Tuesday, October 07, 2008

Doyenz exits stealth mode

Earlier this year, I looked at a bunch of startups, including those from Paul Graham's Y-combinator. My policy with startups is that unlike a venture capitalist, I don't have energy (or the money, really), to go spray a ton of cash around a bunch of ideas and hope one sticks. I'm also relatively risk-averse, compared to those whose net worth is much higher.

Most Web 2.0 startups don't impress me, mostly because I don't see a path to revenue and profitability for most of them. Worse of all, most of them are quite cheap to run, so if you put money in them, there's no resolution for many years while they limp along. What's interesting about the Y-combinator startups is that for most of them, it's their first startup, and it shows --- there's no concern for monetization, and there's not enough "Oh yeah, if Microsoft tried to buy us for $40million I'd be thrilled and be happy to sell."

When we spoke with the Doyenz co-founders they were clearly a cut above. The first thing I liked about the business plan was how focused it was --- they aren't doing anything seriously sexy (though there are technical barriers to doing what they are doing), so it's unlikely that the next Y-combinator startup will try to address their space (and goodness knows, big companies aren't likely to do so), and it's got a path to profitability even in a recessionary environment (which is when people are most likely to want to save money, which is what Doyenz's product does). The founders have done a previous startup together, and hadn't been too shy to sell out and make money when the time came.

So a coalition of my friends and I anted up and put in some money, and here they are, several months later, with a product and customers. What's interesting is that we had the reverse of buyer's remorse after this investment round --- as we looked around and interviewed more startups, Roberto and I ended up thinking, "I wish I'd put more money into these guys. They really are different."
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