Timing a Major Factor
Timing a Major Factor "You should be one of the first out there with your idea," Arrington said. "Its like the book about the purple cows [the best-selling "Purple Cow" by Seth Godin]: The purple cow is unique for a while, but once all the cows become purple, theyre not so exciting anymore." If youre running a site that is a service for a business, a question to ask about your site is: Does your service remove friction from a process?"Web 2.0": What does it really mean? Click here to read more. "The first thing I look at with a company is whether it has great founder dynamicsIve seen too many good companies go down the drain because of conflicts between the founding partners," Arrington said. "Owners must get along and have a common vision." Arrington also looks at the way Web companies hire staff. "Hire slow, fire fast is always a good idea," he said. About funding, Arrington said that neophyte Web companies should never raise more money than they really need to run efficiently. "A new company should never raise big moneythe owners should just learn to run lean," he said. "And the perfect revenue model is not required; if its a good idea, the owners have passion and want to work hard, and theres a community, it has a good chance to be successful," Arrington said. How to Get Large, Big-Time As an example of a meteoric rise in the Web world, Arrington pointed out the quick success of Digg.com, which according to a couple of Internet information services has surpassed the long-established Slashdot as the No. 1 site for IT-related news and community comment. "Digg has only been around for a short time [less than two years], yet now millions of people get their news each day from the sitesomewhere roughly equal to the number of people who read the New York Times online each day," Arrington said. "Facebook is another huge success85 percent of college students are said to use it. Photobucket is still relatively new, yet it is already handling about 2 percent of all photo traffic on the Web," he said. "If you can do one thing well, word can get around very quickly, and you can get hot very fast." YouTube.com, a do-it-yourself video posting site, has been in business for about a year and is doing gangbuster business. "Its probably worth $2 billion right now," Arrington said, putting on his VC cap for a second. Next Page: Attributes of Web losers.
Arrington, an attorney/venture capitalist, is always on the lookout for new ideas on the Web. However, even if a site has what appears to be a good idea and presentation, there is another key factor that he always investigates right off the top.