This week has been very productive (and it’s only Tuesday morning):

First on Monday, VentureBeat published my guest column on the winning pitch at the Founder Conference. It’s worth watching the video and reading the analysis, if you ever wondered why no one calls you back after you pitch your idea.

Then this morning TechCrunch Europe published the write-up of my Founder Institute Paris graduation speech. I received very positive feedback from European entrepreneurs about the points I raise. If you want to help spread entrepreneurship to the old continent, read this and do something about it.

Finally, FrenchWeb became the media partner for the Founder Conference Paris and also did a write-up today (in French).

That’s it!

There are lots of myths and dreams attached to starting a company. Will you be the next Steve Jobs or Mark Zuckerberg? Will you negotiate million dollars rounds of financing with cool VCs?

This is what starting a company really means: e-mailing 100 strangers a day, every day. For the foreseeable future.

That’s it. Of course, there will also be coding involved, but as most founders are programmers, you already know what that looks like. It’s the CEO part that sounds mysterious and fun, when really it’s just contacting people you don’t know to ask/beg for favors. Asking the press to cover you. Asking bloggers to link to your new site. Asking middle managers in larger companies to agree to meet with you.

The stressful part for first-time founders is asking strangers. People you don’t know. That’s quite uncomfortable at first. But you get used to it. Quickly, you’ll learn that sending the e-mail doesn’t actually cost you anything. If you don’t ask, for sure you’ll never get what you want. So eventually rather than wondering “should I send an e-mail to XYZ”, you just do it.

Again and again. Hundreds of times a day.

That’s how you earn your CEO wings.

PS: this post stemmed from a discussion with a recent Founder Institute grad.

Yesterday night at the Microsoft campus was a great edition of the Founder Showcase. The evening started with a tell-all keynote on freemium business models from Phil Libin, the founder of Evernote. He candidly shared information that is usually impossible to get, such as how many users convert to paying customers or how much it costs to serve the majority of users who only use the free service.

Then the real fun began: of the 12 startups pitching, there would only be one winner, determined jointly by the audience of 200 and the panel of VC judges, among which Jeff Clavier of SoftTech VC and George Zachari of Charles River Venture. The rules: 3 minutes to pitch, then the judges score the presentation on a 1 to 5 scale (1 being very bad, 5 meaning they’d like to invest). Then the audience votes.

In the first round, 6 startups pitched and the first finalist emerged very quickly: Snap Shop(*). They impressed the audience with a strikingly simple demo. Virtual reality on your cell phone finally had a useful (and profitable) use. Buying furniture is now geeky again. Stay tuned as they launch very soon.

After a break, the last 6 startups pitched. The quality was even higher. Breakthrough demoed a very impressive platform for online mental health counseling. Given the stigma associated with mental health issues, going online makes a lot of sense. But it’s eVenues, which lets you book meeting places online, that qualified as the second finalist.

It was now time for the showdown: both finalists answered questions from the judges, which allowed the investors to dig deeper into their business model, how they planned on making money, and details of how the product worked.

By 11pm, it was time for the 4 judges to vote. eVenues got the first two votes, which guaranteed they couldn’t lose anymore. Then Snap Shop got the next vote. And the next. It was a tie (2-2)! That wasn’t planned, so Adeo, the organizer called for a show of hands, which wasn’t conclusive either: the audience was quite divided. Eventually, the judges judged the show of hands, and eVenues was declared the winner.

What an evening! A lot of very smart entrepreneurs and top-notch investors in the same room, very high-quality presentations, and a lot of fun. [Adeo, you get a 9 (out of 10)]. I’ll be attending the next Founder Showcase for sure.

(*) Disclaimer: I hope I have a vested interest in their success through my participation in the Founder Institute.

I was on the Paris subway, returning from one of the first sessions of the Founder Institute there. Sitting next to me was one of the founders. Something was bothering him.

He finally asked: “why do you put so much emphasis on market size? The team, and surely other aspects must be equally important to a startup success.”

He was right: we are putting a lot of emphasis on the market size. It dawned on me that we hadn’t clearly explained why. Maybe because we took it for granted. So I said it: “VCs can fix your team by injecting more money, but they can’t fix your market”.

“Oh, of course!”. That was all the explanation he needed. When you are a bootstrapped entrepreneur, you think of money as something real hard to get, a very expensive commodity. And you lose sight of the fact that on the other side of the table, VCs see money as the cheap commodity, and good startups as the rare one.

If your technology is not quite as good as you thought, your VCs will put more money on the table and hire a bunch of Ph.Ds to make it work. But if your market turns out to be non-existent, there is nothing the VCs can do to fix it. That’s why despite all the claims about backing teams first, it’s so important to target a huge market.

Ideally, VCs want to back great teams targeting great markets. But given the choice, they’ll settle for a somewhat weaker team.

Not a smaller market.

Yesterday was the third Co-Founders MeetUp of Silicon Valley, which set a new attendance record of 120 people. 12 startups pitched their idea with the goal to attract co-founders. The quality of the ideas was very high. Another thing I liked is that this MeetUp truly opens my mind: it’s like a giant idea brainstorming session. It’s captivating. I always learn something new and exciting and find new ideas that I can apply to my own startup. Next time, we’ll try to do even better and make sure we the right mix of technical co-founders.

As I remind all the presenters beforehand, your personality is just as important as your Powerpoint. Finding co-founders has been compared to dating or marriage many times, and it’s true. So you need to show a little bit of your personal side, to attract people who will enjoy working long hours with you and stick with you during the ups and downs of your startup adventure.

And the presenter who stole the show last night is Beto, with FiestasMariachi. I knew something was up when he checked in with a guitar in hand. And he didn’t disappoint the audience!

To get back to business, he probably has found a great niche and he is probably one of a handful of people who can pull it off. I followed up with him after the MeetUp with more questions.

1. Tell us about FiestasMariachi,where the idea came from, or why you think this is important.

Beto: Like a good amount of business idea anecdotes I’ve heard, mine came from the realization that there was a pain point in a certain market. My girlfriend was trying to spend $600 on a mariachi to come to an event in San Francisco – which has a significant Mexican American population – and could not find anything online. She ended up having to go through my old mariachi teacher, two groups removed, to find someone in SF. This is a clear market inefficiency that needs to be addressed. As my roommate @JoshConstine pointed out yesterday, if someone ever has to work to spend money, there’s an opportunity there.

2. What stage are you at (do you have code, specs, etc.)?

I have what most idea people have – a great business plan, executive summary, job description for a technical co-founder, and some basic mock-ups. I’ve tried the code. I’m so bad at it. I just feel like I go round in circles reading tutorials online instead of being productive. Few things bother me more than not feeling productive.

3. What help do you need now? Did you get interesting feedback from the MeetUp?

Now I need one of two things – a technical co-founder that can do a quick build on my idea (less than four weeks should do it) or partner with an existing technology that can be white-labeled and tweeked.

I did have a lot of great feedback at the MeetUp. It’s amazing how much people are willing to engage with your idea and provide feedback; I suppose that’s the lifeblood of entrepreneurs these days: constant feedback. I’m a little disappointed that I didn’t find my technical co-founder right then and there, but it was still a great launching pad for my search (i.e., the networking was excellent).

4. Tell us about yourself, your background

I’m a dreamer from San Antonio, TX. I got into the tech game a little late while doing my undergrad at Stanford. Before then, it was all International Relations and Mariachi. But once the Silicon Valley bug gets in you, it never leaves. Follow me @betoiii to get a little better idea of where my mind is:)

5. What else will you need to succeed, or is there anything else that would make a difference for you?

The name of the game right now is perseverance. I’m extremely boot-strapped, but still committed to a successful business. In the mariachi world, I’m confident I have exactly what I need to build a viable site and marketing campaign. All I need right now is someone who shares that passion to partner with me on the build. Victory is close!

If you have been reading startup advice long enough, you surely noticed two trends repeated ad nauseum.

Iterate Quickly

Also known as “kill ideas fast”, this advice is saying that your idea is probably not worth the pixels it’s displayed on. Ideas are a dime a dozen, execution matters. You’d be better off with a dumb idea in a large, expanding market!

The advice goes on to recommend that you submit your idea to friends, advisors (maybe VCs). Find people who you trust and are honest enough to tell you that your idea is dumb. Don’t fall in love with your idea, move on, try another one.

Trust Your Guts

Also known as resilience or tenacity: when everyone else tells you to give up, when there is no hope in sight, what separates the successsful entrepreneur from the wanna-be: perseverance. Don’t give up.

Or my favorite quote: Instant success takes years!

Making Sense Of It

The apparent contradiction was especially visible during the latest Founder Institute session in Silicon Valley, since several mentors gave both advice back to back. Some founders couldn’t help but notice.

Here’s my take on the contradiction: both your guts and everyone else are right — partially. It takes a very smart person (you) to figure out the gem that your guts detect and remove the junk that everyone else sees.

So it’s not a contradiction at all. We are just going back to the essence of intelligence: you need to keep thinking about every angle of your idea. If you really believe there is something to it, I’ll believe you. But also listen to feedback because while it may be missing your big picture, it is probably right at least on a tactical level. Your rough idea, as you pitch it, likely has shortcomings and limitations.

It’s your job to figure it out.

Aucadia.com is a community website aimed at musicians and fans where the fans can get involved with the bands they love.

It’s such a cool project, we had to find out more from Robin and Owen Spottiswoode, the two co-founders.

Alain: Tell us about your product and maybe where the idea came from, or why you think this is important

Robin: The idea came from research I was doing for a presentation on Digital Rights Management whilst I was at university. I was simultaneously fascinated and appalled at the way the music industry operated. I was fascinated at the audacity of an industry for whom it was common practice to keep its most important commodity – artists – in a legal stranglehold and appalled that this was the way artists continue to be treated. I came to realise that it was the industry itself that was the root of the problem, and became determined to change it for the better.

Owen: Aucadia.com is all about bringing music fans and artists closer together, and finding a fairer way to distribute music and share its profits. We’re trying to build a community where artists are given the freedom to record their best music, and fans are able to get involved in the bands they love, and share in their success.

Robin: We wanted to get away from the idea that record labels dictate everything – from the price of the music to which songs are recorded and released. We want to give this power back to the artist and fans, the people that matter.

Owen: The idea behind Aucadia.com is that fans buy and sell ‘shares’ in the bands they like, at prices determined by them. Shareholders can download an artist’s entire back-catalogue and get access to exclusive gigs/shows and opportunities. The price of a ‘share’ will rise and fall depending on how popular and successful an artist is, so by supporting a band early in their career you can have a stake in their future success.

Robin: The emphasis is definitely on collaboration – we encourage fans to get involved by putting on gigs/shows and helping out the artist in any way possible. We want to break down barriers between artists and their fans in a way that will benefit both sides.

Alain: This is great. It’s also so close to our own values here at FairSoftware. What stage are you at (do you have code, specs, etc.)?

Robin: I’m coding the site as we speak. The specs are all there, it’s just a matter of getting all the functionality working the way we want. It sounds like a boring task, but it’s actually a lot of fun! I’m setting up a complete trading market, where artists’ share prices are dictated by trading between fans and will soon be able to pull all sorts of graphs from the data. It’s not like anything I’ve done before, which is what makes it so interesting (if a bit daunting). I’ll need to tie up a few loose ends before some more testing and debugging, and then there will be a closed alpha release before Christmas.

Owen: Once we’re happy the system is working we’ll jump straight into a public beta with ‘play money’. Each user who signs up will get some funds to build a portfolio with, so that they can start trading straight away. This will be a great way for people to get their feet wet without having to take the plunge and invest their own money straight away. This will also give artists the opportunity to test the service and see how it works.

Alain: What help do you need now?

Robin: We need able-bodied PHP programmers to help with general coding/debugging along with testers, lots of testers. Any PHP programmers that have experience in CakePHP would be a huge bonus, but it’s not a necessity, as Cake is similar to many other frameworks. If you want to get involved, please please please check out our page on FairSoftware or email me. It goes without saying, if you help out you’ll get shares through FairSoftware and be able to share in Aucadia’s success.

Owen: We’ll also be looking to raise our profile in the music world as we get closer to launch, so anyone who would be able offer insights into the industry would prove a valuable team member.

Robin: But the site is all about collaboration, so anyone with an interest in music and new media should definitely get in touch.

Alain: Tell us about yourselves, your backgrounds

Owen: We’re both really into music – we’ve played in a band together for several years – which is what got us both interested in this project. Robin has been doing web development for a while, whilst I work in the media, so there is a natural division of labour: he gets his hands dirty with the nuts and bolts of coding the site, whilst I’m tasked with planning our business development.

Robin: I divide my time between coding websites and bowing/plucking/hammering a musical instrument. This project encompasses the things we are both interested in, which is what makes it so exciting for us.

Alain: What else will you need to succeed, or is there anything else that would make a difference for you?

Owen: Our business model should start generating money from launch, but it gets more successful the more people use the site, so we would consider outside investment if it allowed us to fast-track our marketing strategy and get the word out more quickly.

Robin: We need good people who are passionate about the future of music to get involved. The bigger the pool of ideas, the better the outcome will be. Currently we are trying to encourage interest in the project, to give like-minded people the chance to get involved at this early stage and share in any success. Aucadia.com is going to be a marriage of the social and music web in a way that will be self-sufficient, allowing complete freedom The community will be a key aspect to this, so we are looking for people to help manage and promote the community from the outset.

Owen: And we will have someone else to blame if it all goes horribly wrong.

Robin: *laughs* Yes, that too.

You can follow the progress of the project on twitter: @aucadia.

If you are interested in helping with development, click here.

Yesterday Steve Mathers posted a project on FairSoftware that looks pretty exciting: It’s a Facebook game called despots.

I asked Steve for some more info. The interview is below:

Alain: Tell us about your product and maybe where the idea came from, or why you think this is important

Steve: I’m an avid strategy gamer, and this game has been slowly coming into form over five years. Originally I envisaged it as a web application, but recently I came to realize that Facebook would be a perfect platform for it.

The setting for Despots is a fictional middle-ages world of many states or kingdoms. Each player plays a single character in that world. The central idea behind Despots- is that the players’ characters form the ruling elite of various states – the kings, courts, functionaries, generals, lords and ladies.

Player characters will be able to buy land, build armies, invest in businesses, collect taxes, command their underlings, spy on each other, and above all, conspire with one another via email.

So in a nutshell, I expect Despot to be a snake-pit of shifting alliances, intrigue, and skulduggery, both on an international level, as various states cooperate or compete to their best advantage, and also within each state itself, as individual player characters do the same on a personal level. It will be about strategy, diplomacy, and above all, trust.

Of course there is much more to it — suffice to say that the game is one that hasn’t been seen before.

Alain: What stage are you at – do you have code, specs?

Steve: The game is almost fully specced. There are some minor details awaiting further thought and/or play-testing, but all significant spec work is complete. There needs to be some tweaking now that the aim is the Facebook platform rather than a straight web app.

Alain: What help do you need now?

Steve: I need Facebook app developers and a 2-D graphical artist.

Alain: Tell us about yourself, what is your background?

Steve: I am a software developer with no time on my hands to do this concept justice!

Alain: What else will you need to succeed, or is there anything else that would make a difference for you?

Steve: I am unsure exactly how to monetize a Facebook application. I am hoping that someone with Facebook development experience will have a better idea.

Alain: Thank you!

At an iPhone developer Meetup a few nights ago, an iPhone developer asked me a key question: “how much equity in my project should I offer to the technical writer that I need to finish my app?”

His gut feeling was that as the main developer, he of course should keep most of the revenue.

There are two ways to approach this question. You should use both. If they lead you to similar numbers, you have your answer. If not, something is wrong and you need to understand why before you proceed with a revenue sharing deal.

Be Realistic About Who Needs Who

Everyone tends to have a high opinion of their work. That’s a problem when trying to reach a fair deal.

As a developer, you know how tough it is to write good code. To you, English writing doesn’t seem like a big deal – although you are not willing to do it yourself.

Well, the writer on the other side thinks the same way. It all goes down to negotiations and who can walk away from the deal.

Ask yourself this question: if the writer was to quit when the first version of the app is out, would it be a problem or not? Or will you need them to stay around and improve the product?

This is the key question that tells you the difference between a co-founder and a contractor.

Obviously co-founders deserve a significant amount of shares. Contractors want to be paid, but they can be replaced.

Be realistic about the fact that you indeed need a good writer. Your app’s quality may depend on it.

At the car dealership, you must be willing to walk out three times to get a good deal. Equity negotiations work the same way, except that once you reach a deal, you need to actually spend time with the other person. So you can’t burn bridges.

Discounted Value of Future Revenue

The second exercise is to look at the potential income and check whether it’s in line with compensation. If the writer is expected to put about a month of work full-time and you offer 1% of an app that may make $20,000, that’s a total compensation of $200 for the month. It just doesn’t compute.

No need to go back to business school and run a fancy analysis about discounted values and risk factors, but it’s clear that anyone who works for revenue share is taking a risk. So even the $200 above is a best case scenario.

In reality, there is a possibility that the app never makes it to the market, so the writer makes $0. The app could do ok and generate a few thousand dollars. The writers makes less than $20 (the price of a dinner).

The Number

So what is the right number? In the case of that developer, the amount of work expected of the writer was significant (a month, probably more with updates, changes and what-not). The job was more that of a co-founder, not a hired gun. My recommendation: anywhere from 25% to 40%.

What do you think? Is that the right number? Is too much or too little?

Today we are excited to announce an enhancement to the way you create projects with FairSoftware.

Many of you asked us for a more flexible way to add co-founders early on and offer more flexibility on the allocation of shares, since you haven’t always found all your co-founders by the time you have your initial idea.

Therefore, creating a Fair Project is now split in two parts. First, you setup your project, with a very simple one-page form. At that stage, all you really need is a name and some idea of what you want to build.

You can leave your project in that stage for as long as you want. You an start adding co-founders from friends you know, advertise your project to the rest of our community, and also crowdsource your idea by gathering feedback.

During that setup phase, you can freely add or remove co-founders and modify the share allocation as many times as you want until you are happy with the results.

Invite Co-Founder

Edit Shares Split

Once you have settled on a founding team, you activate the project. That’s when each co-founder has to agree to the deal by approving the Software Bill of Rights. From then on, co-founders can start contributing, write code, and so on. Everyone is protected legally. As before, you can grow your project and bring more contributors on board.

We hope this improvement will make it even easier than before to start working on apps, even if you haven’t found a team yet.

As always, feel free to send us feedback and requests for more improvements.