An easy tip for Gmail users on how to avoiding getting hacked: two-factor verification.  

If there is one lesson to be learned from Wired writer Mat Honan’s "epic" hacking last week - a hack that wiped years of digital memories including emails and photos of his daughter - it’s the importance of Gmail’s two-factor verification security feature.

“Had I used two-factor authentication for my Google account, it’s possible that none of this would have happened,” wrote Honan, who went on to say if he had used the security feature the hack would have stopped during the hacker’s “recon mission” leading up to the multi-device attack.

Google’s two-factor verification, which the company began offering last February,  is easy to set up and just requires a phone capable of receiving text messages. When you try to log into your computer from a different location than the one you set up, like a coffeeshop or airport, Google ask you for a verification code before it lets you proceeds to your inbox. It will text you a code to enter, alongside your password, to make sure it is really you.   

Setting up the security feature can be done through a variety of options (like this one, or this one), but an easy way is to go to the menu options on the top right of your Google Account page screen when signed into Gmail. Click the downward facing arrow on the far right of your Google+ picture, and a small menu will pop out like so:

You want to click on Account, which will open up a new tab on your browser, your Google Account page. From here, you want to navigate to Security located on the far left side. 

Clicking the Security tab will reveal a few options, the most important being "2-step verification." You want to click the "Edit" button and once you do, Google will ask you to sign in again before allowing you to make the security change.

Once you have signed in a second time, Google will ask you for your phone number. You can choose to add additional devices and phone numbers as you see fit.

While many folks might hesitate giving their phone number to Google, the other possible option, having your "entire digital life ...destroyed" (as Honan so succinctly put it), isn't too appealing.  

The answer: Find yourself a mentor.

No "Yes Men"

Surrounding yourself with “yes men” is a stupid startup move. Instead, “all” you need to do is find someone who’s “been there, done that,” and is willing to tell you the truth. Don’t scoff. There’s true value having someone you can bounce ideas off of or who can offer a different perspective.

“Why wouldn’t you want to learn from the experience of others?” says Bob Godlasky, a mentor and counselor with SCORE OC in Santa Ana, Calif. SCORE, a nonprofit partner of the Small Business Administration, has more than 13,000 business experts and offers free mentoring and low-cost workshops nationwide. “There’s value in getting nonfamily, nonfriends' points of view. It’s amazing what we can’t see until someone with no particular bias reviews the same picture or the same data,” Godlasky adds.

Janet Crowther and Katie Covington, founders of For the Makers, a website for DIY design and crafts projects, met while designing jewelry for various fashion houses, including Kate Spade, Anthropologie and Marc Jacobs. As first-time entrepreneurs, they had tons of product and design experience, but had never worked in the tech field. “We went everywhere and asked questions of anyone that would listen,” says Covington about the startup of their social community website. “We set out looking for validation of our ideas, but over time found mentors who can help with more specific questions.”

Ask Questions

How do you find the right mentor for your business? “The only way to find mentors is to be out there, meeting people and asking questions,” Covington says. “We’ve met people at events, through friends, on Twitter and by following blogs. As long as you are respectful of time, mentors are almost always willing to help you and your company evolve. We look for mentors who believe in us, have experiences that are vastly differently from ours, and are always creating.”

Crowther and Covington were fortunate to find tech entrepreneur Cindy Gallop (pictured above), founder of the websites If We Ran The World and Make Love Not Porn. “Often the smartest, most interesting people all seem to know each other and are happy to make introductions,” Covington explains. “After talking with Cindy for 10 minutes, she was making parallels between For the Makers and a handful of other people she knew.” The companies don’t have a ton in common, “but both of our companies are about giving people tools to create something for themselves,” Covington says. “Mentors can use their experiences to frame your business in a unique way.”

And don’t worry about the relationship being too formal or structured. Gallop, like her mentees, is a busy entrepreneur. “Sadly, I cannot possibly mentor all the people who approach me asking me to be their mentor,” she says. “I mentor a small number of chosen startups on an ad hoc basis [for] sporadic, intensive hourlong discussions of a particular issue or consultation on a particular situation.”

Gallop’s advice for a great startup-mentor relationship: “Don’t just fall in love with someone’s reputation, perceived celebrity or name. Identify someone who could be directly relevant to what you want to do, or who is pursuing a similar vision. And someone who is likely to have the time and the inclination to help you.”

Slow and Steady Wins

And take it slow. “It’s like any other human relationship,” Gallop explains. “You need to have established a direct personal relationship and rapport with someone before you ask them to take the relationship to another level.”

The best mentor/mentee relationships are ones that are mutually beneficial. My mentee is a Jamaican entrepreneur who launched Study in Jamaica, a successful website that already ranks in the top 250 for traffic in her native county. I always get one or two takeaways from our monthly hourlong conversations. So if you’ve already hit phase two of the startup cycle, consider mentoring those just launching.

Outsourcing is pretty much de rigueur for modern startups looking to conserve capital. But making outsourcing work for your startup isn’t always easy. One of the first steps is figuring out where to outsource.

There are a lot of choices. The first major decision is geographical. Should you outsource locally, nationally or internationally?

My company, GrowBiz Media, has outsourced Web design and development, both internationally and locally. Believe me when I tell you each comes with its own set of pros and cons.

Here’s a quick overview:

Outsourcing Internationally

When most people think of outsourcing, they envision coders in Southeast Asia working into the wee hours of (our) night. Turns out that many factors can make global outsourcing more difficult and expensive than it appears to be at first glance.

Pros: Low cost is the primary reason most companies outsource overseas. The time difference can also be a plus: You can send your changes to your team at the end of your business day, and have the code ready when you wake up the next morning.

Cons: The old adage “you get what you pay for” often holds true. Managing people thousands of miles away is difficult at best, so when calculating costs, consider that you may need to pay someone to oversee your overseas contractors. Language or cultural barriers can add to the complexity, and different time zones can cause as many problems as they solve.

Outsourcing Nationally

Outsourcing IT within the U.S. is gaining steam. Often called rural sourcing or near-sourcing, the movement is driven partly by companies’ dissatisfaction with the quality of overseas workers and partly by a desire to bring jobs back to the U.S.

The International Association of Outsourcing Professionals named near-sourcing one of its top trends for 2012. In places like Georgia, North Carolina and Arkansas, skilled tech workers can be found for a fraction of what you’d pay in Silicon Valley or New York, according to Rural Sourcing Inc., which matches companies with workers in “second- and third-tier” cities nationwide.

Pros: Lack of cultural and language barriers make communicating with U.S. workers easier and more convenient. The time zone differential may be a slight benefit, depending on where your business and your contractors are located.

Cons: You’ll pay more for outsourcing within America than you would overseas, and if your outsourced team is across the country, meeting in person will still take time, effort and money. Be aware that some American contractors will subcontract some or all of your projects to overseas workers. This can be fine, particularly if they’re familiar with them and their work. But when this happened with one contractor we dealt with, the results were not positive.

Outsourcing Locally

After our negative experiences with outsourcing overseas, GrowBiz Media turned to a local Southern California business when it came time to rebuild our SmallBizDaily.com website.

Pros: Face time is the major advantage of working with a local company. While most of our communication still takes place by email and conference calls, when we undertake big projects or major changes, we can meet in person to brainstorm ideas and sketch out plans. Another advantage: If you do end up hiring full-time in the future, good contractors often turn into good employees.

Cons: By outsourcing to workers in your area, you’ll have to pay the going rate - which can wipe out most of the cost benefits. As with national contractors, some local firms may outsource all or part of your work overseas.

Key Questions

Since all three options come with pros and cons, how do you decide what’s best for your situation? Consider these issues:

Timeliness: Is this a rush project that simply can’t be late? If deadlines are essential, having the team accountable and close at hand could trump all other considerations.

Complexity: A simple project that doesn’t require much direction, has some “wiggle” time built into the schedule and has a bit of room for error may be most economically handled by an overseas team.

Personality: If you don’t have a problem with a more impersonal relationship with your team, overseas contractors could be fine for you. But if you’re a people person who needs face-to-face interaction, you may want to stick with local, or perhaps national, contractors.

Image courtesy of Shutterstock.

Mentoring startups has a lot of benefits: It gives something back to the community and helps other entrepreneurs avoid some of the mistakes that you've already made. And it's also a lot of fun to meet entrepreneurs who are so passionate about their business. Sometimes, though, that passion can make it hard for startups to focus on the business basics, like pricing, market research and finding your niche. 

I have had the opportunity to mentor quite a few startup companies in the St. Louis region over the past several years, and it is also satisfying 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 ways startups can raise funds here, as Jay DeLong shows in this video.

The common theme that I keep coming back to is that 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.

Not a Charity

One services firm I know was charging too little. In fact, after getting some mentoring, the company doubled its rates! Figuring out what you charge isn’t easy: I wrestle with this all the time, particularly in today's down economy. 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 only under very structured and controlled circumstances. For example, I will speak at local community-based organizations’ conferences. A speaker friend I know books up to one pro bono event each month and puts it on her calendar. I like that method; you treat these freebies with the same value as paying gigs. She makes her money selling her books and consulting services from these events.

Sure, 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 time doing 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.

Finding Your Niche

Do you really have the right niche for your product or services? One software firm I work 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.

Typically, startups want to continually find a narrower niche, so they 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), describing the idea of refocusing your startup business as conditions change and you track your progress. Pivoting gives the impression that your original idea wasn’t sound. Instead, I like to suggest constantly refining your offerings.

Finally, once you establish the right price and the right niche, you need to find the right market for your goods and services. Another firm I know was focused on college-age young adults. When it developed a second service, it designed the new offering around this audience as well. College kids are customers who the company knows and understand. The idea is to leverage their existing expertise, not to try to be all things to all ages.

That kind of focus on business basics is a valuable lesson for any startup.

It’s “What traits do successful entrepreneurs share?” They’re not asking about tangible things like good ideas, great teams and adequate funding, but, rather the inner characteristics that set apart the founders of successful startups.

No doubt you’re motivated, but that’s not even close to enough. And there’s no doubt you have to be optimistic, perseverant, energetic and at least a little bit lucky.

But if you really want to know how how an entrepreneur’s brain works, it makes sense to talk to a professional.

Sharon Lewis-Bultsma, Psy.D., a clinical psychologist in Fullerton, Calif., shares the three traits she thinks all successful entrepreneurs must possess:

Startup Success Trait 1: The ability to be organized. “More accurately, it’s the ability to recognize the need for organization, but that you do not need to be the organizer. And do not confuse organization with neatness. Several years ago it was very “in” to point to a person’s desk (was it messy or clean?), and assume that was an indication of a bigger personality flaw or strength. Obviously, it’s not.

“Having a clean desk is not an indication of success, nor does it even mean you’re organized. I’m sure there are plenty of successful entrepreneurs whose desks look like they could be featured on an episode of Hoarders, but I’d bet those business owners have never missed a key appointment, or misplaced an important contract.

“Organization is in the eye of the beholder. If organization does not come naturally to you, at least be aware enough to create a system you’re comfortable enough to stick with [whether it’s online or a pad of stickies]. And as soon as you’re able, hire someone to be organized for you.”

Startup Success Trait 2: The ability to communicate well with those around you. “It’s easy to blame everyone around you for not understanding what you are saying, but in the end it really comes down to how well you can communicate. Whether it’s telling your employees or contract workers what to do, or convincing customers [or investors] why they should buy what you’re selling, if you can’t communicate clearly what you want, you will not get your desired reaction. But this is one area where practice makes (nearly) perfect. So if this is a particular concern of yours, try bouncing ideas and directives off someone you trust first, get their feedback on how you communicate (both style and substance) and keep correcting until you get it right.”

Startup Success Trait 3: The ability to make mistakes and learn from them. “This is a hard lesson for many entrepreneurs - just because you’re the boss, doesn’t mean you’re always right. Learn it and live it. No one succeeds in business when surrounded by “yes men,” so you’d better hope people feel comfortable and empowered to point out the mistakes you’re making. And you’re going to make a lot of mistakes during any startup. Just as with any new skill you acquire, you need to learn from your mistakes and move on.”

These traits all sound achievable, and the good thing is, they’re not dependent on natural ability; all can be acquired and perfected as you grow your startup. But Dr. Lewis-Bultsma says there’s one more attribute that’s characteristic of successful entrepreneurs: “While organization, communication and learning from your mistakes are all important qualities to have while starting your own business, the role of courage must not be overlooked. Sometimes you need to jump in with both feet, and learn as you go."

Image courtesy of Shutterstock.

But bootstrapping a startup is not easy, requiring discipline and fortitude, as well as ingenuity. But entrepreneurs who have done it have discovered some best practices to increase the odds of success.

Serial entrepreneur Rachel Blankstein is bootstrapping her latest startup, Comparz, the largest independent user review site for businesses seeking Web-based software. Blankstein admits bootstrapping also involves “a lot of ingenuity, trial and error - and an immense amount of hard work.“ But she insists there are benefits to bootstrapping. It enables you to “build something incredible with next to no cash, and to retain significant ownership of your company.” Blankstein offers five ways to operate your startup with minimal cash burn.

Bootstrap 1. Offer Equity Compensation to Team Members: Generate interest in joining your team by giving equity to others with complementary skill sets to yours. With a four-year vesting schedule and a six-month “cliff” or trial period, you can get others to join in on the fun of startup, and make progress without expending cash. This type of equity structure safeguards you, so you won’t have to give away a lot of your company if the person does not produce results. In fact, with the six-month cliff, if they do not work out within that timeframe, you have not given away any equity.

Bootstrap 2. Leverage the Skilled Unemployed: Encourage talented workers who are between jobs to work for you, which benefits them by keeping their resumes fresh, and allows them to build new skills. This is a win-win for the younger segment of the workforce who value building skills and enhancing their resumes. They will be grateful for the opportunity, and you will be grateful for their hard work with no cash expenditure. Just make sure you don’t violate any employment laws.

Bootstrap 3. Barter, barter, barter: You can barter more than you think. It can be as simple as saving money on marketing by promoting someone in a blog post who then promotes your company to their audience. There are a thousand ways to do it, but by providing more favors to others, they will be happy to do favors for you - whether you need expert advice, exposure or someone to test your product, etc. You can also barter for services. Exchange your coding skills with someone who will offer the equivalent value of marketing. Just remember, it’s all accountable to the IRS.

Bootstrap 4. Build Relationships with Key Influencers: A successful entrepreneur often has strong relationships with key influencers in their industries. If you don’t have these relationships at the outset of your venture, build them. This gives your brand more exposure to the “right people,” offers you priceless insights into your industry and snowballs as these contacts introduce you to more “important people” if you prove to be good at what you are doing.

Bootstrap 5. Outsource: Don’t hire people, use independent consultants who come highly recommended from your peers when you need to bring in expertise. That way you can learn from them, and use your low-to-no-cost team to implement their ideas. Blankstein adds, “While these may not be ideal [solutions], this is how you limit cash burn, which is important for a startup or business of any size.“ (See also: 4 Ways to Avoid Hiring Your First Employee.)

Image courtesy of Shutterstock.

That's where ReadWriteRecommends comes in. The Startup Toolkit identifies the top tools in seven critical categories: productivity, project management, accounting, file sharing, payments, web content management and support. Some of these tools are consumer-grade. Others are used by the world's largest corporations. And they're all just the right size for startups.

1. Productivity Suites

Winners: Google Apps AND Microsoft Office

Pundits have been predicting the death of the office productivity suite for more than 10 years, but it hasn't happened yet. Instead, they just keep getting new features and new capabilities. And that's why we have two winners in this category. Turns out you need them both!

Google Apps for Business is a fantastic suite of affordable services that will handle email, calendaring and productivity for the majority of your business the majority of the time. It's years ahead of Microsoft for multiuser documents.

But MS Office remains the worldwide standard, and when VCs ask for a presentation in Word or PowerPoint format, you want to know exactly what they're seeing, right down to the pixel. You won't need a site license to cover your entire team, but plan on supplementing Google Apps with copies of Office for key marketing and executive employees, as well as anyone who spends a lot of time working offline.

2. Project Management/Tracking

Winner: BaseCamp

ReadWriteWeb has been a big fan of BaseCamp for years, even using it inside its own walls. Our biggest gripe was solved by beefed-up mobile support, and its user interface has actually gotten simpler as the app has gained features. In its most recent incarnation, BaseCamp has replaced drab, visually tiring lists with a simpler, more graphical UI (pictured above) that makes toggling through projects, calendars and reporting almost effortless.

Pricing starts at $20 a month, with a 45-day free trial. You can certainly find open-source alternatives for less, but while other tools can challenge BaseCamp's functionality, they can't touch its UI. You'll cover your monthly costs in support savings in your first week.

It's worth mentioning that software development firms or other startups with very detailed project milestones and dependencies may find BaseCamp insufficient for some situations. In those cases, you may have to rely on more traditional - and more expensive - project management software, such as Microsoft Project, for the heavy lifting, but you still might find value in BaseCamp as an intranet tool for the rest of your company.

3. Accounting

Winner: QuickBooks

QuickBooks, in its various incarnations (up to a $249.95/year contract that includes mobile app and phone support), handles everything a startup or small business might need, and it integrates seamlessly with Intuit's other financial products. But QuicBbook's true strength stems from its ubiquity.

Almost every accountant or auditor who's worked with a small business is familiar with QuickBooks, dramatically increasing your ability to work with outside contractors, potential investors and business partners. Almost every financial software developer (including some of Intuit's competitors) have built connectors to QuickBooks, eliminating the need for clunky and error-prone manual exports and imports. When it comes to financial software, it makes sense to follow the leader.

4. File Sharing

Winner: Dropbox

There are plenty of worthwhile business competitors to Dropbox. Box.net has done a great job of outdoing Dropbox in certain respects. And Dropbox isn't perfect. For example, sharing folders in a large company can still be a bit awkward. But Dropbox's virtues are undeniable. Its user interface couldn't be any simpler: It's a folder. Drop things into it. It works flawlessly via Web, PC, Mac or mobile, which can be a lifesaver if you need to work with an important presentation on the road. If you're on a budget, you can actually get a lot of use from the free accounts before you have to upgrade, particularly if you work the referral system or participate in beta programs, which can dramatically raise your free storage cap. Make no mistake: You will eventually need to upgrade, but by the time you do, it will be a no-brainer.

5. Payments

Winner: PayPal

If you need to accept credit cards on your Web site and you don't want any hassle, look at PayPal. It has a simple sign-up process, gives one-stop access to all major credit cards, and lets you accept direct payments from other PayPal accounts, which can be very helpful, depending on your customers.

If you need to process recurring (subscription-based) payments, though, look into Recurly. Like BaseCamp, Recurly's power is in its simplicity. Recurly is a management console that sits on top of a merchant account (which it can also provide), letting you address complex functions with relative ease. Recurly automates complex calculations and adjustments, making it simple to create new products and price points, move users between products and packages, prorate refunds or billing, and modify renewal dates. Its reporting interface is equally simple and powerful.

6. Web Content Management

Winner: Wordpress

Every company needs a Web presence, and it's tempting to stand out from the pack by building something different. But different takes effort, and distracts from your website's core mission: providing information about your company to your users, partners and investors. Communication should come first, and you shouldn't have to reinvent the wheel.

That's where Wordpress shines. Some developers will complain that it's not as extensible as other frameworks, and they might be right, but that's irrelevant. You need to get information to your audience as efficiently as possible, and Wordpress is perfect for that.

Equally important, Wordpress is more popular than all other content-management systems combined, with massive networks of developers, designers and SEO experts ready to help out at a moment's notice. It's also incredibly flexible, allowing you to change your entire layout and composition with a single theme file, while still maintaining your site's integrity and standing with search engines. The content creation and editing interface is simple enough for any worker to use. It's also free, and offered and supported by almost every hosting company.

For software developers: If your company is developing custom Web applications, Wordpress can still serve as a front-end for your more static, public-facing content, but you'll obviously need to develop something more involved to showcase your merchandise. Before you consider hosting your own servers, check out Web services like Amazon's Application Hosting. You'll save a ton of time and money, and gain a level of redundancy you almost certainly couldn't otherwise afford. It worked for Instagram, so it will probably work for you.

7. Support

Winner: Zendesk

Once you have customers, you'll need to support them, and $20 a year isn't a lot to pay for solid tools. ZenDesk's Starter plan gives you access to everything you'll need to get your business through its first year, supporting three agent accounts and an unlimited number of support tickets and end-users. For your 20 bucks, you get a full ticketing system with two-way Web and email channels, mobile applications and customizable forums you can use to build a knowledge base.

You can certainly find cheaper ticketing and forum software, but you'll sacrifice support and integration and add a burden to your own IT staff.

What are your favorite startup tools? And what additional categories should we include in the Startup Toolkit? Share your suggestions in the comments.

- Cormac Foster

Lead image courtesy of Shutterstock.

When tech giants such as Facebook give their workers six-figure packages and everything up to and including free leather repair (leather repair?), a salary in the low 80s isn't going to land you any elite tech talent. But you can still reel in good people - if you're generous with your equity.

"Pinterest can hire, Square can hire, Dropbox can hire - these companies have a clear demand for their products and are becoming market leaders," explains Naval Ravikant, founder of startup advice site Venture Hacks. "Every other company must now give up 10% to their first key employees."

Ouch.

That's a large piece to break off to someone who wasn't there back when your company didn't have two iPhones to rub together. But you don't have a choice if you want top-flight people. Offer them a big chunk of equity, or they'll go to a company that's actually selling its products - and where half of 1% is more likely to one day be worth some real money.

"You must treat early hires like late founders, or you won't be able to hire until you get market traction," Ravikant warns. "If a company has no clear evidence of customer demand and the founders own 30%, 40%, 50% apiece, and they want to offer their first employees half a percent, that's ludicrous, because they don't have anything yet of any great value. Potential employees, at least the good ones, aren't interested. They'd rather start their own companies."

Which is now fairly easy to do. If you have a good idea, money is there for the taking. Need $25,000 for product development? No problem. Join an incubator. Need the next $100,000? Easy. Investors now follow incubators with automatic notes.

"That means everyone and their brother who you would normally hire is now starting a company," says Ravikant (who himself founded Epinions and Vast.com).

You'd think entrepreneurs would get the message. But many are not. The industry clings to its old rules: VCs get about 30% of equity, founders get 60% and the entire employee pool gets maybe 10%. And a chair massage.

Ravikant also runs AngelList, which pairs entrepreneurs with angel investors. The site just launched a recruiting service for startups, where it asks companies to state how much salary and equity they're offering to employees - and Ravikant says he still sees a "huge disparity" in the range.

"Some companies are offering $80,000 and 0.1%, and others are offering $80,000 and 10%. The pricing is all over the place. But when push comes to shove, the company offering 10% equity will absolutely get the better hire. Close the equity gap, and hiring will get a lot easier," Ravikant suggests.

Image courtesy of Shutterstock.

I know, because my company, GrowBiz Media, tried this not once, but twice, during our early years. Let me share what I learned (the hard way) about the pros and cons of sharing space.

Consider these factors before you move in:

1. Clarify expectations. Be crystal clear about what both you and your landlord expect from the situation. Will you pay for space, or will you work rent-free in return for bartering your services?

Having tried it both ways, I highly recommend paying if you can swing it. Barter arrangements tend to suffering from "mission creep," and when the person who owns the room you're sitting in asks you to do one more extra thing... and one more... and one more... it's hard to say no. Paying, on the other hand, keeps the relationship professional.

2. Consider the culture. Assess how your way of working will mesh with the company you're considering sharing space with. If your team likes to blow off steam with impromptu Nerf football games or yell ideas to each other across the room, will that clash with a more formal landlord's need for a quiet atmosphere or serious client meetings?

3. Could you be competitive? Think carefully about whether you and your potential landlord are at all competitive. It's great if you've got synergy and can work on projects together, but that can also backfire. If you and your landlord are competing for the same clients, you could end up in that awkward place of not being able to discuss your plans out loud in your own office.

4. Check the details. In your excitement, don't forget to ask the standard questions you'd ask any landlord. What will be included in your rent? Is there enough parking for your team and visiting clients? Can you use the conference room when you need to? Will your landlord provide office furniture? What kind of Internet connection and phone service is available? Will you have access to the building at night and on weekends? If you do, will the heating or A/C be turned on? (Take it from me, there's nothing like working a January weekend in a building without heat to get you looking for your own office space.)

5. Draw up a lease. No matter how close you are with your landlord, you need a written lease to protect both of you if the relationship should go south. And believe me, it can. There's also a more mundane reason you need a lease: When you look for business insurance, the insurance company will want a copy of your lease before issuing a policy.

6. Be respectful. When you share an office, you're in someone else's space, and people often have weird territorial issues that won't raise their ugly heads until you've settled in. You could find out that the landlord wants all the window shades drawn to exactly 10 inches above the windowsill level, or monitors toilet paper consumption and threatens you when your staff is using too much, or is a thermostat Nazi (all true stories).

Unless these issues are truly disrupting your business, try to go with the flow. Draw the shades, BYO TP, put on a sweater - and let your landlord's quirks motivate you to be so successful that you can afford your very own offices.

After our experiences, we realized, given the nature of our business, we didn't need to be in an office at all. We went virtual, and now we meet once a week at a coffee shop with free Wi-Fi and soda refills, and no longer worry about how much toilet paper we're using.

Image courtesy of Shutterstock.

Thanks to a loyal customer, Nirvan Mullick (pictured with Monroy), the schoolboy now has a $150,000 scholarship fund and fans all over the world. And the story holds lessons for budding online entrepreneurs, too. How did all this happen?

Last year, Monroy was just another nine-year-old kid from East Los Angeles trying to figure out what to do with his summer, when one day he went to his dad's auto parts store. The store was largely devoid of customers, as Dad does most of his business online. Caine asked if he could play with the cardboard boxes that the parts came in, and before you could say "Zoltar," he had constructed his own cardboard replica of several arcade-style games, such as miniature pop-shot basketball and ring toss. He then proceeded to sit in the store and wait for customers to play at his arcade.

There weren't many since foot traffic to the store was sparse. One day, Mullick happened to stop by and became entranced. He bought Caine's premium "Fun Pass" and started coming back for more games. He thought about a way to market the arcade and put together a flash mob meet-up at the auto parts store, along with a short 10-minute documentary video. The rest is thanks to the Internet and a lot of people. You can watch the movie here:

In the video, you'll note that Caine has implemented a sophisticated algorithm to ensure that his "Fun Pass" tickets are authentic, using the square root function of a pocket calculator. You've got to hand it to the kid. He has plenty of pluck.

Mullick started a scholarship fund, which has already topped $175,000 and is still growing. And that doesn't include a matching grant from the Goldhirsh Foundation. Caine also has a Facebook fan page with 100,000 fans and a Twitter account with more than 6,000 followers. To give his arcade an element of authenticity, Caine made his own special logo T-shirt and is now selling it on the site. The movie even has a theme song that you can download from iTunes (and it's another way to support the fund).

Plenty of media outlets have given Caine coverage, including today's New York Times and dozens of TV stations. Forbes did a story earlier this week that details nine factors of Caine and Mullick's success that other entrepreneurs should review. TJ McCue writes, "There is a certain allure in American entrepreneur circles for turning waste in[to] wonder, of finding a diamond in the rough, so to speak." Another Forbes columnist thinks Caine will be a billionaire in 30 years. Certainly, his star is rising. Another meme is born.

But more than a meme is what startups can learn from this experience: Just because you only have one customer doesn't mean you aren't in business, and you should treat every customer as carefully as Caine did. The care he took in realizing his vision is extraordinary, especially for someone so young. And understanding the power of just one person to leverage various social media is also key.

So if you are an entrepreneur looking for inspiration today, check out the short video and read up on Caine's Arcade. It should get you thinking on how you too can create something from your own passion, even if you are just nine years old.

As the lyrics to the theme song say, "It's the best cardboard arcade that has ever been made." And that is something to which we can all aspire.

Problem is, they haven't had a handy database of common errors to refer to. Until now. Wasserman has just written one, titled The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls that Can Sink a Startup.

"There's a craving for a roadmap that entrepreneurs have never had, to be able to anticipate things that in the past would have taken a serial entrepreneur with the pattern recognition to see that decision X will lead to outcome Y," says Wasserman, who's an associate professor of business administration at Harvard.

Wasserman has spent decades researching startups and why they succeed or fail. He's compiled a database of experiences from 10,000 company founders, and his new book mines the data for lessons, with stories from entrepreneurs like Evan Williams of Twitter and Tim Westergren of Pandora.

We talked to Wasserman about the most frequent causes of startup failure.

People problems. One of the surprises of Wasserman's research is that it's everyday choices that sink the majority of startups. "The most common decisions are in fact the ones most fraught with peril," he says.

Like who to work with.

Wasserman discovered that most failed startups are done in by people problems, such as picking the wrong cofounder. "The most common decision is to cofound with someone you know socially," he says. "But that's the least stable of all teams, because you'll likely be cofounding with someone who's more similar to you than they should be."

Cofounders who come from the same background have too many of the same skills, which leaves holes in important places.

And then there are the emotional issues. It's harder to be blunt and make the tough decisions about equity and responsibility when you're dealing with friends, Wasserman says. "You could be far less likely to handle the tension-filled discussions and tackle the elephant in the room until these issues blow up in your face."

To avoid that mess, start your company with someone you know professionally. Wasserman's research shows the most stable cofounder teams are those formed from prior professional relationships.

Equity splits. Wasserman says 73% of the teams in his dataset divided the equity within a month of founding. Too early.

"This is when uncertainties for the venture are at their highest, when you don't really know what your business strategy will ultimately be or the roles you'll ultimately be playing. Yet founders are splitting equity then and setting it in stone and it causes major tensions later."

He says it's OK to divide equity early - if you build dynamic elements into your agreement to allow for flexibility in the future.

Investor relations. Most founders take money from family and friends. "But you're playing with fire when you take money from Aunt Sally," Wasserman says, "and if you play with fire, you have to build some firewalls."

He suggests writing a prenup and discussing worst-case scenarios up front. "And thinking hard, as founder, that if Aunt Sally is the only one willing to invest in your business, maybe that's telling you something."

Of course, professional investors come with their own concerns. They add value, but they also bring risk - control risk. "You're opening up the possibility of being fired from your baby," Wasserman says. "By the time founders in my dataset raised their C round of funding, 52% had been replaced as CEOs and, of those, three-quarters were fired by the board."

Not an ideal exit. Then again, if you are escorted to the door with your laptop and your cardboard box, you can always go start another company. Just remember to learn from your mistakes.

Image courtesy of Shutterstock.

In quintessential entrepreneurial fashion, Onswipe was born when Baptiste and cofounder Andres Barreto couldn't find a solution to a problem they were each independently experiencing. They started "with an idea and the belief that something big would come of it." But no money. Within six months they had raised $6 million in two rounds of VC funding, and had 15 employees. (They're now up to a staff of 30.)

Market shifts were the impetus for creating Onswipe, a multimillion-dollar business which works with publishers to format website content on tablet platforms. The founders actually dub it "Angry Birds for content." Baptiste and Barreto noted "large shifts of behavior away from pay-per-click and towards pay-per-swipe," and the rising popularity of tablets, before launching their business.

From the beginning, Baptiste says, they made a "conscious decision to build a large business." But they created a formula Baptiste now recommends for all startups: "Keep it [your idea] simple; build it [a prototype] simple; and be ready to ship in 30 to 60 days." And it helps if your idea can be "supported by advertising," he adds.

Though so many successful tech startups are born in Silicon Valley, Baptiste admits his biggest mistake was almost "locating on the wrong coast. We would have tanked if we started on the West Coast," he says, "and we almost did. We were lucky our first round of money was raised on the East Coast." His advice to media or digital startups is to locate where the advertisers are - in New York City.

The other action that was "crucial" to their success was applying (and getting accepted) to TechStars NYC, a highly ranked startup incubator and accelerator. Onswipe had already raised $1 million before it joined TechStars, but being there helped the company to "do more faster," Baptiste says. The question became, "How fast can we accelerate? How much can we grow in three months?"

The answer? Really fast - in three months the company raised another $5 million in funding.

Baptiste wrote "The Ultralight Startup" because he believes "entrepreneurship is leading the 21st century renaissance, changing the world and the way we think about work." Being an entrepreneur, he writes in his book, "has become not only a respected career path but a necessary one" in this post-recessionary economy.

But what exactly is an ultralight startup?

As defined by Baptiste, it's about "creating a startup from scratch -- with little upfront capital, little experience, or few connections in your industry." It's "like a Porsche," he says. "It's lightweight and doesn't seem like much. But when you get into a certain gear, you have to accelerate. You have to do everything possible to get to the next gear. You can't be afraid to accelerate."

And now is the ideal time to hit the gas. "The good news," Baptiste writes, "is that the barriers to becoming an entrepreneur are lower than ever before. The Internet has made it possible for anyone to connect with influencers, experts and potential customers around the world." But first, he warns, you need to "stop listening to the MBAs and any other naysayers. It's time to free your mind."

Baptiste realizes Onswipe's success was a bit out of the ordinary. The company enjoyed a "perfect storm of market, product and people," he says, referring to his team and timing.

What's next for Baptiste and Onswipe? In addition to writing another book, Baptiste predicts Onswipe's "next evolution will be hundreds of percentages greater."

If you want to craft your own ultralight startup, Baptiste offers a three-step plan:

1. Set out to make it big.
2. See the opportunity, go with your gut and triple down.
3. Keep on shipping.

Steve Davis packed his laptop and his Spanish phrasebook and moved to Chile. On arrival, a government program called Start-Up Chile handed him $40,000, no equity required. He also got a visa, office space, mentoring, help with networking and fundraising, and connections to potential clients.

In return, all Davis and his cofounders had to do was promise to spend six months in the country working on their startup, CruiseWise - an online travel agency for booking cruises - and engage with Chilean businesspeople.

"The government wants to bring in foreign entrepreneurs to interact with the business community," Davis says. "Having people around who want to try new things and believe it's OK to fail - that's a huge benefit for them, to foster an entrepreneurial mindset."

Davis and his partners, Amit Aharoni and Nicolas Meunier, were members of Start-Up Chile's freshman class, arriving in August 2010. When the six-month program ended, they returned to San Francisco. They raised $1.6 million in funding from SV Angel, NEA, Index Ventures and PROfounders Capital and launched CruiseWise on February 14th.

Davis says they looked for financing in the Bay Area before they applied to Start-Up Chile, and the feedback was positive, "but it was clear we wouldn't be able to raise much, given that we were first-time entrepreneurs with nothing more than a PowerPoint deck."

In Chile, they spent their time - and their funding - building a working prototype that they could later take to investor meetings. About a third of their money went to living expenses, the rest to technology they needed, like cloud storage and software.

"If we'd had to bootstrap it, I don't know if we could have done it," Davis says. "The $40,000 made it a lot easier for us to get started."

Start-Up Chile has received criticism from some participants. The primary gripe is that the $40,000 is not given up front in a lump sum. It comes in the form of monthly reimbursement for expenses - which can include salaries, marketing and housing - and the payments from the government don't kick in until a couple months after participants arrive.

But even the nitpickers concede that the program is a good experience overall. For Davis, it was almost entirely positive. It gave him and his partners time - no need to work a second job - exposure to a new culture and the knowledge that they helped teach Chileans a thing or two about entrepreneurship.

"In Chile, if you start a business and fail at it, you're branded a failure," Davis says. "Future employers look at you and say, 'I don't want to hire this person.' In Silicon Valley, if you fail quickly and cheaply, people think that's awesome because you learned a lot."

And if you join Start-Up Chile, you're that much less likely to fail in Silicon Valley.

If you're interested in Start-Up Chile, check out this advice on how to write a successful application from a current member of the program.

But do you know what it is? Are you using it? You should be. Here are three good reasons to use Markdown. There are no good reasons not to.

Wait... What Is Markdown Again?

If you don't know what Markdown is, here's the introduction from the Markdown project page:

"Markdown is a text-to-HTML conversion tool for web writers. Markdown allows you to write using an easy-to-read, easy-to-write plain text format, then convert it to structurally valid XHTML (or HTML).

Thus, 'Markdown' is two things: (1) a plain-text formatting syntax; and (2) a software tool, written in Perl, that converts the plain text formatting to HTML."

We're here to discuss No. 1, using Markdown whenever you're typing to format your text - whether or not you plan to post that text on the Web. Installing it allows you to directly post Markdown documents as blog posts or Web pages, but that's up to you.

One of its key strengths is that you can use HTML in Markdown. If there's something you can't do in Markdown, or if you can't remember the Markdown syntax, you can switch back and forth freely between HTML and Markdown within one document. It understands both.

You don't have to have Markdown installed on your site in order to use it. It's amazingly useful just as a writing language. Even if you don't have to convert to HTML at all, it's still an appealing way to format plain text without having to deal with Microsoft Word or another goofy rich-text editor.

But if you write for the Web, or you work with people who do, you just have to try it. Here's why.

Easy On The Eyes

"The overriding design goal for Markdown's formatting syntax is to make it as readable as possible," writes John Gruber of Daring Fireball, creator of Markdown. "The idea is that a Markdown-formatted document should be publishable as-is, as plain text, without looking like it's been marked up with tags or formatting instructions."

HTML tags add lots of in-line noise. They make a document hard to read. For people unfamiliar with HTML, it could be impossible. Reading a Markdown document should make plain sense to anyone.

Here's an example of the difference:

HTML

<h1>Why <em>you</em> should use Markdown to write your next blog post</h1>

<p><a href="http://daringfireball.net/projects/markdown/">Markdown</a> is just so dang legible, it will make your <em>whole life</em> easier. <strong>I promise.</strong></p>

Markdown

# Why *you* should use Markdown to write your next blog post

[Markdown][1] is just so dang legible, it will make your *whole life* easier. **I promise.**

[1]: http://daringfireball.net/projects/markdown/basics

Not only is Markdown easier to type and read, it's accessible to someone who doesn't know the first thing about HTML. There are no extra words or letters, the link looks like a footnote readers are used to seeing, and asterisks around a word convey emphasis even if you don't know which is italics and which is bold.

For Web developers and designers, this clarity will make life easier for nontechnical members of your team. For people not used to writing in hypertext, the Markdown characters are far more intuitive and easier to remember.

Fewer Errors

HTML just begs for typos. Even the smallest, one-letter tags require three characters to open them and four characters to close. If you forget a slash or accidentally type an apostrophe instead of a quotation mark, your whole page could be screwed up. And especially if you're in a hurry, the errors can be hard to spot.

Plenty of tools assist with HTML writing by highlighting errors on the fly, but why rely on those? Markdown's simplicity and flexibility helps you make fewer mistakes, and errors are much easier to find.

Kill Your CMS

Writing straight into a browser window is a dangerous game. It's so easy to accidentally lose or save over data. Furthermore, most content management systems offer the temptation to use WYSIWYG tools, and those tend to create awful HTML code that could make your page display in funky ways.

Markdown can be written anywhere there's a blinking cursor and shared in any format. It's just plain text. You don't need any WYSIWYG controls, because the Markdown characters actually look like the formatted results you'll get.

Markdown syntax is intuitive and, in many cases, it allows for multiple options, so writers can choose the formatting characters that make the most sense for them.

Plus, thanks to the Markdown renaissance, there are tons of new text apps that help Markdown writers on Mac, Windows, iOS and the Web. The good ones can even preview and export your Markdown writing as HTML, which you can then paste or upload into your CMS once you're done.

Markdown is so easy to learn. Don't let inertia stop you. Just download a Markdown text editor or use Gruber's browser-based dingus and start writing. You'll get it under your fingers in no time.

Lead image courtesy of Shutterstock.

If you like stories about the intersection of technology and language, then be sure to check out our Top 5 TEDxTeen Talks.

Can the difference between "it's" and "its" actually affect the fortunes of a technology startup? You might be surprised. If you're working with a startup, odds are you're wearing a half-dozen hats and doing too much with too little. Often, this means that founders are writing their own website copy, press releases and blog posts. Too often, that results in grammatical errors that reflect poorly on the startup. Developers may not care, but other folks do. When you're composing copy, no matter if it's for the company website or a tweet, slow down a little bit and take a look to be sure you're not making any of these dozen deadly errors.

Everyone Makes Mistakes

Two things before we get started. First, this doesn't apply to non-native English speakers. If English is your second, third or Nth language, it's understandable that English grammar and spelling might be tricky - partly because the language is a bit of a jumbled mess, and partially because you'd be exposed to a lot of native English speakers getting it wrong. If you're a non-native English speaker, please don't worry too much about your English usage.

Secondly, this shouldn't be taken as a claim that any writing is completely error-free. We all make mistakes, but there's a difference between the occasional slipup and repeated errors. With input from several tech industry veterans, here is a list of errors seen frequently enough that it seemed worthwhile to point them out.

The Dirty Dozen

1. Its or It's: Its is possessive, but it's is a contraction of "it is."

2. Then or than: Than is used in comparisons; then is often used for time. For some reason, the phrase "more then" keeps cropping up in online communications - and it's more than a little annoying.

3. Loose or lose: Loose means that something isn't tight, while lose means that something has been lost. Admittedly, there's some room for confusion. Lose is a verb, loose is an adjective, but you can let loose of something and wind up losing it.

4. Unique: There's no problem with using unique on its own. The problem is using modifiers with unique, as in "we have the most unique product in this category" or "this is a really unique website." Since "unique" means something is singular, it can't be "most" or "pretty" unique. In fact, you can't qualify it at all.

5. In my personal opinion: If it's your opinion, it's personal. The qualifier "personal" is redundant. This one is so often used, though, that it can be hard to avoid.

6. You're or your: Another possessive that causes confusion, "your" is possessive while "you're" is a contraction of "you are."

7. Literally: Don't use literally when you really mean figuratively. Literally should be used to mean "in reality," not as an intensifier.

8. Pique, peek or peak: This one crops up all too often when folks use peek or peak to mean pique. Someone might want a peek at your press release or product, if their interest has been piqued. Choose wisely for peak impact.

9. Flush out an idea: Generally, you want to flesh out an idea, though it might be flushed if it's particularly bad.

10. Affect or Effect: It's not entirely surprising that these are mixed up often, given their similar spellings and meanings. Affect is a verb, and effect is a noun. You can affect something, which might have an effect.

11. Compliment and complement: A compliment is praise, while complement means that two (or more) things work well together. When two companies form a partnership, the product offerings may complement each other while the CEOs will probably compliment their partners and themselves on a wise deal.

To further confuse things, because English is a cruel and unforgiving language, there's complimentary and complementary. Complimentary can mean that something is related to a compliment, or it can mean something given freely - as in "a complimentary" breakfast. Complementary is an adjective which is similar in meaning to complement.

12. Capitol and capital: You can raise capital in the state capital, but you should only use capitol to refer to buildings that house the legislatures.

Finally, a bonus entry for leetspeak or text-speak. If you're sending a text message to your best friend to say you're going to be late to the bar, then abbreviating "you" to "U" is perfectly acceptable. (Unless your friend is an English professor, perhaps.) It's not acceptable in any kind of professional communication if you wish to be taken seriously. No, not even on Twitter.

Ain't You Going to Mention Ain't?

Has anyone ever told you that ain't isn't a word? Well, they're wrong.

If you do the research, you'll find that it's not only a legitimate word - it has a long history. Ain't is a contraction of "are not" (don't ask me how) that dates back to 1778, according to the Oxford English Dictionary. If it pleases you to use ain't, then the OED is on your side.

This list represents some errors that are common enough to be noteworthy. It avoids stylistic issues like more than versus over that have strong opposition in some style guides with no grammatical basis for the disapproval.

That said, let us know what errors you see most often. And which ones bug you the most.

Image under the CC BY-SA 2.0 license, courtesy of mikeymckay on Flickr.

But that's their problem. Your problem - if you're building a cool startup and you don't have millions from Andreessen Horowitz - is how to choose the incubator that will nurture your company and launch you toward fame, fortune and a Facebook acquisition.

Here's how.

If you do have a startup, odds are you went to college. And, depending on what you got up to on weekends in your dorm room, you probably remember the application process. You should select an incubator the same way.

"Incubators are the new grad schools for entrepreneurs," says Naval Ravikant, who knows a thing or two about the startup process. He founded Epinions and Vast.com, invested in Twitter and FourSquare, and now runs AngelList and Venture Hacks. "There are incubators like Stanford and MIT, and there are incubators like University of Phoenix. They give different levels of help, and they have different prices - they ask for different amounts of equity."

Of course, the choice is not entirely up to you. If you want a spot at one of the top incubators, your innovation must be good enough to qualify. You don't just waltz into Harvard Business School - and you don't just pull up a chair at TechStars or Y Combinator. (In fact, getting a seat at a superior incubator is three times harder than getting into Harvard Business School.)

But let's say you're good enough to go anywhere. In that case, your selection process is easy. Choose from the handful of first-rate incubators. (Here's the Forbes top 10.) "Go to one of the elite incubators, and you'll be looked upon more kindly by investors and potential employees once you graduate," says Ravikant. "These programs make it easier to land funding and recruit employees."

But suppose you're not TechStars material. Then you can't simply rely on reputation to choose an incubator. You have to do your homework. Ravikant suggests asking the important questions: "Who are the mentors? Are they successful entrepreneurs? And what are the class sizes? Is it six startups to a mentor or 30? And look at demo day. Demo day is like career day at school. At school, you look at which recruiters show up. At an incubator, look at which investors show up. And ask how the incubator's graduates have done, how many get funded."

If you don't get your first choice, don't worry. You'll soon have many more incubators to choose from. Though some bemoan the incubator boom, it's not likely to slow any time soon. The economics are just too compelling. Incubators typically take between 5% and 8% ownership in their participating companies in exchange for a 10-week program. They graduate dozens of companies. And even if the majority of those graduates fall on their faces, incubators still produce a better economic outcome than just about any investment channel outside of big-time venture capital.

That's a good thing, Ravikant says. "Finally, we're seeing some innovation in the venture business."

Image courtesy of Shutterstock.

Late last year, Mark Cuban (self-made billionaire and owner of the Dallas Mavericks) wrote that entrepreneurs should ignore what their customers want. This may sound shocking, but it's nothing new. In fact, it's practically common knowledge for start-up companies; many entrepreneurs (including Steve Jobs) consider it one of the "best practices" of developing a product.

In Cuban's words, "Entrepreneurs need to be reminded that it's not the job of their customers to know what they don't. In other words, your customers have a tough enough time doing their jobs. They don't spend time trying to reinvent their industries or how their jobs are performed." While it's important to stay in touch with a customer base, we shouldn't ask customers to solve a problem that they expect us to solve. This scenario can be called the "Doctor's Dilemma." Many startups would benefit from tackling their product feedback with the Doctor's Dilemma in mind.

The Doctor's Dilemma

A patient walks into the doctor's office and says, "I think I have tuberculosis. I looked it up on the Internet." So what are the doctor's options for treatment?

He could:

1. Stop everything and treat the patient with drugs to cure tuberculosis.
2. Have no conversation with the patient but do a full physical exam, then offer treatment for any symptoms that turn up as a result of the exam.
3. Do a physical exam, ask a few questions about where the pain discomfort is, what it feels like etc., then prescribe a solution based on his diagnosis.

The solution lies in the way the doctor balances his own intuition and experience with the claims of the patient.

The Startup Doctor

Of course, the entrepreneur (or startup company) is the doctor. As entrepreneurs, we solve pain. The best entrepreneurs solve a lot of pain for a lot of people. Often a customer doesn't even realize the pain until being introduced to a product or company, but it's pain nonetheless. Now, if entrepreneurs think of themselves as doctors, it's easy to determine exactly how to solicit feedback from a customer. Would a competent, trustworthy doctor prescribe medication based solely on the diagnosis of a patient?

No way. If a patient had real confidence in his own Google-search diagnosis, he would never visit the doctor in the first place.

People visit the doctor because they have a problem that they don't know how to solve. And the same goes for a startup company. It's your job to innovate and solve the customer's pain.

Some companies choose to do extensive research - from click-through rates to A/B testing - and accumulate all the necessary stats to measure "user engagement." This is useful and, like option No. 2 in the Doctor's Dilemma, can lead to a successful diagnosis. However, there's no question that option No. 3, a thorough analysis combined with specific patient feedback, will ultimately lead to the best results.

Optimizing Feedback

While we shouldn't depend on customers to create or innovate, we should count on them to validate. After pinpointing a diagnosis and prescribing treatment, the doctor can only wait and see what happens. In fact, the doctor may not even know whether a treatment is working, without a validation from the patient. "Is your pain gone?" proves to be a simple, yet very effective question to determine next steps.

An entrepreneur, like a doctor, should observe how the customer interacts and reacts to the product or service that is designed to "treat" the customer's pain. Rather than asking, "What do you think this product needs?" a startup should ask, "How are people using our product and what is the result of them using it?"

Trust your own expertise as a "doctor of innovation" and you'll be much more successful than if you rely on customers to solve their own problems.

- Max Ogles

Image courtesy of Shutterstock.

Alas, most companies don't have so easy a time. There are ways to attract these rare and beautiful creatures. You just have to know what they're looking for.  

Finding investors tops the must-do list for most startups, and that typically starts with finding an angel. Before you start the angel hunt though, it helps to know what angels are looking for before they'll invest.

There's a lot at stake. According to the just-released Halo Report from the Angel Capital Association and the Angel Resource Institute (ARI), founded by the Ewing Marion Kauffman Foundation, "The median size of angel & angel group syndicate rounds was $700,000" last year, up from $500,000 in 2010. That's enough to jumpstart your company's development in a way bootstrapping and maxing out your credit cards simply can't match.

So what do angels want?

Before an angel investor writes a check, he or she wants to know if you have the leadership skills to grow your venture. And they want to make sure you thoroughly understand the market, who your competition is and how your product or service is uniquely positioned to create a market impact.

Also high on angels' wish lists:

• Are you coachable or intractable? Angels are not likely to take a back seat. It's their money, so most likely they'll expect to have input on major decisions. Will you be open to following their advice? Or do you think no one could possibly understand your business as well as you do (an all-too-common entrepreneurial misconception)?

• Does your business have legs? Once the money from the initial round of funding is gone, does a viable business concept remain? Will you be generating enough revenues to keep growing?

• How realistic are your projections? All pitches consist of some levels of hype and hope. Angel investors want to know the true size of the market, revenue potential, barriers to entry and competitive landscape.

• What's your end game? Even though you're just getting started, investors want to know about your exit strategy. How will they get their money out? The Angel Capital Association reports most angels want to achieve their goals within five to seven years.

• It's all about the money. How much do you really need now, and specifically what do you need it for? How much will you need six months from now? What percentage of ownership does their money buy? How much money have you personally invested? (No one wants to invest in something you're not willing to invest in yourself.) And where will additional funding, if needed, come from?

Of course there's much more. Angels will ask about your patents, trademarks, copyrights or other protections, marketing strategies and expansion plans.

But really it's all about you. Angels are looking for the 3 Cs. If you want them to bless you with their money (and advice), you need to be Confident, Capable and Committed.

Image courtesy of Shutterstock.

What are you doing wrong?

Find the Right Niche

A scattershot approach to VC investment is not going to work. You need to narrow your scope and home in on VCs who are targeting specific startups in your area of expertise. Do some digging to learn:

• What types of businesses does the VC typically fund? Do they often finance businesses in your industry?

• Does the VC focus on a geographic region? Some VCs invest nationally or even globally, so where you are based won't matter. Others, however, prefer to stay close to home.

• What stage of business does the VC finance? Seeking early-stage capital from a VC that typically funds expansion is asking for rejection. Focus on the VCs that invest in companies at your stage of growth.

Find a Personal Connection

Directly emailing or cold calling a VC without any type of introduction or connection is a major misstep. You need an "in." Here are some ways to get one:

• Tap into your professional networks. Attorneys or accountants are often good sources of referrals, since they're more likely to work with VCs or have colleagues who do.

• Tap into your business networks. Use your connections on and offline to find people with whom you've done business or who might have connections to a VC.

• Tap into your personal networks. Don't forget your friends, relatives and Facebook buddies. You never know whose uncle might have gone to school with the VC you're trying to reach.

Get Creative

If you can't make a direct connection, try to get in via the back door:

• Research companies the VC has previously funded. Find out who's on their management teams and see if you or one of your connections has a relationship with that person.

• Look for influencers in your industry. Is there an industry leader with whom you could connect? Even if the VC doesn't actually know this person, he or she will likely be more impressed that the influencer is willing to vouch for you.

• Think small. Plenty of entrepreneurs have gotten their "in" through a VC's assistant - or even the assistant's assistant. Find out who else might have influence at the VC firm and how you can connect to them.

Targeting your niche, finding a common link or leveraging a personal connection to make contact will improve your chances of getting a VC's attention. Then the hard work begins. Good luck!

Then again, if your new company is deep into a brainstorming session and somebody suggests Fartronics, you should probably keep thinking. (Besides, that name's already taken.)

"Can a bad name kill a startup? Absolutely," said Phil Davis, founder of Tungsten Branding. "If you do something off-key or too convoluted, then there's a knee-jerk reaction against it."

Of course, some degree of creativity is required, for several reasons. A catchy, descriptive and memorable name (like, say, Flickr) makes your company sound smart and hip. But most of the obvious names are already-owned domains (like Food.com). And if you go too generic (with something like Restaurants.com) you could end up on page 17 of any Google search result.

Davis says it's important to think about your audience. Names that combine two words, like Agilent, are OK for business-to-business companies but not so good for consumer-facing businesses. "When you're going out to the consumer, the name has to be intuitive and sticky and fun. The consumer is very unforgiving, so your name has to hit right away. In B-to-B, your audience is much more limited, and you have greater control over the conversation."

Davis' firm has named more than 250 companies, from Pods (which makes those storage containers that sit in your driveway) to Double Cross Vodka (talk about truth in advertising). He says his current favorite company names include Pinterest and DropBox. A name he doesn't like is Gotomeeting.com.

"If Gotomeeting ever tries to expand beyond meetings, they can't. Also, it's a long phrase and it still misses defining what they do. You can't say, 'Send me a Gotomeeting.' The ability to 'language' a brand is huge, and it's usually better if a name has verb potential. Can the name contort easily so someone can say, 'Hey, can you Xerox this?'"

Names don't exist in isolation. A name that looks great on a whiteboard may sound dumb in an elevator pitch, so try it out often in conversation. "People miss by creating a name that stops you in your tracks - but doesn't go anywhere from there," Davis says. "Like Blue Taco. That's a cool name but where do you go from there? It's not about creativity for creativity's sake."

Misspellings can be catchy, like Tumblr. But double misspellings not so much, like Netflix's late, unlamented Qwikster.

"There's fine line between bending rules and breaking them," Davis says. "Bend them to your advantage. A bad name stops the conversation. If people stop and say, 'Huh? What?' then you've lost them. The mind is open to new ideas for only a matter of seconds, then it stops and makes judgments."

So keep thinking. And if all else fails, pick your name out of a hat. That's what Twitter did.

Image courtesy of Shutterstock.