Modern-Day Tech Startups Tread Carefully

Landy Ung and her boyfriend Wan Hsi Yuan work on their startup company out of their studio apartment on Oct. 30, 2007 in New York. (AP Photo/Mark Lennihan) (Mark Lennihan - AP)

-- There are a few hurdles between Landy Ung and her dream of growing her startup into a household name. One is the fact that her only outside funding comes from her mom's fried chicken restaurant, another is that her only full-time programmer is her boyfriend, who has a day job.

She and her boyfriend, Wan Hsi Yuan, 27, run the business, 8coupons.com, from their 500-square-foot studio apartment, meaning headquarters is, effectively, their couch. The business, which text messages discounts to users' mobile phones, keeps Yuan and Ung, who is 28, up until 3 a.m. most nights. Then, Ung said, she sometimes finds herself lying awake, worrying.

"I need to watch a little National Geographic special on the rain forest or something before I go to sleep," she said.

Welcome startup life in 2007.

While their Internet bubble predecessors dreamed of stock offerings, spoke blithely about burn rate and talked about selling everything online, these startups are focusing on interactivity, services for mobile gadgets and getting bought by a bigger company.

This time, the cost of everything from laptops to programmers is lower and no one is splashing for fancy office space, so starting up a company is cheaper, said Chris Shipley, executive producer of the DEMO Conference, a new-technology showcase.

"The Aeron chair is out, the Starbucks latte is in," Shipley said.

"If your team includes some engineers, you've got a laptop, you've got an Internet connection, you code like hell and see what you can come up with," she said. "It costs your time, it costs a lot of sleepless nights."

Venture funding for all industries has fallen by more than half since 1999, dropping from $54.1 billion then to $26.5 billion in 2006, according to the National Venture Capital Association. Funding for Internet startups is running at roughly $1 billion a quarter in 2007, down from a high of $14.27 billion in the first quarter of 2000.

At an October startup camp in Manhattan, Ung, in a ponytail and puffy vest, and Yuan, in an "8coupons.com, One Free Hug" T-shirt, exchanged cards with other startup founders, led a talk about marketing on Facebook and flew through e-mails on their laptops during breaks.

"We don't go out anymore," Yuan said. "For the past two years, all we do is work." When a founder of another Web site asked Yuan to name a restaurant he likes, he was stumped. He thought for a minute, then named Cafe Fuego, an 8coupons advertiser.

Ung said, "He develops and creates. I do everything else. People look at the site and say, 'How many people do you have working on it? I think, 'Umm. What should I say?'"