At GigaOM???s recent Structure 08 event, Meebo co-founder and engineering chief, Sandy Jen, joined a panel to talk about scaling your computing infrastructure for explosive growth. Jen also spoke with Found|READ, this time to offer founders tips on how to overcome what she calls the internal scaling challenge: hiring.

Meebo launched in September 2005, when it unveiled the first Ajax application that allowed users to access several instant messaging clients (AIM, Jabber, Google Talk, etc.) from its home page. Back then, Jen and co-founders Seth Sternberg and Elaine Wherry were bootstrapping, even using personal credit cards to lease the three servers they needed in order to launch. With no money left over for marketing, they went guerrilla.

???Digg had started about six months earlier, so we said, ???Let???s just Digg ourselves,’” Jen recalled. “We wrote a quick description of Meebo ??? ‘Web IM: AIM! Yahoo!; No downloads; draggable windows! It???s free!?????? and went to bed. The next morning we had 600 Diggs, and our servers were overloaded.???

Three years later, Meebo has raised $37.5 million in venture capital, has all sorts of new products (and servers), gets 30 million unique visitors a month, and faces its toughest scaling challenge yet: ???The No. 1 thing we worry about is hiring,??? said Jen. To keep up with user demand, Meebo must grown to 50 employees from its current 30 by 2009 ??? a 67 percent increase.

In a fast-growing startup, maintaining your core values is crucial. ???But how do you hire and keep your small team culture? It???s really hard,??? Jen told us. ???In the beginning it???s easy to ask your friends and people you trust for names. But eventually you???ll tap out your networks. Then where do you look for talent????

In order to uncover new recruits ??? and not just the very talented people, but the right people ??? for her company, Jen has developed a few tricks:

1. Go to industry events. You want to hire people who are interested in the same things that you’re interested in. That means reaching out to people who attend the same events that you do. Once you???ve seen the same person at four of five events, make your move.

2. Keep track of smart comments in blogs and forums. Pay attention to the people who are commenting smartly on the stories you’re reading — especially if they’re doing so frequently. This is an indicator of their engagement and passion.

3. Look for people through your extra-curricular activities. You want people interested in your technology, but the right cultural fit means finding people who share your other values, too. A good indicator of shared values is a shared extra-curricular activity. Do you rock climb? Play ultimate Frisbee? (Jen does.) Common fun offers opportunities for bonding, which can be a great way to find new staff.

4. Go outside your geographic circle. There’s a lot of talent in the world. One of the first things Meebo did was commission its graphic design from a guy in Italy, whose work they found on an art web site. They hired him on a trial basis; today he’s Meebo???s Agent Icon.

5. Leverage contract arrangements. As Jen acknowledged, getting H-1B visas is a long process and a pain in the butt. But they’re worth it. If you find someone you want on your team, get them in the door, excited about your company and under contract as soon as possible. Meebo usually has six or seven people working under contract at any time.

6. Commit and be generous. Really talented people rarely advertise themselves, at least not as much as we’d like them to. You must court them. There is a lot of competition, so this could mean being flexible with hours or remote work options. And once you decide to hire someone, you have to welcome them with open arms.

7. Fire fast. When someone isn???t working out, have them leave quickly. In three years, two people have left Meebo — one left in three weeks, the other, in a few months. But a bad fit will contaminate your culture. You can???t afford that.

(Photo credit: Lea Suzuki, San Francisco Chronicle.)

For more on how Jen manages Meebo’s infrastructure, check out her interview with Om, below.

During a break at GigaOM’s Structure 08 conference this week, Found|READ sat down with VMware co-founder and chief scientist, Dr. Mendel Rosenblum.

Dr. Rosenblum developed VMware’s virtualization software while working on a supercomputer research project with his graduate students at Stanford University, where he remains an active professor of computer science. In 1998 he went on leave from Stanford to launch VMware with four business partners, including his spouse, Diane Greene, who remains the company’s CEO. It wasn’t easy going. Back then, VCs had a hard time wrapping their minds around the business opportunity in Dr. Rosenblum’s software, which allows one server to do the work of many.

Today, VMware has 100,000 customers and is expected to sell nearly $2 billion worth of its products this year. And that’s after debuting on the New York Stock Exchange last summer in one of the most successful IPOs since Google.
Om spoke with Dr. Rosenblum in December about the history of the company and state of the virtualization market. Here Dr. Rosenblum talks about being a founder.

F|R: Some of our readers refer to founding as a “lifestyle,” not a job. What convinced you to table your very well-established career in science and academia to risk launching a startup?

Rosenblum: We were working on this supercomputer, trying to figure out how you could build scalable computers of a very big size. I wasn’t really that interested in high-performance computers — for one thing, you’d sell very few of them, other than to the government. What motivated me was wondering whether you could use these computers for something else. I had this idea about virtualization, that you could carve this one, big computer up and use it for a whole enterprise worth of computing. I was just more interested in working on something that would have a large impact on the masses.

One of the nice thing about Stanford is that the path is pretty well worn into entrepreneurship, so it didn’t seem like this radical thing to become a founder. If you had an interesting idea, there were plenty of people who you could talk to about it. Part of what convinced me were the grad students; they’d seen the Yahoo people go off and so they were excited about starting a company. I was sort of trailing along thinking, “Well, it sounds like a fun thing to try out.” But the deciding factor was when my wife, Diane, got interested in it. That made it incredibly easy for me.

F|R: Finding the right co-founder is a critical step. There is an unspoken rule in Silicon Valley that VCs won’t fund husband-and-wife teams. You did not raise VC money to launch VMWare, but what advantages did you and Diane Greene have as a founding team because of your status?

Rosenblum: Yes, we just did some self-funding in the beginning and then brought in some friends later — angel investors — and that was enough to do it. I can imagine that husband-wife teams can work out badly, but in our case, I had confidence in her dealing with the business side and she had confidence in what we were doing on the technical side and so we just partitioned up the company that way. And we didn’t really have any conflicts whatsoever. The nice thing about being married is that is gives you even more time to talk everything through, and it kind of consumed our life for a long time — maybe to the detriment of our children — but we just had great communication. It was a benefit, too, in co-founding with faculty from Stanford (Scott Devine, Dr. Edward Wang and Edouard Bugnion). We knew were launching VMware with people we trusted.

F|R: What was the most difficult thing about VMware’s 10-year run to its IPO? And can you offer a piece of advice to founders just starting out?

Rosenblum: When we first started out the whole challenge was trying to convince people that virtualization was a good ting, what’s it’s good for — and trying to figure out for ourselves what it could be used for! There were challenges on the technology side and challenges about how to go to market. We took the approach that we wanted to partner extensively with [hardware vendors like IBM and Dell]. That ended up working out pretty well, though lots of people have made lots of money in shorter time that we did.

One thing I would say is important: Make sure there is more than one application for your technology. There were a dozen applications for VMware that we didn’t pursue. Some we did, and they didn’t work out. In the dot-com boom, we thought we’d sell our software to ASPs, who’d use it to manage other people’s applications more efficiently. Then all the ASPs went out of business. So we switched strategies to focus on selling VMware into enterprises, so companies could use it to run their own servers better.

If you’re bootstrapping your startup, offshoring your web development is a great way to save money. But it’s also fraught with risk. Working with remote contractors makes it far harder to manage project development and communicate ideas. Taking proper steps to protect yourself is crucial.

I’ve been bootstrapping my e-commerce startup, Aroxo, for the last year and blogging about it for Found|READ and on my own site. My previous post explained how to use your network to build a quality list of prospects. Today I’ll tell you how to vet the list to select the right offshore developer.

Step 1: Send a “Request for Information” to Prospective Vendors:

The RFI is a questionnaire you will draft to help you determine which developer can deliver your project within your price range (here’s a sample). Your RFI should produce the following data:

Additional RFI Tips:

Include a hypothetical “technical problem” relevant to your project and ask the developer to show how they would solve it. For customer references, ask for projects similar to yours that were completed for clients physically near to you so you can arrange to meet them in person.

Worried about your IP? Don’t discuss the specifics of your business in the RFI. Describe the type of business that you’re launching in general terms (e.g. e-commerce), or refer to similar companies by way of description.

Give the vendors two weeks to respond, and an opportunity to ask you questions. Include your deadline(s) so the developers have a timeline. Not every vendor will respond to your RFI. Some will, but won’t answer all your questions. Others will will send you “documentation packs” that contain all the answers, but not in the format you requested. All of these companies should be dropped from your list.

Step 2: Vetting Your Vendor Prospects

Two weeks after you’ve issued your RFI, you will have all the responses you’re going to get. (Don’t bother chasing companies that don’t reply.) Now you must work through the list until you have at least four — but no more than seven — prospective developers. This is an important yet difficult step. First, think about who your ideal vendor is. Identify the criteria by asking the following questions:

Now you’re ready to start “the sift.” First, remove any companies that don’t fit the criteria established above. When I read through my RFI responses I arrange them into three piles: Yes, No, and Questions. I then put my additional questions to the vendor again, and update. I continue this until I have complete Yes and No piles.

When in doubt, go to their references. Don’t just ask if the developer delivered on time and to budget. Also ask: Have they given the vendor any new work? Will they in the future?

The reason I recommend getting to preferably four and no more than seven potential vendors is that you don’t want to take too many through your bidding process because you don’t want any more of them than necessary to know what you’ll be building.

If you don’t end up with four candidates, don’t go back through your pile. Approach new developers until you do.

Matt Rogers is co-founder of Aroxo.

Jim Barnett is co-founder and CEO of Turn, a three-year-old online advertising firm that uses an eBay-like auction to improve the way advertisers are matched to web publishers. Previously, Jim was president of AltaVista, and later, of Overture’s search division, which Yahoo bought for $1.6 billion in 2003. Jim talks to us about why he finally became a founder, why bootstrapping is not always the answer, and why sometimes co-founders need to part ways.

F|R: When did you first get the startup bug?

Barnett: Unlike some of your contributors, I’m a serial CEO. Historically, my passion and expertise has been taking entrepreneurial companies and scaling them into professionally-run companies. I did that with several companies, but ever since I was a kid I wanted to run a company from scratch.

F|R: Many founders find themselves in David vs. Goliath contests. Conventional wisdom is the only way to win is with superior technology. Turn is in a space dominated by DoubleClick, aQuantive, Advertising.com and Google. How do you compete?

Barnett: The Internet space doesn’t require you to have dramatically better technology, but there is no question that you have to be exponentially better at something. It might be technology, or maybe just a better product strategy.

In the ad space it depends on what part of the market you’re going after. Better technology is Turn’s approach because we’re going after the broad, more developed market in display advertising – it’s worth $30 billion now, and growing 20 percent annually. If you’re going after emerging categories, like mobile or video advertising, a lot of innovation comes from strategy; it is not necessarily a requirement to have better technology. Personally, I like to attack mature markets because even a small piece of a big market can lead to a big company, and I always want the vision of a big company. But for most startups, pursuing an emerging market where there is not an entrenched Goliath is a better path. So it’s about finding a new market (eBay, Yahoo, Netflix), a different product (Facebook) or simply a better product (Google).

F|R: Many of our founders are fond of bootstrapping. You’ve raised $22.5 million in venture capital for Turn. Why was this necessary?

Barnett: Bootstrapping is a fine strategy for consumer applications that don’t require deep technology or where a lot of your technology will be off-the-shelf. At Turn, we had to build both a team of PhDs focused on ad-selection algorithms and a best-in-class ad serving platform. It was capital-intensive. Whether you bootstrap or not, keeping your staff small until you get it right is absolutely the right thing to do. The truth is most startups struggle. Very few open their doors and experience life “up and to the right” every day afterwards. Often you have to evolve your strategy midstream, and that almost always requires tremendous persistence and time. We changed our strategy at Turn. If you don’t have capital, you won’t have the time to get it right. Selling equity to get some runway is the right thing to do.

F|R: How did Turn evolve its strategy from Plan A to Plan B and why?

Barnett: When we started we were focused on the long tail in advertising, but around year two, we changed our strategy to focus on larger advertisers and publishers. The problem with the long tail is that it’s the tail, it’s not the heart or the body…it’s not where the mass is. Our service is about aligning advertisers’ needs with publishers’ needs. Higher-quality advertisers want to be on higher-quality publishers and vice versa. The long tail gets a lot of visibility, but the real tonnage in terms of users and revenue is with the larger players.

F|R: Was this change difficult? What consequences did it have on Turn?

Barnett: Initially I had a co-founder at Turn. He’s a brilliant technologist, and he focused really deeply on our technology. But at a certain point I wanted to aggressively move to our new strategy and he had different opinions. So we parted ways. The lesson there is sometimes you have to make a change for change’s sake.

F|R: How do you know when change for the sake of change is what’s needed?

Barnett: You don’t know — you’ve got to trust your instincts. Most of the time there is no proven path, particularly if you’re in an emerging space. You want a collaborative environment, but at critical junctures most organizations ultimately need one leader to make the call, to stand up and say, “Nope, this is what we’re doing and here’s why…” That’s what good CEOs need to do.

Dear FoundRead readers, after nearly 12 months, the time has come to take a hard look at the progress of this blog. The results have been mixed, and as such, it’s time to make some changes.

First the good news: The concept (and the premise) on which we started the effort was spot on, reflected in the dozens of contributors that became part of the FoundRead roster. In Hollywood lingo, this blog has been a critical hit, with more than 5,000 RSS subscribers, many of them startup founders or aspiring founders. That is very cool.

Popular aggregator and news discovery sites have linked to us occasionally, but there is one site that has embraced us completely: Hacker News (news.ycombinator.com.) To them we say thanks.

And of course many of these achievements can be directly attributed to FoundRead editor Carleen Hawn, who has done an awesome job of building a community, finding interesting writers and drawing the very best stories out of a wide range of startup founders.

Sadly, FoundRead hasn’t really generated the kind of traffic we had hoped for, so it’s time for a change. Here are the details:

1. FoundRead will stop being a standalone blog and will become a category on GigaOM. Each article in this category will carry FR branding, including the logo.
2. Readers of FoundRead will be forwarded seamlessly to the new category page.
3. FoundRead RSS subscribers will continue to get articles from the FoundRead category: no more, no less. [If you want to subscribe to FR feed, click here
4. Carleen Hawn will remain the editor of the FoundRead channel, so you can still contact her with story ideas, etc.

What I hope to achieve with this change is to keep the concept of FR alive but expose the great content to the larger community of readers who visit GigaOM. I want everyone to know that this has been a painful decision, but given the current economy, a necessary one. I hope you will continue to support us in this new, somewhat more modest format.