Glenn Kelman and Michael Arrington at the "Naked Truth" event.

Four entrepreneurs, a blogging venture capitalist, a New York Times technology editor, a Wired magazine scribe and an only mildly abrasive Michael Arrington joined forces Thursday night to deliver an interesting and occasionally revealing glimpse into the art of running a startup technology business two decades after the dawn of the Web.

Anyone seeking real controversy or similar forms of entertainment might have been disappointed. The "Naked Truth" event at Seattle's Olympic Sculpture Park was more Oprah Winfrey than it was Jerry Springer. But there was some moderate disagreement and insight. Those moments, and some guy offering his opinion from the sidewalk, kept things pretty interesting for most of the night.

See our previous post for slides, and read on for some highlights.

On what investors want now

Michael Arrington, TechCrunch: In my opinion, there are two kinds of investors out there: spreadsheet investors and instinct investors. If you look at Fred, he's invested in some things that looked absolutely insane when he invested in them, that suddenly, down the road, look brilliant. I mean, he's an investor in Twitter, but when did you make that investment? At that point all of the other investors had backed out. There was no way to build a spreadsheet around Twitter. This was in '06? '07?

Fred Wilson, A VC: Still isn't.

Arrington: So if you look at these certain types investors who still have a gleam in their eye and a little bit of childhood innocence about them ... you can convince them on somewhat of a dream. ... But most VCs I've found are spreadsheet VCs, and you at least have to play the game of showing some bulls--- on an Excel document.

On how to approach business

Sposato

Jonathan Sposato, Picnik: You have to pick whether you want to be a missionary or a mercenary. And I will admit that I'm a mercenary, meaning that I am in this to make a few bucks, and life is short, so I think that it's wonderful and great to try to change the world, make a big impact, but unless you have a clear vision in your head about the kind of exit that you want and/or ... you actually have a clear vision in your head about the business model and the kinds of revenues you want to make, and what would be acceptable return on your investment and your shareholders' investments, then you're wasting time.

Glenn Kelman, Redfin: I'm not sure I agree with that, actually. I feel like every time I see people who are trying to come up with a business that they can monetize, instead of trying to think of a problem that they really want to solve, that they really care about solving, they just get it ass-backward, and they don't build a good product. Instead they're grubbing for money, and I'm not saying you're one of those people -- I love Picnik, it's a delightful product.

Arrington: Look, if you're going to pick a fight, let's pick a fight! He just called you out as a money-grubber!

Kelman: No, I gave Madrona a hard time for not trying to throw more money at Picnik. I don't know, I just think that if you do something meaningful, you can always make money off of it.

Sposato: I actually think you're absolutely right, and I wanted to amend my earlier statement. At these panels, you make provocative statements. So in reality, the decisions you're faced with every day, in terms of product decisions, business model and hiring, and all that stuff, the reality is that it's a balance, and absolutely, I do think that the first thing is that your product has to add value, it has to solve, scratch a user itch that hasn't been scratched. So absolutely, we're not in disagreement on that.

How to make money on iPhone apps

Lowry

Ethan Lowry, Urbanspoon: If you go into it trying to make a fortune, I think you're going to have some challenges. The market size, the advertising rates, you're going to be making a choice. You're either going to be charging in the old model, prior to their latest release, you're either going to be charging a per-app install fee, and if you think there are 40 million iPhones out there, and let's say you charge 5 bucks, there's your market size there today.

So you have some issues there of how big that market is if you're going to charge for it, and similarly with advertising, I mean, you saw our numbers, right, 100,000 users we can make 5,000 bucks, it's going to be a while before you make a ton of money.  If I were to give somebody advice, with today's models, I would say, go in to it, figure out a way that you can charge a reasonable price --

Moderator Greg Gottesman: Can you charge for an iPhone app and actually get enough downloads to where it makes sense?

Lowry: Absolutely, yeah (but) you're not going to make a giant business off of that.

On revenue from events

Darlin

Damon Darlin, New York Times technology editor: The powers that be at our company think that we get ourselves into an ethical quandry if we solicit the people like you guys to come to a conference and talk, in which we then have some form of compensation. And that it imposes a financial relationship between a reporter and the people they report about.

There is a group of people at the Times who also think we're watching a lot of money go to everybody else. .. It's odd, we bring in movie stars and playwrights, we have conferences with those people,but we don't do it with business people, yet Stephen Spielberg is a product as Glenn Kelman's a product. I personally don't see where there's a difference on that level.

You talk about free, you've got to find some other source of making the money.

On Seattle vs. Silicon Valley

Kelman: I feel like I put my coonskin cap on and go down there, and they're like, oh, let's meet the hillbilly from Seattle.

Arrington: There's a lot of really good things going on up here, and in fact, it's probably the second most interesting place after Silicon Valley, in my point of view. I'm saying that's above New York, so that's saying something. But when you look at the quality of startups that come out of Silicon Valley, compared to everywhere else in the world, combined, it's not even a fight.

Wilson

Wilson: I think that the whole Silicon Valley thing is a crock of sh--. And I think that you can build a great company anywhere. I mean, Microsoft and Amazon are two of the greatest companies created in the past 30 years, right here in Seattle. New York can't hold a candle to that. We don't have one company in New York that's great as Microsoft or Amazon. So I do think in some ways ...

Arrington: But what else? Keep going down the list. That's kind of it, right?

From the crowd: Starbucks!

On how best to monetize an online Web service

Sposato, Picnik: Screw up fast. Learn quickly.

Brad Jefferson, Animoto: Yeah, just a kick-ass product.

Wilson: I would say there's more than one way to do it. There's probably hundreds.

Fred Vogelstein, Wired: Ask yourself, would your mother use it.

Some guy out on the sidewalk: And why won't you shut the f--- up?

Sposato: You should ask that guy.

Arrington: Seattle's such a nice place.

Ethan Lowry, Urbanspoon: Just find out where the money is related to what you're working on, and figure out how to get a piece of it.

Arrington: I'm going to pass on this question. Well, I don't know what the question -- what I said before is, forget the money, just sell yourself like YouTube did before you ever make any money. Twitter is going to sell for $2 billion to Microsoft or Google by the end of the year, and they're going to have absolutely no revenue whatsoever. We're never going to see Fred again, because he's like 20,000-to-one on that investment. That's the win right there. Eight generations later, even after estate taxes, your children are still the richest people in the United States, instead of worrying about AdSense revenue or the right CPM for your mobile ads.

Kelman: I think it's finding a big problem. If you find a big problem, you can screw up in a lot of different ways and still make money, whereas if you're in a pretty tight space, you have to be perfect. I just prefer having a lot of room to screw up and still be able to make it work.

Darlin: The best advice that I can see from watching a lot of companies is take control of your pricing, don't let someone else control it -- including control of your distribution.

Vogelstein, Wilson, Jefferson, and Sposato