Last winter, when we all thought the economy had really taken a nosedive, I made the case that bad times could be the best of times to start a company. Well, over the last eight months, economic conditions have gone from bad to worse—but the startup boom shows few signs of slowing down.

Want proof? Spend time with Paul Graham, who’s spent the last three years helping young entrepreneurs launch the companies of their dreams. Graham and his cofounders run a cool outfit called Y Combinator, with operations in two hotbeds of entrepreneurship: Silicon Valley and Cambridge, Massachusetts.

Graham and his colleagues provide both seed funding and hands-on advice to startups. Y Combinator invests a little money (rarely more than $20,000) and takes a small equity stake (an average of 6 percent or so.) And it funds its companies in “batches.” Every summer, entrepreneurs from around the world apply for the chance to spend three months in Cambridge. Graham and his colleagues help people refine their ideas, critique their prototypes, and teach them how to present to venture capitalists and angels—all of which leads to a “Demo Day” for potential investors. Every winter, the same immersion experience takes place in Mountain View, California. There are two Demo Days in the Valley, given the sheer number of eager venture capitalists.

This summer, Graham’s got 60 founders, representing 22 companies, at work on their ideas. All told, Y Combinator has invested in 102 startups—including a bunch that have attracted lots of money and attention (Loopt, for example) or been acquired by big-time players (Reddit, for example). In other words, Graham has seen it all when it comes to startups (including starting and selling a company of his own back in the first Internet boom.)

So how would Paul Graham advise young entrepreneurs who want to be “practically radical” in their approach to startups? He offers a few simple (and proven) principles that determine which startups work and which fail:

First, he says, “make something people want.” It sounds obvious, but young entrepreneurs often fall in love with what technology can do as opposed to what customers need. One of the questions on the application to Y Combinator makes the point well: “What are people forced to do now because what you plan to do doesn’t exist yet?”

Second, entrepreneurs have to “be willing to let their ideas change.” This sounds strange: Aren’t great startups built around a great idea? Yes, but a great idea isn’t always the original idea. Countless times during the Y Combinator experience, startups have made dramatic changes not just in strategies and tactics, but in the very essence of what they do. Amazingly, Graham told me, the founders of Reddit came to Y Combinator with a plan to help people order fast food on their cell phones. When everyone agreed it wasn't exactly a killer idea, the desperate search for a new idea led to the launch of their successful company.

Third, and this also sounds strange, Graham tells startups: “Don’t worry too much about money.” That’s what’s really different about this second wave of Web-enabled startups: It’s become so cheap to buy equipment, reach customers, and generate buzz on the Web, that the power of investors and venture capitalists is on the wane. “It’s so much easier to get the money you need than to make something great,” he says. Or, as Graham points out, today, unlike back in the mid-90s, you’ve got the MBAs working for the technologists, rather than the other way around.

Finally, Graham urges his company founders to always “be benevolent” in terms of how they do business—to act in the long-term best interests of customers, as opposed to the short-term best interests of themselves. In other words, the most important rule for starting a company is the Golden Rule—or, in the uopdated version in Google’s strategic bible, “Don’t be evil.”

Why is benevolence powerful? First, it keeps morale and energy high. In an age of constant disruption and realignment, employees want to be the “good guys” in their field—so it makes sense for companies to act that way.

Second, more than ever, successful companies require the active participation of customers, suppliers, and industry enthusiasts. “If you’re benevolent,” Graham says, “people will rally around you” with ideas, improvements, and word-of-mouth marketing.

Finally, benevolence helps founders to be more decisive. If you make every decision based on “doing whatever is best for your users,” it’s that much easier to make decisions.

The most important decision, of course, is starting a company in the first place. And once you do, be sure to use these two resources: Paul’s must-see talk to a gathering of entrepreneurs at Stanford called Startup School, and his must read-essay “How to Start a Startup.”

Here’s hoping you decide to get started—and that you succeed.

The arrival of summer means trips to the beach, fireworks and parades—and another boffo performance by the creative geniuses at Pixar. The studio’s just-released summer movie, Wall-E, has generated rapturous reviews, record-setting ticket sales, and loads of cultural commentary.

More than anything, though, Wall-E has generated amazement from Hollywood observers at Pixar’s capacity to generate hit after hit in the fickle world of big-budget filmmaking. Wall-E is the studio’s ninth consecutive number-one movie since the release of Toy Story in 1995, an unparalleled record of creative and commercial success.

There are all kinds of theories about the secrets of Pixar’s success. But I’m convinced that Pixar’s films work so well with audiences because Pixar works so distinctively as a company. My colleague Polly LaBarre and I wrote about Pixar in our book, Mavericks at Work, and its latest box-office hit gives me a chance to reprise one of our “greatest-hit” messages from the book: You can’t win big unless you change the game in your field.

Pixar doesn't just make films that perform better than standard fare. It also makes its films differently — and, in the process, defies many familiar, and dysfunctional, industry conventions. Pixar has become the envy of Hollywood because it never went Hollywood.

More than a few business pundits have drawn parallels between the flat, decentralized "corporation of the future" and the ad-hoc collection of actors, producers and technicians that come together around a film and disband once it is finished. In the Hollywood model, highly talented people agree to terms, do their jobs, and move on to the next project. The model allows for maximum flexibility, to be sure, but it inspires minimum loyalty and endless jockeying for advantage.

Turn that model on its head and you get the Pixar version: a tightknit company of long-term collaborators who stick together, learn from one another, and strive to improve with every production. Andrew Stanton, who directed Wall-E, was a key figure behind Finding Nemo, which won two Oscars, generated worldwide box-office of $840 million, and became the best-selling DVD of all time. But Stanton didn’t follow the success of Nemo by offering himself to the highest bidder or demanding perks and special treatment. He went back to his job as an employee of the studio, to pitch in on other films and eventually begin work on his next major project.

And Stanton is merely one of many superbly talented writers and directors who have staked their reputations on their work at Pixar. Again, in contrast to convention, these professionals have traded one-time contracts for long-term affiliation and contribute across the studio, rather than to just their pet projects.

According to Randy Nelson, who joined the company in 1997 and is dean of Pixar University, this model reflects "Pixar's specific critique of the industry's standard practice." He explains it this way: "Contracts allow you to be irresponsible as a company. You don't need to worry about keeping people happy and fulfilled. What we have created here — an incredible workspace, opportunities to learn and grow, and, most of all, great co-workers — is better than any contract."

Pixar University is at the center of Pixar’s workplace agenda. The operation has more than 110 courses: a complete filmmaking curriculum, classes on painting, drawing, sculpting and creative writing. "We offer the equivalent of an undergraduate education in fine arts and the art of filmmaking," Nelson said. Every employee — whether an animator, technician, production assistant, accountant, marketer, or security guard — is encouraged to devote up to four hours a week, every week, to his or her education.

Randy Nelson is adamant: these classes are not just a break from the office routine. "This is part of everyone's work," he said. "We're all filmmakers here. We all have access to the same curriculum. In class, people from every level sit right next to our directors and the president of the company."

During our research for Mavericks, Polly sat in on a class at Pixar University. The students represented an intriguing cross-section of employees: a post-production software engineer, a set dresser, a marketer, even a company chef, Luigi Passalacqua. "I speak the language of food," he said. "Now I'm learning to speak the language of film."

Thanks to Pixar University, employees learn to see the company's work (and their colleagues) in a new light. "The skills we develop are skills we need everywhere in the organization," Nelson said. "Why teach drawing to accountants? Because drawing class doesn't just teach people to draw. It teaches them to be more observant. There's no company on earth that wouldn't benefit from having people become more observant."

That helps to explain why the Pixar University crest bears the Latin inscription, Alienus Non Diutius. Translation: alone no longer. "It's the heart of our model," Randy Nelson says, "giving people opportunities to fail together and to recover from mistakes together."

That’s not how most of Hollywood does it—which helps to explain why Pixar does so well. How are you changing the game in your field? What is your distinctive take on how your industry operates? Do you work as distinctively as you compete?

Generate compelling answers to these make-or-break questions, and you just might create some hits of your own.

Fans of edgy comedy—and critics of the political establishment—are mourning the death of George Carlin. Most of us know this game-changing comedian through his riff on the "seven words you can never say on television." (Warning: This "Seven Dirty Words" clip on YouTube does indeed contain some pretty dirty words.)

But George Carlin made another contribution to the language—believe it or not, to the language of business and innovation. The term he coined was "vuja dé"—and it's become a battle cry of sorts for innovators who aspire to make big change by identifying opportunities that others don't see.

We all know déjà vu—looking at an unfamiliar situation and feeling like you’ve been there before. But what's valuable to innovation is vuja dé—looking at a familiar situation with fresh eyes, as if you’ve never seen it before, and with those fresh eyes developing a new line of sight into the future.

Let's face it: Most companies in most industries have a kind of tunnel vision. They chase the same opportunities that everyone else is chasing, they miss the same opportunities that everyone else is missing. It’s the companies that see a different game that win big. The most important question for innovators today is: What do you see that the competition doesn't see?

Answering that question requires vuja dé. And vuja dé requires a radical shift in perspective—which is why outsiders often see the future first. It’s also one of the big limitations of benchmarking. The most creative CEOs I’ve met don’t aspire to learn from the “best in class” in their industry—especially when the best in class aren’t all that great. They aspire to learn from companies far outside their field as a way to shake things up and make real change.

I first heard the term from Tom Kelley of IDEO, in his book The Ten Faces of Innovation. Tom reports that he heard the term from Stanford Professor Bob Sutton, who explores it in his book, Weird Ideas that Work. And Bob reports that George Carlin was the original inventor. This blog post from Tom gives a pretty good history of the term.

And now you've heard it from me! (Actually, in psychological circles, the more formal term is jamais vu, defined as "a sense of eeriness and the observer's impression of seeing a situation for the first time, despite rationally knowing that he or she has been in the situation before.")

So the next time you feel stuck, like you're cycling through the same tired thinking about the same old problems, figure out a way to look at things fresh—to apply the virtues of vuja dé. It just might unleash a new approach to innovation—and prevent you, in your frustration, from using one of the seven words you can can never say on TV!

Thanks for the laughs, George, and thanks for helping us see the world with fresh eyes.

Boston is bathed in green now that the Celtics have secured their 17th World Championship banner after a 22-year drought. I had the great fortune to attend Game 6 and cheer on this likeable team, as three spectacular performers (Paul Pierce, Kevin Garnett, and Ray Allen) coalesced to do together what none of them had ever been able to do on their own—win an NBA title. It was a memorable night, filled with respect for the players and their coach, with nostalgia for the great teams and players in Celtics history, and with anticipation that this banner might be the first of several to be hoisted in Boston in the next few years.

It’s always fun to try to apply lessons from sports to the world of business—even though usually, as I’ve written in a previous post, the lessons are pretty limited. In this case, though, the re-emergence of the NBA’s most storied franchise can teach important lessons about leadership and teamwork—and teach us why, even as so much of the competitive environment changes all around us, the rules of success remain largely the same.

Indeed, what struck me most about Game 6 was how the success of the 2007-2008 Celtics blended leadership wisdom from the past with a cultural sensibility rooted in the present. Or, to put it more simply, how the unlikely combination of Red Auerbach and Archbishop Desmond Tutu inspired the team on its championship run.

The influence of Red Auerbach is obvious. I was choked up and literally choking towards the end of Game 6, as fans around me lit up cigars in tribute to the legendary coach, general manager, and president of the Boston Celtics—the man most responsible for those first 16 championship banners.

The best way to understand the genius of Red Auerbach, and to appreciate how relevant his ideas were to the current Celtics, is to re-read an interview he did with HBR back in 1987, shortly after the Celtics won their 16th title. My friend and Fast Company co-founder Alan Webber conducted the interview, and it is filled with insights about how to create teamwork in an organization, how to evaluate performance in ways that go beyond statistics, and how one bozo at the top (in this case, John Y. Brown, who co-owned the Celtics briefly) could jeopardize in a year what it had took decades to build.

“How do you motivate the players?” Alan asked, expecting, I imagine, a complicated, multi-faceted answer. “Pride, that’s all,” Red answered. “Pride of excellence. Pride of winning. I tell our guys, ‘Isn’t it nice to go around all summer and say that you’re a member of the greatest basketball team in the world.’”

No wonder so many fans at Game 6 wore T-shirts emblazoned with messages about “Celtics pride”—a mystique that Red Auerbach invented, and this team finally restored, not because they won this game, but because of how they played all year.

But there was a second legendary leader whose values hovered over the court during Game 6. At the beginning of the season, searching for a way to inspire three great players to sacrifice on behalf of team goals, coach “Doc” Rivers read a collection of speeches by South Africa’s Archbishop Desmond Tutu. At the center of the speeches was the concept of “ubuntu”—a term from the Bantu languages of southern Africa that’s hard to translate into English but boils down to a simple but rich idea: “I am because of you.”

As Tutu explained, “A person with Ubuntu is open and available to others, affirming of others, does not feel threatened that others are able and good, for he or she has a proper self-assurance that comes from knowing that he or she belongs in a greater whole and is diminished when others are humiliated or diminished…”

The players took to the idea with real passion—they wore “ubuntu” on their wristbands, they chanted “ubuntu” as they broke the huddle, and, most important, they played selflessly, as if infused by the philosophy about which Archbishop Tutu spoke so eloquently.

Call it pride. Call it something more exotic. But it’s still what separates mediocre organizations from champions. And it’s why, the morning after Game 6, I ordered a different kind of T-shirt. It’s green, of course, featuring the Celtics shamrock, but it has only one word on it: Ubuntu.

Dave Balter, founder and CEO of BzzAgent, is my kind of innovator. First of all, he hasn't just started a high-profile, fast-growing company—he helped invent an entire field. To be sure, word-of-mouth marketing was around long before Dave and his colleagues started their agency in Boston. But BzzAgent's success, and Dave's personal thought leadership in the area, has taken the field to whole new levels of impact and professionalism.

Second, he is the kind of entrepreneur who insists on walking his talk—no matter how controversial the actions may be. Dave's entire philosophy of business is about the virtues of transparency and the power of interaction. So, as I have written in a previous GameChanger post, he and his colleagues have opened up the inner workings of BzzAgent, turning their corporate blog into a warts-and-all look at how BzzAgent really operates.

Well, in the spirit of walking the talk, Dave has done it again—and all of you get to benefit from his commitment to innovation! Like many idea-driven entrepreneurs, Dave decided to publish a book, in this case, a short, insatiably useful guide to the state-of-the-art in his field. The book is called The Word of Mouth Manual Volume II, and if you have any curiosity about how to get customers to start talking about your products and services, you simply must get a copy.

And that's where the innovation comes in! Dave has persuaded a collection of bloggers who believe in what he is doing to write about the book and suggest that their readers check it out. We're all doing it on the same day—today—and of course we're free to say whatever we'd like. In return for our being part of this experiment, our readers—that's you!—get to download Dave's book for free.

That's right: This book, which I guarantee will be of tremendous value as you think about the best way to raise the visibility of whatever you're doing, is available to you at no cost. You can download it here. Of course, if you're a traditionalist, you can also buy it from Amazon.com here.

I hope Dave's publishing experiment works for him (and you) because it demonstrates some game-changing approaches to the new world of marketing. It starts, of course, with a terrific product—something worth talking about. It then leverages a strategy to get people talking—in this case offering a valuable book at no cost. And finally, that strategy relies on allies and enthusiasts to help carry the message—people who are prepared to talk about what Dave and his colleagues are doing because they believe that they are advancing a cause, not just peddling a product.

My advice? Download the book, talk about it inside your company, and ask how you can apply its ideas to get other people talking about your products.

I’ve always believed that the first step in any successful venture is to establish a clear definition of what it means to succeed. And there’s something about business that convinces most executives that being successful means doing more: generating more revenue, hiring more people, launching products with more features. If you want to win big, the only choice is to “one-up” your competition and “out-do” your rivals. Right?

Not if you’re one of the programming wizards at 37Signals, a fast-growing company that is winning converts in the marketplace based on its commitment to “one-down” the competition and “under-do” its rivals. Talk about a strategic mind-flip: In a competitive environment defined by bloated products, hyped-up marketing, and financial excess, the way to succeed more is to do less.

There’s no question that 37Signals is succeeding. The company doesn’t just have customers, it has raving fans, and its leaders are certified Web celebrities. Its offerings, such as its Basecamp project-management software and its Highrise contact-management software, are refreshing models of simplicity in an industry ruled (and haunted) by complexity.

During a recent visit to Chicago, I visited 37Signals and spent some time with founder Jason Fried and his colleague David Heinemeier Hansson, creator of the much-celebrated Ruby on Rails programming framework. (Twitter and many other Web 2.0 services are built on Ruby on Rails.) As it turns out, Jason, David and their colleagues don’t just have a simpler-is-better philosophy for writing software—they have a philosophy for building a business, and it’s every bit as well-defined as their code.

“When you’re competing against companies that have so much more, the only answer is to do less,” Jason and David told me. “Do less than your competitors to beat them. Instead of one-upping other companies, one-down them. Instead of out-doing other products, under-do them.”

I get it, I responded: Less is more, right? Jason and David shook their heads. “No, less is less—because more is not better! Everyone tries to do too much: solve too many problems, build products with too many features. Our goal is to do less, to build half a product rather than a half-assed product. So we say ‘no’ to almost everything. If you include every decent idea that comes along, you'll just wind up with a half-assed version of your product. What you really want to do is build half a product that kicks ass.”

That’s why, as products strategists, Jason and David focus on customers with smaller budgets, less bureaucracy, and fewer headaches. Most technology companies are obsessed with the “enterprise” market—Fortune 500 giants with complicated problems and big budgets. 37Signals builds software for entrepreneurs and small companies where the executives who buy the product also use the product—a market that they call the Fortune 5,000,000: “We solve the simple problems and leave the hairy, difficult, nasty problems to everyone else,” the company likes to say.

It’s a provocative challenge to a business culture addicted to more—whether that’s features of finances. “Revenue growth in and of itself is not a goal,” Jason and David insist. “We are about profits—profits per employee. And growth forever is not sustainable. There is a right size for certain things, at least if you want to do them well.”

That’s why, as entrepreneurs, Jason and David push themselves to spend less money and hire fewer colleagues. They also insist on working fewer hours. The company recently adopted an official four-day workweek, the better to keep everyone fresh, energized, and forced to avoid distractions.

“Don't hire people,” they implore in Getting Real, their Web-based book that is chock-a-block with great advice. “Look for another way. Is the work that's burdening you really necessary? What if you just don't do it? Can you solve the problem with a slice of software or a change of practice instead?”

Products that offer fewer features. Fewer employees who work fewer hours. Leaders who reject growth for growth’s sake. It’s the formula for success at 37Signals—and food for thought for the rest of us. Are you ready to succeed by one-downing the competition and under-doing your rivals?