Christine Mason McCaull is one of several entrepreneurs Portfolio.com is following as part of the series The Great Global Adventure. All of the entrepreneurs will be blogging about their experiences. This is the third in the series of blogs from entrepreneurs.

When we started our most recent business, ClickMarkets (in shared office space with a decent broadband connection and high-powered laptops), we did all the same things we did at our last big endeavor.

It was the usual drill: Develop a value proposition, craft a brand and market-entry strategy, put together a financial model, pull together a team, set up an infrastructure, and, eventually, actually sell services to our first customers.

But this time there was a big difference: It took a lot less of money and time to get to that first dollar in sales revenue, thanks to technologies that have vastly reduced selling, marketing, and administrative costs in setting up a new venture. This has freed us up to invest our money and time in the development of what is core to our business, run very lean, and bootstrap our company through sales revenue, not Other People’s Money.

I’ll even put numbers on it: What cost a minimum of $500,000 and took nine months and lots of engineering talent in 2004 can be done today, thanks to technology changes, by smart people with some Web awareness or the willingness to learn, for less than $20,000 in three months. It’s not that we’re doing this business on duct tape and baling wire, either. We’re working with very clean, professional services that can scale and which just a few years ago cost a hundred times as much to put in place.

As a former venture-backed CEO and 18-year industry vet, I’ve been an insider creating some of these technology shifts—but it’s only now, as we’re applying them in our own new startup, that we really understand their real impact from an operating perspective.

The following five major tech-enabled trends have saved us money and improved our business in the process.

• Trend 1: The Open-Source Movement
• Trend 2: Technology-Enabled Distributed Workforce
• Trend 3: Social Media
• Trend 4: Software as a Service
• Trend 5: Online Productivity and Communications Tools

We see that these trends don’t just impact new businesses, but are also applicable to established businesses of all sizes.

Trend 1: Open Source Everything

The open-source movement makes it easy to launch a functional, commercial, and robust Web presence at a fraction of the cost.

Usable open-source software and business applications cut down the cost of building really robust, functional websites.

Example: We used the free open-source Joomla (www.joomla.org) content management system to build our Web presence, including user registration, email, and social-media management and e-commerce—and to avoid using developers to interpret our content and place it on the Web.

• Cost savings: $25,000.
• Extra benefit: Day-to-day control of our own site content without developer intervention.

The case in brief:

For more than 30 years, Black controlled the publishing conglomerate Hollinger International, which owned among other newspapers the Chicago Sun-Times and the UK’s Daily Telegraph. At its peak in 1999, Hollinger’s revenues were $2.1 billion.

In the late 1990s, Black advised Hollinger to start selling its smaller newspapers before the Internet began to crush their profits. It was lucrative for Black and three other Hollinger execs who structured the newspaper deals so that they personally received millions of dollars in noncompete fees from the buyers. Hollinger’s board knew nothing of these noncompetition agreements.

In 2007 an Illinois jury convicted Black on three counts of fraud (amounting to more than $6 million) and one count of obstruction of justice.

Black’s appeal asks the court to consider a fundamental question: If an executive’s dishonest actions cause no discernible economic harm to a company or its shareholders, is it still considered criminal fraud?

Why it matters:

Black’s will be a test case to rule whether the “honest services” clause is so broad that it should be invalidated.

Critics of the statute say it is so vague that it has become a relatively easy way for prosecutors to go after those in government and business who participate in activities that are, as one court put it “something close to bribery,” but not actual bribery.

“First, its unintelligible language fails to give ordinary citizens fair notice of what is prohibited,” argues the Chamber of Commerce in a friend-of-the-court brief. “Second, the statute’s capacious language invites arbitrary and unpredictable enforcement. As real-life examples show, the statute is a catch-all that can be used to target almost any imaginable form of dishonesty in government or business.”

If the court decides the language is too vague, it could invalidate parts of the convictions of Black, Skilling, Madoff, and any number of other corporate fraud cases, says Thomas Goldstein, a partner at Akin Gump Strauss Hauer & Feld. “Congress would surely move to amend the law to make it more detailed and clear,” he adds.

A more likely outcome, legal scholars say, is that the court will attempt to define what it means to deprive someone of “honest services,” which could send Black back to a lower court for a new trial in light of the new definition. It could also result in further confusion as judges attempt to interpret the clarified law.

The court is also hearing two other cases this term, including one brought by Skilling, that challenge different applications of the honest services clause — an indication that it is considering narrowing the definition of what exactly qualifies as criminal fraud.

The infamous Conrad Black office (where he walked out a slew of banker boxes of documents) was across the street from a party I was at this weekend. The exact topic of this article came through my mind while walking down the sidewalk – who really defines fraud? (I am not suggesting that what he did was above board, but just a thought that past through my mind at the time)

A friend/contrarian Tweeted the following that I though was worth a discussion (the 140 character limit of Twitter quickly got too painful for me).

“What’s wrong with this world: Twitter is making $4mil per year yet is valued at $1bil. #newmath”

I think this is an important thing to talk about– it’s certainly something that would have resonated with me before I raised money from investors, but now falls pretty flat. I have two quick points to make about it, then I’ll wait for Marina to attack me in the comments.

1. Valuation does NOT equal market value for the company. Founders don’t like to give away a lot of equity when raising money (nor should they!). So, to bring the #s back to earth, let’s pretend that I have a seed stage idea with a little promise/traction that I’d like to raise $1m for. During the fundraising process, there is NO discussion about what the company is WORTH. Instead, the discussion is about how much equity I want to sell (say 25%) and how much I think I can get for it ($1m). This establishes a post money VALUATION of $4m (i.e. 25% of the company is worth $1m, so 100% is worth $4m). No one is saying that anyone who buys companies would even DREAM of buying it at a price of $4m… We just need a mechanism to decide how much equity the founders get to keep if we want to raise $1m. We could fix this offensive math by either selling stock in a company based on the market value (what someone would buy it for), but I think you’d find that good entrepreneurs are not interested in working for free/cheap when they own a tiny percentage of their “fairly” valued company. This model scales all the way up to Twitter. The conversation is more about how much founders and previous investors own after they raise their big rounds than “So, whaddya think we’re worth if we put this puppy on the auction block?”

2. Supply and demand. There are two markets here. One is the scarce (and not always rational) market of GOOD entrepreneurs/startups. If an investor wants a stake in startup that’s growing, they have precious few opportunities to do so. This market has VERY little to do with the current cash value/revenue of the company (at the early stage), but instead is based on the size of the market/opportunity, the entrepreneurs involved, growth patterns, long-term market trends, and how much competition there is for the deal. If Ev Williams punted Twitter tomorrow to start a new startup, he’d get huge valuations if all he had was a sketch on a post-it note, just because there are very few opportunities to work with a guy who has made VCs rich in the past (i.e. had an exit). And because the upside of a successful exit/IPO is so high it makes sense to buy the opportunity at that cost even if Ev’s post-it note probably wouldn’t sell for much on the open market.

Whether you think Twitter is or ever will be worth $1B is immaterial (I think it will, for what it’s worth). The real question is, should an an early stage investor buy stock in a company with a valuation that doesn’t reflect current market value of the company? I think the answer is a resounding yes– if it wasn’t, you’d have a lot fewer startups in the world.

I think the solution for the disconnect is to stop equating the phrase “valuation” (especially when talking about early stage startups) with market-value in your head. We back into those numbers in funding negotiations to make sure that entrepreneurs have the cash resources they need and enough equity to be motivated by the upside at the end of the rainbow.

And, remember: don’t be held back by common sense. There’s a great quote about an insane idea being a necessary but not sufficient requirement for startup success. Early stage investors have been in the business of funding companies without revenue forever, and the smart ones seem to make a lot of money doing it. Monetizing Twitter on a grand scale right now seems insanely hard. But a LOT of smart pundits were saying that the search market was a dead end when Google started spinning up. Markets change, smart people innovate, and magical things happen…

Great article for entrepreneurs looking for VC style funding.