. Obviously at some point you have to take the leap to make the pass, but learning your opponent’s weaknesses is key to minimizing risk.

Another form of this research comes through race engineers. They work with you before and during the race (over the radio) to tell you what opponent will do or is doing during the race. They are knowledgeable about other races on the track with you. They know who’s fast, who’s a hot-head, which cars are prone to breaking and which cars are going to be the main competition. They are complimentary to an advisory board, people in the industry who have been through the early stages of where you are and have “made it”. They are benevolent souls who aren’t in the “driver’s seat” anymore, but want to help the next generation make their mark and, again, minimize their risk by directing them towards actions that will maximize their goals and minimize their failures.

Though it may seem cliche, running a business is akin to driving a race car. Every week is another race and constantly finishing well will put your business high in the rankings. Making impatient, rash moves may put you ahead one week and behind the next. A few weeks of poor finishes can lead to frustration that snowballs. Planning and thinking ahead is an ongoing and evolving process while racing or in business. You have to constantly reassess yourself to make sure you’re decisions are taking you to your goal. As Randy ends the article, “To continue pounding this into your head, planning means planning to finish. All the crying and blaming and finger-pointing in the world will not unbend that suspension and get you back on track. Planning means using your head, not just your heart, or your hormones.”

In an effort to justify my whining over the last few weeks over the dissatisfaction of the Atlanta early-stage startup scene, I’ve decided to help be a part of the solution than to sit around and do nothing.

After all… We are the change we’re looking for.

If you’re interested in helping to change, grow and foster the Atlanta startup community, you should register for the START Atlanta kickoff event.  More information below…

START Atlanta, a non-profit organization started by local Atlanta entrepreneurs is holding a kickoff event the weekend of September 19-21 to bring together Atlanta-based angel investors, VC’s and Atlanta entrepreneurs to help connect the Atlanta Startup Community.

The vision of START Atlanta is to provide the Atlanta early-stage technology startup community access to knowledge and capital necessary to launch new businesses. START Atlanta focuses on very early-stage companies in Atlanta that are typically below the radar of the angel and VC community. The funding needed for these companies to reach their first milestone is usually between $15k to $50k. START Atlanta plans to help companies network within the Atlanta startup community and to help raise the needed capital to build these companies to a level where they can seek additional rounds from angels or higher.  START Atlanta’s technology platform will also make it easy to allow investors to invest in smaller amounts and help bring transparency to the local technology companies.

For more information, check out the START Atlanta website.

AWS has launched this years AWS Start-Up Challenge, a contest for entrepreneurs and start-ups that will award the winner $50,000 in cash, $50,000 in AWS credits, a potential investment offer from Amazon.com, and more. Submissions will be accepted until October 3, 2008.

Check out the link below for more information:

http://www.amazon.com/gp/browse.html?node=377634011

While roaming through the numerous excellent business articles on the Wall Street Journal online, one particular nugget of gold hit me a few days ago. Did you know that the US has the second highest corporate tax rates in the world? That is, unless you’ve started a business in California, Iowa, New Jersey or Pennsylvania (among others) in which case you surpass the levels companies in Japan, the highest overall in the world. A new study from the Paris-based Organization for Economic Cooperation and Development (OECD) has confirmed that “corporate taxes are most harmful for growth, followed by personal income taxes, and then consumption taxes.” The study says “investment is adversely affected by corporate taxation,” and that the most profitable and rapidly growing companies tend to be particularly sensitive to high business tax rates.

With all the evidence pointing to high corporate taxation as a huge contributor to a slowing economy, you have to ask where this sentiment comes from? I’ll tell you, people like Senator Byron Dorgan of North Dakota who have used stastics by Government Accountability Office (GAO) such as the following: 28% of large U.S. corporations paid no income tax in 2005. He says, “It’s time for big corporations to pay their fair share.” Did anyone tell Seator Dorgan that 85% of those companies didn’t make a profit last year? The story even offers this clever quip:

American Airlines and General Motors escaped income tax for 2005 through the clever tax dodge of losing $862 million and $10.5 billion, respectively. How unpatriotic.

Are these idiots really running the show in Washington? Senator Dorgan, and the rest of the polito, need to realize that corporations aren’t a true individual like you and I. Taxing a corporation is just another form of taxing the owners and shareholders of America’s companies. More taxes don’t mean less money for companies. It means less dividends. It means lower stock prices. It means your local fireman, policeman and teacher’s IRA is X% lower because the government had to take their “fair share”.

Simply put, the tax system in the US is becoming less about generating and maximixing government revenues and more about punishing behavior and redirecting people’s labor, and that’s not right. Abolish corporate taxes all together and you’ll have such a surge of new companies, companies moving from overseas and individual startups that the US will see an economic boom such has never been seen before. And with all this extra income people will be getting, the government will get their “fair share”, not to mention we won’t be double taxed any more.

It’s going to take someone with balls to stand up for the big guy and ignore all the anti-corporate rhetoric. Corporations are amoral entities. They aren’t good. They aren’t evil. They are just a vehicle to maximize profits and when they do, EVERYONE benefits. Be it shareholders, employees, charities and other businesses, business is good for America. In a few short months there will be an election and I hope we all look at our local representatives as well as our national to remove these chains which are binding America’s corporations.