Long-time Internet entrepreneur Jason Calacanis recently shared an epiphany he had regarding startups. A critic of Facebook, he has come to appreciate the value of the company’s developer-driven culture. His new belief is that the primary cause of Facebook’s success (and, to be fair, mistakes) is that within the organization, developers are empowered to create products and features then push them live, all without oversight, formal review, or interference from management. They just build and launch, build and launch, over and over.

This is unusual in any company, much less one of the most popular websites in the world. While it has at times created problems for Facebook and left them with a PR mess that needs cleaning up, it has also allowed them to move incredibly quickly and keep up with their explosive growth. It also gives them a competitive advantage that other large companies just can’t top.

Being More Like Facebook
Based on this revelation, Calacanis decided to completely overhaul his company, Mahalo, and “remove everything between the developer and iterating on the product.” He cut back on people and positions, eliminating the formal role of product management. One of his more interesting decisions involved the actual creation process:

No more formal wireframes is Rule #1 at Mahalo. You build your wireframe in HTML — or maybe on a white board or bevnap at a bar.

No more mockups is Rule #2. Instead of having a product design team, we’re outsourcing our site design to independent design shops and individual designers of note.

This instantly made me think of the hackathons that we participate in at my company, Kickstart Concepts.

Running a Company Like a Hackathon
This is basically how we operate during a hackthon. With a limited amount of time, we don’t have the option to create traditional wireframes, have lengthy discussions, or entertain a formal review process. We just build. Every minute of effort needs to be spent on something usable.

For example, the advantage of building prototypes or mockups in HTML is that once you’re done, you actually have a skeleton of a site to continue working on. By eliminating traditional product management, you’re removing the massive layers of overhead that go into administration, developing spec documents, traditional project management and more. It’s amazing how this sense of focus can produce incredible results in a short amount of time.

In a hackathon, these are all removed by necessity. At Mahalo, they’re being removed to reduce drag on the product and allow the company to innovate at a much faster rate.

A Growing Approach
Hackathons demand the type of iterative prototyping, rapid-development approach we use with our clients at Kickstart Concepts. And Facebook is helping drive it’s adoption, with Mahalo being a great example. But this road isn’t without its bumps. The secret is to just have more big wins than big losses.

I’m excited to see how this change in direction will work for Mahalo. It’s not easy to make a decision like that, and I applaud Calacanis for taking the leap.

Now comes the fun part: seeing how it plays out.

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In the course of meeting with aspiring entrepreneurs and people with big ideas, I have come to hear the same thought shared over and over again:

“If only I knew {something}.”

Within the world of web start-ups, this is often programming. “If only I knew how to actually code, I could launch my business.” But it applies to other things as well. I have met people who have an idea, but decide the best way to start is by learning how to write a proper business plan. Or people who want to be a professional blogger or author who read about writing instead of, y’know, actually writing.

Skills Help, But Only to a Point
I’m not saying that learning a certain skill won’t make something easier. If you want to build a website, it’s a big help if you can build it yourself. But too often people push aside good ideas for the pursuit of learning something they’re convinced is required for success, instead of finding a way to work with the tools already at their disposal.

The focus on “learning” before doing can become it’s own endless pursuit, never leading to the perfect moment where you feel you now know what you need in order to succeed. There will always be another blog to visit or book to read to “know enough.”

Does this sound familiar?
You read a book on productivity instead of being productive. You watch a show on organizing your closets without touching your messy closet. You spend time researching the best running shoe to buy before you ever step outside for a jog.

We’ve all done this. And it’s tempting, because learning about something often gives you the illusion of progress, making you feel you are closer to your goal, even though it can become just another roadblock.

You’re Smart Enough
It’s important to continue learning, and in the pursuit of any idea, you’re going to learn more and acquire more skills than you would have ever imagined. But stop looking at learning something new as a prerequisite that needs to be done before you work on the thing you really want to do. Start thinking about the strengths you already have and how they can be leveraged to achieve your goal.

Here’s a secret: you’re smart enough to do it now. So stop focusing on just learning how to do something, and try doing it instead.

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Few things have the power to drive customers to your business like a referral. Having someone recommend your product or service carries with it an implied sense of trust and value that is hard to top with advertising or marketing alone.

So what is the key to encouraging someone to recommend your business to others? How do you reward or incentivize people to refer new clients?

Showing Your Appreciation
You could just thank people for sending business your way. You could show your appreciation through a small gift or gesture. Or you could reward them with a discount or other offer tied to your business or service? So which to choose?

The question is really about social norms (doing things to help someone out or feel good about yourself, asking for a favor) vs. market norms (being financially rewarded for something, paying for a certain action, creating financial incentives to provoke actions). Either can play a role in what someone chooses to do.

The Science Behind Our Behavior
In his book, Predictably Irrational, behavioral economist Dan Ariely illustrates the effects that social and market norms can have on our behavior and how fragile social norms can be.

He shares the following story about a day care center in Israel:

An excerpt from Dan Ariely’s Book Predictably Irrational

My good friends Uri Gneezy (a professor at the University of California at San Diego) and Aldo Rustichini (a professor at the University of Minnesota) provided a very clever test of the long-term effects of a switch from social to market norms. A few years ago, they studied a day care center in Israel to determine whether imposing a fine on parents who arrived late to pick up their children was a useful deterrent. Uri and Aldo concluded that the fine didn’t work well, and in fact it had long-term negative effects. Why? Before the fine was introduced, the teachers and parents had a social contract, with social norms about being late. Thus, if parents were late — as they occasionally were — they felt guilty about it — and their guilt compelled them to be more prompt in picking up their kids in the future. (In Israel, guilt seems to be an effective way to get compliance.) But once the fine was imposed, the day care center had inadvertently replaced the social norms with market norms. Now that the parents were paying for their tardiness, they interpreted the situation in terms of market norms. In other words, since they were being fined, they could decide for themselves whether to be late or not, and they frequently chose to be late. Needless to say, this was not what the day care center intended.

But the real story only started here. The most interesting part occurred a few weeks later, when the day care center removed the fine. Now the center was back to the social norm. Would the parents also return to the social norm? Would their guilt return as well? Not at all. Once the fine was removed, the behavior of the parents didn’t change. They continued to pick up their kids late. In fact, when the fine was removed, there was a slight increase in the number of tardy pickups (after all, both the social norms and the fine had been removed).

This experiment illustrates an unfortunate fact: when a social norm collides with a market norm, the social norm goes away for a long time. In other words, social relationships are not easy to reestablish. Once the bloom is off the rose — once a social norm is trumped by a market norm — it will rarely return.

The fact that we live in both the social world and the market world has many implications for our personal lives. From time to time, we all need someone to help us move something, or to watch our kids for a few hours, or to take in our mail when we’re out of town. What’s the best way to motivate our friends and neighbors to help us? Would cash do it — a gift, perhaps? How much? Or nothing at all? This social dance, as I’m sure you know, isn’t easy to figure out — especially when there’s a risk of pushing a relationship into the realm of a market exchange.

More Than Just Money
Which brings us back to your clients. Clearly there is some market relationship between you, as there is a financial exchange for the service you provide. But the best client relationships also share a social bond. Besides enjoying your work, your customers should like you as a person (we all want to do business with people we like). And when you are liked, your clients will want to help you. They will also want to help the person they are referring you too, as they feel the service you provide would be of value to them.

The Importance of Giving
This social bond should also be a two-way street. I encourage my clients to reach out to me with questions, even if I don’t charge them for it. And I occasionally sprinkle in a little work here and there that I don’t charge for. Some people would call this working for free. I consider it doing someone a favor. And it’s been my experience that people are always excited to be able to return a favor (like through a referral). I usually only do this for clients who I feel are friends as well as customers. And it’s usually that same group that sends me new business.

Plus, a referral is much more powerful when it’s delivered due to social norms. When there is a financial reward involved, it dilutes the value of the recommendation. It creates the perception that someone may be recommending you not because they value your service or want to help you, but because there is “something in it for them.”

This isn’t to say a reward can’t be offered at all. A nice bottle of wine or tickets to an event can always help you express your gratitude for their support. But keeping any rewards seperate from whatever service you provide can help establish and protect the social bond.

Keeping The Balance
Balancing the social and market aspects of your client relationships can be tricky at times. But keeping the right mix of both is crucial to success. Otherwise, you run this risk of becoming just another vendor.

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The tech press is buzzing today with word that Google has just brought “mobile app development to the masses” with the launch of Google App Inventor. The company claims that the tool enables non-coders to develop apps for any phone running on the Android platform.

In a nutshell, App Inventor lets anyone assemble a mobile app by connecting a bunch of “blocks” of code. Apparently Google has been testing this new tool with students in different schools over the last year. The goal is to make mobile development as accessible as possible.

The Dark Side of WYSIWYG
One of the great things about the Internet has been that (in theory) anyone can participate and build websites through the use of what-you-see-is-what-you-get (WYSIWYG) tools. But that has come with a price. The web is full of poorly-designed, poorly-constructed websites. Worse still is that there exists a belief among many people that everyone can design and build websites and that it “isn’t that hard” (anyone who has worked with clients will attest to this). This has led not only to a sea of mediocrity across the web, but also a perception problem regarding the skill and value of web designers and developers.

The New Microsoft Frontpage?
What will the Google App Inventor likely lead to? A whole slew of Android apps ranging in quality from decent to god-awful. I would be shocked to see many useful apps come from this tool. Building great products is about more than just having the tools to do it. Giving anyone the ability to produce these applications with a WYSIWYG platform will mostly lead to horrible results, much like Microsoft Frontpage lead to mostly horrible websites.

The Silver Lining
The upside here is that it will lead to increased interest in mobile development. Users will start to tinker with App Inventor before deciding to learn how to actually develop these types of applications, much like Frontpage and Dreamweaver introduced many of us to web development, enticing us to continue on and improve our skills. This promises to take mobile development out of the hands of a few and grow a much larger talent base.

Whenever you lower the barrier of entry to a platform, it usually floods the market with a lot of garbage. But it also provides an opportunity for true talent to rise above the rest. So I don’t expect great things from Google App Inventor, but I do expect to see great things from the people who got their start with it.

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Freelancing is an odd thing. You decide that you have some skill or talent that people would be willing to pay for, so you make the choice to go into business for yourself (either full-time or part-time). But you quickly realize that to be successful, your one skill isn’t enough. You also need to focus on marketing, client relations, accounts receivable, project management and a whole slew of other areas in order to grow your business.

One of the first lessons I learned when starting out was to read everything you can find about freelancing. While there is definitely some questionable advice out there, it’s a good idea to consume as much information on the topic as possible. Recently I picked up a copy of The Wealthy Freelancer by Steve Slaunwhite, Pete Savage, and Ed Gandia. I’m working on a full review of the book, but they had a great suggestion I wanted to share now.

How to Bill Clients For Your Work
Deciding how and when to bill clients for your work is an important part of freelancing. You need to find a balance between being reasonable and protecting yourself from bad clients. The book outlines the following steps to striking this balance.

Step 1: Collecting a Deposit Before You Start
In the book, the authors talk about the importance of collecting a deposit before starting a new project. While some freelancers just starting out may feel awkward collecting money before they’ve done anything, this is a crucial step in making sure you aren’t left working for free. Also, when a client pays a deposit upfront, they are showing that they take the project seriously. Any hesitance regarding paying a deposit is a huge red flag and should make you think twice about working with someone. The authors suggest 50% to start. Personally, I sometimes collect a slightly lower amount depending on the job, but there isn’t any science behind this decision. It really just depends on what the freelancer is comfortable with.

Step 2: Collecting the Balance Upon INITIAL Delivery
Now this is where the book gets interesting. Instead of collecting the remaining balance upon final delivery of your work, the authors suggest billing the client for the outstanding amount upon INITIAL delivery of your work and giving them some set time period (30-45 days) to pay the invoice. This helps to ensure that they deliver any feedback or changes promptly and prevents projects from dragging on and on (something I like to call Final Approval Hell). This is definitely a novel approach and I have never met a freelancer who does it. But I might try it on several projects moving forward to see how it goes.

The Importance of Getting Paid
When you decide to freelance, you give up the predictability of a paycheck, so it’s important to create as much structure as possible around how you bill for your time and work. By setting these types of formal payment arrangements, you’ll not only provide yourself some much needed security, you’ll also encourage your clients to be on their best behavior.

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Mark Webster

About Mark Webster

One of the Co-Founders of SideTour, former TechStar (NYC Summer 2011), ex-NBA'er, and past TechCrunch Disrupt Hackathon Winner.