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SAN FRANCISCO--By late afternoon on Tuesday, it was getting awfully hot in the conference venue hosting TechCrunch50. Blame it on the body heat, or maybe the scores of laptops humming away.

But the air was sure to get a little hotter when it came time for the "Social Media Streams" category of start-ups to present.

The organizers of TechCrunch50 decided to save the last slot on the final day of the event (you know, right before everybody starts downing booze at the cocktail reception) to showcase new start-ups that deal with Silicon Valley's most hyped niche of the moment: real-time social media. As if Facebook and Twitter couldn't be dominating enough headlines here, there were six start-ups filling up the "stream" category: Threadsy, Lissn, Radiusly, Stribe, Clixtr, and The Whuffie Bank. And the panel of judges was joined by Twitter-savvy rapper Chamillionaire as a surprise guest.

Guess what? The judges, some of whom have been known to drink Silicon Valley hype Kool-Aid as though it were the world's finest wine, didn't think we needed most of these companies.

Oh, boy.

Threadsy's CEO Rob Goldman demos the site.

(Credit: CNET / Josh Lowensohn)

Threadsy, whose founders called it "the world's first integrated commnications client," was the best received of the bunch by far. It's a messaging client that aggregates e-mails, Facebook messages, Twitter replies, instant messages, and also "unbound" communications like general tweets and status messages that aren't necessarily geared to you. "We built Threadsy to pull you back together," CEO Rob Goldman told the audience, citing the rapidly growing percentage of Americans who are using more than one messaging client ona regular basis.

It's got a slick interface, can also aggregate automated profiles for your contacts' social-network feeds, and can track Twitter queries in an almost dizzying visual format.

"I think Robert Scoble's head was about to explode," conference organizer Jason Calacanis commented afterward, referring to the Valley mainstay's near-pathological obsession with social feed aggregation.

Scoble's response was remarkably pragmatic.

"I'm just wondering if it has the FriendFeed problem," he said, "which means there's not enough people in the world that care about aggregating all their friends' social networks," but added that he wanted to try it out as soon as possible. A few of the other judges raised questions about how Threadsy will make money, considering inboxes have never been a huge trove for ad dollars. Goldman's answer was a little bit convoluted, which this reporter took to mean that Threadsy hasn't quite figured it out yet.

Up next was Lissn, which appeared to be a combination of a news aggregator, a chat room, and a question-and-answer service. "Lissn starts with a conversation," founder Myke Armstrong said, and then demonstrated the app by posting the question "What would happen if the moon disappeared?" and watched comments and answers roll in. What wasn't really clear was exactly why anyone would use it, what with Twitter, Facebook statuses, and various "conversation" trackers out there already.

"Why would I leave Twitter to join this?" Scoble asked. Harsh words coming from the guy who loves to rave about the next shiny thing that streams words across your laptop screen.

Lissn lets people begin conversations about whatever they want.

(Credit: CNET / Josh Lowensohn)

Lissn was followed by Radiusly, which aims to solve scaling and communication problems for companies and brands that want to use microblogging and other social-media tools--many of which aren't terribly customizable. A company can build a Radiusly profile to create a directory of official social-network profiles for its employees, manage them internally, and share media like product images and videos for marketing and customer service purposes.

"I think you guys aimed at the right target but your dart hit the wall and not the target," Scoble said. LinkedIn founder Reid Hoffman chimed in, "In a rare position I agree with much of what Robert (Scoble) was saying." Ouch.

Next in the lineup was Stribe, which is in the same vein as Meebo's chat toolbar and Google Friend Connect--in other words, something that a smattering of established companies are already trying--adding social-networking features to any site by adding a chunk of code. Stribe can provide metrics pertaining to traffic and engagement, too.

Stribe's social network on a page (click to enlarge).

(Credit: CNET / Josh Lowensohn)

This was another well-designed one, but it was met with more skepticism. "I think one of the hardest things about these networks is actually getting the community to sign up," Facebook exec Mike Schroepfer said on the panel of judges. Dick Costolo gently reminded the Stribe team, "You can do too many things and then it becomes difficult for people to understand what they should use your product for...when you try to do a lot of things at once, it confuses people as to how they should use it and then they just don't use it."

The fifth company in the lineup received a somewhat better reaction. Called Clixtr, it's an iPhone app (and eventually expanding to more handsets) that combines photo-sharing with location awareness, turning the phone into what CEO Fergus Hurley called "the ultimate social camera." Clixtr's hook is event photos: The iPhone app lets you browse pictures from geo-tagged events, send photos instantly to other Clixtr users' phones, and find events near you.

"I think that was awesome," Schroepfer said, but expressed some confusion over exactly how geotagging could sync up to an event. Scoble complimented its sign-up process, but said "I'm not sure it causes enough gameplay, or enough something-else that gets me into this." He wasn't the only one to point out that getting people to use the app would be a challenge. "I would up the level of incentive for participation," Reid Hoffman said, and added that Facebook could easily build location-awareness into the photo feature of its mobile apps.

The last company was what Calacanis called "one of our wild-cards," The Whuffie Bank. Named after the deplorable term preferred by marketing-buzzword-loving social media consultants everywhere (basically, it's slang for social capital, a term coined by science fiction author Cory Doctorow), The Whuffie Bank is a non-profit organization for building a virtual currency around online reputation and influence. You can then use that currency to pay others with "whuffie," like tossing a bribe someone's way to ask them to retweet something you've posted on Twitter.

Note to the Whuffie Bankers: At the very least, please choose a different name for your organization. "Whuffie" sounds like something that would happen in porn movies. And the judges seemed to think that however cool of an idea it might be, it might be best if the currency stays in science fiction.

"The problem with these kinds of currencies is you generally need some kind of banking system to regulate them," Reid Hoffman said. "A lot of cool things...I think conceptually it's going to be extraordinary difficult."

"I want to hear in one line, what do I get?" celebrity judge Chamillionaire asked. "It seem like you've got to do a lot of work for them to raise your reputation...It seems like you can fake it."

And with that, it was happy hour. Or so everyone hoped.

Comedian Penn Jillette demos his new iPhone app.

(Credit: CNET / Josh Lowensohn)

SAN FRANCISCO--The fall season has officially begun. Starting Monday morning, the annual TechCrunch50 conference took over the San Francisco Design Center for two days of start-up pitches and presentations; the conference's angle, as co-hosts Michael Arrington and Jason Calacanis reiterated, is that all 50 companies on the roster are completely new and launching for the first time.

Start-ups presenting at the conference, which were chosen through a behind-the-scenes elimination process, were grouped into categories. The first of the day was "Youth & Games," with an array of kid-focused and entertainment start-ups.

The day had already begun with some theatrics: the news was broken (unsurprisingly, by TechCrunch) that a previous TechCrunch50 winner, personal finance start-up Mint, had just sold to Intuit for $170 million in cash. Mint CEO Aaron Patzer took the stage on Monday to formally confirm the announcement.

So it was appropriate that the first pitch of the session, kicking off the TechCrunch50 conference as a whole, was pretty far out in left field: an iPhone app created by comedy-magic duo Penn & Teller. At first, their developers came onstage and apologized that the entertainers couldn't actually make it to the conference, and proceeded to demonstrate a text-messaging magic trick app. But then Penn Jillette stepped out to formally demonstrate the app, which has the aim of (ideally) fooling the iPhone user's friends into thinking that they're actually playing a guess-the-card trick with Penn and Teller via text messaging.

"It's not so much a moneymaker for us as a public service to get guys laid," Jillette said when asked if there was a revenue model to the app, which sells for $1.99 and is now in the iTunes Store. "If there's a Nobel prize for getting guys laid we'd definitely be in the running for it."

Jillette also announced that the app's alpha tester is a stripper from Philadelphia who has raked in extra tips by demonstrating the app alongside lap dances. Unfortunately, the array of judges didn't seem terribly impressed at its long-term business prospects.

Child's play for start-ups
The next presentation couldn't have been more different: Story Something, "which makes the personalization of children's stories simple and easy," founder Jim Rose said. The Web company uses Mad Libs-like text fields for a parent to personalize a story with their children's names and other attributes, and new stories can be sent on a schedule--for example, every evening before bedtime--as part of a paid-subscription model. There's also an iPhone app for easy reading to kids.

Most of the questions from the judges pertained to business model and the intellectual-property rights associated with the stories published through StorySomething. Judge Don Dodge called it "a lottery-ticket investment" for an angel investor, given the relatively low overhead costs and likelihood that such a company could scale without much additional investment.

Other judges' questions were a bit sillier.

"How profound is the assumption that parents will continue to make kids?" judge Yossi Vardi asked facetiously.

ClaseMovil lets you wander around a virtual world and spend microcurrency. It's also got an education tools, but is currently for Spanish-speaking users only.

(Credit: CNET / Josh Lowensohn)

The third start-up in the round was the Mexico-based Clasemovil, a start-up that offers game- and video-based online educational exercises for kids in areas like math, science, and history. Clasemovil uses a format much like trendy kid-focused virtual-world services--its virtual currency, for example, is used to teach personal-finance lessons. The executives were accompanied by an on-staff teacher who vouched for the company's platform as a classroom tool, demonstrating progress-report tracking features.

It's launching first in Latin America (in the U.S. next year, apparently) but its founders hope that it ultimately will allow elementary-school students from around the world to learn by interacting with one another. ClaseMovil, which hopes to make money from subscription fees from both individual users and educational-institution subscriptions, has already raised seed funding and is looking not just to investors but also grant money from governments and organizations.

When asked by conference host Jason Calacanis whether they'd invest in it, judges said they'd consider it. Veteran investor Ron Conway said that it could benefit from some partnerships with other companies. "I would consider, but I wouldn't write a check until it's in English," Don Dodge said of the currently Spanish-only site. "English is where the money is."

Two judges, investor George Zachary and MySpace exec Jason Hirschhorn, said that they'd turn the investment opportunity down outright, with Zachary citing "so much competition" and "huge brand and marketing challenges" when it comes to making a splash in the education market.

The fourth start-up was another kid-focused one, ToonsTunes, a virtual world focused on teaching kids about making music. Players can record music through a mixer interface, network with other users, and sign up for "concert" spots at virtual "clubs." They can share their creations on social networks like Twitter and MySpace, or download them as ringtones. There is, of course, also a virtual currency involved for micropayments like purchasing samples of pop songs.

Obviously, virtual worlds for kids are hot in the wake of the success of companies like Club Penguin, which sold to Disney for $350 million two years ago. And the graphics-heavy ToonsTunes received a pretty warm reception.

"I like it very much," George Zachary said, calling it "GarageBand meets Club Penguin." Don Dodge said that "the quality is absolutely amazing." Hirschhorn questioned the company's ability to compete with the likes of "Guitar Hero." Vardi called it "very, very impressive," considering especially the fact that the company was privately funded and employs only five people.

Ron Conway said that the makers of Guitar Hero would love a product like this, but Hirschhorn remained the skeptic and said that it would be easy for the likes of a huge player like Electronic Arts to create a similar product with far better resources and connections.

Sealtale lets you claim products or services you use, then stick a logo of them on your blog.

(Credit: CNET / Josh Lowensohn)

The Sealtale of approval
The last company of the "Youth & Games" round was a little different: Sealtale, a Korean company that lets users create personalized badges (or "seals") to embed on their blogs to identify themselves and express their affinities--as an iPhone user, a supporter of a certain cause, a fan of a band, for example. Clicking on a "seal" can bring up related blog posts from other bloggers with the same seal. It's one part self-branding service, one part blogroll, and one part Google Friend Connect-like networking service.

Calacanis asked the judges what they thought of Sealtale, which he called "Webring 2.0" in an allusion to the '90s-era blog network start-up. "We'd have to see how the product took off and how the acceptance was in other countries (besides Korea)," Conway said. Hirschhorn said he liked the user interface but wasn't totally sold how it was needed in a world of MySpace pages and Facebook fan pages.

So what did the judges think overall of the "Youth & Games" category at TechCrunch50? Calacanis asked them which of the five companies they'd take an investor meeting with, and it looks like there was a clear winner: Dodge and Vardi both preferred ToonsTunes, and Conway said he'd take a meeting with either ToonsTunes or Story Something but ranked them about even. Zachary, meanwhile, said "I'd put ToonsTunes at the top, Story Something a distant second, and the others are off the map."

Hirschhorn--the lone entertainment-industry member on the panel, it should be noted-- was the dissenter, ranking Story Something at the top and ToonsTunes behind it, sticking to his instinct that it'd be tough to get a music games start-up off the ground when there are already so many big players in the industry.

Totlol offers a collection of community-vetted, kid-safe YouTube videos.

(Credit: Totlol)

Totlol developer Ron Ilan had enough.

It had been just over a year since he launched his site of community-vetted YouTube videos--where kids can watch Elmo, cutesy animal videos, or "Big Comfy Couch" without the accidental off-color search mishap. And, despite its popularity, he couldn't find a way to make it sustainable or survivable without adverse impacts.

So, earlier this month, at two in the morning, he wrote a long explanatory note to Totlol's users that ended with, "I'm closing Totlol down. Life goes on." Then he went to sleep.

"I woke up to hundreds of messages," he says. While Ilan was asleep, TechCrunch wrote a short post about the closing of Totlol and "they stirred things up," says Ilan.

Parents and fans wrote Ilan imploring him to find some solution to keep Totlol from closing. He's found one for now but says he doesn't know how long it will last.

Ilan conceived of Totlol while digging through YouTube looking for videos that were appropriate for his young son. As he built up a list of bookmarks with suitable clips, he thought other parents were probably doing the same.

When he began building Totlol in 2008, YouTube had just released an upgrade that allowed independent developers to use YouTube as a platform. So, Ilan developed Totlol as an application in which users can create profiles, manage their favorites, and do specific searches.

A YouTube video plays via Totlol.

(Credit: Totlol)

Once launched, Totlol steadily grew; it went from Ilan's few bookmarks to more than 15,000 clips submitted by hundreds of parents. Since then, Totlol has received tons of press, was an official honoree in the 2009 Webby Awards, was named in the Top 100 Undiscovered Web Sites in 2008 by PC Magazine, and even has an iPhone application.

"The site has its niche," he says, "and has its love." While the audience is modest, it's attached. The problem is, like so many other Internet start-ups, Ilan cannot find a way to monetize Totlol.

When using YouTube as a platform, there are various restrictions that state it cannot be combined with any sort of marketing or advertising. Obviously, this makes it difficult to create revenue to hire staff. "The Web site doesn't run itself," Ilan says, "it needs some minimum care." After the outcry at his decision to shut Totlol down, he began to look for other ways to make the site work.

The solution he's temporarily come up with is to separate content from advertising. Now, when going to Totlol's home page, users see an advertiser-supported catalog of videos but cannot view any content until they register. Once logged in, though, the ads disappear.

However, this isn't an ideal situation for Ilan. "This setup is not something I'm proud of," he wrote on Totlol, "and certainly not what I intended Totlol to be."

Ilan will try this model for a few months to see if it works. If not, he may ask members to either donate or pay a fee and hope other ideas will pop up so he can avoid closing Totlol down. As Ilan said in the note he wrote at two in the morning, "I just can't support and develop it all by myself anymore."

One of the greatest stumbling blocks that a start-up Web service company has to get over is customers' fear that the company will die and take their data with it. Manufacturers of traditional software can go belly-up without it immediately affecting a product's utility. And if General Motors went out of business tomorrow (I know, shocking), its cars would still be drivable. But Web services are different. When your cloud app goes under for the last time, it sinks customers, too.

In the best of the bad cases, when a Web service goes offline, the company in question is able to shut down in an orderly way and let its users know long before the servers are pulled off the Net. Large multiproduct companies generally do this well. When Yahoo shut down Yahoo Photos in favor of Flickr, it gave users plenty of time to offload their pictures, or move them to another service. When Hewlett-Packard shuttered the cloud backup system Upline, it likewise gave users fair warning.

But smaller companies may not be able to keep their servers up when their companies begin to fail. Does that mean you can't trust them with your data? Not necessarily. One company that's planning for the worst is Pogoplug, the makers of the cool, simple network file-sharing appliance I covered in April. Pogoplug's doomsday plan is not exactly fail-safe. The servers won't magically spring back to life if the company goes under. It's more of a seed vault kind of thing, but it's a good solution.

Pogoplug has put the source code for its servers in escrow. If the company goes bankrupt, the terms of the escrow dictate that the code be released to SourceForge as an open-source library. Then someone could come in and restart the service. Pogoplug CEO Dan Putterman says the service is designed to run on cloud services like Amazon EC2, so whoever wanted to re-light the system wouldn't need a large, expensive infrastructure to do so.

It's worth noting that Pogoplug doesn't actually store customers' data files. Rather, the online component of the product is a service that connects customers, their storage devices, and the users they invite together so they can share information. Were Pogoplug to go belly-up tomorrow, nobody would lose data, only the access to the transfer service they paid to use.

If the worst happens and Pogoplug does shut down, whoever restarts the service would have to re-gain the trust of users, who would need to re-configure their accounts and get new passwords to use the service again.

Even so, I like the dead-man's switch aspect to Pogoplug's escrow plan. While it won't guarantee that the product will resurrect if the company dies, it does at least make it possible--maybe even likely.

I'm surprised more companies, especially Web companies that store customer data, don't have public doomsday plans. If you buy life insurance, it's not an admission of weakness. It does not telegraph that you expect to die tomorrow. But if you've got a family (of customers) to support, the insurance can be a smart thing to have.

Nitobi present their app-building tool, PhoneGap, during Web 2.0 Expo Thursday.

(Credit: James Martin/CNET)

The mini-Demo conference at the Web 2.0 Expo is the Launch Pad, where five start-up companies pitched to a small panel of experts (Marshall Kirkpatrick of ReadWriteWeb, Matt Marshall of VentureBeat, and Anand Iyer of Microsoft) and a moderate audience spread out across a very large hall. Of the five pitches, I found four very smart (read the summaries to figure out which one didn't get my nod) and of those, one appeared to be a genuinely new idea. That would be the first company in this run-down. (The audience, though, liked Nitobi the best.)

80legs is building a platform for "Web-scale" applications, which it defines as apps that deal with the ocean of data and transactions, just like a search engine (like Google) does. The service crawls up to two billion pages a day, the pitchman said. 80legs lets you run scripts against that corpus of knowledge, and for a reasonable fee: $2 per million pages looked at plus 3 cents per CPU hour. The service could be used to analyze Web-wide trends, scan for content that pops up on it, and, of course, for new search engines. It's a really interesting subset of cloud computing: a crawler for rent in the sky, as it were. I am very curious to see what people do (if anything) with this platform. 80legs "data center" is made up of a mesh of computers enabled by Plura Processing technology.

Bantam Networks is an online workspace for businesses that's entering private beta today. It's a combination of a nanoblog "activity stream," a task list, a file store, and so on. There are, of course, dozens if not hundreds of workflow apps out there, and more and more are taking on Web 2.0 aesthetics and getting Web 2.0 features, like this one. Bantam also pulls in personal data and updates from other Web 2.0 sources, like Twitter and LinkedIn, which is smart. The on-stage demo was strong, and in a vacuum, this would be a strong service for work groups. However, as I said, this is a crowded space and it's evolving very fast.

DubMeNow is trying to solve the business card problem: the fact that most cards get lost or forgotten, or at the best, put into a database where their information slowly becomes out of date. DubMeNow is a mobile app, runs on several types of phones, and lets you send and receive electronic cards, which then feed into your contact list. Remember the Palm Pilot's infrared card beaming? This is the same thing, except the data goes over the Internet and is stored on a server as well as on your devices. I don't want to be too harsh, because I, for one, desperately need a better solution for business cards, but this one rings flat to me. As inefficient as business cards are, they are part of an important social ritual that everyone understands. I don't know how DubMeNow gets a step in this dance. See also: Plaxo.

Nitobi is launching PhoneGap, a tool for building apps for smart phones. Developers write their apps in HTML and Javascript, and PhoneGap will make the app run on multiple devices--eventually (just iPhone and Android so far). It's an open-source project, and so far there are more than 50 apps in the iPhone app store that have been built with it. Eventually the company will also offer app store integration to push apps out to the various and different stores. Success here is measured in apps built on it, and it looks like the platform is getting traction.

ZeaLog is a Web app to help you meet your goals--to collect data, log it, and share it. The presenter, Aaron Hurley, used it to track his weight when he wanted to lose it. I'm of a mind to reduce my daily lunch expenses, so I might give it a try for that. Hurley points out that although there are dozens of personal tracking sites for weight loss, quitting smoking, and so on, each of those personal improvement tasks is an industry, most of which have giant global advertising spends. This is not a ground-breaking new idea, but it does look like a very smart business built on top of a useful service. My advice, though, is not to go to this service looking for a personal improvement task, but rather remember it for the future when you finally realize you want to get serious and lose weight, drink more water, drive more slowly, or what have you.

roundup The annual conference of Web innovators may be smaller than last year's. But it's still a place for big ideas, with a focus on mobile apps and solid business plans. Get the latest news about products and lectures here.

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Just in from GigaOm: Inside Details of Sequoia Capital's Doomsday Meeting With its Companies

In 2001, the first dot-com economy collapsed. New companies couldn't raise funds to continue operating. Existing companies couldn't go public or get bought. My employer (Red Herring) folded, as did hundreds of other businesses. Almost all companies with speculative growth-based (as opposed to revenue-based) business models died off. And Aeron chairs flooded the market.

We're heading into another start-up downturn right now. Erick Schonfeld on TechCrunch points out how the credit crunch will lead to a venture crunch, and Jason Calacanis' latest e-mail newsletter predicts that "50-80 percent of the venture-backed start-ups currently operating will shut down or go on life-support" within the next 18 months (italics mine). Is it time to panic?

I don't believe so, although to operate as if the world isn't changing for young technology companies is equally irresponsible. There are similarities between the current economic picture and the last bubble, but there are differences as well, and they are important for start-ups. Here are a few things new company CEOs might want to consider as they formulate a strategy for surviving the next 18 or so months of what is likely to be a weak economy.

Advertising is a trailing indicator. If your business is based on advertising revenues of any kind--from big sponsor contracts to Google ad words--count on it diminishing drastically in coming months. Reduced consumer spending means less advertising (I don't care what Digg says), and it sometimes takes a quarter or so for contracts and plans to unwind. What appears to be stable advertising income cannot be counted on.

Rotation into business. As the consumer economy slows, most companies will search for additional revenue strategies, which will likely include selling to business if the companies are currently consumer-focused. Get ahead of that curve. It's more difficult to sell a contract to a medium or large business than it is to push goods and services on individual consumers, but business products generally support more predictible margins and slower churn. However, to sell to business you need products that are more robust than single-feature Web sites, and you need a top-flight sales team. B2B products don't sell themselves.

Nobody trusts start-ups. Regarding the above tip...You may think you have a product or service that plays in business, but you're going to have a hard time selling it. Big business won't trust a start-up. And why should they? Underfunded, undisciplined opportunists don't often have stable, secure, or scalable services that real business needs to operate. Your best bet is to partner with a company that is already selling to business. Don't try to go direct. Yes, you'll lose a lot of your margin. Them's the breaks.

Forget the VCs, head to the angels. Although venture capitalists may be affected by the credit crunch, since they rely on their partners' funds that could be harder to scare up, this should not affect as much the availability of capital from the angel investors, generally early-stage investors who put their own money into companies. The challenge is that while angel funding is often enough to get a company launched, you won't find the multimillion-dollar funding rounds in that ecosystem that you might need to develop the big product that big companies will buy. But for early-stage development, now's as good a time as any. It costs a lot less to get a product off the ground now than it did seven years ago. It's the scaling and selling that's the challenge.

No credit. One of the biggest and most ominous differences between the 2001 pop and the current crunch is that companies will have an even harder time securing credit today than they did then. A few companies, like Ning, managed to load up on cash for the "nuclear winter," but for other firms it's too late. So it goes without saying that companies should do everything they can to conserve resources. That doesn't mean folding up shop. It does mean to lay off the fancy parties and expensive conference travel.

Spend into the recession, or move. If you have a runway of funding to last out a bleak year, don't panic. But most of all, don't stand still. Go under the radar and build your product. Talk to your potential customers. The clouds will lift eventually--and if not in this economy, then perhaps in another, like China or Dubai. As a friend of mine said: "I go where the construction cranes are."

Related: Why the credit crunch is about more than Wall Street.

Scott McNealy delivered the keynote speech at Plug and Play Expo Fall 2008.

(Credit: Sun Microsystems)

If you're itching to take your struggling start-up to the big time, you could do worse than take Sun Microsystems' Chairman and co-founder Scott McNealy advice to heart. After all, in three months, McNealy and the three others of his cohort turned their start-up profitable and brought us Java, Solaris, and OpenOffice.org.

Besides, how could you not want to listen to a guy who, when flummoxed over launching a PowerPoint presentation during a keynote talk at the Plug and Play Expo in Sunnyvale, CA, sarcastically quips, "You know, this Windows thing...I use Open source. F5? That's intuitive."

Rule #1: Have a controversial strategy. Look for the counter-intuitive idea and go after it. If you're conventional, you'll do things the same way things have always been done. Differentiation is key. The hard part is, you have to be right.

Rule #2: Break the rules of business, but don't cheat, lie, or steal to do it. If you do, you'll drive off your brainiest collaborators and will lose your credibility among your once-loyal staff.

Rule #3: Get a little money, but not too much. A small funding pool will force you to be scrappy, efficient, and to find new production approaches.

Rule #4: Have a cause. "Humans are coin-operated in general," McNealy says, "But they also like a little psychic income." As an example, Sun created Curriki, an open-source cirriculum wiki, that solved a problem McNealy and his son encountered during his son's grade school project.

Rule #5: Just do it, but marry well. Pour your heart and soul into a start-up, but try to do it before you marry. McNealy didn't marry until he was 39, he said, but has since caught up with four sons. "The most important decision you make is who you marry and have kids with," McNealy advised. "Pick a spouse or significant other, or whatever you want. Just make sure you pick a good one. There's some real technical advice for you from an entrepreneur."

For more concrete products, downloads, and tips, start-ups can visit Sun's Web page for start-up essentials. Or, McNealy suggests, just e-mail him: scott@sun.com.