Back in the day, Nolan Bushnell invented Pong, founded Atari and created Chuck E. Cheese. But now he says that new tools and cultural norms are enabling creativity in ways never before possible - and offers hints on how to make your company more creative.

We spoke on the occasion of the release of Bushnell's new book: Finding the Next Steve Jobs, written with Gene Stone (more on the book's unusual publishing model later).

As many people know, Jobs worked for Bushnell at Atari in the mid 1970s before moving on to Apple. Bushnell uses Jobs as a symbol of creativity at tech companies: "Steve Jobs showed that an innovative company can create the highest market cap company in the world." Despite Jobs' passing in 2011, Bushnell says today's best companies are far ahead of where we used to be.

"In the early days of Atari," Bushnell recalls, "engineers came to work in a coat and tie and were working 9-5." Venture capitalists willing to give cash to help innovative startups were just a tiny niche, he says, "All the real financial clout was controlled by big banks in New York, but now we have vibrant angel investors, Kickstarter and crowdfunding."

And that's only part of the change. Even as we eliminate the gatekeepers, Bushnell contends, the costs of creativity itself are coming down as technological tools get cheaper and more powerful. Individuals and small groups can now shoot a movie or create a software company on their own. "In many cases, that's the most important thing," Bushnell says.

Unleashing Creativity

But there's still a lot more to be done. "The problem isn't creativity," Bushnell explains, "but creating the environment for creatives to work in… too much [good stuff] ends up on the cutting room floor."

"I believe we have literally thousands of Steve Jobses," but we don't empower them to create. "Look at the way we treat creative people! We just have to detoxify our companies and we'll have innovation flowing out of the ground like oil."

Hire Obnoxious People

One key considieration is to value true creative talent over mere niceness. This flies in the face of the "no assholes" rules now gaining popularity The problem, Bushnell says, is that "a lot of really brilliant people are obnoxious. They're used to always being the smartest person in the room and they may treat other people with disdain."

And Bushnell says that separating brilliant and obnoxious from just plain obnoxious is actually easier than you think.

The Importance Of Hobbies

Their contribution is one clue, of course, but Bushnell also suggests looking at what creative types do on their own time. "Enthusiasm is kind of the mitigator" for the obnoxious people, he says.

What you want is someone who truly has the companies interest at heart and just happens to be dismissive of people less capable of achieving those goals.

Bushnell points out that many people used to complain withering criticism from Steve Jobs. But Bushnell adds that it turns out that most of the time, Jobs was right. His victims just didn't like the way he critiziced them.

Today's Most Creative Company?

"Google. There are so many things going on at the Google campus right now that exemplify the right track. A lot of true craziness coming out of that company, but it's crazy like a fox. Autodrive cars? That's going to happen in a short amount of time… and think about what it took! That represents a large corporate commitment."

Book Publishing As Startup

Clearly, Bushnell tried to be creative with his book, as well. Rather than signing with a big publisher or going the self-publishing route espoused by folks like Guy Kawasaki, Bushnell chose to be the first example of a new startup publishing model that distributes the risk and the rewards.

Instead of doing all the work yourself, or having a traditional publisher pull together all the skills needed to put together a book, Net Minds works by trading equity in the project for the required work. Editors, designers, etc. get points, not just cash, and participate in any upside. According to co-founder Tim Sanders, Net Minds has 17 more books in the pipeline - not all of them attached to well-known names like Bushnell. According to Sanders, the team-publishing model lets freelance publishing professionals optimize their available time to earn passive income from successful projects.

Sanders claims to have 400 freelancers signed up, both new players and established veterans like Bushnell's co-author Gene Stone. While Sanders says the company is working on software to appraise a book's commercial potential, it's hard to see how it could pull in top-notch talent for anything but the sexiest, easiest-to-sell projects.

Disclosure: Many years ago, Nolan Bushnell wrote a column for me at Electronic Entertainment magazine.

TED, the international conference known for tackling "ideas worth spreading" just topped a billion views for its videos. That's a billion with a "b."

That milestone didn't just happen on its own - TED has been gathering momentum online for a decade.

The first step came in 2001, when TED's current curator Chris Anderson's Sapling Foundation took over and turned the company into a nonprofit organization. Five years later, in 2006, an experiment to post six TED-talk videos online led to the birth of a viral phenomenon. Today, these videos are watched globally, and the speakers behind them are some of the most influential people in their fields, working to share insight on issues not often seen by the general public. But with TED's enormous success has also come criticsim and charges of elitism. Among other things, TED has taken heat for claiming to be for the masses, yet charging exorbitant ticket prices for attendance. And these days, even TED has competition. 

I had the chance to speak with Anderson about TED, from answering the critics to what it  took to get here, where TED is going, and the role of technology in the developing world. Anderson, an idea man born in a small village in Pakistan to missionary parents, stressed his desire to serve social change, the future of media companies and how technology is unifying us and creating a level playing field:

READWRITE: TED just went over a billion views on its videos. Tell me what it meant to get here and what that means for you as the curator and the founder of the brand.

CHRIS ANDERSON: Everyone here is thrilled about that milestone. We never dreamed it would get this big, this fast. What's surprising is that the reason it's happened. It's not like there's any big giant marketing budget or anything like that driving it. It's more been through word-of-mouth. Through online word-of-mouth. Largely email referrals, sharing and more recently social media, Facebook as well. So that's the thrilling part. There are enough curious people in the world that are getting excited about learning to the point where they'll watch something and then pass it on to their friends and family. I just find that exciting. 

RW: Tell me when the first TED talk was and how you got the word out there and that first push.

ANDERSON: We put six talks out in June of 2006. It was a small media team that tried to find a way to get TED out there. Early on our thoughts were let's put these out in a way that they're well-shot, they're well-edited and they capture the drama of what the audience feels live. It's a modern campfire experience. So, eyes locked onto a speaker. Not the boring, traditional association people certainly brought with them, of a guy stuck behind a podium in the distance. Communication is much more dramatic than that, so video has to reflect that. We certainly felt that. And then we only put up six talks as an experiment and just shared the links with a few blogs. And it took off from there to our pride and crossing our fingers. We were really excited by the response to these initial talks. Not just in the numbers but people reacting to them in email back to us, instead of being ripped by them, you know laughed, shared and wept, and that was a surprise. It was amazing they worked. 

RW: Who gave the first talk and how many talks have their been total?

ANDERSON: The six we launched on the first day, that included what is still today the number one talk. Ken Robinson's talk on education and a talk by Hans Rossling on showing why our conception of the developing world is wrong. There are now 1,400 or so talks posted. 

RW: And those are just official TED events. That's not counting TEDx, correct?

ANDERSON: Those are talks posted on our site. So some of them include TEDx or best of the other conferences on our site. But the majority of them are from our own events, yes. And it doesn't include the 25,000 other TEDx talks that are up on YouTube.

RW: Tell me who's one of your favorite guests, a best guest, and who was a worst guest? Or a worst speaker?

ANDERSON: I don't know if you can quote me on the worst but there's been some flops. And there's so many favorites. I love best talks that give you a mental shift. They just make you see the world differenrly. Everything from David Deutsch who's given a couple of talks. The way he thinks really appeals to me. Ken Robinson himself, changed a lot of peoples minds on how to think about education and how we have to figure out a better path before it all falls. I'm a fan of so many talks. Barry Schwartz who had the talk of the paradox of choice. He says that too much choice is actually not necessarily good for us. 

RW: Can you tell me, without insulting past speakers, maybe some flops, or at least the subject matter you didn't like?

CA: Well, I think there were people who way overshot their time slot and were gently nudged, pushed off the stage. There have been people who have been given, had their say, talks that were full of ego rather than insight. And there's a favorite instance, of a celebrity who was hissed off the stage because of the ego. The ego-to-insight ratio was just way out of whack. As they say, not all the talks are good, but at least the bad ones are short.  

Looking Ahead

RW: Now that you've gotten such a big name and created such a big, relatively mainstream brand, what are the goals going forward?

ANDERSON: The number one focus is just keep up research ongreat ideas. The world is often described in terms of events and political upheaval and so forth. We view the world through the development of knowledge. The truth is human knowledge is growing at a spectacular rate. There's amazing discoveries every year and the vast majority of them are completely invisible to most of us. That I think is something of a tragedy. Because the ideas are out there. They could fix our problems, it's just that they're not easily accessed. So, literally the number one goal is keep on finding those people and figure out how to make their work accessible.

RW: Do you have a roadmap?

ANDERSON: I often say that we do not have a roadmap. I think a five-year roadmap for TED, or a five-year roadmap for anything, in the fast changing world that we're in, sounds to be a flawed document. What we do have is a compass. Our compass is our mission statement and then first a strategy, a sense of openeness. When we want to get something done instead of seeking ourselves, we seek to empower the people to do it. We give away our best stuff so people can do it for us. So that whole TEDx thing that has happened in the last three years. We've given away our brand and allowed pre-licenses to people around the world to hold their own event. To the point that there are now six or seven every day held somewhere. It's vastly increased the number of people who can go to a conference. Instead of in California, 1,000 people spending $7,500, around the world there are 800,000 plus people who have spent less than $100 to go to one of these events. It's really democratized TED and that's thrilling. My whole genuine philosophy is how to open this thing up and make it available to anyone.

Is TED Elitist?

RW: Some would say that the price point for a ticket makes TED elitist. What's your take on that?

ANDERSON: The business model is that the profits made from the main conference are used to fund the rest of what we do. So the whole free distribution of ideas online (the TED Foundation) and the opening up of TEDx, none of that would have been possible without a successful concept where people were willing to pay lots of money. So, it's true that not everyone can come and afford to go that. But even if we cut the price to zero, it's not like everyone else could go. It would just make the waiting list that much longer. So we're doing what we can do. One, give away the content, and two, give away the brand. Which makes it kind of hard to make the charge of elitism stick, I think. It's absolutely the opposite of what TED is doing. TED is taking knowledge and making it as widely available as possible. 

On Publishing And Media

RW: I know you have a background in the news business and publishing. Where do you see that business going?

ANDERSON: Speaking broadly, attention is always going to be one of the world's most valuable commodities. From attention everything else flows. Every decision that anyone makes come from a point of attention. So it's always going to be an incredibly important business. How it is won, how it is monetized is in total flux right now. And I think that a lot of the traditional models of paying a large number of people a lot of money to write, when there are millions of people who are willing to write for free, many of them very insightfully, that is a problem. I think media owners need to grasp how to move their talent up a notch to a level of inspring, identifying, coaching, empowering other writers. Because the overall model is broken. 

Technology And The Developing World

RW: You were born in Pakistan. Do you think technology creates a level playing field for the developing world?

ANDERSON: I absolutely do. I grew up in a village in Pakistan in my early years. Kids I grew up with, most of them are probably grinding out a life of poverty somewhere. The main reason I'm not is because of education. My parents could afford to get me fully educated.

RW: What's different there now? 

ANDERSON: The kid in that village right now is going to have access to a cellphone within the next few years, if they don't already. Through which they can be eyeball to eyeball with the worlds great futures, and basically have a shot at realizing their full human potential. It's a game changer, it's really exciting, and I think we have already seen many instances where they're leapfrogging what we're doing in the West because of the pace of learning. 

Photo courtesy of TED Conference.

The group of caretakers of Internet standards and practices has been on record supporting fundamental principles linked with net neutrality. But in Part 3 of ReadWriteWeb's interview with Sally Wentworth, the Internet Society's public policy spokesperson says that enabling a service provider to engineer a competitive advantage for itself may also be considered fair.

If you go back and read every major story on the topic of net neutrality, you may still come away asking the basic question: What is it, really? 

Net Neutrality is one of those strange political topics that you think you understand until you begin studying it. From one side of the aisle, you'll be told it's about one price for one tier of bandwidth; from the other, it's all about deregulation. If you deregulate a market, you don't get one price.

The Internet Society (ISOC) - the coalition of caretakers of Internet standards and practices, including the IETF (Internet Engineering Task Force) - is on record as supporting equal access to the Internet for all the world's citizens. That support has been trumpeted under headlines stating it supports net neutrality.  But it's presumptions like this that can get a global consortium into trouble, especially with member countries and other stakeholders who think the Society has just endorsed their particular interpretation of Net Neutrality.

In this third and final part of our interview with ISOC Senior Public Policy Manager Sally Wentworth, we talked about how difficult it is to navigate a path that has a dozen different maps.

Scott Fulton, ReadWriteWeb: When I ask Internet companies what’s the number one policy issue they face, four out of five say it's “net neutrality.” Their definitions vary because net neutrality means different things to different people. But one thing they can agree upon is the notion that bandwidth should be like tofu: plain, homogenized and one level - not stratified. It should be available for all companies at the same, essentially fair, rates. So how does that get regulated and by whom? Is this something we must leave to individual countries to sort out, or do we need to start negotiating an international regulatory framework that countries can follow for their own best interests?

Sally Wentworth, Senior Public Policy Manager, The Internet Society: My first view would be that there is no one-size-fits-all approach to something like this, because different countries really do have different economic models with respect to their communications markets. The competition levels in the United States are different from what we’ve seen in Europe, and certainly different from what you might find in emerging markets, for example. So it’s difficult to provide a single regulatory solution that’s going to be applicable or successful [for all countries].

Having said that, I think there are some basic principles that apply. That’s been our view, because we had a similar experience to you. We said, “Okay, we should say something about net neutrality,” and [the responses we got sounded like], “What is it you want me to comment on?” “Net neutrality” seems to be a buzzword that means lots of different things to lots of different people. So if we step back from that and say, “What are the basic principles that should apply?” we have said that we believe that people should have access to the legal content of their choosing. They should have competition among carriers. And there should be transparency between the user, the consumer and the provider as to what network management means, and how it’s been implemented for their service. We do recognize that networks are managed, but they should not be managed in ways that are anti-competitive or discriminatory.

When you step back from that, different countries may have different tools or require different policy measures to fulfill those principles. Maybe the solution in some country is to really focus on promoting competition in the marketplace. Other countries might say that’s less of an issue; [they may say], “We have plenty of last-mile competition,” but there’s an issue with transparency and making sure customers know what the terms of service really mean. Like I said, I don’t think there’s a one-size-fits-all [solution]. But in the end, if you think of having an Internet experience - you go online, and [as far as you can tell], This Is The Internet - then those are the principles that should apply.

RWW: Comcast has a system in place right now where subscribers can get access to first-run, on-demand movies that are delivered via Internet, without that service applying to the customer’s download caps. Subscribers can’t do the same thing with their Netflix service even if they subscribe to Netflix over Comcast. A lot of people are claiming that’s not competitive. Comcast says it can offer the service like this because it’s going through content delivery networks like Akamai, they are the networks of Comcast’s choosing, and it makes delivery [of this service] cost-effective.

You talked about fairness and about preserving competition. In a lot of people’s minds, those two are joined at the hip. And there are some who would make the case that, if you’re going to promote competitiveness, then part of being competitive is engineering an advantage for yourself and not necessarily giving that advantage to your competitor. Don’t you think it’s important that innovation, with respect to competitiveness, should enable the innovators to have some type of competitive advantage, even if it’s for a limited period of time?

SW: Yes, I suppose I probably would. There is, and always has been, in the Internet space, new and innovative business models. Some of those business models have survived, and some of them haven’t. In the cases where they haven’t, then oftentimes either somebody’s come up with a better idea or a better application, or the application itself didn’t meet the expectations of the end user. Yeah, I think it’s fair to say we will see innovation on the technical side; we’ll also see innovation in the business models and business cases. And that’s probably a good thing. 

Stock photo by Shutterstock.

While maybe hundreds of white papers are published every day leading off with the statement that the Internet is changing so very rapidly, with respect to its technical underpinnings, real change has been dreadfully slow. The exodus of Internet Protocol hosts to an IPv6 address system whose benefits are almost undisputed has yet to begin after nearly two decades of initiatives. And the top-level domain system that helped make Web addresses friendlier to the world than phone numbers is rapidly disintegrating into a bizarre carnival of conflicting interests and outrageous conduct. It's a state of affairs that gives justification to proposals like that of Russian President Vladimir Putin: that the Internet be brought under more direct governmental control.

Scott Fulton, ReadWriteWeb: It’s hard to take a look at just what’s happened in the past few years, with respect to the opening up of the Top Level Domain system by ICANN, and not say there’s been a little bit of chaos there as a result of it. It seemed to many a good idea at the time to diversify and take the proposition of building top-level domains into a multilingual system one step further and expand it into a multi-social system. I myself spoke out in favor of the .XXX top-level domain, because I believed that it was useful to give people a very easy way to turn off a certain channel of content that they don’t want to see.

But since that time, I was cooking dinner the other day in my kitchen, and I had one of these basic cable channels on. And one of the ads was trying to sell me on the idea of getting my own .XXX domain name, the reason being that I should get mine before someone else does. Almost an implied blackmail there: If I’m a sensible person, then I don’t want my name associated with porn. We’re starting to see an opening up of the idea of private interests purchasing their own top-level domains, building up more on-the-fence TLDs like .vegas. Which makes me think it’s going to be hard to make the case that a deregulated model for Internet governance always works. When you have a chaotic example like that, it’s easy for someone like President Putin to simply point to the .XXX domain and say, “Look what happened there! Do you want this to happen to the rest of the Internet?”

Isn’t the final solution maybe something in between complete deregulation and complete government centralized control?

Sally Wentworth, Senior Public Policy Manager, The Internet Society: We have never said there is no role for government or for public policy. There is a role for public policy at the national level, and in some cases, there are quite good examples of international cooperation among policy makers. I’m not sure we’re talking about an either/or. One question is, how is the policy developed? Policy that’s developed in the back room, with limited transparency and a small number of interested parties, is likely not going to produce a result that is going to be good for end users or the Internet itself.

The question is, how is the policy developed? Who is allowed to participate? And is there sufficient sunshine/transparency/collaboration/participation by the relevant stakeholders in developing the policy so that a good outcome can be produced for that country, for that community? There are plenty of public policy initiatives that are quite useful. We see emerging a large number of broadband plans around the world, ICT strategies by governments to help promote the deployment of IPv6, strategies to try to address things like cybersecurity or consumer protections. These are all constructive, but again, it’s the direction of, can you do this, or are governments doing this in a way that is participatory and transparent and involves the relevant stakeholders, or is this just the providence of a few people in a room making policy for everyone?

RWW: I spoke a few months ago with Richard Jimmerson [who leads ISOC's Deploy360 IPv6 awareness campaign] about ISOC’s efforts to incentivize the transition to IPv6. He told me a story about how a lot of commercial vendors are failing to explain IPv6 to their customers because they can’t come up with the “value-add” message: “IPv6 gives you _____” They don’t seem to be capable of filling in the blank. If ISOC truly is the multistakeholder model that you want it to be, how come so many companies, after so long - since IPv6 has been with us for decades - don’t have an understanding of the tremendous benefits that IPv6 offers?

SW: I think sometimes it is a matter of selling the story. Also, the resources haven't yet to come to a point where there is a requirement to transition.

We are seeing quite a few companies worldwide now that see [IPv6] as an imperative. The question now is, can we convince them to build it as a transition, rather than them being confronted with a problem at some point? You want this to be a smooth transition to IPv6 rather than a difficult one, so they can be able to test it. So sometimes these technical issues aren’t as front-and-center, but... this is fundamentally good for the overall Internet. And there will be a transition; it will happen.

RWW: It’s hard to say that’s inevitable. I’ve covered IPv6 since the 1990s, and I’m starting to think the IPv6 transition might not necessarily happen in my lifetime anymore. It doesn’t seem to want to be a one-time event. It’s not like the VHF-to-digital transition in the United States, where we just threw a switch.

SW: Oh, no, absolutely not. I was at the White House when we did that! Very different!

RWW: The VHF transition was a magnificent success, for all intents and purposes. I think it went very smoothly, and that had to have confused millions of people who, despite all the news, didn’t quite understand what was going on. Their TVs weren’t working! But we made it work, one way or the other. And you’d think that if it were as simple as throwing a switch, we’d engineer the switch, and we’d have Microsoft and Red Hat and all the operating systems vendors create in their systems something that’s an obvious switch for the administrators to throw. And say, “On January 14, 2014, you press this button.” What’s to stop them from doing that?

SW: It’s hard because IPv4 is not going to disappear after a certain date. There will still be content and devices that depend upon IPv4. So what’s going to happen is - and we’re already seeing it happen - IPv6 is going to live on alongside IPv4. I think there will be - and there increasingly is - a move by companies, as they see others in the marketplace and as they see it’s good for their long-term business interests, they are making that transition. They're deploying IPv6 already, and many of their devices are ready for it. There will be a preponderance of traffic that will move to IPv6. But it will not be a switch like the digital television transition.

It’s also not something that’s necessarily visible to the end user. I may or may not be aware of whether my network is running IPv6 or not, or whether my device is IPv6-capable. This is going to be something that happens over time as devices and content become IPv6-accessible.

Administrators do need time to test this in their networks, and that’s why we do things like World IPv6 Day last year, and World IPv6 Week this year. The goal this year is that you turn it on and you leave it on. Last year, a lot of companies had a chance to turn it on, test it, see what went right, what went wrong, where we needed to do more work. What we also found, though, is that a lot of companies left it on, because they didn’t have the problems they thought they would.

Photo credit: The Internet Society, 2012

Intellectual property theft, U.S. Vice President Joe Biden has frequently declared, is theft.  His theme would appear to indicate that, if we treated the issue plainly, the solution would be a plain and simple one.  The problem is, plain and simple solutions applied to the Internet often have complex consequences and uncontrollable repercussions.

Newly reinstalled Russian President Vladimir Putin has proposed what he perceives to be a plain and simple solution to a host of Internet problems, including piracy and freedom of accessibility.  Essentially, Mr. Putin would redeclare the Internet a telecommunications medium like any other, and reassign its governance to the International Telecommunications Union - the multi-country standards and policy department of the United Nations, and an agency in existence since the 19th century.  Putin's response to critics thus far sounds a little like that of a not-so-distant predecessor:  If you think you have a better solution, put it out there and let's see if it works or if we will bury it.

One person whose job it is to respond to that specific challenge, is Sally Wentworth.  Having served in the White House Office of Science and Technology Policy under President George W. Bush, and before that, eight years crafting Internet policy for the State Dept., perhaps no other person knows more about balancing the conflicting interests of the Internet's multiple stakeholders, both in governments and the private sector.  Now Wentworth serves as Senior Manager for Public Policy at the Internet Society (ISOC), the coalition of guidance and governance bodies that collectively - if often unofficially - determine how the Internet works and what it stands for.  In a candid and exclusive interview with ReadWriteWeb, part 1 of which appears today, she states that the "plain and simple" solutions that governments like Russia and the U.S. have proposed thus far, are inadequate and incompatible with the way the Internet works.  But she adds that whatever means the Internet develops to resolve such issues in the future may require us to accept some measure of compromise - perhaps even enough to bring a smile to a certain Russian president who never smiles.

Sally Wentworth, Regional Bureau Director for Public Policy, ISOC:  I think we have never said that governments don’t have a role. Certainly, governments and policy makers could be considered stakeholders as part of a multi-stakeholder process. One challenge of the approach that Mr. Putin is suggesting is that the ITU itself is not a multi-stakeholder forum. There is no provision within the ITU context, for example, for civil society... for groups other than the telecom industry and member states. Perhaps there’s a long way to go before we get to true multi-stakeholder, but I think clearly that those impacted by the decisions need to have an opportunity to be heard and be part of the discussion, have access to the information, and have a voice. That has not been the case in the proposal that Mr. Putin is putting forward.

Scott Fulton, ReadWriteWeb:  Well, certainly from the vantage point of someone who sees the business world from a fairly Russian perspective, it’s easier to imagine the telecommunications industry having closer ties with the government - almost the same way that the Postal Service has ties with our government... So it would seem that, if you’re going to involve the telecommunications industry, at some point you’re going to have to deal with government interests as they relate to the telecom industry in those countries, wouldn’t you agree?

SW: Well, I think there are two different questions there. In one dimension, certainly government policy makers have a role in the Internet policy space. They have obligations to their people to protect consumers, conduct law enforcement, protect free speech... But obviously, the telecom industry, throughout much of the world, has been privatized. We see this trend having emerged for many years, especially since the ITRs [International Telecommunication Regulations] were renegotiated. [In Russia], there is a close tie between the telecom industry and the government. I think that’s a true statement. That isn’t true throughout the world. In the Internet industry, it is almost exclusively privatized. So there are a lot of stakeholders, there’s a lot of diversity. And that has to be preserved in any discussion about Internet public policy.

RWW: I know that one of the metaphors Mr. Putin likes to use is that, as we emerge into a more virtual world, our rules about law and enforcement don’t really need to shift all that much.  Just as we would expect to have law enforcement policing us in the real world, we should have a similar expectation about law enforcement policing us in the virtual world. He would go so far as to say, just as you’d expect a cop to pull you over on a highway, surely you’d expect law enforcement to be able to reroute you around something that’s wrong on the Internet superhighway. How would you respond to that, knowing that you and the Internet Society have to both represent the interests of major stakeholders like Russia, as well as those governments and private interests that would argue the converse, that the best Internet is a free Internet where no rerouting takes place at all?

SW: I think Mr. Putin is suggesting that the Internet operates similarly or precisely like any other physical infrastructure - that traffic goes from point A to point B, and that somehow government as a gatekeeper would be both effective and efficient. The Internet architecture, when you step back and look at it, doesn’t work that way. Just from an architectural perspective, that would be inconsistent with basic fundamentals of routing, of moving traffic around a global network of networks. Clearly, then, we have the added concern with that approach, which is, what would that mean for the global Internet as a resource for global communications, for the free flow of information, for the ability of people to recognize their human rights as set forth in the U.N. Declaration on Human Rights - the ability to impart information regardless of frontiers?

I think Mr. Putin’s approach, at least as you’ve described it, would have real problems from an architectural perspective and the technical layer of the Internet, as well as from [the vantage point of] what the Internet really is: a medium for global communication.

RWW: We obviously had this same argument take place in the United States, at least to some extent, with respect to the SOPA legislation that failed Congress. Certainly, legislators felt they had an obligation as representatives of the public trust to be able to reroute traffic around anything that was either a known perpetrator or a suspected one - the argument against that being, the Internet architecture doesn’t work that way. So maybe we dodged that bullet. Then again, the problem does remain that we do have a tremendous amount of intellectual property theft taking place online, from relatively few sources. And there are congressmen who would ask, if you can’t just put a roadblock in front of them, what can we do?

SW: Again, I think we have to go back to the concept that the Internet is a global network of networks. It is not an architecture that confines itself to traditional, national boundaries. Part of the challenge, of course, with the SOPA legislation - and there were a host of challenges with it - was that the mechanism they were trying to put in place (essentially, fiddling with the DNS infrastructure) could not have achieved the goals they were trying to achieve. But it also was inconsistent with this notion that the Internet really is global. So by tinkering around the edges of something like this, you really wouldn’t be addressing the problem that you were trying to solve.

In an area like the topic of downloading of illegal content, I think one of the real solutions to that is in the area of international cooperation. We’re not going to solve this on a country-by-country level. We really do need to come together, both for the technical community, industries - there’s a wide swath of industries that have interest here - and also with law enforcement, to find ways to address this challenge without undermining the basic principles that make the Internet work.

RWW: I think most countries would agree that trafficking in illicit content is illegal under somebody’s national law. And I suppose the problem you’re pointing out here is that national law cannot apply, in a broad sense, to the Internet, which is a global entity. If that’s the case, if there really can be no “global law” that can effectively say, “If you are doing this trans-nationally, you are in violation of something,” then is there not some type of treaty that needs to be negotiated internationally? And shouldn’t that treaty look something like the Anti-Counterfeiting Trade Agreement?

SW: I think the challenge there is, if you’re looking at a technology like the Internet, it’s constantly evolving. There are new challenges, new opportunities, new innovations. But it is a technology that doesn’t stand still. So that kind of treaty-like approach tends to suggest that you can take a snapshot and apply the static approach, which is what a treaty is - a static approach to a constantly evolving technology. And I think that isn’t going to ultimately solve the problem.

Having said that, there is clearly room for cooperation, and actually, it’s happening to a considerable extent, between law enforcement agencies across the world. There is considerable technical industry-led collaboration that’s happening in real-time, to address real problems as they arise. So the challenge now is illegal downloading. Perhaps we’ll see another challenge in two years, and it’s hard to think that a treaty that’s a snapshot of a moment in time is going to allow that kind of evolution, in innovation and also in the problem-solving that needs to happen.

RWW: So in a sense, there’s kind of a technical fallacy for treaties to be able to apply to any type of evolving system of telecommunications, then. If I understand the way you’re explaining it to me, a treaty can only explain the current state of affairs - you used the term “snapshot.” And I know you’ve had experience at the State Dept., so you would have first-hand knowledge of how such snapshots are built. Would we need perhaps a kind of snapshot as an interim method, something that could take us through the next five years, to give a majority of law-abiding nations, and nations that respect each other’s laws and treaties, some time to hammer out more of a collective agreement on how they can better police each other’s citizens with respect to the use of each other’s intellectual property, in a way that’s more evolving and more capable of adapting to new modes of operation than ACTA?

SW: In some ways, we have that in the U.N. Declaration of Principles that came out of WCIT [World Conference on International Telecommunications], Phase I (2003) and Phase II (2005). If you go back and look at those, you’ll see a recognition of both the opportunities of the information society, but also some of the public policy challenges that were beginning to emerge then, but are still emerging today - intellectual property, the need to preserve cultural diversity, the need to protect freedom of expression, the need to address the integration of cybersecurity. You will see in there a framework for international cooperation with regard to these things, for both the opportunities and challenges.

That, in some ways, is perhaps what you’re talking about. That took a tremendous amount of time and energy to negotiate, as you might recall. The question is, do we need to do that all over again, or do we need to move forward with the actual cooperation? Because countries have agreed to do that. I’m just not sure that a treaty is the best mechanism to accomplish that end.

RWW: You’ve argued that there are proposals going on [emerging from] WCIT that would place further restrictions on Internet cooperation, and operations between Internet stakeholders. Could you explain those a bit, and perhaps distinguish them from the act of negotiating a treaty?

SW: If you step back and look at what the International Telecommunications Regulations are, dating back to 1988 and, in fact, much further than that, it’s a framework through which countries could exchange telecommunications traffic across borders. If you think of where we were in 1988, they are - as you would expect - a snapshot of the era. This is an era where you have traditional telecom operators - in many cases, government owned; in some cases, government operated.  We didn’t have independent regulatory agencies, relatively little competition in terms of end user services and devices. But since then, obviously global communications has shifted dramatically, and countries, quite naturally, are trying to see how they can update the treaty.

One of the problems that has emerged is, there’s the perspective on the part of some countries that the Internet is simply another telecommunications service, and can therefore be regulated as such - that it can be regulated in the same way, and with much the same rules, as the telecommunications networks of 1988, in terms of numbering, routing, settlements of business relationships, security provisioning, etc. So when we look at some of the proposals that have come forward by governments, what we see is this tendency to say, “This is how we regulated point-to-point communications in the telecommunications era of 1988; we should just simply expand that approach to include the Internet.”

We see some proposals, for example, to simply apply the accounting rate regimes that have been governing the telecommunications space, to IP traffic. We’ve seen proposals to regulate routing of traffic for purposes of directing “security and fraud.”  There are a host of proposals about numbering, which may or may not include IP addressing. There’s actually some 200 pages of proposals, which is quite a heavy read. But this is what has come forward from member states.

An alternative approach to this could be to say, what has worked in the area of telecommunications since 1988?...  The things that have been effective have clearly been things like competition. We’ve seen privatization of services, tremendous innovations with respect to the role of regulators. We have independent regulators today; we have regulatory transparency. These are concepts that are not reflected in the treaty. So we’re trying to make sure we can put forward the vision of perhaps what could be included in a treaty. We’re also stating some fairly strong concerns about some of the proposals that have come forward already.

Go Daddy wants to be known for more than domain names and racy Superbowl ads. The company has built large businesses around Web hosting and other services for companies of all sizes. But can it really have it both ways?

At a recent meeting in ReadWriteWeb’s San Francisco headquarters, new Go Daddy CEO Warren Adelman delighted in reeling off the company’s impressive numbers: almost $1.4 billion in sales, 53 million domains registered, 5 million websites hosted, and so on. Go Daddy is as big as the next eight competitors combined, Adleman said, and gets more than half of all new domain registrations.

But the company, which was bought by private equity firms for $2.25 billion last year has even bigger aspirations. “We don’t want to move away from that,” Adelman said, but “we think we can do more than serve that segment.”

Servers or Celebrities?

“People think we’re a bunch of guys down in Arizona” with domain names and Super Bowls ads, he said, but there are “sections of the site to address the needs of different communities… We have offerings for the tech community, for the developer community.”

Overcoming those perceptions among seasoned techies won’t be easy, though. Questions like “you’re still using Go Daddy?” are often posed to tech start ups. And really, it’s Go Daddy’s own fault.

No matter what its actual technology credentials, the company spent millions of dollars promoting Go Daddy Girls, not cloud infrastructure (4GH Cloud Hosting) or online storage. Even companies that use those services might think twice about explaining why to the CEO. And that’s especially true the larger, and more sophisticated the company.

Adelman acknowledges “some amount of polarization” around the Go Daddy brand, but believes that the company’s scale more than makes up for any negative perceptions. Go Daddy is big enough to enjoy massive economies of scale, and to create a full suite of add-on products for all kinds of customers. Domian names, website hosting and site-building tools, SSL certificates, marketing tools like search engine optimization, search engine marketing, email marketing and social media. “It’s like selling hot dogs at the ballpark,” Adelman said. Sixty six percent of Go Daddy customers have a product in addition to a domain name, he said.

An App Threat?

Why the tech push now? Although Adelman says it kept growing through the recession, the reason for the push could be the gradual move to mobile apps instead of websites, a transition that threatens Go Daddy’s core business. But Adelman says he’s not worried. “The Web will die a slower death than predicted,” he said, adding that given the hype cycle and the rise of HTML5, it might not be long before you start hearing that “the App World is dead.”

Bullpen is one of a growing number of early-stage funds - or, perhaps more accurately, "earlier-stage," since even his is no longer the first out of the gate. In an interview with ReadWriteWeb, Davidson explains how the latest industry to receive the disruption treatment has been the venture capital business itself, with the epicenter of the quake right around San Francisco.

"There used to be the Four Horsemen of the IPO world, back in the '80s and '90s. They were some great, small banks: Robertson Stephens, Hambrecht & Quist, Alex. Brown & Sons, Montgomery Securities. They all went away; they got rolled up in 1999 and 2000 into these too-big-to-fail banking operations," Davidson tells us. "The question is why? The answer is, they couldn't make any money trading, [or on] giving analyst support for small stocks because the spread got too small."

The spread he's talking about is the decimalization of the U.S. stock market: The change led by NASDAQ in early 2001 to valuing stocks in increments from one-eighth of a dollar down to one cent. "When you make the spread a penny, only very high-volume stocks can garner economic value for the banks to be worried about it," says Davidson. Firms that gave analyst support for small stock issues used to provide price target projections that had some meat between the bones because their highs and lows were separated by eighths of a point.

Believe it or not, this is where the change begins. When small fluctuations in stock value changed from 12.5¢ down to 1¢, the meaning of small stock got smaller. Decimalization forced analysts to tighten their spreads, the result being that their analysis looked like they were wasting their time commenting on penny stocks. It became unprofitable for the Four Horsemen to continue doing business independently. When they exited the scene, the small IPO market followed suit.

What followed is what the VC industry now calls "The Era of Cheap," and we're still very much in it.

Number of U.S. IPOs by year, 1980-2011, with pre-IPO last 12-month sales less than (small firms) or greater than (large firms) $50 million (2009 purchasing power). Credit: Professor Jay Ritter, for testimony before the Senate Banking Committee

The way startup funding worked at the turn of the decade, he describes, small firms would raise "seed round" capital from friends and family to get off the ground. From there, they'd make the leap to "Series A," which used to refer to the first round of institutional capital invested. Davidson says, "Those are the funds you've all heard about: Sequoia, Kleiner Perkins, Mayfield and a whole bunch of great funds. The reason you had to do that back then was because it took $5 million to launch a company into the marketplace, or at least to get the technology done and see [how it performed].

"What's happened in the last decade, the cost of launching an Internet product - forget other technologies, we'll focus on Internet - has dropped from $5 million to $500,000 in 2005, to $50,000 today," he continues. "Two orders of magnitude. That's why a couple of kids in their dorm room can start a company, launch it, and see if anybody cares out there. With that great decrease in cost to launch something, you have the emergence of all these new funds. The emergence has been extraordinarily traumatic and disruptive on the venture industry."

By Bullpen's count, at least 80 new firms have been formed recently with the intention of helping newer firms raise smaller amounts prior to what's still called the "Series A" round, though it may have become the fourth or even fifth rung on the totem pole.

A startup (or what the newly passed JOBS Act calls emerging growth companies, or EGCs) may not need a seven-digit investment until what's called the "seed round," but what's really round three after the "accelerator round." Bullpen may come into play with about $2.25 million on average, before "Series A" even begins.

"It's all driven by the Era of Cheap," says Davidson. "It's all because it's a lot less expensive to start a company than it used to be, so you keep the amount of funding in much, much less, and as long as you can before you go for big money."

Davidson's company explains that backers are looking for companies that can sustain leaner growth models. It's still growth, mind you, but it's more efficient, less wasteful, and a bit less self-assured. A company can validate its growth metrics, Bullpen believes, in as little as four to six months after its initial funding periods.

"You don't know if these deals are real; it's all an experiment. And the leaner you keep it, the more options you have with what to do with it. Once you put a lot of money in, you're no longer lean and flexible and kinkin' and jivin' and trying to figure it out," he says. "Now you're on a bit of a race to actually prove out the value of the money you raise, and scale it. When you keep it lean, everybody has better options, and a better outcome when all the dust settles."

The benefit for Bullpen, and other investors in its space, is risk avoidance. Having a little less money to burn drives the EGC to get its product to market on time. Then the risk of that product succeeding is lessened by network effects made feasible by app stores and digital distribution, driving up customer adoption. Risk to the company's business model in the early stages is reduced by adopting this app store "template" that customers worldwide have already embraced.

"Look at Instagram, which got bought by Facebook. How old is Instagram? It's not a very old company, and it just sold for a billion dollars. Zynga goes from zero to multi-billion-dollar company in four years. There's been two fundamental changes here that have been overlooked by a lot of people, and this is why it's fundamentally different than it was in 1999: One change is this Era of Cheap and the lean finance model... Everything's better with the lean model.

"Money, in effect, can be a drug - it can be a problem," he continues. "You get too much money, you lose flexibility instead of gaining it. You pay yourself too much money, you sort of relax, you don't have the same urgency - all these things happen when you take too much money in. In a lean model, you're in a race, you're worried, you're not there yet. You're at a constant level of anxiety, and it makes you more agile and responsive - a lot of good things happen."

The second change comes from the globalization of technology markets made possible by the Internet, as Bullpen's Duncan Davidson explains: "You're not just selling to a few companies in the U.S.; you're selling to a huge consumer marketplace. So a franchise can evolve extraordinarily quickly. Bill Gates once called this the 'friction-free economy,' and it's pretty damn close. This explains why a company like Zynga or Groupon or Instagram can go from nowhere to a very valuable company, extraordinarily quickly, much more rapidly than ever before. The changes are: It's very cheap to do things, given modern technologies, and the global market makes a potential win absolutely huge - faster, bigger than we ever imagined before."

(NOTE: For more of Duncan Davidson's insights - along with those of five other top-tier VCs - download Scott Fulton's exclusive 14-page report: "Growing Your Business In The Modern Economy: 6 VCs Weigh In.")

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.

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.

One of the more interesting choices this time is Jeff Jonas, a 47-year old chief scientist with the company who blogs here. Jonas never graduated from college with any degree but is clearly one of the smarter people you'll ever come across. He is also quite a character.

Unlike many of his fellow Fellows - who have resumes that you might have trouble parsing - Jonas has lived a very interesting life and worked on numerous problems that are easily understood by the rest of us.

Jonas came to IBM through a 2005 acquisition of Systems Research and Development, a company that he founded in 1985 to handle labor reporting, inventory management and other back-office systems consulting. One of his jobs was designing the casino security systems in Las Vegas, where he currently lives. He worked for the surveillance intelligence group of several casinos, and automated various manual processes, adding facial recognition software that was key to slowing down the MIT card counting group. "We built [another] system to immediately identify risk in real time so they could get these people out of the casino quickly." This software is still offered by IBM as its InfoSphere Identity Insight event processing and identity tracking technology.

Jonas is one of these people that look at the world with very careful thinking, always searching for actionable patterns. For example, he helped use his casino risk-management system to track down lost family members after the Katrina flooding of New Orleans. He and his team integrated data across 15 web sites - these web sites were being used by people who said they were seeking family members with those seeking them. I was impressed by how he structured his algorithm so it wasn't going to be used by bill collectors, for example.

He calls this perpetual analytics and sense-making to keep track of data changes and to help advise decision-makers in real time. "As information changes, you want to be able to reconsider earlier decisions. If you want to prevent really bad things from happening, you want to be able to monitor risks and trends while they are happening." You want to monitor the motion of the data, as it were.

His current internal IBM project is called G2. The idea is to "make sense of new observations as they happen, fast enough to do something about it, while the transaction is still happening." His work is looking at how to commingle diverse data and weave them together - especially when things are the same, such as people named Billy and William, who could be the same person. "If you can count things that are the same, you can analyze them better and understand how they are related. It is a bit of a breakthrough technology," he told me in an interview today. "I took what I developed for the casinos and made it more generalized and easier to use." He and IBM plan to offer G2 sometime soon for the paying business public.

He gives another example in his blog:

"If someone has three phone numbers - no big deal. On the other hand, if someone has five different dates of birth, that just doesn't seem quite right does it? That would be confusing. Why is this important? Well, if you are looking to analytics to make important decisions, wouldn't you want to know during the decision making process if there was related confusion ... before [any] action is taken."

So a car's color can change over its lifetime, but its make and model remains the same. A person's Social Security Number should remain the same. "The trick is being able to relate how each of these data points to other things."

You can listen to a podcast interview that Jonas did back in March 2009 here with two other IBMers, where he talks about some of these concepts.

Whatever it is, it needs to be fixed fast. That much is easy to figure out. Much harder to answer is what's the best, most efficient way to prevent and cure these kinds of potential catastrophes.

Technology meltdowns are not just a theoretical concern. I know, because my own startup has been hit with them. I had one standing at the Geek Squad counter in my local Best Buy. On another occasion, I stumbled sobbing through a Walmart in Fergus Falls, Minn., at midnight - thousands of miles from home - because I somehow broke my laptop, and faced two looming deadlines.

Your company's meltdowns will be different, but all startups are vulnerable one way or another.

Most startups have the ability to fix the small stuff, either on their own, with the help of expert friends or colleagues, or with a quick call to a local IT consultant. But at some point, you risk running out of either answers or time. Even if you're a star coder, as your business grows there will come a moment when you're going to need IT help on a full-time basis.

But how do you know when that moment comes - when is the right time to stop outsourcing your tech support needs and actually hire an in-house IT person? I put that question to Greg Marks, an IT consultant and software specialist at O'Neil Software, based in Irvine, Calif., who has talked me through many an IT crisis. Marks suggests that you first consider the size of your company. He says, "Getting to 20 systems is usually a common breaking point when companies have to move IT staff in-house."

Of course, the type of business you're building and the nature of your IT needs will also influence that decision. As Marks explains, "Companies that rely on having a Web-based presence to get their messages out or sell products online likely have a greater need for an in-house IT person. If their websites go down, then they are essentially shut down. Having an IT person on staff constantly maintaining the network and site is vital because it prevents problems and allows for faster resolution of issues." Also, he adds, "If your data is critical to your business, then it is worth having an IT person on-site to maintain all your hardware and software, as well as ensure that the systems are always backed up."

Make sure to stay on top of how your IT is functioning. "Too often companies only [worry about] IT during startup," warns Marks, "and then never engage with the outside contractor again, or don't consider bringing someone in-house until a major crisis hits." At that point, Marks says, it may be too late. "I have seen firsthand companies lose key databases and years of information because in-house IT services were never considered, or the IT person that they contracted with had no vested interest in the organization."

Create an IT plan now, before a crisis hits... or your promising startup might never really get off the ground.

Image courtesy of Shutterstock.com.

Apart from distorting exactly what Henry said, focusing on the winning-or-losing aspect of his retirement comments takes away from his broader point. Andy Purdy, former director of the National Cyber Security Division of the U.S. Dept. of Homeland Security, tells ReadWriteWeb that the real point is far more fundamental than whether we're winning or losing the so-called cyberwar.

"We Can't Eliminate All Risk"

"Risk management needs to be the approach that guides our government agencies," states Purdy, currently the chief cybersecurity strategist at enterprise services provider CSC. "I think that concept of risk management needs to guide the approach to our critical infrastructure, and you see that reflected in the National Infrastructure Protection Plan that was launched back when I was at DHS. And the nation needs a risk management approach."

In 2003, Purdy served as Senior Advisor and coauthor of the DHS' National Strategy to Secure Cyberspace. Today, Purdy talks about both government and business moving away from a warfare scenario and toward something more like a maintenance operation - a way of making adjustments for losses and ensuring the integrity of data systems in the face of changing threats. "We can't eliminate all risk; we can't be just reactive, though we have to be prepared," he tells RWW.

"Some of the functions and some of the work can be outsourced. But in a risk management process, with the ongoing assessment of risk, the interaction with the business owners, and the changing dynamics in terms of the IT landscape within the larger enterprise, you can't outsource all that. There needs to be that kind of customer [focused], ongoing engagement. In larger enterprises, I think we're increasingly seeing an enterprise risk manager with very senior reporting responsibilities, who has access to the information from [resources] below - which perhaps may be outsourced - and then direct connectivity to the leading decision makers in the company, so that the risk issues can be escalated appropriately, brought to decision, and the risk can be accepted, transferred or mitigated much more quickly than in the past."

It's here that traditional reporting tools are showing signs of age, and where service providers may take a cue from how Salesforce has very rapidly revolutionized team management in the world of CRM.

Purdy introduces us to a concept he calls leveraged, managed security services, which builds on a CSC idea called, "The Security Stack." Every enterprise needs global, full-time security operations centers, he argues.

These centers do not need to be dedicated - indeed, Purdy suggests they should be shared between enterprises so that sources of threat intelligence from both commercial and the public sector may be integrated. "That ability to monitor from a centralized source, [puts you] in a much better position to connect the dots and eliminate the difficulties of legacy communications processes."

Situational Awareness

It's the notion of situational awareness - the third layer of CSC's Security Stack - that distinguishes the risk management process. Though it sounds like a Pentagon euphemism, it doesn't require a military mindset. It's what Shawn Henry told a cyber defense summit in Muscat, Oman, last week - that everyday businesses need a central channel of communication that places the best intelligence in the hands of the decision maker.

"If the leadership of organizations doesn't get it, its people are not going to pay attention," an Oman news service quotes Henry as telling attendees. "If the boss doesn't think it is important, then people are not going to take it seriously. So I want to get to the organizations at the CEO level or the CIO level, at the leadership, at the executives in organizations. I want to get to corporate counsel, general counsels and organizations so that they understand what the liability is. If you can raise the situational awareness at the executive leadership of [organizations], you will get a much better response and have a much more secure organization."

"I think Shawn's one of the more experienced people ever to take that position," Purdy tsays, "and I think he's made tremendous progress working within the country and internationally to try to set up processes for greater cooperation with allies and others, and to make sure that they're working in a strategic, targeted way, and we're trying to learn from those activities."

Next Page: Dropping the Wrong Bomb...

Dropping the Wrong Bomb

Recently, Henry has been invoking a "bomb" analogy with respect to the situational awareness model: It's the idea that if you told the CEO there's a bomb in the basement, he'd react and evacuate the building. But if you can't describe a threat as something equally tangible and equally serious, there's a good chance they'll do nothing at all. (The analogy made an appearance l during Henry's retirement speech; and bloggers who translated that speech from a foreign language back into English concluded that Henry was saying there's a bomb in the basement.)

"I hope and expect at some point that he will come out with a 'Part 2' of his discussion," remarks Purdy. "There are those who feel that, when you finish reading what he said, it feels a little hopeless and helpless, and that the necessary path forward cannot really help contribute in the long term to managing the risk more effectively. I would say that some of the efforts we've seen recently to do some things that can drain the swamp of malicious cyber activity are critically important."

One example Purdy cites is an agreement last month between ISPs and the FCC for codes of conduct and best practices in detecting threat activity that may impact customers, and in informing those customers. Those best practices include an accelerated deployment of DNSSEC (Domain Name Security Extensions), improving security for DNS routing to prevent domain hijacking. "That activity is a necessary complement to the great work that law enforcement has been doing. But they have not been emphasized enough in this country... I think some of the challenges and the frustrations that Shawn talked about can be addressed by enhancing the role of ISPs and enhancing information sharing. [This] can reduce the number and seriousness of machine infections around the country - hopefully if we work internationally on it, around the world - so that we can make it harder for the bad guys to hide in the white noise of cyberspace, to make it easier to find the more sophisticated actors, and to force them, frankly, into using some of the more sophisticated tools, the zero-days, rather than using the very common exploits and botnets to launch their attacks."

Responding to the Nation's IP Crisis

Although much of the security industry in 2011 focused on the "rise of hacktivism," Purdy believes that deflected attention from a much greater problem.

"I think the major development in 2011 was a consensus among senior government officials and senior private sector officials in this country that we are suffering a systematic online theft of intellectual property. It rises to the level of national security significance because of the impact on global competitiveness of American companies. We have to do much more than we're doing now. I'm not as comfortable in putting it in terms of 'winners and losers,' but I think the kinds of harm that's being suffered in this country by individuals and organizations, that Shawn Henry talked about, is very real, and we can't just think of it in terms of, 'Will there be a digital Pearl Harbor?'" says Purdy, invoking a phrase coined recently by Defense Secretary Leon Panetta. "The fact is, we're suffering very significant losses, very significant harms right now, and we have to do more about it. We've got to get a little bit out of the 'Kumbaya' attitude of public/private partnerships."

This was one of the lessons of Hurricane Katrina, Purdy notes, which was learned way too late: Situational awareness could have been achieved had government agencies been more willing to share information with telecoms, for example, in keeping lines of communication open.

Working together to analyze information, respond to incidents and recover from disruptions is now something that agencies realize is not only possible, but critical. The National Coordination Center, now co-located within DHS, manages situational awareness. "That kind of analysis needs to be done, so when Secretary Panetta says we face a possibility of a devastating attack against the power grid... government and the private sector, the electric power providers, need to do that kind of analysis, identify gaps, set goals, objectives and milestones so we can drive and enhance the cyber preparedness of each of our key sectors, and enhance the nation."

That needs to change.

Most startups take the obvious measures:

• Be careful who you hire
• Don't leave your laptop at the café
• Don't share your business plan too freely, even with potential clients (as ReadWriteWeb contributor Steve Blank learned the hard way)

And then there are all the not-so-obvious measures:

• Put up a firewall
• Install anti-hacking software
• Hire an IT geek to lock down your networks
• And many more

The problem is, these steps are obvious, too. They just cost money, so a lot of cash-strapped startups decide to put them off until "later."

Trouble is, by putting off these critical steps, your startup risks the real possibility that there will be no "later." If some other company steals your intellectual property, your dreams can give way to lights out, a phone call to the lawyer, and "Who wants some vodka in their Red Bull?"

And don't think that you're safe just because you're small. "IP theft is happening a lot more in startups," says Chris Porter, senior security analyst at Verizon and coauthor of Verizon's recently released 2012 Data Breach Investigations Report. "IP theft and other data breaches at startups are definitely trending up."

Worse, Porter warns, breaches of intellectual property are hard to detect. If someone steals your credit card number, you'll probably see the results in your online account statement. But if someone heists the software code at the core of your business, you may not know about it until you discover some rival company selling your service to their clients.

"There is not a fraud algorithm out there that lets you know your IP has been stolen," Porter explains. "If you find out about it, it's because a competitor of yours has put one of your features in their product. This is hard enough for big businesses to combat, but small businesses that don't have IT staff and security staff and technology to help them with these things, they really have a hard time."

Porter recommends startups find a trusted partner, a third-party cloud-based solution to manage IP security for you. "The argument can be made for both financial reasons and security reasons," he says. "A service you have contracts with is liable if a breach happens. It can be a lot cheaper than doing this type of protection yourself."

Whatever you do, you can't ignore the security issue until "later." No amount of Red Bull can save your startup once your IP has been stolen.

When you think you've made the perfect pitch to an investor (Yes, an investor. What did you think we were talking about?) and shockingly, the person leaves you hanging without a clue why you've been rejected, what do you do next?

Most likely, it's time to rethink and refine your pitch.

To get a definitive answer, I talked to Brent Beshore, CEO and founder of investment company AdVentures, who advises entrepreneurs "to be as clear and 'meaty' as possible." And he'd prefer, if possible, you say it all in one sentence.

"I hear pitches that start with 'Well, we're like a cross between Twitter and Facebook that utilizes some aspects of Groupon,'" says Beshore. "That's worthless. An elevator pitch should be very concise and very direct."

Here are some examples of what he means:

• "We buy failed magazines."
• "We enhance company culture through fitness."
• "We sell bathtubs online."

Now think about your elevator pitch. Ask yourself these four questions:

1. Was your pitch confusing or nonsensical? Sometimes you can be so enthusiastic about your business ideas or so nervous about making the pitch that you end up running at the mouth or throwing in too many details.

2. Did the investor see the need? Did you spell out why your target group of consumers will see the need to buy your products or use your services?

3. Did you emphasize points of differentiation? Maybe the investor wasn't convinced your idea is innovative or different enough to distinguish it from the millions of other businesses out there.

4. Did you talk up your team? Investors want to know you have the right people with the right skills to make it happen.

Now that you know what investors are looking for, rework your pitch. And practice pitching to people unfamiliar with your industry to see if they understand what you have to offer.

Then try again. And again.

If you still can't get traction for your idea, it may be time to rethink not just your pitch, but your business ideas. If your pitch is perfect but still isn't working, the problem could go beyond your delivery to the actual fundamentals of your business idea. Take another look at the four questions above and make sure your business idea is clear, that it really does fill a need, that it really is different from competitors, and that your team really does have the chops to execute your plans.

Photo courtesy of Shutterstock.

Mitchell is responding to criticism that a bill based on her own work may undo some of the benefits of the Sarbanes-Oxley law, which tightened reporting regulations and increased transparency for businesses. But she's making these comments while taking a victory lap. In fact, today she's at the White House, watching President Obama sign the bill her task force put in motion.

In March 2011, the U.S. Treasury Department assembled 17 leaders of the startup business investment community, under the auspices of its Access to Capital Conference. Their task was to draft a set of recommendations for how the nation's "IPO crisis," as some call it, could be resolved - a post-bubble lull in the number of startup companies in all sectors that proceed to the initial public offering stage and go public. Among their recommendations was something called an "IPO on-ramp:" a five-year relaxation in the reporting requirements for companies in the formative stage. This while increasing the limit on small investments in these companies by 10 times, and legalizing crowdfunding.

In an interview with ReadWriteWeb prior to the signing ceremony, Mitchell speaks about the formation of the IPO Task Force and the process of crafting their recommendations - a bit of it in jest: "It was meant to be a diverse group, and that really gets to the point of why we got to the recommendations we did. We had institutional public IPO buyers on the task force, they got two votes. (I joke.) There were CEOs and private investors, securities attorneys, the former head of [PriceWaterhouseCooper's] tech practice in Silicon Valley. Then we had some boutique investment banks, and I joke that they got half-a-vote."

It was a diverse enough group of financial professionals, she tells us, that they could all come in with their preconceived notions of why the market is in the state it's in, and then come to recognize those notions for what they were. Throughout the summer, as often as three times a week, the group would come together to hash it out over ideas that one side of the room believed was beneficial for the folks they represent, that the other side of the room couldn't swallow. It's the type of issue-driven discussion that used to happen inside the walls of Congress, back before politics became a sporting event.

"We really ended up coming up with something that reflected what will work for the ecosystem," remarks Mitchell about the group's recommendations, which were largely adopted by Congress. "It was meaningful for issuers, but provided for investor protection from the investor perspective. So that's [the] really why we brought that diverse group together; it wasn't just any one given group of people, or from any certain part of the ecosystem. It was a diverse group."

The task force recommendations, titled, "Rebuilding the IPO On-ramp," presented stunning insight into the symptoms of the nation's startup problem. During a 25-year span of time until 2005, their final report noted, nearly all net job growth in the U.S. was created by firms less than five years old. Some 92% of job growth comes after a company goes public - which makes sense, because a company acquires public capital in order to hire people.

But in 2008, only 45% of companies went public. And in an August 2011 survey by the IPO task force of CEOs of companies in both the pre- and post-IPO stage, while every single one agreed a strong IPO market is important for the U.S. economy and for maintaining competitiveness, 86% of CEOs surveyed said that going public was a less attractive option for businesses today than in 1995.

The report suggested that one reason for this change in sentiment may lie in how Sarbanes-Oxley (SOX) and other regulations tailored toward holding large companies accountable, may be strangling smaller and newer ones. "A series of rules, regulations and other compliance issues aimed at large-cap, already-public companies has increased the time and costs required for emerging companies to take this critical first step," the report stated. "Many of the rules and regulations adopted over the last 15 years aimed to respond to scandals or crises at major public companies and to restore confidence in the public markets by requiring public companies to adopt more stringent financial and accounting controls."

The survey learned that the average cost that companies sustain just to go public was $2.5 million, and companies spent another $1.5 million per year just to stay public. RWW asked Kate Mitchell how much of that expense was actually wrapped up in meeting reporting requirements and hiring independent auditors. She told us that SOX accounted for about 30% to 40% on average, although for one company in the survey, the cost for going public exceeded $4 million.

Mitchell tells us about her experience testifying before Congress at the time the task force was first being assembled. Also speaking during the same session was Seth Goldman, the founder of Honest Tea. "He said it's become so daunting to go public that he would rather stay private."

This was the genesis of the task force recommendations for relaxing SOX for small companies. But the relaxation itself comes with limits, Mitchell tells us - limits that maintain the spirit in which the reporting rules were created, and which many investors actually insisted should remain.

"One of the appeals we got from institutional investors was that they want to invest in growth companies on the public regulated exchanges," the former NVCA head tells RWW, "They know, they trust, the ways of doing business on a regulated exchange; [whereas] what they have to do now is to go into the second markets in the private world, where buying and selling securities are governed by contractual law. And they'd rather be in a regulated environment rather than a contractual environment. So the idea that a) we would allow more IPOs, but b) it had to be consistent with SEC regulations, was really the intent of what we were doing."

Mitchell listed for us the reporting and transparency requirements that do not go away as a result of the JOBS Act: The ban on investment banks using their own banking revenues to pay for investment research and analysis - known as the "Spitzer Decree," after the former New York attorney-general who drove it into law - remains. The FINRA Rules of Conduct, which stipulate - among other things - that independent research analysts must have their independence certified, also remains. "All the accounting disclosure requirements in GAAP stay in place," she added. "This is actually borrowing from existing SEC regulations that apply to small companies." She then noted that small reporting companies (SRCs) with a public float of under $75 million, or annual revenues of under $50 million, are already permanently exempt from SOX regulation 404(b). "The CEO and CFO are still personally liable to assert that they have certified for any material weaknesses. The auditors, when they find them, have to disclose them."

"You do know that General Motors, when they go public, gets up to two years themselves to comply with the external audit of internal controls, which is a 'belt-and-suspenders' approach, and a very reasonable thing ultimately for all these companies to provide. We're simply saying, give these smaller companies slightly more leeway than the largest companies already have," Kate Mitchell says. "We didn't want this to be a radical recommendation; we wanted to have companies that public investors are going to want to invest in, because they have confidence in the numbers, the source of the information they're getting outside the company, about the company... CEOs find public markets unattractive today, and we want to take that away. That's part of the problem. That's why they don't grow to be big."

In the era of social media, you may think public relations doesn't play a role in your marketing plans. Think again. In fact, thanks to social media, committing PR blunders can sink your startup even faster than ever, no matter if you're selling the coolest products or offering killer services. To make sure that doesn't happen to your company, we asked marketing maven Gini Dietrich to share six regrettably common PR mistakes today's startups must avoid.

Dietrich - founder and CEO of Arment Dietrich, an integrated marketing communication firm, and author of the PR and marketing blog Spin Sucks - knows there's a fine line between creating a brilliant PR strategy and one that can blow up in your face.

To make sure you end up on the right side of that line, avoid trying to do it yourself - and these all-to-common errors:

1. Not making PR a priority. Many startups think about PR last, as if it takes only two months to launch your business to the world. In most cases, you should bring on PR help at least a year before you launch, but no later than six months prior. If you wait until you're ready to launch, no one will know about it for a good three to four months after you're out of the gate -- and in today's world, that may be too late to do you any good.

2. Hiring a PR firm without thinking about the ROI. Startup founders tend to relate public relations to publicity and hire a PR firm without any idea of how they're going to measure results, other than the number of stories placed. While publicity is one tool PR pros use, it's not the only one. Don't hire a PR firm just to get stories about your startup in your targeted blogs, trade magazines and other media. Hire a PR firm to help you drive sales, and ask them to show you how their efforts will do exactly that.

3. Abdicating all responsibility to the PR team. PR is a joint effort. You have to put in time-building relationships. Don't expect that just because a PR firm already has connections with the influencers you need to reach, it can sprinkle some fairy dust and get you in front of the right people in a matter of days.

4. Flying by the seat of your pants. You need to develop a strategy with your PR pros to get your messaging exactly right. (This heads off mistakes like boasting about being green in the least eco-friendly way.) When criticism or negative comments about your business arise (and they will), you need to be prepared with an immediate response in our 24/7/365 world. At the very least, have an informal crisis plan at-the-ready that includes the five Ps: Predict, Position, Prevent, Plan and Persevere.

5. Being inflexible. Your business is your baby. Everything about it is glorious to you. But a PR professional will know how to tell your story in a way that gains traction, explains the brand and scales your business. If you aren't willing to adjust the story in your head, you may fail at telling the story your customers want to hear.

6. Refusing to listen to criticism, advice and feedback. Social media has revolutionized how businesses get feedback about their efforts. But you must be willing to listen and incorporate what you see and hear. An outside PR professional (or firm) can be essential in helping you listen, monitor and absorb.

How can companies giving away T-shirts compete with that? With a perfect pitch and cool perks. Like a phone call from a celebrity - it worked for George "Dr. Funkenstein" Clinton!

The JOBS Act makes selling stock easier, but that certainly doesn't mean it's a smart move for every startup. Fortunately, selling stock still isn't necessarily required to land large sums of cash. Double Fine Productions, a San Francisco gamemaker, raised a record $3.3 million for a new game and documentary through crowdfunding site Kickstarter. Contributors were given a copy of the game, the film and other gifts. People who gave over $10,000 got to have lunch with the game's designer.

Double Fine founder Tim Schafer told the San Francisco Chronicle that he'd think about selling shares down the road but notes that giving up equity in return for just $1 million doesn't make sense for Double Fine. "We raised three times that giving away lunches and T-shirts."

But the law will doubtless bring an increase in the number of businesses looking to sell stock online. And that means stiffer competition for any company hoping to raise money online the old-fashioned way, by offering contributors cool perks. So how can your startup stand out at a crowded crowdfunding site?

We asked Slava Rubin, CEO and cofounder of four-year-old IndieGoGo, the largest crowdfunding site by number of campaigns:

Perfect your pitch. Your pitch should be engaging - and nothing engages like video. Rubin says it's essential to any funding campaign. Companies with a video pitch raise 114% more money than those without. "It can be video of anything but you want it to be personal and engaging. Not just you selling aggressively or begging for money. That absolutely does not work."

Set a hard deadline. Short campaigns work better than long ones. Rubin says successful campaigns typically reach their funding target around day 36 of a 47-day campaign. "Be aggressive with your deadline and keep the ball rolling. If a deadline is too long there's a lull that's detrimental to your campaign."

Start fast. Nobody funds a company if nobody else is funding it, which means your campaign will stand a better chance if you get early contributions from friends and family. "We know you need to get 30 to 40 percent of your funding from your inner circle," Rubin says. "That includes friends, family and all your social network connections." Once you get that, strangers are more willing to jump on board. "Also, it helps you get on our homepage and in our blog or newsletter, which raises your exposure even more." Rubin says campaigns get, on average, 20% of funding from complete strangers, 30 percent from friends and family and 40 to 50% from their first-degree network.

Stay busy. You can't simply post your fundraising campaign and walk away. You must update regularly to keep the narrative fresh. Rubin says fundraisers who update every five days or less raise four times more money than those who update every 20 days or more. "And 'update' means saying something like, 'We have a new perk today. Or, 'Thank you John, Jan and Billy for contributing.' Or, 'Hey, we just found a new designer for our new product.' You also really have to leverage you social media networks on email, Facebook, Twitter, YouTube, etc."

Offer cool perks. Rubin says 90% of the IndieGoGo campaigns that hit their target offer gifts and perks - and the more creative they are, the better. "We've seen everything from a personal phone call from funk legend George Clinton, who was raising money on the site to refurbish his recording studio, to a personal thank you etched on an antique Seltzer bottle, from a Seattle-based startup that delivers seltzer water in antique bottles."

Better perks for bigger donors. Rubin recommends offering different perks for different levels of contribution. Say, one for donations of $25 or less, one for donations up to $100 and one for donations over $100 "You also want an aspirational perk for really high contributions of like $5,000 or $15,000. We actually see these four-digit contributions a number of times a day and for aspirational perks we've seen like a private show of a band at your house or a private dinner catered for you."

Find strength in numbers. Rubin says startups with four or more people on the team raise 70% more money than those with just one person.

Set a realistic goal. Not realistic as in low. Realistic as in reasonable. Rubin says funders viewing your pitch must see that it's doable. "It means people can feel they can trust what you're setting out to do can be accomplished. So don't raise $3 million for a short film and don't raise $20 to build a new mall."

Of course, right? But would you pay for the privilege of "renting" a tech company founder? OK, what if the money you spent went to charity? And what if the founders came from high-profile startups like Reddit, Hipmunk, Scribd, Parse, Sincerely, and Exec?

If your answer is "yes" to these somewhat unusual questions, here's your chance. San Francisco-based service site Exec, has lined up founders to talk to other entrepreneurs from 11 a.m. to 5 p.m. Pacific on April 7, either on the phone or via Skype. The promotion includes a number of execs, including ones from Exec, natch:

Alexis Ohanian (Reddit, Breadpig) for questions on Y Combinator, building brands and communities online, or combatting terrible legislation in Washington (e.g., SOPA/PIPA).

Steve Huffman (Reddit, Hipmunk) for help with Web applications.

Matt Brezina (Xobni, Sincerely) for advice on customer development, finding product/market fit and scaling user acquisition.

Tikhon Bernstam (Parse, Scribd) for insight into building out your product, team and company.

Justin Kan (Justin.tv, Exec) for advice on starting companies, recruiting talent, and management as well as online video and advertising.

According to Exec, you can ask the founders to give you "advice for your business, serve as a sounding board for your startup idea, or just to chat." You can even ask to pick the brain of specific founders. ("No promises though.")

So how much does it cost to talk to a founder? $100 per hour, with a half hour minimum. Cheaper than a psychiatrist, and not much more than a plumber. Better still, the money goes to DonorsChoose.org. So even if you don't learn the secret to making a fortune in Silicon Valley, you'll at least be helping out classrooms in need.

Click here to sign up. Or go to the [Exec blog] (http://blog.iamexec.com/post/20415502048/rent-a-tech-company-founder-through-exec-for-donors) for more information.

Lead image courtesy of Shutterstock.

To make sure that doesn't happen - and help startups avoid costly lawsuits (another instance where the only people who get rich are the lawyers) I asked Anton Rosandic, a California-based attorney and an entrepreneur himself, for some free advice. The solution isn't all that complicated, Rosandic says, "A successful investor/business owner relationship is all about managing expectations" and making sure all the terms are clear to everyone involved.

The first step is to pay attention to Rosandic's key do's and don'ts:

• Don't do a handshake deal; everything (and he means everything) needs to be in writing.
• Even if the investor is a friend or relative, don't assume you can skip the formalities. You can't. If something goes wrong, you want to make sure your relationship is "protected."

Just as important, don't play lawyer and try to write the agreement yourself. Instead...

• Get a lawyer - and make sure he or she is experienced in drafting investment agreements.

Then, before you sign any agreement, have the lawyers create a simplified description of the deal terms in plain English, so all parties understand the expectations, the deliverables and the consequences. For example:

• How much money is involved, and when can you expect to actually receive it?
• Is this an equity deal, and what percentage of the business does the investor get? Or is the investor loaning you money, which means you're taking on debt?
• If it this is a debt deal, what are the repayment terms?
• Is the loan secured by someone's house or similar collateral?
• When does the investor expect to see a return on their investment?

Next, clarify what say the investor has in the business operations. "For instance," says Rosandic, "will you have to get the investor's permission before making major decisions, like selling an asset or buying equipment?" Make sure your expectations match the investors'.

Of course, that's not all you need to worry about. Once you've covered the basic issues, Rosandic says there are still a lot of questions that need to be answered and clarifying that needs to be done.

• Clarify everyone's roles. Will the investor actively participate in the business as a manager or director? If so, what is expected of the investor as a participant? Will the investor be entitled to any salary or distribution?
• It's crucial to understand your investors' specific expectations for your startup. For example, are they looking for an increase in sales or in net revenue?
• Create a budget for the next 12 to 16 months so that everyone is clear on how you plan to spend the money you raise. "Even if it changes, and it very likely will, [a budget] gives you a starting point," explains Rosandic.
• What's your exit strategy? How do the investors expect to get a return on their investments, and are you onboard with that? Will you be selling the business, merging with another entity, or do you plan to go public?
• Do your investors have their own exit strategies? Can they sell their interest at any time? If so, do you have a right of first refusal to buy back their interest? Are there time constraints on a buyback? Do the investors have a right to force you to buy back their investments?

The sooner you know the answers to all these questions and the more everyone understands everyone else's expectations, the better you'll be able to manage not only your business, but your investor relationships.

Best-case scenario? "If your startup is successful," Rosandic notes, "most of these issues will be nonissues."

chpwn is the creator of jailbrea.kr, a single destination to keep you posted on the latest jailbreaks for all devices and OS versions. He's also created a host of apps and services that really make the most of the freedom afforded by jailbreaking. He doesn't just break the conventions of iOS for the sheer joy of it; he understands what the system needs but doesn't have.

ReadWriteWeb: Why jailbreak? What does an iOS user gain by jailbreaking?

chpwn: Jailbreaking is about getting around the restrictions that Apple puts in place, so you might think that jailbreaking is mostly about getting the kind of apps that Apple doesn't allow.

But jailbreaking is really about a lot more than that. Most of what's available in Cydia (the jailbreak "equivalent" to Apple's App Store) are extensions, tweaks, or modifications to what's built in to the iPhone or the iPad. If you've ever used Firefox's extension system, that's the about the closest equivalent to what's available in Cydia.

Some tweaks improve something that's already there: my Infinifolders let you add more icons to folders than Apple's standard 12-icon limit. Others make it easier to use: @phoenixdev's Music Controls Pro adds gestures and other controls to dozens of music apps. Some of the most cool are the extensions that provide completely new features: I personally like Ryan Petrich's DisplayRecorder, which allows you to record and share videos of whatever is running on your screen.

None of these are traditional "applications," like what's in the App Store, though. Many don't even have icons on your home screen. They just hook into various parts of the OS, and modify what's needed to add the feature.

chpwn: A lot of people jailbreak for very simple reasons. Before it was added in iOS 4, just the ability to add a wallpaper to your home screen was often what led many people to jailbreaking. Nowadays, one of the most popular reasons is to add quick settings and toggles for commonly used functions: the extension SBSettings lets you turn on and off Wi-Fi and other connections right from Notification Center.

Theming, too, is popular. Cydia has tens of thousands of themes available, which can make iOS look like anything from Windows 7 to a movie poster - or just improve or customize the existing look. Customization, in general, is one of the big themes of jailbreaking. Most iPhones look identical, so lots of people want to be able to make theirs stand out.

RWW: What are some of the most interesting modifications you've made or come across?

chpwn: One of the most visually impressive tweaks I've seen is Barrel, by Aaron Ash. It takes your home screen icons, and then adds 3D transitions as you swipe from page to page. They might turn like on a cube, or spin like a wheel, but then smoothly end up back where they started. It's hard to describe; you have to see it in person for the real effect.

Another one of my favorites is Conrad Kramer's Graviboard, which adds gravity to your icons. Rather than just a boring grid, you can pick up your icons and throw them around your home screen, bouncing with simulated physics and gravity in whatever direction you turn your device. It's a lot of fun, and definitely a cool way to show off jailbreaking.

On the more practical side, Jay Freeman (@saurik, the creator of Cydia) makes Cyntact, which just adds pictures next to each of your contacts names, throughout your phone. It seems simple, but it helps a lot in practice to quickly find the right contact. The popular time-based screen-dimming tool f.lux is also in Cydia, and helps quite a bit with reading at night.

None of these even conceptually make sense in the App Store. They modify the entire phone, not just a self-contained icon. So it's definitely interesting to see how iOS might be improved if it was open to more outside modification.

TOMORROW on ReadWriteWeb: Jon reports back from his own month-long adventure in iOS jailbreaking.

Disclosure: Grant "chpwn" Paul is related to ReadWriteWeb Channels Editor Fred Paul.