Digg.com founder boosts startups

Digg founder Kevin Rose encourages internet entrepreneurs to follow their dreams – on the cheap, if possible.

Mr Rose created Digg, a news aggregation site that attracts 38 million visitors each month, in San Francisco in 2004. He has started a string of other start-ups and provided angel investment to Twitter and Foursquare.

Living in "the Bay" isn't essential for success on the net, he says. But Mr Rose encourages entrepreneurs to get there and network once or twice a year if they can.

He sees location-based services, such as Foursquare, as one of the biggest new opportunities.

Mr Rose was free with his advice at WebStock but says running ideas past others is not always wise. Before he founded Digg, he asked his three room-mates about the concept and they "all pretty much said it sucked", which hurt. "You just have to go out and build it."

Mr Rose was working for a television company in a US$100,000-a-year (NZ$140,000) job and initially worked on Digg in his spare time to keep costs down.

"If you are really passionate about something, it is possible to work a fulltime day job and have that side project, but be prepared to make some sacrifices."

At some point net entrepreneurs will need to decide whether to quit their jobs and commit to their ventures, but the longer they can work without taking on investors, the more equity they can retain in their start-ups.

Other ways to scrimp include:

* Skipping conferences if theyare too expensive, networking instead at after-conference parties.

* Renting rather than buying server capacity to test the waters for any online service.

* Dispensing with an office – as Digg did for its first six months in business.

Mr Rose advises entrepreneurs not to design too many features into their products from the start, and to stay involved in the hiring process as their companies expand, to make sure new staff see the big picture.

"When it comes to hiring junior people, hire hustlers – people who will run rings around you."

Entrepreneurs should also avoid taking on "dumb money" from unknowledgeable investors, unless they want to be bogged down in unproductive board meetings and in answering stupid questions.

It was often possible to buy an hour or two's phone advice a month from experts who could advise on technical or business problems in return for a small stake in the business. Pricey, talented employees could be hired on a temporary contract or part-time and then wooed.

Mr Rose's income dropped to US$34,000 during his first year in business, until Digg got solid financial backing, "but it felt so much better".

Digg lets people vote on news stories, with popular stories presented more prominently on the site. Mr Rose says there were stressful times after its launch, ensuring the site wasn't hacked or taken over by spammers.

"It was really scary. I can remember waking up early in the morning because I didn't know what was going to be on the homepage."

- © Fairfax NZ News