Category Archives: startups

The 10 hour idea for your next startup

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Most of the time, you hear founders of startups talking about their great idea that is sweeping in scale and scope. But last night I went to a meetup where the exact opposite was proposed: an idea that will take you exactly 10 hours to put together: or, as the presenter Dylan Hassinger tells it, “one long night of coding.”

It bears further thought. Because as you flesh out your idea, you find out that it is going to take you a lot longer to really pull everything together. As an example, consider last week’s subject, Juristat. It took them the better part of a weekend to formulate the kernel of the company, and now, many months’ later, they are just seeing an actual product.

But the 10 hour idea is a good goal to keep in mind. The current term is “minimum value proposition” but this really strips things to the barest, most essential part of your startup. What is it that you are trying to get across? If you can figure something out in 10 hours, you have your elevator pitch, your have the essence of what you are trying to do. You have your hook for hiring new help. It gives you a lot of leverage.

At last night’s meetup, Hassinger boiled his own presentation on the “bulletproof startup” into a sound bite: “”Use your skills to build a tiny product with real value for a growing market that excites you.” That I like. He told us that he originally started out by saying an idea should take three months, then one month, then a weekend. I like that he arrived at 10 hours. One all-nighter. That has some appeal (although lately I value my sleep higher and higher).

Too often I see startups that are all over the place. They are trying to do too much too soon. They have multiple great ideas, and flip from one to the next, trying to satisfy the whims of their last mentor or last customer or the defects that they uncovered at their last coding session. Sure, there are a lot of blind alleys that you have go down as part of the startup process: that is to be expected. But if you have this laser focus, you can strip away everything else that isn’t essential for your actual business.

Sometimes, the 10 hour idea also means that you drop features from your product, because they are taking you away from what is that essential essence. It is easy to get into the feature war: just one more feature, really, I promise. I see this all the time in the software products that I review for major publications. They add and add and add features until you can’t find your way out of a menu tree. In review sessions where I face down developers and marketing folks (often the first time that they are actually in the same room together, which is sad and should be the subject for another column), they see how complex they have made their product and where they went astray. “But our biggest customer asked for that feature!” Sure thing. Then you add another. Resist the temptation to add complexity.

Helping lawyers predict the future

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juriA company started over the course of a weekend today is one of the winners of the St. Louis Arch Grants competition. Juristat, which applies big data analytics to legal caseloads, won a $50,000 grant as part of the competition. This comes on top of a $50,000 equity investment by Capital Innovators, a St. Louis-based venture capital firm. Juristat’s tagline is “helping lawyers predict the future.”

A little over a year ago, Drew Winship was one of the participants in the St. Louis Startup Weekend. The goal was to find others of like mind and form a company within 50 hours over a weekend. I watched as he brought his team together and began to formulate their plan, and it was fascinating. Winship’s idea was to download information from the state court websites to determine the best days and trial judges for lawyers to try their cases in front of. Because there are differences among them, and if you know going into a trial that you can get a better outcome some place else, why not use that to your advantage?

For example, why not figure out the probably of a judge granting a summary judgment (meaning a shortened trial)? Or which litigators at particular firms have better won/lost case stats? Or if your stats are better than competing law firms’? Or the composition of particular juries? If you get enough data, the analyses can be pretty compelling, particularly for large dollar law suits.

There was just one tiny problem: the Missouri state court website didn’t have any easy way for the general public to download its data. So Winship and his team put together a series of automated scraping techniques to gather the data over that first weekend. That created something of an issue, because this automated scraping effort looked to the court website as a denial of service attack in progress.

So began Juristat. You could see how lawyers and their regulatory bodies might not have much of a sense of humor, especially when it comes to having their data taken without their permission. Indeed, if you examine the sad tale of Aaron Swartz and his suicide earlier this year, he was essentially doing something similar with downloading batches of academic journal articles.

Winship is a member of the Missouri bar and somewhat reluctant to become a cowboy data wrangler: mainly because he could be put in jail for these activities. The courts decide what is and isn’t appropriate fair use of their data, even though it should be available to the public. This reminds me of the early days of the Internet when folks like Carl Malamud fought with the US Patent Office and the Securities and Exchange Commission to to free their data archives. Now we don’t think much of having this kind of access: indeed, you would be hard pressed to find folks that prefer the paper documents to what you can find online.

I spent some time with Winship last week and he brought me up to date on his fledgling company. While Missouri’s courts have since balked about giving him any data, he has been able to legally access the entire New York state court system and process it in his system. He is expecting contracts from a couple of major Manhattan law firms “any day now” and has continued to develop and refine his algorithms to make them unique and useful to his legal clients. Part of their challenge was to develop application interfaces that would work and that others could use to build on top of Juristat’s efforts. And part was just manipulating the data in such a way that it would be useful for your average lawyer with no computer knowledge. (Insert your favorite lawyer joke here.)

Yes, there are some pretty big players in their space, including Lexis and Westlaw. They don’t have all the data that Juristat has, and they don’t have any accessible analytics either. That is the golden opportunity available, and why the company has won the attention of Arch Grants.

But what I like about Juristat’s story is that you don’t often find its founders that simulate a DDOS attack to start up their company. And certainly not by a bunch of lawyers! I wish them well.

That breakout job

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In my work as a mentor for startups and as an informal career coach for others, I often tell people about the moment in time when I made a major career change. Many of you might enjoy this story as well, and use it to think about how you have gotten to where you are today.

The Internet has made it easier to stay in touch with people from our past: just this week I met with someone that attended my undergraduate college (whom I never met when I was there) and got an email from a co-worker from my past. It put me in a mood.

This job change was a big moment for me: it turned me towards my path of tech journalism and changed the nature of what I do every day.

I can remember it precisely: it was the winter of 1986, and I was working as an IT analyst for a large insurance company in downtown Los Angeles.

It was a fun job. Back then, end user computing was on the rise. Budgets and staff were big. We had, I think, somewhere north of 20 people working in various capacities, and we were installing PCs by the truck load across our three building “campus” (although no one called it that back then). I was good at my job, and enjoyed working with end users and helping them to learn about the few apps (by today’s standards) that we supported on their PCs.

I was an avid reader of PC Week, which (along with Infoworld) was the leading trade pub for IT workers. All work would stop when the internal mail delivered our copies Monday afternoon, as we tried to scan its pages before our users (who also were subscribers) would start calling us with questions about the tech they were reading about in the latest issue.

PC Week was starting a special edition that was going to be called Connectivity. It would be a supplement that would go to a subset of its readership, what publishers call a “demographic.” And they were looking for writers and stories.

I found out who was going to be running the publication and sent him what I now know is a query letter. At the time, I was just an interested reader of the pub and didn’t think anyone would be even interested in hiring me, let alone want to know what I thought was important and interesting. I mean, I was just this little cog in a big machine. I had zero professional writing experience. I didn’t know who the CEOs were of the major tech vendors by name. I was in the process of installing my company’s first LAN, so was interested in PC communications.

I was dead wrong. They were more than interested.

That query letter led to flying me out to Comdex in Vegas, the biggest tech show back then, and meeting the newly minted Connectivity staff, and eventually a job offer to join their ranks as a staff writer. I began working for them almost immediately, and the rest, as they say, is history.

That first year I wrote more than 300 individual stories for the publication. They were stories about how LANs were connecting to mainframes, and how PCs were changing the nature of American business. They were heady times: we had the ear of every major tech company around. I got to work with some of the most creative and interesting people of my career, some of whom I still am in touch with today. Many of the original PC Weekers went on to bigger and better things in the tech industry, and I am proud to count myself as part of them.

I went from installing my first LAN to telling thousands of people how to do it themselves. Back then, we could talk to anyone, including Bill Gates, just by calling them on the phone. Email was still a bright and shiny object, and the Internet was yet to be invented, by Al Gore or Vint Cerf or anyone else.

What motivated me to write that letter? I really don’t know. But it was a transformative moment for my career, to say the least. And I tell this story to you today in the hopes that you may share your own moment when your career went in a new and exciting direction, and you have the perspective to acknowledge and celebrate it. Please share your stories here if you feel so moved.

What should a startup do to prepare for crowdfunding?

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If you are thinking about using the crowd to fund your startup, you might want to think carefully about why, how and when.  Until SEC does finally promulgate the JOBS act regulations, it is mostly illegal.  Even when the final rules will be publicized, it still may not be very desirable to do so, depending on the type of business you are in and what kind of funding you are looking for.

Current status of crowdfunding

There are actually three different potential equity offerings that intersect with the online and crowdfunding world. First is a series of offerings that are made to accredited investors, such as some Missouri Venture Forum members. This is presently legal and goes under Regulation D, Rule 506 of securities laws. There are several equity-based crowdfunding sites such as AngelList, Bolstr, EarlyShares.com, Navocate.com, ReturnOnChage.com, RoyaltyClouds.com, InitialCrowdOffering.com and CircleUp, among others. The ventures can’t publically advertise for investors and the offerings have to be carefully prepared, much as an offline private placement offering is done now.

The JOBS act added two other situations, one which has proposed regulations that haven’t yet been adopted, called Title 2, and one which is still at the starting gate with nothing yet proposed, called Title 3. The former is just for accredited investors but the ventures can advertise for prospects, while the latter is for anyone who wants to buy in, with the specific circumstances still under discussion. Regardless of which way you go, your venture will probably be limited to raising one million dollars annually within any crowdfunding rounds. Given that one popular game raised that much in a day last year on Kickstarter, this could be a big possibility and a limitation. There will also be minimum and maximum equity amounts limits. These issues are still being worked out by the SEC.

One local venture that isn’t waiting for the SEC is Passer.by, which began operations earlier this year. Todd Metheny is their CEO and he said they started Passer.by “with the specific goal of providing an equity-based crowdfunding platform for indie films and allow a new breed of investors to have some say in what movies are made. If hundreds of people are interested enough in a film concept to invest, theoretically that movie has a much higher chance of finding an audience.” He calls this “social proof” and it is a powerful concept for his business. Right now they aren’t doing any equity funding, of course. They have gotten donors to back three different films, so they are starting slowly. Metheny is waiting to see how the SEC regs play out. “One of the big issues is whether the regs require audited financials. That is one of the potential deal killer provisions. It doesn’t really make sense to force a company with no financial history to provide audited financials, and the cost would be a significant risk for a new company anyway.”

Passer.by isn’t the only St. Louis-based crowdfunding startup: Former Center for Emerging Technologies COO Bill Simon’s Propelfund.com has also begun operations and is accepting ventures. They also plan on offering equity funding when approved by the SEC.

Outside of the US, there are numerous other sites such as the Dutch site Symbid.com that are used as a mechanism for raising equity or debt funding of business ventures. These countries have more permissive securities laws, and well, you can take your chances with that.

Next steps to take

So before the SEC acts, make sure you thoroughly understand the JOBS act and how it is written, and what it means for your startup. “You might be making a statement that inadvertently is fraudulent under one of the federal securities laws,” says Sara Hanks, the CEO for Crowdcheck.com, a startup due diligence firm for crowdfunding investors and companies looking for them.  “You don’t want to be overstating or overpromising something.” You might want to hire a lawyer, or use one of CrowdCheck’s services, or find other professional advice.

Should startups mix and match the crowd with traditional VC funding? The experts urge plenty of caution here. “With a larger number of investors comes greater investor relations management responsibilities,” says Metheny, who has a lot of questions about how things will work, especially for Title 3 deals. “What will the regs require in terms of updating the investors? Managing half a dozen investors is difficult–what about managing 500? How do you balance creating a system that provides adequate protection for investors but isn’t too onerous to be worth the trouble for startups?”

One possible mix-and-match scenario is to use the crowd for this social proof and pre-sell or pre-market a given product or service, to test the market, promote a startup’s efforts, and get the buzz going. Clearly, even some established companies are doing this already, such as the funding of a Veronica Mars movie to expand its popular TV franchise. Certainly, a major Hollywood studio doesn’t need the monies it raised from the crowd, but it helped get the project moving forward.

Another perspective comes from Bill Frezza, a venture partner in Adams Capital Management. Adams has $800 million under management, and Frezza thinks that startups shouldn’t mix funds from the crowd with the professionals. “If a startup does the initial angel round from the crowd and then does a subsequent round from VCs or sell any stock afterwards, you start getting more complex capital structures. And then liquidity becomes tough if things come apart with the company, if they have a down round or have to restructure. It could end up that the crowd-based investors get screwed and class action lawsuits will certainly happen.”

Metheny thinks it all comes down to how the JOBS regulations are written. “There could be some poor outcomes, but bad regulations have been written before, or you could have unintended consequences.”

Frezza says, “When you buy a security from a public company, it is a well-defined thing. From a venture financed company, it can be a Turkish bazaar, with very complex provisions that will make your head spin. We have enough problems with companies founded with doctors and dentists, but this could be even worse. It could be real easy to see your crowd-based ownership disappear entirely, because every new financing action can reshuffle the equity deck.”

Tim McFadden, a partner with Armstrong Teasdale LLP, recommends that startups interested in crowdfunding should get acquainted with the JOBS Act statute and what disclosures you may be required to make.  Prepare those in advance with help from your legal and accounting counsel so when SEC finally clarifies the crowdfunding rules, you have all documents in place and can act quickly.

(This originally appeared in the newsletter of the Missouri Venture Forum.)

To all entrepreneurs: Focus!

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For the past three and a half years, I have been meeting occasionally with a nice young man named Aaron Witt who has a startup software business called ConvertMyEmail.com. Aaron is smart, he is earnest, he works hard, and he is making a modest amount of cash from the company. The business is one in an area that I happen to know a lot about (email software), and I think I have been mostly helpful in getting it going.

When we get together for our periodic mentoring sessions, Aaron is hyper-organized. He comes with a solid agenda; we go through it point by point. He has PERT charts that track his goals and what he has to accomplish when, and takes them to heart. He goes through during our session his stickiest points that he is wrestling with at the moment. He listens well and takes careful notes, and then more often than not acts upon them. As a mentee, he is one of my favorites because he has all these process things down pat. From the outside, it looks like he is making progress.

There is just one thing, almost Shakespearean in terms of a tragic flaw: he lacks focus.

When we began our sessions in late 2009, he had a full time job where he had to travel around the world for his company. As you might imagine, that took a lot of his time and I couldn’t really blame him for wanting to stay with the regular paycheck. But as it happened, another firm bought out his and he became redundant and was cut loose last year. Aha, I thought. Finally, time where he can really get behind his business and make it sing.

It hasn’t happened, although he is doing all the right things. Why? Because of his lack of focus.

We met this week for another mentoring session and an update, and he gave me the bad news. Well, he didn’t initially see it that way. “Did I mention that I am thinking about starting another company?” he asks. Oy vey, I am thinking. Here we go again. We discussed this new company – which has at its core a dandy idea – and I am beginning to think, he just can’t stay on company #1. I told him my feelings, and that he needs to stick with the first business and give it his all, otherwise he will be responsible for two failures. “That is what my wife tells me.” Yes, maybe I should give her a call (although there is something sacrosanct about the mentor/mentee confidence, similar to a confessional booth almost).

 

Coincidentally, I met another young entrepreneur this week for the first time. He was all over the map: in addition to working a full time job, he was starting a new company and volunteering at several charities. Focus, I told him. (It is like that line about plastics in The Graduate. You don’t need to say anything more.)

In all my years of coaching and mentoring entrepreneurs, focus is Job 1. Not raising capital (although that can be tricky). Not hiring the right programmer (ditto), or building the right set of Web sites and social media entities, or nailing customer satisfaction, or the hundreds of other things that can swallow a startup and quickly sink it. It is staying focused. Take your eye off the ball, and someone takes your ball away.

Slashdot: Big Data Meets Big Box: How Two St. Louis Startups are Changing the Retail Game

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foodTwo St. Louis startups are working independently to change the way we shop for the basics such as groceries and hardware, with core strategies that rely on Big Data collections to transform the buying process and improve the flow of information from consumers to retailers and brands.

The startups are Aisle411.com and FoodEssentials.com. You can read more about what they are doing on Slashdot/BI here.

Internet Evolution blog: Ten Ways Not to Screw Up Your Next Tech Merger

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One sign that the economy is improving is that there are more mergers happening, as companies free up cash to invest in other ongoing businesses. Having seen a few of these firsthand, I offer ten suggestions on how things can go wrong, and what IT managers and CIOs should look out for. And yes, if you know my work history, you can figure out which mergers I draw on here.

1. Ignore employee contracts. At announcement day you should have a plan in place over who stays and who goes, and plan on honoring longer-term contracts, even paying bonuses when called for. The good people – especially your key developers and technical staff — aren’t going to be watching what happens to their contracts. Mess with this, and they won’t stick around a minute more than they have to.

2. Speaking of which, give everyone meager bonuses upon the merger announcement. Some people are getting big payouts, but try to fair with those that aren’t owners.

3. Overpromise when changes will be implemented. If everything is going to happen “within 90 days” after the acquisition, make it so. Like never-ending software projects, this could turn into a moving time window and these changes never get implemented. Better yet, figure out what you can do within two weeks’ time, and focus on these short-term objectives.

4. Have no clear chain of command in the new regime. Who approves travel requests? Where does someone call when someone’s invoice doesn’t get paid? What are the new regulations for cell phone reimbursement? Who approves new hosting contracts or software purchases? This nitty-gritty stuff can be easy or hard, depending on the marriage of corporate cultures and policies. Pay attention to this stuff before the announcement.

5. Take your sweet time to define new roles. This should be part of the acquisition plan. The longer you delay this, the quicker people will start leaving out of frustration over the ambiguity. This is especially the case for IT departments that have overlapping responsibilities.

6. Treat your developers like commodities. Regardless of whether you want to keep them or not, you will need them to help with the transition to whatever systems the new overlords have. A bad sign is when developers leave soon after the merger, showing they don’t have much confidence in the combined company.

7. Pay your contractors slowly. If you don’t have procedures in place to absorb new contractors and get them paid, they will find other clients quickly. Figure out how many independent contractors are on board in the acquired company and make them happy by getting your HR systems in place to pay them as quickly as possible under the new regime.

8. Keep the announcement a secret from the staff. I’ve seen mergers where the first anyone hears about it is in the press. That isn’t a good strategy. Your staff knows that something is up, so trust them to keep it quiet. By not doing so you set the wrong tone for what should be a very exciting day. At least let your managers know what is going on ahead of time.

9. Insist that everyone immediately relocate to the new HQ. Come on, this is 2012! Accept that people will want to work from wherever they currently live, and invest in hiring managers who are comfortable with supervising remote workers. Make sure you have the technology in place to encourage distributed work teams too. Let the moving evolve slowly as individuals need to find their new niche in an organization. One of my favorite positions was long ago at PC Week (now called eWeek). I started out working remotely for them, me in Los Angeles and they in Boston. Over time I got promoted and it became obvious that I needed to be in the Mother Ship. But it was a joint decision, not something dictated by HR fiat. When you let things evolve, it goes a long way towards improving morale and keeping the key people on your team.

10. Spend lots on window dressing. One firm that I knew spent lots of money on a new domain name, leaving little in the budget for other, more substantial items. A domain name isn’t any good without the associated content and the people to contribute value.

These are by no means the only ten mistakes that I have seen over the years. What were your favorite merger blunders?

The next gen manufacturers in St. Louis

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If you were paying attention, you have learned that we tend to close our factories here in St. Louis. Up until a few years ago, all of the Big Three Detroit car makers had plants: now it is just GM. This week we stopped making Twinkies and Wonder Bread here and elsewhere around the country. Luckily, we still make most of the world’s Tums right downtown in a factory across the street from our baseball stadium. But there are other kinds of factories that are popping up in the past couple of years, and it has been interesting to watch. They are less obvious than the Tums plant, with small two or three person teams.

I have been making the rounds of various entrepreneurial gatherings the past couple of weeks, first at Washington University, then at St. Louis University, then downtown at our latest startup weekend. There are people making things, but they aren’t always something that can come from a traditional factory floor.

This isn’t news, but what is interesting to me is how often I am seeing this situation, and how I am seeing second-generation effects, where folks are building on top of existing software and hardware platforms. And the kinds of people who are these next gen manufacturers aren’t just the kind of nerds out of central casting on “The Big Bang Theory” but from all walks of life and all kinds of disciplines outside the STEM core. Heck, some of them don’t even wear glasses or have oddly mismatched 60’s clothing.

The winning entry in the Idea to Product competition at SLU were two students who came up with a way to use CAD modeling software to calculate stress and loading factors. A few years ago they would have built the program from scratch. Now they are building a plug-in to extend the Sketch up tool, which once was owned by Google and used to build out the various buildings that we see in Google Earth. I was one of the judges and saw other presenters who were former schoolteachers and MBA students.

At the Olin Cup competition at the Wash U Biz school across town, one of the fellows that I am mentoring is working on a hardware case for iPhones that will turn your phone into what he calls “the next generation wallet.” The idea is to carry some common tools. He is an architect, and years ago he would be building this from scratch too. You can donate to his Kickstarter campaign now if you want to get a jump on things.

Another Olin entrant was a group of ex lawyers who are building a piece of software that theirs brethren can use to figure out which venues would be the best places for particulars trials. They got going a year ago at the last startup weekend. They are building on top of existing legal opinions that are online and available to anyone who knows how to access them. You’ll be hearing more about them soon.

The Olin Cup winners get thousands of dollars and tons of other benefits too. The CAD guys from SLU won a thousand bucks for their efforts. The next group of Arch Grant applicants is being considered, which carries a purse of $50 thousand to 20 companies who want to relocate to downtown St. Louis. Last year we had someone move here from South America.

Another company to watch is Evtron, a bunch of kids that are barely out of their teens trying to make network servers in Missouri. They were presenting at the DEMO conference last month. It seems like a pretty wild idea, but they might have a tiger by the tail. (The tiger is the Mizzou mascot, for those of you that aren’t watching college football this weekend.)

So yes, we still make GM cars in St. Louis. And software and hardware too. Happy Thanksgiving everyone! (Those Tums could come in handy also.)

Going back to basics with your next startup

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I have had the opportunity to mentor quite a few startup companies in the St. Louis region over the past several years. I was asked yesterday why I do it, and it because I want to give something back to my community, help others avoid some of the same mistakes that I did when I started my own business, and also because it is a lot of fun to meet entrepreneurs who are so passionate about their business.

It is also fun to see the widening of the entrepreneurial community in St. Louis: we just had a business plan competition (the Arch Grants) which gave away grants of $50k to 15 different startups, a few of whom are in the process of moving into town (as part of the deal to take the dough). This is just one of numerous other ways startups can raise funds here, as Jay DeLong shows you in this video.

The common theme that I keep coming back to is taking care of the basics of business isn’t always easy. What do I mean by basics? Things like pricing, understanding your market, and making sure that your niche is as narrow as possible. Let me give you a few examples.

One services firm I know was charging too little: in fact after getting some mentoring they doubled their rates! Figuring out what you charge isn’t easy: I wrestle with this all the time, particularly in the down economy that we have today. My own rates have fluctuated over the 20 years that I have been in business, and today I still marvel at firms that want me to do work for them at bargain-basement rates, or better yet, for free for “the exposure.” If I wanted exposure, I would go hiking in the mountains. I keep telling folks that I am not a charitable organization: I work for a living, and so should you. Yes, there are times when I will work for free, but under very structured and controlled circumstances. For example, I will speak at different local community-based organizations’ conferences. A speaker friend I know books up to one pro bono event each month and puts on her calendar. I like that method: you treat these freebies with the same value of paying gigs. She makes her money selling her books and consulting services from these events.

Yes, setting the right price is more art than science, but you do have to spend some time looking at your competitors and understanding that there is an implicit value in your rate: if you undercharge, you will be undervalued.

If you need help with your pricing, spend some time doing some testing: see what you can get at different prices from different clients. While this isn’t very scientific, it should give you an idea of how high your should (usually) raise your rates.

Do you really have the right niche for your product or services? One software firm that I am working with has a very narrow niche for its product, and has done well continuing to focus on what people in that niche need. But what happens if your niche is evolving? You have to evolve with it. As I said earlier, you want to continually find a narrower niche, so you can become the dominant player in that niche. Many new ventures make the mistake of going too wide rather than deep: then you are in different markets with limited resources for each.

The term du jour is “pivot” which used to mean solving a set of linear equations back when I was in grad school but now means that you refocus your startup business. That gives the impression that your original idea wasn’t sound. Instead, constantly refine what your offerings are.

Finally, if you have the right price and the right niche, there is the right market for your goods and services. Another firm I know was focused on the college-age market. They had a second service and designed it around this audience, because this customer is someone they knew and understood. They want to leverage their expertise in this space, not try to be all things to all ages. It is a valuable lesson.

How to start a new company in 50 hours or less

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I was working this past weekend, but before you send me sympathies I should tell you that I was having tons of fun. I was one of the coaches at our local Startup Weekend here in St. Louis. And I had a blast.

Startup Weekend is an outfit that has been around for several years. They do this blitz unconference-meetup-hackathon event that starts Friday evening and some 50 hours later (with optional time off for sleep), ends Sunday night with a series of pitches from participants. In between random people, many who have never met each other, try to figure out how to work together and form a company on the basis of a few wild ideas. It is just crazy enough that it actually works: last year more than 2,000 new ventures were started in cities scattered around the world. Zaarly.com is one of the success stories that started about a year ago, and Foodspotting.com is another company that had its origins with one of the Startup Weekend.

This past weekend I could have attended Startup Weekends in Nice (France), San Jose, Minsk or Norway, but I figured I would take the easier route and just drive downtown to the local one. I am glad that I did. Over the weekend, I met with a half dozen of the 12 teams that were eventually working together, offering advice and pearls of wisdom, some of which was taken, some of which was ignored. That is part of the fun of the process: you aren’t making the decisions, just acting like a trusted advisor.

This whole notion of trust is an interesting one, something that I thought about last night when I finally got home from the festivities. I mean, these people are just sitting in a random conference room. They don’t know if the person across the table is a charlatan or the real deal. And the group has to select a team leader and figure out who is going to do what when and how. That is a lot of decisions to make in a very short time.

On top of this, there was a broad mix of skills and people that came together for the weekend than you would find at the typical tech conference. I was expected to see a lot of multiple-pierced 20-somethings; instead there were lots of minorities and women and people nearing my advanced age sitting around the tables with the Gen Y’ers. That was amazing: and what was more amazing is that everyone had something to contribute. Several of them came from other cities that don’t have their own weekends, they wanted to be part of this that badly.

Nevertheless, the people in St. Louis weekend seemed to be getting along just fine. The winner of the weekend was a group that didn’t even have the germ of an idea when they sat down together. By the end of the weekend, they had done some test marketing, grabbed gigabytes of data from the Internet, put together a very compelling pitch, and two of the members were trying to figure out how to quit their day jobs to devote time to the venture. That was exciting to watch.

Startup Weekend isn’t completely free: there is an entrance fee of around $100 to support its operations, and there are grants from a variety of corporate benefactors to keep it going.

The weekend kicked off a series of events for St. Louis entrepreneurs. Tomorrow, there is the initial meeting of the local chapter of Startup America that tries to foster relationships between entrepreneurs (startupmo.org). Then Thursday is an open house for the next group of five companies that will receive investments from Capital Innovators, a tech accelerator program that has been in operation for several months. And I am involved in another mentoring operation called VentureAdvisors.org that is trying to provide a broad selection of services for more mundane companies.

These events plus the Startup Weekend are being held at an old office building downtown that used to house the regional headquarters of Macy’s. I am glad to see St. Louis bring new life into its downtown, and bring so many people together who are interested in starting new ventures.