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.

Microsoft will hold its fourth Microsoft Research Silicon Valley Road Show at its campus in Mountain View, Calif., next Thursday, May 22. The event, which will showcase examples of all kinds of cool things the Redmond giant is working on, including an Xbox-based programming game for kids to program a virtual robot, is free to the public. But space is limited, so go here to register and enter the RSVP code “RoadShow08.”

Weather in San Francisco Bay Area is especially nice and is likely to remain that way for a while. It makes perfect sense to sit outside and talk about the hottest topic to hit the Innerwebs: Data portability/interoperability. Whether it is Facebook, MySpace or Google, each has been coming up with ways to control the user. Somehow the noise has gotten ahead of the fact, and I would like to meet smart people about this over the weekend.

A frank conversation with non-conflicted parties that would help me write smarter and conceptually sound posts going forward. I propose: 2.30 PM at Starbucks on Clay & Battery in San Francisco. I will buy coffee and cakes, but please don’t pitch me your company. I want some honesty about this topic.

Networking has always been a high art in business. Just ask Susan Roane, my mentor and author of the seminal tome, “How to Work a Room.” (I know a handful of VCs and startup kings on Sand Hill Road who have her book tucked into a drawer.) I’ve been showcasing Roane’s lessons for founders in my Found|READ series, “What They Don’t Teach You At Stanford Business School.”

By now it’s time to address the latest, and arguably the most powerful, networking tool in any founders’ arsenal: Twitter. It’s simple. If you’re not “tweeting,” you’re missing half the conversation. Just ask Sarah Lacy. (How different Lacy’s now-infamous SXSW interview of Facebook’s Mark Zuckerberg might have been had she been plugged into the tweets flying around the conference room floor!) Don’t know how to use Twitter? No sweat. Here are my 8 Tips for How to Work a Twitter Party.
(Photo credit: News.com. SXSW Tweeters celebrating before the ill-fated Zuckerberg interview.)

First things first: For founders, the goal of Twittering isn’t to tell people what we ate for lunch, but to get technology influencers — like Dave McClure, Mike Arrington or Guy Kawasaki — to read and respond to our Twitter feeds. In Twitter nomenclature, this is called “following.”

1. Don’t be afraid to Tweet above your head. McClure is an Alpha Tweeter. One tweet from Dave is like a TechCrunch link two years ago. But you’re no one, so you’ll have to tweet Dave five times to get him to reciprocate, and do something really interesting for him to “follow” your feed. Reciprocity is also a must. Guy Kawasaki, a top Twitter-er, takes this to the extreme, following every Tweeter who follows him. So do I. Use text message updates to keep tabs on those tweeting you.

2. Watch your Twitter ratios. Spammers have a bad follower-to-following ratio, so don’t randomly follow 20, 200 or 2,000 people without some Twittering under your belt. Similarly if you’re twittering a little too substantively, or have a banal topic, then expect to have a horrible updates-to-follower ratio. (my updates-to-followers ratio is bad because I tweet about FICO scores, a topic so dull that my “ABC News” segment on YouTube only has 12 views.)

3. Leverage what’s going on. If you knew HP would buy EDS a week ago or a month ago, then tweet and claim credit. I’m not joking, people. Do this. Did you walk in on a powerSet 2.0 pitch at Peet’s on University Ave.? Twitter that too.

4. Move your Twitter conversation(s) off-line. Good meet-ups can start with Twitter marketing. Good examples include Startup School or Sarah’s <a href="a book-signing in San Francisco. Twitter loves Y Combinator and vice versa! Tweet your friends to organize a pre-party (like a breakfast at Fraiche) and voila! One day prior to your event, and the RSVP list on Facebook is 50 percent over capacity.

5. Migrate your real-world conversation to Twitter. At ad-tech, I was with Oren Michels, Scott Rafer, Owen Thomas and others. During post-conference parties, people tweeted back-and-forth other constantly. What does this do? It stimulates more face-to-face conversation! Indeed, working the Twitter party makes the real party you’re at better, bigger and better-documented.

6. Time your tweets. A great man once told me: “Be a vacation in your interactions with people.” He meant: “Don’t tax your conversation partners.” Is reading your Twitter feed a part-time job, or a little beach break that people can take from right inside their cube at work? For maximum impact, release your tweets with the time of day in mind. News-related tweets fly in the morning. Post-lunch tweets should be on the lighter side.

7. Pre-write some of your material. There is nothing wrong with pre-composing a few impromtu tweets. Think improv comedians don’t prepare? So don’t post stream of consciousness to your Twitter. And whatever you do, don’t tweet with a buzz on.

8. Work the Twitter Room for product development. A product manager for pbWiki, Kris, was recently using Twitter to collect ideas for product tweaks. So I chimed in with a tweet requesting that updates to my company’s 400 pbWiki pages be distributed via email, but only to those who’ve actually edited those pages. Hey Dave Weekly (founder of pbWiki), did you know your employees work the Twitter Party for your benefit?

Written by Larry Chiang, founder of duck9.com, which helps college students improve their credit ratings. He is also a frequent contributor to Found|READ.

In what is proving to be yet another high-profile Metro Wi-Fi failure, MetroFi, a San Jose-based startup that raised over $15 million from Sevin Rosen and August Capital, is close to shutting down, according to WiFi NetNews and MuniWireless, two blogs that follow the MuniFi industry closely.

MetroFi is trying to sell its citywide Wi-Fi networks in Portland (Oregon), Aurora and Naperville (Illinois) and Santa Clara, Cupertino, Sunnyvale, Foster City and Concord (California). MetroFi founder, Chuck Haas, says he is also exploring the sale of MetroFi itself to a third party.

MetroFi had started to offer ad-supported wireless access in many cities, except it couldn’t find any traction. I think with all the noise Google made, even that company has backed away from WiFi-access based on advertising. There were a few others that have found going really tough when it comes to MuniFi. The trials and tribulations of EarthLink are well known by now. Glenn Fleishman blames EarthLink for the current spate of industry problems. And he’s not far off the mark, though I think the sector became a victim of its overambition.

EarthLink was in many ways largely responsible for the mess that all Wi-Fi providers found themselves in last year by offering to build Philadelphia’s network back in 2005 at no cost to the city—in fact, paying the city and the local utility fees. That set the stage for nearly all the RFPs that followed where, if EarthLink were a bidder or the city was aware of the alternatives, the notion was that no city dollars would be spent, even if taxpayer money wasn’t “at risk”—that is, even if a city could save money by switching current line items in their telecom and data budget to a wireless network.

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However great an idea it might have seemed when it was first conceived, the One Laptop Per Child project has never been something I’ve been able to wrap my head around. I’ve always felt, despite the backers’ good intentions, that it was being shoved down the throats of emerging economies with more dire needs, such as food, clean water and schools. I was dismissed as a naysayer by many, mostly for not grokking how computing can revolutionize nations. But I haven’t changed my mind. This project comes off like a vanity play for the elite, who perhaps can’t grok the meaning of living within minimal means.

That personal opinion aside, OLPC has also had its share of teething problems, as we have chronicled time and again. First it was met with strong opposition from folks like Intel, who went on to create their own rival platforms, mostly to disrupt the whole OLPC movement. At the same time, Moore’s Law brought about the rise of low-cost Internet devices like the ASUS EEE PC, which I think are only going to get cheaper as time goes by.

The biggest blows, however, are proving to be self-inflicted. Today OStatic notes that OLPC’s Open Sugar platform is going to be adopted for new hardware platforms by Sugar Labs, the new effort of OLPC former president Walter Bender and one where he is joined by many of the core Sugar developers.

I can’t help but wonder if there’s a link between Bender’s efforts at Sugar Labs and yesterday’s announcement that Windows XP is going to be available on OLPC machines and that Sugar will be ported over to Windows. (Yeah, right…not with most of the people off doing Sugar Labs.) The availability of Windows XP is different from what the people behind OLPC had set out to do — build a truly open, low-cost connected computing device for kids around the world. The press materials don’t make it clear how much Microsoft is going to pocket.

There are some who might point to the low-cost hardware — $180 a pop — as reason for people to buy OLPCs for kids in emerging economies, but how will these machines compete with low-end computers and Internet devices that will run using Intel’s Atom devices?

I think this is the end of OLPC as we know it, even though I’m sure that almost all of you would disagree with me.

Bonus Reading:

* What you can learn from the sad state of OLPC.
* The unintended consequences of OLPC

Finally, a wireless company makes a smart acquisition. Vodafone has acquired Danish wireless address book company Zyb, whose service I have often used to keep my growing array of mobile phones synchronized, for 31.5 million euros, or roughly $49 million. Zyb had raised around $4.7 million in VC funds, with Nordic Venture Partners the biggest investor. This deal is also another win for Morten Lund, who was an early investor not just in Zyb but in Skype.

Vodafone is making a lot of noise about using Zyb’s social networking abilities for its mobile platform, but this is utter rubbish, and distracts from what Zyb is really good for: backing up your address book — a crucial service these days, given how quickly people switch their phones.

Zyb is the smartest way to keep your contacts up-to-date; it’s even (in some cases) a decent option for syncing your calendars. This will help boost customer satisfaction, thanks to seamless switching between phones. I hope Vodafone keeps it free and doesn’t revert to the carrier philosophy of greed-before customer happiness.

While Zyb’s acquisition by Vodafone dovetails with my long-standing belief that the real social network is the address book on our mobile phones, as things currently stand, Zyb is not the answer to Vodafone’s prayers. The company has its issues: Zyb’s downtime, for example, is worse that my pre-January 2008 track record of going to a gym. The company recently bought social networking company, Imity, but how that works out remains to be seen. Sure, Zyb has some average sharing features that allow you to send messages and photos. But as I said, a great connected address book — nothing more, and nothing less.

P.S.: Does anyone else find something intriguing about two address books companies being snapped up by telcos/broadband providers, specifically Vodafone buying Zyb and Comcast snapping up Plaxo? If this is a trend, who is the next to go, and where? Let the speculation begin.

Qualcomm has spent 8.3 million pounds ($16.2 million) buying 40 MHz of L-band spectrum in the U.K., which the company could use for its MediaFLO mobile television or other two-way wireless data services. However, the wireless chipmaker’s overseas shopping spree might end at the borders of continental Europe.

That’s because the EU is encouraging its member countries to adopt the DVB-H standard. Lucky for Qualcomm, those cheeky Brits decided to keep the auction open to a variety of mobile standards. That gives Qualcomm a chance to keep selling pricey intellectual property licenses for its proprietary MediaFLO technology. With all the vendors choosing the open LTE standard, it has to find some way to goose those royalties.