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Starting upJason Calacanis wrote a arguably good article on how save money running a startup. He is the CEO of Mahalo.com, a human powered search engine. Mahalo has a great concept and I see it as a cross between Wikipedia and Squidoo, a little more biased towards Squidoo. So lets see what pointers he have on saving money running a startup. Plus a little of my comments from the experience I had.

1. Buy Macintosh computers, save money on an IT department

Save money by buying Macs? I will suggest getting decent hardware and then have Ubuntu in those systems. For web developement or web applications, get one Mac, one Windows machine for user interface testing. Else I cannot see how Macintosh computers can save money much. Macs in Singapore are not cheap.

To add, a Machintosh is essential if the designer in the team requires it.

2. Buy second monitors for everyone, they will save at least 30 minutes a day, which is 100 hours a year… which is at least $2,000 a year…. which is $6,000 over three years. A second monitor cost $300-500 depending on which one you get. That means you’re getting 10-20x return on your investment… and you’ve got a happy team member.

This is a interesting point. First of all, I have no experience in using 2 monitors but do l understand that 2 monitors does help in increasing productivity and reducing carpal tunnel problem. Imagine the number of “ctrl+tab” you can save while you are viewing code and debugging.

But with 2 monitors come with desk space. And desk space relates to office space. Of course this can be countered with intelligent workspace arrangement. The number of 10-20x return does not see so attractive if space comes with a premium.

3. Buy everyone lunch four days a week and establish a no-meetings policy. Going out for food or ording in takes at least 20-60 minutes more than walking up to the buffet and eating. If you do meetings over lunch you also save that time. So, 30 minutes a day across say four days a week is two hours a week… which is 100 hours a year. You get the idea.

I wil have to agree that Jason makes sense with this point. At certain stage of starting up, it is essential to keep the momentum going and cut down the time spend on non-productivity issues. But to save 100 hours a year, that means a lot of in office meals, and a lot less socialisation. Do that to your sales people and their performance will take a hit. And I am someone who believe everyone in the team is a salesperson for the startup.

4. Buy cheap tables and expensive chairs. Tables are a complete rip off. We buy stainless steel restaurant tables that are $100 and $600 Areon chairs. Total cost per workstation? $700. Compare that to buying a $500-$1,500 cube/designer workstation. The chair is the only thing that matters… invest in it.

I liked this point. Chairs are all important. A good chair can make or break the programmer’s stamina. At the same time, do place some consideration on lighting as well. Eyes are all important too to coders.

5. Don’t buy a phone system. No one will use it. No one at Mahalo has a desk phone except the admin folks. Everyone else is on IRC, chat, and their cell phone. Everyone has a cell phone, folks would rather get calls on it, and 99% of communication is NOT on the phone. Savings? At least $500 a year per person… 50 people over three years? $75-100k

This is pretty simple. Leave the ego at the door and everyone shares a common line. Plus mobile lines that is paid for by the team members themselves.

6. Rent out your extra space. Many folks have extra space in their office. If you rent 5-10 desks for $500 each you can cut your burn $2,500 to $5,000 a month, or $30-60,000 a year. That’s big money.

This is possible and I do co-share my office with another company which is of totally different business. But do consider the overhead in management the rental, tenants and stuff that comes with being a “landlord”.

7. Outsource accounting and HR—such a no brainer.

True. Accounting can be outsourced. For HR, outsourcing may not be all. Getting recommendations from team members for openings are important as they may know people who are capable and who they can work it. Very important. Just do not hire someone who you can not fire.

8. Don’t buy everyone Microsoft Office–it’s too much money. Put Office on three or four common computers and use Google Docs.

Not to sound anti-Microsoft. This is a good point. Go for OpenOffice if bandwidth is limited in the office.

9. Use Google hosted email. $50 or free per user…. how can you beat that?!?! Why screw with an exchange server!?!?

Again this is good advice. But bear in mind that employees need a “work” email. One that is separated from their person email.

10. Buy your hardest working folks computers for home. If you have folks who are willing to work an extra hour a day a week you should get them a computer for home. Once you get to three hours of work a week from home you’re at 150 hours a year and that’s a no brainer. Invest in equipment *if* the person is a workaholic.

This is questionable. If there is a workaholic, I will do suggest that he decide something else to do at home. But again there are people who enjoy their work that they do not see it as work. Getting hardware for workers who are on call is a very good gesture. Especially those helpdesk people and programmers who might be doing support and troubleshooting away from the office.

11. Fire people who are not workaholics. don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or stabucks if you’re not into it you want balance in your life. For realz.

This is where Jason sounded harsh. I believe he wanted to label these workers as passionate people, not workaholics. Morale is important in most cases and when someone burns out, it will hit the rest of the team. Workaholics may seems as competitive to others in the team as well.

In short, perspective and passion is top on my list. The person should have passion and be able to balance what is demanded now and what is required for long term well being.

12. Get an expensive, automatic espresso machine at the office. Going to starbucks twice a day cost $4 each time, but more importantly it costs 20 minutes. Buy a $3-5,000 Jura industrial, get the good beans, and supply the coffee room with soy, low fat, etc. 50 people making one trip a day is 20 hours of wasted time for the company, and $150 in coffee costs for the employees. Makes no sense.

Coffee yes. I like coffee. But here in Singapore, I settle for instant coffee. Too bad not all in my office drink coffee.

13. Stock the fridge with sodas—same drill as above.

Word of caution. Regulate sugar intake. For the benefit when you get older. Also unregulated intake of sugary drinks may results in tides of sugar highs and lows which might be disruptive to concerntration. Sodas are not all evil on the other hand. Pulling a all nighter is always better with a fridge stocked with Cokes.

14. Allow folks to work off hours. Commuting sucks and is a waste of time for everyone. Let folks start at 6am or 11am and you’ll cut their commute in half (at least in LA).

This I agree. Travelling during peak hours kills energy and lowers morale. Getting stuck in jams does no good to the mind and body. Singapore peak hours are packed and expensive for cabs. (35% surcharge anyone?) Trying reaching the office at 11am for a change and give ERP a miss. Yes you might end real late like 8pm but too, you will miss the evening commute crowd.

Different people may come in at different time but that is fine as long as things get done. Also it might help to have a fixed hours of maybe from 2pm to 5pm where everyone is expected to be together so as to have face time for discussion or brainstorming.

15. Go to each of your vendors every 6-9 months and ask for 10-30% off. If half of them say yes you’ll save 5-15% on fixed costs. People will give you a discount if they think they are going to lose the business.

I am not the best negotiator around but asking for the best price maybe a sound concept. I always believe in a good bargain. But do pay good vendors their value worth. What goes around comes around.

16. Don’t waste money on recruiters. Get inside of linkedin and Facebook and start looking for people–it works better anyway.

True. Word of mouth and recommendations could offer better choices without the attached price tag. This might contradict point 7 above. Again, never hire someone you cannot fire.

17. Really think about if you need that $15,000 a month PR firm. Perhaps you can get a PR consultant to work on 2-3 projects a year for $10-15k each and save 75%. More PR firms are wasted half the year while you build up your product anyway.

PR is not my strengths. But I do remember this conversation some time back where the company should not confuse PR with marketing. Marketing is when you push hard to market (duh!) a product or service while PR is when the company have to react to adverse conditions from the market or competitors.

That sums up my reponse to Calacanis seventeen, or eighteen. Do read up on the different response to the original post at TechCrunch and at Signal vs Noise.