The main theme of the book is to trim the fat and do fewer things better; simplifying every aspect of your business and doing a smaller number of things at a higher quality is far better than trying to do too much and a mediocre level. There were times when customers of their products wanted more features and they refused to comply because it would slow them down and decrease efficiency. They decry time-stealing meetings, lengthy contracts, childish office politics and bloated inventories because they weigh down companies from reaching their full potential.

Rework is a great read for entrepreneurs because it is very focused and doesn't waste any time with lengthy use cases. The book itself is an example of the principals it teaches; the quality of a written work is not based on it's length, so why should company be judged by how many features it offers? Fried and Hansson admit that the book, which comes in at a dense but brief 288 pages, was originally drafted to be nearly twice as long, but why say in 600 pages what you can say under 300? Another reason the book is a great read is because of the authors' open and honest tone.

"Ever seen those weapons prisoners make out of soap, or a spoon? They make do with what they've got," one passage humorously points out. "Now we're not saying you should go out and shank somebody, but get creative, and you'll amazed with what you can make with just a little."

Other useful and easily digestible analogies for their unique business ideas include comparing your company to a hot dog stand. They advise that the best way to trim down an inflated company is to find the "epicenter" by asking yourself, "If I took this away, would what I'm selling still exist?" The best hot dog stand doesn't worry about the decorations on the stand, or the condiments - it worries about the hot dogs.

There are dozens of other valuable pieces of advice in Rework that are sure to inspire any entrepreneur or small business owner. But as LeVar Burton famously said at the end of each episode of Reading Rainbow, you don't have to take my word for it. Seth Godin, who has authored several books on business and entrepreneurship including The Dip which we profiled earlier this year, had nothing but high praise for Rework.

"Jason and David have broken all the rules and won. Again and again they've demonstrated that the regular way isn't necessarily the right way," says Godin. "They just don't say it, they do it. And they do it better than just about anyone has any right to expect."

This book is an obvious buy not only because the of the expert advice dispensed by the successful founders of 37signals, but also because the book is an easy, quick and inexpensive read. Personally, in a few short hours I was able to breeze through the audio version, which can be found online for less than $10. But if you prefer reading words on a page, the Kindle version is also $10, or a hardback copy is just $3 more at some online retailers.

Silicon Valley is certainly the mecca of venture capital and social web applications, and in many ways, moving the company to the Valley is a smart move. As we mentioned back in January, Formspring.me plans to rewrite its application to scale more efficiently as the product grows in popularity - something that requires talented programmers. The company has already listed four job openings in San Francisco for a pair of developers, a designer and a data analyst.

By moving to the Valley, Formspring.me will be able to tap the enormous talent pools to find top tier programmers and designers to take their app to the next level. If they want to build out an API and create mobile applications for their app, they are in the right place to do it. When the time comes to look for further funding, having set up shop in the Valley will certainly benefit the company in their efforts.

For other cities outside of the Valley looking to build competitive startup and venture capital communities, these are unfortunate truths. It is not uncommon to see successful startups leave their cities of birth for the Valley to find talented employees and raise their chances for finding funding. We recently discussed Chicago's growing startup scene, which is not far from Indianapolis, but the opportunities in the Midwest do not yet compare to those available in other booming startup cities.

Had Formspring.me been founded in a city like Austin, Boulder, New York or Boston, they would have likely remained there upon receiving funding. That is, perhaps, if they received funding locally. While the Midwest is growing its startup culture, there are far fewer VC firms, and far smaller talent pools when compared to other locations. Until more cities have their own thriving startup scene, stories like Formspring.me's will continue to play out across the country.

The fact that Formspring.me attracted funding from the Valley before relocating raises the question of whether the decision to move was theirs or if it was a recommendation or stipulation of the investors. We have reached out for comment on this question and will update this post as more information becomes available. In the meantime, let us know what you think of Formspring.me or any other startup moving to the Valley in the comments.

UPDATE: We received a response to the question from the company's President John Wechsler on his Formspring.me page. Wechsler explains that the decision to move to San Francisco was was made by the team and was not part of the terms of the funding agreement.

Disclosure: The New York Times is a syndication partner of ReadWriteWeb

"VCs hear bad news all the time -- it is part of the startup process and part of the VC job description," says Hirshland. "Any VC worth his or her salt should respond to bad news, provided it is shared in a timely fashion, by helping the entrepreneur figure out the best way to respond rather than dwelling on what went wrong."

He advises CEOs to stear clear of attempts to placate their board members by spouting off excuses for whatever their bad news is, or by claiming that they are already fixing the problem in hopes of avoiding any impending wrath. From what Hirshland says, board members are not schoolmasters there to punish you and whip you into shape; they are there to help, so don't isolate yourself, he says. If you speak openly and honestly about your issues with your board, chances are you will preserve your most valued asset as an entrepreneur and as a startup: credibility.

"Early stage ventures are filled with ambiguity. Entrepreneurs and their investors need to make quick decisions based on information that is far from complete," says Hirshland. "This necessitates relying to a very substantial degree on the entrepreneurs' interpretation of the situation and prospects."

In other words, you are the eyes and ears for your board, and if you aren't being open and honest with them, bad things will happen. Worst of all, speaking with fluff and rounding out the rough edges of your company will destroy your credibility, which Hirshland calls "toxic" to your partnership and "not a happy place for either the entrepreneur or the investor."

As we mentioned earlier this week, credibility is your best friend when trying to get funded, so make sure you carry it with you and preserve it in your board meetings and into your company's future. Save the pitching for future rounds of fundraising, and when it comes to your board members, don't try to win them over, simply treat them like equal members of your team.

So what are startups to do when an updated version of their product or service sets off a firestorm of hate mail from previously pleased users? Well, for starters, make sure you're not taking a Borg-like approach by assimilating customers into submission; forcing things on people never goes over well. Secondly, as crowdSPRING co-founder Ross Kimbarovsky advises, take the time to listen to your users; after all, they are the ones using your product day-to-day and they probably have a few good ideas.

"You have to be patient, you have to give your customers and your community some room, some time to react, to criticize, to discuss, to debate," says Kimbarovsky in a recent video blog. "You can't harshly tell them 'this is the way it is and that's it', because it will close off communications and make it sound like you don't care what they say."

There also may be a chance to bring about the change gradually as to not upset your customers with sudden drastic changes. Kimbarovsky recounts an example in which eBay wanted to change its background color from yellow to white, so instead of flipping a switch, they slowly changed the background to a lighter shade of yellow day-by-day until the background was white. But for the most part, changes can't always be long and drawn out like eBay's color choices, so Kimbarovsky simply says to engage with your customers when they react and let their voices be heard.

"After a short amount of time, if your change is good, if it's reasonable and if it's meant to improve as you believe it is, then your customers and your community will understand it," says Kimbarovsky. "And if it's not, then you will understand that it just isn't working."

Towards that end we've posted many a list. And now it's time for a review. Here are six of our best lists in abbreviated form. From how not to kill your startup, to public speaking, to funders to follow, we at ReadWriteStart want to help. If you have ideas for future lists, please post 'em as comments below.

1. The Operations Blog
2. The Veteran / Inspirational Blog
3. The Prediction Blog
4. The Research Blog
5. The Community / Advocate Blog
6. The Coolhunter Blog

Kevin Rose's 10 Tips for Entrepreneurs

1. Just Build It
2. Iterate
3. Hire Your Boss
4. Demand Excellence
5. Raising Money
6. Hack the Press
7. Invest in Advisors
8. Connect With the Community
9. Leverage Your User Base to Spread the Word
10. Analyze Your Traffic

6 Great Approaches to Public Speaking

1. How Not to Suck at a Group Presentation LA-based investor Mark Suster
2. Guy Kawasaki wrote this rule for PowerPoint
3. How to Present While People are Twittering: Presentation trainer Olivia Mitchell
4. Uncovering Steve Jobs' Presentation Secrets: Business Week columnist Carmine Gallo
5. The Lessig Method: :Lawyer and activist Lawrence Lessig
6. Joseph Campbell's The Hero with a Thousand Faces

10 Principles For Not Killing Your Startup

1. This one's obvious - watch your cash flow.
2. Spot a real problem and concentrate your efforts on solving it.
3. Identify your target market(s) and collect market feedback early on.
4. Design and develop a minimum viable solution as fast as possible.
5. Surround yourself with dedicated, effective people.
6. Read Crossing the Chasm. Appreciate the difference between early adopters and mainstream.
7. Consider other sources of competitive power than just technological sophistication.
8. Have a plan for cutting through market noise.
9. Invest time in selecting and testing a business model.
10. Be creative and resourceful in meeting your objectives.

5 Great Blogs For Funding Advice

1. BOTH SIDES OF THE TABLE @msuster
2. PAULGRAHAM.COM
3. A VC, @fredwilson
4. VENTURE HACKS, @venturehacks
5. VENTURE BLOG, @ventureblog

10 Things to Be Clear About Before You Start a Company

1. Is this your first venture?
2. Are you really an entrepreneur?
3. Does your venture involve something you understand really well?
4. Can your mother understand the value proposition?
5. Can you see the right wave?
6. What does your startup want to be when it grows up?
7. Starting a company is hard and filled with uncertainty.
8. Get a partner or fly solo?
9. Would you refuse a well-paying job to do this?
10. Can you raise appropriate financing?

Photo by Wiki Commons.

There was a time when all you needed to succeed on the Internet were lots and lots of eyeballs, and the best way of measuring those eyeballs was by tracking pageviews (measuring exactly which pages on a website are viewed by individual visitors). The dot-com crash showed us that the eyeball-based business model was a failure.

Guest author Tim Trefren is one of the founders of Mixpanel, a real-time Web analytics service that helps companies understand how users interact with Web applications. He writes about analytics at the company blog.

For startups that sell something, metrics like average revenue per user (ARPU) and customer lifetime value (CLV) are vastly more valuable than detailed pageview tracking. It doesn't make any sense to focus on pageviews (an approximation for value) when you can measure the real thing directly.

There's also a clear pattern in the direction the Web is heading - toward interaction and responsiveness, and away from separate pages. If you're going for incredible user experience, on-page interactions are your bread and butter. Can you imagine what a drag it would be if the page reloaded every time you commented or 'Liked' something on Facebook? It would be awful.

This trend further devalues the pageview as a valid metric. If you have a highly interactive Web application that spans only a few pages, there's not a whole lot of value in seeing how many times those pages were loaded. Much more valuable information can be found by tracking the parts of your application that your users are interacting with the most. The benefits here are twofold: You can directly measure the things that are important to you, and you gain unparalleled insight into how people actually use your application.

If Not Pageviews, Then What?

When you're deciding how to incorporate analytics into your strategy, the most important thing is that you are gathering actionable data. By this I mean that you have to be able to use the information you gather to make a decision and take action. If you're not going to use it to make a decision, it's a waste of time to even look at it.

With this in mind, there are a few areas we should focus on: split testing, interaction tracking, conversion funnel analysis, and click tracking. These methods will give you the information you need to both improve your conversion rates and your understanding of user behavior.

Just a few years back, your only options were to roll your own analytics or to pay tons of money to a giant company like Omniture. This left startups in a tough spot, one many startup founders still encounter today: it's difficult to justify putting a lot of development time into analytics when it's not your main product, and it's hard for a small company to work with a large sales organization.

Luckily, the analytics landscape is changing. Many new companies are sprouting up to handle every aspect of your analytics, freeing you from the need to develop your own internal tools.

Split testing

Split testing involves creating different versions of your site and measuring how the changes affect user behavior. Your changes can be as small as a different call to action or as large as a complete redesign. With this data in hand, you can make changes to your website to massively improve your conversion rates.

What companies do it?

• Google Website Optimizer is a free multivariate testing solution. It makes it possible to change a number of different things and determine the optimal combination of changes.

Conversion funnel analysis

Funnel analysis is a way of measuring conversion rates across multiple steps of user acquisition. For example, you can measure the rate at which visitors from the front page go to the pricing page, and then how many continue on to actually create an account. This is an incredibly important concept to understand, and can be applied to many aspects of your application.

What companies do it?

• Mixpanel (my company) is a freemium service that provides funnel analysis and segmentation.
• Google Analytics has a feature called Funnel Visualization that provides basic pageview-based funnel tracking.
• KISSmetrics is a new company with a funnel analysis product in closed beta.

Click tracking

Click tracking is a great way to measure how effective your website is. Every click a visitor makes is recorded, so you know which links and buttons are receiving attention. There are a number of ways to report this data, but the most popular is to overlay an image of your website with a heatmap of all of the clicks. If your users aren't performing as you expect, you can try changing the page and continuing the test.

What products do it?

• ClickTale is a freemium service that can generate click heatmaps and movies of single visitor sessions.
• CrazyEgg is a paid service that can generate a few different reports for your visitor click activity, including heatmaps.

Event tracking

Event tracking is a way of measuring exactly what users are doing on your site. Things like invites sent, videos played, and user signups all count as events. This functionality will grow more and more important as the Web grows more interactive.

What companies do it?

• Kontagent is a freemium service that is focused on Facebook applications. It can track Facebook-specific events like invites and notifications, among other things.
• Google Analytics recently added basic event tracking to complement its pageview based service.

Measure Relevancy, Not Your Ego

Ultimately, analytics are crucial to online success. If you want to improve your startup, you've got to be measuring it. It's critical to measure the right things, though - the things that are actually important to your business, not things merely appeal to your ego. It can be mesmerizing to watch the unique visitor count go up day-over-day, but this is a dangerous diversion. The era of eyeballs equaling success is long past, so you should instead be measuring the things that are truly relevant to your business.

If you're not measuring your visitors yet, I urge you to get your toes wet - track something small. The conversion rates for the buttons on your front page would be a great place to start.

Is the pageview really dead? What other companies and services are available to help companies move beyond a pageview-centric mindset? Let us know in the comments

Photo by Iva Villi.

Not only would this bill make the process of attaining seed-stage funding more difficult, more expensive, and more time consuming, it goes against the government's goal to create jobs in America. If these regulations become law, fewer startups will get funding because they won't want to deal with the lengthy SEC filing process.

Instead, more innovative ideas will go by the wayside, startups will not get funding, and jobs will not be created. Furthermore, by raising the requirements to provide angel funding, the pool of investors will shrink, which will only exacerbate the problems facing the nation's already floundering venture capital industry that is only recently seeing signs of recovery. In a letter sent to Senator Dodd earlier this month, Mark Heesen, President of the National Venture Capital Association, and Marianne Hudson, Executive Director of the Angel Capital Association, together outlined their grievances with the bill and its danger towards the VC industry.

"Venture capitalists often invest in companies that were supported by angels, so ensuring that regulations for accredited investors do not harm this capital source is important," said Heesen and Hudson. "In addition, as more and more venture capital firms co-invest with angel investors and angel organizations, the state preemption of securities regulations could extend to a large number of businesses, from start-ups to others that need capital for growth."

What do you think of this bill? It seems to me the sections mentioned above will be in direct conflict with the Startup Visa movement which most of the startup community seems to be on board with. The distinction seems obviously clear: encouraging foreign entrepreneurs to start their companies in America will create jobs, and this new bill from Senator Dodd will prevent the creation of jobs by thinning out angel investments. Let us know your thoughts below in the comments.

"[ZooLoo's original model] was an advertising platform, we had a shopping page, we would do affiliate marketing, you could buy and order prints off of our website - we had a very broad business model," says Baer. "We discovered that didn't work."

They also realized that it wasn't the model their customers wanted. Under the old model, users were presented with two options: a free basic service, and a premium service with more features in an "all or nothing," fashion. Customers complained that they wanted to upgrade and purchase premium services, but that they weren't willing to pony up the full price for a bunch of other features they didn't want.

In January, ZooLoo fundamentally changed their business model by creating a storefront through which customers could pick and choose features on a micropayment level. Now if a user wants to purchase their own domain name, but doesn't want to pay for ZooLoo's SEO services, they can do that instead of being forced into picking from a tiered package.

While customer feedback was a substantial motivator for the change, Baer says that potential investors also played a role in the addition of the storefront. "The investors said, 'You have a solid product, but I want to see you find a better way to package it, and a better way to sell it'," he says.

And the change worked. Since adding their micropayment storefront, ZooLoo has seen an increase in purchases of their premium services. The company is making more money marketing virtual goods in a micropayment system than they were when they bundled everything together at a higher price and relied on advertising and affiliate marketing. This is the exact paradigm shift in online marketing that Dave McClure preaches in his post mentioned earlier.

"Gradually we are discovering that the default revenue model on the internet should probably be the simplest one," writes McClure. "That is: basic transactions for physical or digital goods, and recurring transactions (aka subscriptions) for repeat usage."

Without repeat usage, McClure says that the biggest obstacle in the way of getting users on board with micropayments is that they forget their password. Honestly, if I was asked to login to my Amazon or PayPal accounts right now, I would be playing a guessing game with a handful of passwords because I don't use those services too often. But for iTunes, Google and Facebook - the services McClure says will be the leaders in eCommerce login in five years - I use those every day, and surely remember my password.

ZooLoo realizes this too, which is why they foster repeat usage by connecting their services with Twitter, Facebook, and other popular online social networks. Users can also log into ZooLoo using Facebook Connect, which eliminates the problem of remembering a less frequently used password. ZooLoo and Baer are fully on board with this emerging model, and suggest others hop on as well.

"There is this social media bubble forming where all these services are saying, 'We're free, come use us!', but eventually those services need to make money," says Baer. "We think micropayments are the next big thing."

Photo by Flickr user r-z.

Earlier today we wrote about a new mobile analytics report that showed that Google is no Apple. We explained the difference between these two as relates to phone sales and usage. Now we'd like to highlight the difference for startups that are deciding which one to do business with. It's tempting to go with Apple because of their current sales figures, but in the long run Google is going to be a far less limiting business partner.

In early March at the Mobilex Conference in Chicago, Charles Yim, of Ad Mob explained his company's mobile metrics report: "Android and iPhone users download a similar number of apps every month and spend a similar amount of time using the apps. However, iPhone users continue to download more paid applications, with 50% of users purchasing at least one paid application a month compared to 21% of Android users and 24% of webOS users."

This, as well as the iPad's pre-order numbers, is one of the strongest arguments for why the iPhone is the best way to go. So yes, the money is in Apple apps, but consider that app developers are starting to make equivalent money with Android.

Difference between Apple and Google as a Business Partner

Recently ReadWriteWeb guest writer Daniel Cawrey pointed out that Google makes most of their ad revenue by driving traffic to Google-owned websites. So the greater the number of apps Google can get on their websites, the more page views and resultant ad revenue they generate.

Yes, that's good for Google. But since selling mobile apps increases the amount of page views Google can generate, the company is going to be far less concerned with charging or limiting app developers in the way that Apple does.

Finally, mobile innovator forums are already being dominated by Android. Where do you think you'll find more app makers to partner with? There are far fewer barriers to app developers collaborating on the Android platform compared to the walled-garden of Apple.

Tech startups often have to plan for long-term economic growth in ways that the current market says is not yet possible and when it come to long-term growth, Google Android is going to limit those possibilities far less than Apple.

UPDATE: An earlier version of this story incorrectly described the Android and Google marketplaces. We regret the error.

One important lesson they learned through their first set of interviews is that they hadn't talked to anyone but themselves about the idea. After all, if you're trying to create a service that will change the way scientists and college professors share information, shouldn't you talk to them about what their needs are? Investors and organizations want to see more than a great idea; they want to know you've thought it out and have identified a specific audience that has needs. For Burnham and his team, after being shown the door a few times, they turned around and spoke with their "users," even though they didn't have a product to show.

"We started asking for input from every potential user we knew and sending cold e-​​mails by the dozen to [University of Michigan professors] to ask them to talk with us about their software needs," writes Burnham on his blog. "Based on the feedback we were getting, our understanding of the market completely changed."

If there is one thing startups can learn from the perilous launch of Google Buzz, its that getting feedback from users is a good thing to before launching; or in the case of Theoryville, before looking for funding or acceptance to an incubator. Burnham and his partners assumed that they needed a working demo before they could get any useful customer feedback, but in reality, there is much to be learned about your audience before you start building.

In fact, it makes a whole lot more sense to speak with the people you want to see using your product before you waste time, resources, and perhaps money on building an early prototype that they will snub their noses at. It's a lot like making sure the plot of land you have chosen to build your house on is a solid and stable foundation. That is not to say, however, that building a demo does not lend itself to learning valuable lessons about your product.

"[Building a demo] led us to grapple with some design decisions that weren't apparent when we were just using white boards and static mockups," says Burnham. "That, in turn, gave us a more specific notion of what our product's advantages are."

So they checked the foundation before building, but when their house was done they realized that too many windows were facing west and catching the hot late-afternoon sun - a regrettable error and a lesson learned (especially for home builders where I'm from). Despite some changes that needed to be made, Burnahm says "it gave us some momentum, which we're using to build a much-​​improved demo now." So the best way to make early progress, it seems, would be to get that first rough draft out the door and begin iterating over and over on it; move some windows around until the latest version is a better, more mature version of your product.

It also seems like it helped that they had applied to earlier incubators before applying to Y Combinator. They also participated in TechStars For A Day in Boulder, where they not only learned a lot from the mentors but were able to network with potential users of their service in the area. Attending these events and applying to other incubators worked like spring training before a preliminary interview with Y Combinator via Skype, and it couldn't have looked bad on their application either.

Between Paul Graham of YCombinator, David Cohen of TechStars, Naval Ravikant of Venture Hacks and Josh Baer of Capital Factory, yesterday afternoon's Seed Combinator SXSW panel showcased some of the pioneers of the seed fund model.

How important is it to live in SIlicon Valley?
Those in the Valley, including Graham and Ravikant, noted the wider availability of late stage funding and the breadth of mentors in the Bay. Those outside of the Valley including Baer in DC and Cohen in Boulder, maintained that you can create a startup anywhere.

How do you calculate the incubator participant's investment?
Graham explains that his $5000 investment per founder was calculated to match the same amount alloted to MIT graduate students over a 3 month period.

How do you choose the participant companies?
Said Ravikant, "Beyond having a good idea it's important that you're intelligent, energetic and that you've got integrity. Integrity is especially important. Without that you've got an intelligent and enthusiastic crook." Agreed Graham, "It's true. You need to be a good egg - someone who is willing to help other startups after they've graduated." Said Baer, " You also need to be the type of person who is willing to take advice. We've had those that are unwilling to change and that makes it tough to justify a spot."

Once the obvious questions were answered, it was interesting to hear the questions fielded from the floor. They ranged from those on mentorship and incubator logistics to the more personal/political. One particularly animated audience member asked the question: Do you fund founders over 40?

Explained Graham, "We're totally open to funding those over 40, but we honestly don't get many applications. It's a matter of social overhead. There aren't many over 40 who can afford to live like College students. And given that we prefer people who are willing to move and we prefer teams over individual founders, this makes it even more difficult." As a follow up, the audience member asked, "Why does it have to be a team? I'm over 40 and I've started a startup." Replied Ravikant, "Can you start a startup alone? Yes, of course. it's entirely possible to raise kids alone, but it's easier to do it in a marriage."

"Not working full time takes away almost all credibility," writes Aberman on his company's blog. "If your idea is so great, why haven't you committed to it? Why should I invest and risk my money if you're not even fully committed?"

Credibility, for first-time entrepreneurs, is crucial, he adds. One of his keys to successfully attaining venture funding is building credibility through traction. As Aberman points out, investors don't necessarily look for the best ideas, but rather the best teams of entrepreneurs. When you don't have a reputation to bring to the table, having traction for your product generates credibility that can catch the eyes of investors. Traction shows potential investors that there is a market for your idea - an advantage you're going to need when trying to raise funds, especially if you're not in Silicon Valley.

Aberman stepped on some toes when he said "unless you're part of the Silicon Valley in-crowd and you have traction, you're not going to raise venture capital," but corrected himself in the comments on his blog and on Twitter. Undoubtedly, there is a much larger pool of cash in Silicon Valley, and Aberman points out that raising capital elsewhere is not entirely impossible, but what he meant was that raising capital in the Valley is harder without being part of "the in-crowd."

His other suggestions focus on the importance of finding a passionate technical co-founder and submitting to the fact that customer acquisition is a constant uphill climb, but these ideas, as Aberman admits upfront, have "been made before, multiple times, by people smarter than myself." The crux of his argument seems to focus on credibility, which generates an equation-like string of logic. Working full time on your project and generating traction creates the credibility that first-time startups need to break into the "in-crowd" of venture funding which relies heavily on reputation.

"How do first-time entrepreneurs gain momentum and raise money? They build something that people like and use," says Aberman. "If you can do that, then you just have to convince VCs that you can keep doing what you're doing."

One of the differences between VCs and entrepreneurs he points out is the type of employees each values. O'Donnell says VCs tend to look at the leadership and the entrepreneurs as the top priority employees, while entrepreneurs will tend to place higher importance on the people "in the trenches," doing the programming and development. "Not many VCs really know how to evaluate team talent if they haven't run a company before--and that's a critical skill as an entrepreneur," he says.

Another wedge between these two types of businessmen that he notes is that entrepreneurs focus much more about what they can do with the resources they have, while VCs are constantly looking at what a company needs. O'Donnell says switching these mindsets can be difficult and that he spent too much time thinking of creating the "next big thing," rather than focusing on short-term goals and creating a solid foundation upon which to build.

Of course, as he points out, there are exceptions to the notion that a VC can't become a successful entrepreneur. As a commenter on O'Donnell's post points out, Hunch co-founder Chris Dixon began as an investor at Arbitrade and Bessemer Venture Partners before starting his own companies. Another commenter argues that its hard to make assumptions about this topic when the sample size of VCs trying to become entrepreneurs is relatively small.

Whether O'Donnell's suggestion has validity or not is certainly an interesting discussion, but the real lesson to learn from his post comes from his personal experiences in failure. One of the reasons O'Donnell doesn't think VCs make good entrepreneurs is that they may be prone to approaching the situation with advice for how to succeed permeating their brains. The trick is, success can be the product of any of a million different variables, and there is no single proven path to success. Instead, the best way to get there is to avoid failures.

Focus on the errors that most unsuccessful startups make and go out of your way to avoid them; more often than not you will find yourself inching closer and closer towards your goal this way. Just remember that errors and failures are not always things that were done that went wrong, they are sometimes things that were never done in the first place.

The question of whether VCs have a difficult time become entrepreneurs has drawn a mixed response so far from O'Donnell's blog, so what do you think? Is the road between them marked by a one-way street? Or is one side just paved a little more smoothly? Let us know what you think in the comments below.

At 3:30 in the Radisson Travis, Jason Oberfest of ngmoco and Eroc Eldon of Inside Network will be presenting on how online games can take advantage of social media. We've seen a lot of interesting developments in web-based gaming lately, especially with the success of Zynga on Facebook. New technologies are making in-browser games much more powerful than anything we've seen before, and the opportunities to tie social networking into the experience make the possibilities for startups in this genre very promising.

If gaming isn't your cup of tea, head on over to the Courtyard Rio Grande A to see Elizabeth Hallmark and Drew Scherz of Texas Comptroller speak on "Building Happy and High Performing Teams." This is similar to a topic discussed by David Russo in his book 17 Rules Successful Companies Use to Attract and Keep Top Talent, which we also profiled in our Weekend Reading series.

But stealing the 3:30 time-slot might be a discussion of the future of incubators with some startup super-stars. Naval Ravikant of Venture Hacks, David Cohen of TechStars and Paul Graham of Y Combinator will join a few others to discuss what they call the "Seed Combinator," but really startups and entrepreneurs could glean value from anything these guys chose to talk about, so don't miss it.

After those panels, pick up and walk over to the Hilton at 5pm for what should be a fascinating discussion about customer service in the world of today's social networks. This five-member panel including Jeremiah Owyang, CNET's Caroline McCarthy, and executives from Microsoft, HP and Comcast should shed some light on how customer support has evolved "in a 140 character world."

Tomorrow morning, as the Interactive portion closes out, entrepreneurs may want to stop by Ballroom A at 9:30 for a discussion on protyping web applications. Are wire-frames and mock-ups going the way of the Dodo? Darren Delave and Michael Leggett of Google think so, and will present on ways "make and present prototypes to improve all stages of the design and development cycle."

But the real issue every startup and entrepreneur wants to know about is how to get money from investors. At 3:30 tomorrow in Hilton A/B, don't miss legendary investor Reid Hoffman and Justin Fishner-Wolfson of Founders Fund present on "Getting Your Company Funded." The talk promises to debunk the myths and questions behind VC funding, term sheets, options, liquidation, "much much more."

And finally, a good way to close out the festivities is to check out day 2 of the Microsoft BizSpark Accellerator competition at the Hilton. You can stop by and check out the companies which present throughout the day, but come back at 6pm to see which of the 12 finalists will be crowned this year's winners. And if you aren't in Austin, you can still watch for free online at the Accellerator homepage (granted you have Silverlight installed, of course).

Also, remember that everyone at SXSW is tweeting like crazy at all of these events and discussions, so use Twitter search to find out more information if you can't make it to each event. Each event's description on the SXSW homepage also includes the official hashtag for the event so you can easily see what people are saying about it on Twitter. If you have any other suggestions for startups and entrepreneurs at SXSW, let us know in the comments.

Photos by Flickr users toprankonlinemarketing, and magerleague.

Boulder is the home of Blue Mountain cards, one of the first successful online greeting cards websites. In the 1990s, Fortune 1,000 tech companies popped up all over the Western prairie between Boulder and Denver. Since then, Boulder's creative, crunchy, beautiful mountain environment has nurtured a self-supporting startup tech ecosystem.

Community Support

The Boulder startup community, continues to be a supportive, passionate community with talented individuals, inspired ideas that is affecting change politically and economically in the United States. Lunching with four startups that Micah Baldwin organized was like lunching with a family. The group we talked with share office space, mentor each other and talk proudly of each others ideas and accomplishments.

The Underground Rail Road

Attracting talent is foundational to any startup environment. Eric Marcoullier, co-founder of Gnip described the "underground railroad" of transients that have made their way from Silicon Valley to Boulder. "Weekly I would get emails asking about what Boulder was like. Eventually I just started telling people to come here, visit and ask the locals themselves," he said. Venture capitalists have also made their way from busy Silicon Valley to the Boulder Valley.

Affecting Change - The Startup Visa Act

Once you have the foundation of talented motivated individuals, ideas flow. Brad Feld of TechStars took the idea for a national startup visa bill and made it a reality. TechStars receives proposals from all over the world. Startups based in foreign countries come on tourist visas with great ideas - and potential jobs are being sent home with them. The startup bill seeks to change this. The bill will enable companies that do not have U.S. citizen or resident status, but who have blessed by at least $100,000 in VC investment, to start their companies in the United States.

Measuring Outcomes

The four thought-provoking, pioneering startups we met with had had nothing but positive things to say about TechStars and starting a business in Boulder. Each had a unique story; two of them were locals and all of them men.

Gnip

Eric Marcoullier, co-founder of Gnip, launched two years ago with the unique idea of providing data collection and analysis of social signals across multiple social websites to help companies improve their product and service experience. The Gnip platform and service bridges the gap between the data APIs between large companies and multiple social sites such as Facebook, Twitter and Post Rank. ReadWriteWeb has covered Gnip extensively. Since its launch, Gnip has changed its technology strategy and will be re-launching soon.

Everlater

Natty Zola and Nate Abbott spent one year sleeping on couches as they traveled across five continents before they came up with the concept for Everlater. Everlater allows travelers to easily record and share their travel experiences through Twitter and Facebook. The platform allows users to use data from across multiple photo sharing sites. People can also publish their travel "scrapbooks". An algorithm lays out the book automatically so you don't have to. For hopeless photo organizers like me, this is a godsend!

Next Big Sound

Alex White, co-founder Next Big Sound, provides cultural analytics specifically to music companies. Music professionals can track how fans interact with their music, or music from many musicians across sites such as MySpace and LastFM. It is currently developing a premium service.

Graphic.ly

Micah Baldwin is not only social hub-connector extraordinaire, but also works for the uniquely cool comic book community Graphic.ly. Graphic.ly, which is currently in private beta, hopes to open opportunities for comic book creators, publishers and enthusiasts that are currently suffering under a one distributor model - as well as reawaken America's and the world's love for online comics. Members can both purchase and discuss comic books on Graphic.ly.

Ties to the Universities

Startup's ties with Colorado universities are immature, but starting to materialize. The morning of our lunch someone from the Colorado startup community (who we promised not to name) had met with the University of Colorado. As the individual put it, "Universities are turning out graduates prepped for a traditional computer science career at the likes of Lockheed Martin. We don't need MBAs - we need coders." The local Universities are overlooking careers in startups that are based - literally - around the corner or down from "The Hill" as a viable career option. An exception, University of Colorado Law School is has been offering startups free legal advice in exchange for student experience.

Judging from the close-knit group of entrepreneurs we saw, Boulder has matured significantly since the dot-com boom and bust. The only thing lacking at lunch was more estrogen.