Jason Calacanis' How To Save Money Running A Startup Misses Mark - Sort Of

There's a firestorm going on and at the hub of this is none other than Mahalo founder Jason Calacanis. Jason wrote a blog post called "How To Save Money Running A Startup" which has upset a number of people because it seems to reduce his employees to slave status.

Having ran Sports Business Simulations for over five years and without a million dollar or more investment -- we started with just $25,000 and later a loan from me to the firm of $18,500 -- I think I have a good list to "sort of" add to what Jason wrote.

Well, OK, more modify what he wrote.

First, don't hire employees, bring in independent contractors. The reason is that you do save money on liability issues and health insurance and equipment. Look, you're a startup, that's what startups do.

Second, don't promise a level of pay you can't achieve. If you know what you're going to have coming in, use that as a basis. Then offer percentage revenue deals to the contractor. In five years, I have yet to experience a controversy because I said I could make a payment I could not indeed do.

Third, work out of your house. You really don't need a large office and telecommuting is all the rage, so use your house or apartment and have a dedicated workspace. For extra space, use the kitchen and dining room.

Fourth, learn to love the Internet Cafe. There a lot of places to go to just get out of the house with your partners in work and get coffee, work on the computer, and admire the single talent when your mind wanders -- and you're single yourself.

Fifth, think of your co-workers as just that, co-workers; not slaves, or insects, or idiots, or expendable units. But you have to seek out people who themselves are entrepreneurial. Be very careful not to find people who want you to provide an employment structure because they will sap your energy dry. Remember, you're a startup. Start with contractors, make great deals, and grow the business first.

Sixth, make sure to find people who don't use company party time to get royally smashed and have you wonder why you contracted with them in the first place. Remember, startups are known for parties, but that doesn't mean you have to have a high booze tab.

Seventh, Jason's right about the cell phones.

In closing, you too can grow a startup with my advice. But don't stop with me, ask around. And remember that startups are fun!