Business

Medium Models

Jun 03, 2010

"I think people are willing to pay for content. I believe it for music and video, and I believe it for the media."

                                                                                                Steve Jobs

Steve made the comment at D8 on Tuesday.  About the same time I was having an interesting conversation with some smart people about the same subject.  And here was the most interesting point of the conversation.  Music, video, and whatever the heck media is are very different. 

People purchase music for the most part because it is provides very repeatable consumption.  The number of times I have listened to Damn The Torpedos is countless.  But with the exceptions The Lord of the Rings, T2, and whatever your personal favs happen to be, video is generally rented or subscribed to because you really only need to see it once.

Music, as content, is a little bit ahead of video in terms of consumption via new technology distribution methods.  The buying model has held serve.  I would surmise that as video becomes more Internet oriented that the traditional model of renting or subscribing and not owning will become the predominant purchase method. 

People will indeed pay for content if packaged the right way. The big question is who will figure out the right way to package and deliver these next generation video rental/subscription services.  It is going to be an interesting game.

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Posted in Business, Current Affairs, Internet, Music, Television

Lessons for Aspiring Entrepreneurs, Part 1: "Purpose = Power"

Apr 26, 2010

by David Eckoff, special to Force of Good

Boxer Everyone knows someone who has come up with a good idea and who has not acted upon that idea. Or started working on the idea… and not finished.

Perhaps you can even personally relate to that.

People come up with good ideas for new businesses all of the time. Unfortunately, many of those ideas are never acted upon and most are never brought to market.

This is tragic, because it’s not a matter or whether or not we can. In 2010, an average person of average intelligence can come up with a good idea and bring it to market - thanks to a democratization of the tools of production, distribution and sales.

But not everyone will.

Why do you suppose that is?

Lessons Learned

I’ve made it my focus over the past 20 years to turn ideas into products and businesses. Most recently launching Spitter.com, and working with other companies such as Rivals.com, RealNetworks, Turner Broadcasting, Ustream.tv, and Zazzle to bring their revolutionary ideas to market.

What have I learned that can shed some light on what makes the difference in going to market with your ideas?

There will be obstacles along the way. Distractions. Problems. Frustrations. Doubters. Skeptics.

The single greatest way to overcome those obstacles is something often overlooked in execution: having a big enough reason why.

Big Enough Reasons Why

Chris Klaus, founder and CEO of Atlanta-based Kaneva explains why this is so important.

"Part of the secret sauce of a successful startup, is finding a vision and mission that you and your team are passionate about,” Klaus told me. “Every startup has incredible challenges. The teams that are passionate about their mission will be determined to learn from their mistakes. They have the desire and energy to overcome these obstacles."

Reasons why are the fuel that will get you to follow through.

Big enough reasons why can help get you through anything.

Pamela Slim, business coach and author of ‘Escape from Cubicle Nation: From Corporate Employee to Thriving Entrepreneur’ explains:

"Knowing why you are starting your business -- how you will impact others, or even change the world -- will fuel you through the inevitable periods of struggle as a first-stage entrepreneur,” Slim told me. “Your customers will feel the meaning and purpose behind your business, and your marketing position will be much stronger."

What Do Most People Do Instead?

As entrepreneurs, we love our ideas - often to the point of irrational exuberance. And being excited about our ideas, we often focus so much on “what” we are doing (the product) that we don’t define - or we lose sight of - “why” we are doing it.

And without big enough reasons why to motivate us through the hard times, we’re more likely to get stalled - when we really need to be putting in the extra effort.

"The difference between success and failure might be the difference between calling it a day at 7 pm or midnight,” David Payne, founder of Atlanta-based Scoutmob, told me. “Only a strong mission will cause you to feel good about working those hard extra few hours."

A Powerful Approach to Getting Important Things Done

Start by answering these time-tested four questions:

1) What is your desired outcome?

Most people answer: "I don't know". Perhaps that explains why so many ideas are never acted on.

Think about what your desired outcome is, what do you really want? And write it down. Be as specific as possible. Set a specific date for that outcome.

2) Why do you want that outcome?

The power is in why. When you get enough reasons you can do just about anything, you can find the way.

A big enough reason why is where you get your drive to follow through.

A useful way to frame this question is to think about why you must do it (as opposed to why you should do it).  Think about what matters most to you, what do you most value?

For example: so you want to make a million dollars? Why? Dig deeper. Ultimately, what do you value most?

3) How am I going to make it happen?

Think about - and write down - the most important actions you need to take to accomplish your desired outcome.

Bonus: take it one step further. You are more than your to-do list. Think about and write down the answer to these questions. What kind of person would you need to become to accomplish your outcome? What skills would you need? And become that kind of person. Develop those skills.

4) How will I know when I’m getting my outcome?

Sometimes we can be winning - and feel like we’re losing - because we’re not keeping score. How will you measure it? How will you know?

Not All Reasons Why Are Created Equal

I’m not here to tell you which reasons are the right reasons for you. The “big enough reason why” is unique to each person. (Although some reasons that are often cited by aspiring entrepreneurs are misguided at best - and really bad reasons at worst - and I’ve written about them here.)

But the reasons that drive you could make the difference between success and failure.

What Have You Learned?

So, what do you want to remember from this article?

Before you get started with your to-do list, be clear about what it is you really want and why you want it.

You’ve got to be clear about your outcome and your purpose. The “why” is what will get you to follow through on your decision.

And as you’re bringing your idea to market, remember that Purpose = Power.

What do YOU think? What gives you your drive to follow through and launch new businesses and products? I'd love to hear about your experiences, in the comment section here.

Like the article? Please retweet it! Thanks @Gearheadgal @pslovin @thewordpainter

Coming Next Week: Lessons for Aspiring Entrepreneurs, Part 2: “Goals Alone Are Not Enough”

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DAVID ECKOFF is co-founder of Spitter.com, advisor to media & technology companies and business educator. He has worked with Rivals.com, RealNetworks, Turner Broadcasting, UStream.tv, Zazzle and more, to bring revolutionary ideas to market.

You can read more about David Eckoff on his blog at www.DavidEckoff.com and follow him on Twitter at @davideckoff and @IdeaToMarket

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Trainers-8up-i2mEditor’s note: David will be among a group of 9 business leaders teaching at Idea to Market, a one-day business bootcamp, May 8 in Atlanta. Readers of Force of Good can redeem Discount Code “LANCE40” for a special discount on a regular ticket to the event.

-

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Posted in Business, Entrepreneurship, Startups

Washout Weekend

Mar 01, 2010

As the organizer of Atlanta Startup Weekend I have been involved with a few companies that emerge from the event.  And as they move forward there is always an issue.  An issue of equity holders and complexity of the cap table. 

This issue has been a subject of conversations within both Skribit and Twitpay.  Investors don't like the look of the cap table of Startup Weekend companies.  Too many founders.  Too much complexity.  To an investor it is a bit of a mess.  Something to be avoided.  But how to do so?

The big news a few weeks back was that Twitpay was acquired for $100,000. Or more specifically, "the investors acquired Twitpay’s assets for $100,000 and plan to plow an additional $1 million in product development and marketing."

Now I have done quite a few asset acquisitions in my time.  Well over a hundred.  The beauty of such transactions is that you get to buy the things that you believe to have value while leaving the liabilities and things that you don't believe have much value behind.  While the co-founder participants in Startup Weekend may not like it, the fact of the matter is that over a year or so into a company they really don't add a lot of value while adding a lot of complexity to the company.  As an investor an asset acquisition is an smart way to clean that up.  

If other Startup Weekend companies garner angel funding in the future you may see transactions take the same form as the Twitpay deal.

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Posted in Business, Startups

Startups Create Jobs

Nov 06, 2009

In a nice opinion piece for The Wall Street Journal, by Schramm et al.  They essentially say that the age of the business not the size is the more precise characteristic of companies creating jobs.

The more precise factor is not the size of businesses, but rather their age. According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007, two-thirds of the jobs created were in such firms. Put more starkly, without new businesses, job creation in the American economy would have been negative for many years.

The authors go on to cite economic and regulatory barriers that are in the way of young companies and propose a four pronged solution.
  1. Welcome immigrants seeking scientific training to our universities by granting permanent residency and work status.
  2. Unbridle academic entrepreneurs by opening up licensing to non-university entities.
  3. Provide easier assess to capital.
  4. Fix the cost burden of SOX compliance for small companies.
Seems like a reasonable course of action to me.  How about you?

Hat tip to John Cottingham and Mike Eckert for pointing the way. Comments and Reactions Tweet

Posted in Business, Entrepreneurship, Startups

When Worlds Collide

Oct 13, 2009

Rich DeMillo is blogging.

He is writing about the interesting things that happen when technology innovation and business execution impact each other.  How technologists can get things done in a technology company and what business managers need to know to be successful.  When Worlds Collide is about how organizations can succeed when business execution and technology innovation seem to be on a collision course.  The "hey, you got your peanut butter on my chocolate" result.

Rich has an impressive background.  He was in charge of the rebirth of undergraduate education in computer science at Georgia Tech, Chief Technology Officer at Hewlett-Packard, VP of Computer Science Research at Bellcore, and Director of Computing Research at the National Science Foundation.  I had the chance to meet him at a football game a few years back.  He is nice guy.  And much easier to talk to than his background might suggest.

I love the title, When Worlds Collide.  The articles are thoughtful.  And I expect them to be as interesting and thought provoking as Rich's “Murder, Starvation, & Catastrophe – What Eric The Red Can Teach Us About 21st Century Innovation” that he delivered a few years back.  Rich was great in person.  I am looking forward to what he has to say online.

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Posted in Business, Computing

Quote of the Week

Jul 03, 2009

"The rich keep getting richer because they keep doing whatever it was that made them rich. Ditto for the poor."

Neal Boortz

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Posted in Business, Quotes

The AT&T Saga Continues

Jun 24, 2009

Remember Nina.  That lady I thought was a god send.  She's a liar too. 

My wireless modem never showed up on Friday. 

Gotta give AT&T a little credit though.  Mike showed up.  I speed tested the AT&T service on Friday morning.  Maxed out at 3Mbps.   I signed up for 6Mbps.  So I had to call technical support (my fifth AT&T call in this ordeal).  It was about 7:30 am. They made me run an AT&T speed test.  Like the SpeakEasy speed test was wrong.  

Told me they were going to send out a tech.  Gave me a window of 8 - 12.  Gave them my cell.  I'm going to work.  Mike shows up at around 9:10 am.  Abby is still home.  Checks the outside equipment. Says he has to get some stuff.  Goes away.

I go away.  Have a fun weekend.

Come home Sunday night.  Speed check.  6.2Mbps down, 435Mbps up.  $32.95 a month.  Rock on.

Abby checks voice mail.  Mike called over the weekend.  Upgraded the service.  Left his cell phone number in the event we had any issues.

But remember, my wireless modem never showed up on Friday.  So I called customer service (call #6) on Monday, cause AT&T's convenient for them customer service hours are 8 to 7 on weekdays.  There was no record of an order.  Lady places another order for the wireless modem.  Tells me it will be here by Tuesday.

Tuesday comes and goes.  No wireless modem.  I am really not surprised.  The rep that promised me that it would be here was not able to provide me with a tracking number.  Was not able to send me a tracking number when I asked if she would do so via email when it was available.  Automated package tracking notification seems a bit beyond AT&T's capabilities thus far in the 21st century.

So I called customer service (call #7) on Wednesday morning, cause AT&T's convenient for them customer service hours are 8 to 7 on weekdays.  Guy tells me he needs to transfer me to another queue.  Puts me on hold for a bit.  Comes back asks me to wait.  Puts me on hold for a bit.  Comes back and tells me to call back later.  They are too busy.  Gives me a specific number to call and tells me to call back later.  When I tell him the number he gave me is the same number I called.  He is dumbfounded.  Tells me to call the number and select option #4.

I wait a few hours.  I called customer service (call #8).  There is no option #4.  It is all voice activated. Get Ray.  Nice lady.  She can actually provide a tracking number.  Wireless modem to be delivered today.  The anticipation is killing me.

Got home tonight.  Package is here.  The anticipation is really killing me.  Open the box.  Wrong modem.  It is the same silly single computer modem they sent when they slammed me, I'm sorry, activated my service without request. 

I could not make this stuff up if I had to.  But I might start a business selling unused AT&T modems on eBay.

Before I do that, I am gonna give Mike a call on his cell phone tomorrow. That will be call number 9.  And this whole thing is starting to sound a little bit like that Beatles song.

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Posted in Business, Customer Focus, Internet

Internet Disservice

Jun 18, 2009

I called AT&T to inquire about Internet service pricing last week.  They slammed me.  I figured this out last night when I got home and there was a package on the porch.  Took it inside.  Opened it.  Saw a DSL modem.  Livid.

This started 10 days ago.  I made an inquiry to AT&T sales.  Wanted to know how much it would cost me to bundle my Internet, phone, and television service.  It was getting close to time to switch from EarthLink.  Though you will not find it anywhere on their Web site EarthLink charges $49.95 for 3.0 Mpbs.  AT&T is $30.  I am loyal to EarthLink.  But they are charging about 66% over market rate for the same level of service.  It was time to switch and it was my intent to do so when Abby and the kids were off on their summer tour.  Anyhow, the AT&T rep told me their pricing for various services and that I could immediately save $10 a month by switching phone service to something called Complete Choice Enhanced.  I said sure and forgot about it.

On Monday night my Internet service went down.  Seemed odd.  Used to do that quite a lot back in the day.  Not so much anymore.  Decided to head off to work and give it a little time.  When I got home it was still down.  So I called EarthLink tech support.  The rep did not speak English well.  Made me do all the obvious things.  Then something not so obvious.  He asked me to switch phone jacks.  Which is not the easiest thing to do in the world.  I pinged.  Googled the word idiot.  It seemed to have worked.  Odd that the jack would just go bad.  But I started moving some network gear around to get all the computers online.  Did not work.  I checked all the jacks.  None of them would give me PPPoE.  Called back EarthLink tech support. The rep did not speak English well.  I was told there was a widespread outage and my service would be down until midnight on Tuesday.  Suggested I use dial up.  Was a bit taken aback when I said that my computers did not have dial modems so that was not possible.

On Wednesday morning DSL was still down.  So instead of calling EarthLink tech support, because the reps tend to not speak English well, I decided to have a chat session.  Was told that the outage would continue to affect me for another 24 hours. And then I got home and opened the DSL modem.  No prior notification that I had an account with them of any kind.  No mail.  Nothing.  Just a DSL modem on my doorstep.  And it's just a simple plug in one computer type of modem.  Would not even work for my setup if I wanted it to.

Livid.  So livid I think I scared my kids.  Livid because AT&T slammed me and made my Internet service go down.  To get semi-technical here, a DSL line can only be provisioned by one telephone company at a central office.  If AT&T has a DSL line provisioned on the switch for your phone then EarthLink cannot.  EarthLink had my line provisioned.  AT&T put in the order to provision my line and essentially took down my DSL service.

Called AT&T.  Asked for a sup.  No love.  Could not even tell me what level of service they signed me up for without my permission.  Said I had to speak with customer service.  Which of course is closed at night when normal people take care of such things (remember that convenient for us not the customer sin?).  Denied that they had anything to do with my EarthLink service going down.  Liar.

Called EarthLink tech support.  The rep did not speak English well.  With a little direction he figured out my line was "inactive".  Transferred me to another phone queue.  The queue that I was transferred to had a recording.  "Not able to handle calls due to system outages."  Great.

So I called AT&T customer service this morning.  Explained what had happened.  Guy was a jerk. Denied that they had anything to do with my EarthLink service going down.  Liar.   Hung up on him.

Called back, got a nice calm lady.  Explained what happened.  Found out I was signed up for 6.0Mpbs service.  That I was currently being billed for the DSL service, and I was being billed $75 for the DSL modem that I did not order.  Made a note in the account that I did not order the service and if I cancelled I would not be billed anything.

I cranked up EarthLink chat tech support.  This is the conversation.

Shawn P: Your DSL line is turned off.
lance@mindspring.com: why?
Shawn P: You can contact our Installation Department and get it turned back.
Shawn P: Seems your area is undergoing some changes on the phone line. Hence it happened.
Shawn P: You can reach us at 1-888-EARTHLINK (1-888-327-8454), available Mon - Fri 7 a.m. to Midnight, ET Sat & Sun 8 a.m. to 10 p.m. ET.
Shawn P: This is what I am going to do for you.
Shawn P: I've kept a note on your account.
Shawn P: Please phone them after few hours.
Shawn P: It helps us to serve you quickly.

Quickly would be nice.  It's been three days.  I called the EarthLink tech support.  The rep did not speak English well.  He told me it would take five days to reprovision the account.  I said no thanks.  Tired to cancel.  Guy would not let me.  I hung up.

I called EarthLink tech support.  The rep did not speak English well.  Told the lady I wanted to cancel.  Told her pricing was too high.  And I swear it was just like the infamous AOL recording.


I very specifically had to say "cancel the account" seven times.  Once she got finished with that she started to tell me about the final bill that I was going to be receiving.  $49.95 for the period of June 16 - July 16.  I tried to politely explain to her that she could not charge me for a service that was not being provided and that if she did so I was not going to pay it.  She agreed to only charge me $25 because the phone company got the other half.  Told her that was not my problem and that if they charged me anything I would not pay it and would walk down the street to EarthLink HQ and have a chat with the receptionist.  I am not going to get billed.

So back to AT&T to see if they want my business.  Explained to the rep what happened.  Said if they did not do something to make up for this mess I would cancel all my AT&T business and go to Comcast.  I got transferred to a specialist. Nina.

Nina from Atlanta.  Nina in Atlanta. Nina in the office park where I take the kids to Taco Mac.  Nina was nice.  The first person I spoke to in this whole ordeal that was nice.  Nina understood the semi-technical issue I described.  Nina had empathy that I had been without Internet service since Monday.  Nina cut me a deal.  Nina is overnighting the proper modem.  Nina fixed the problem.  Nina kept me as a customer.

Nina was service.  Service gets and keeps customers.

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Posted in Business, Customer Focus, Internet

Calacanis' Customer Acquisition Cost Math

Mar 24, 2009

You may have heard that Jason Calacanis, the CEO of Mahalo, publicly offered $250,000 for two years for one of the top twenty slots of suggested users that Twitter is now offering up as part of its service.  Jason's offer was a publicity stunt.  A game.  He intended to attract media coverage.  He is extremely skilled at getting attention.  The king of linkbait.  It is one of the things that makes him a good entrepreneur.  And once again it worked.

But with an interchange with TechCrunch he said he was serious about the offer.  And I believe he is.

Jason outlined his thought process for the $250k offer in his most recent list mailing (He stopped blogging in 2007.  Blogs are so last, last year, though he really did not stop.)  Jason did some math on his offer and this is what it looked like.

My plan was to post the Top Five most absolutely fascinating questions from Mahalo Answers to our @questions account every day. Everyone loves a timely or fascinating question and, in my estimation, I would get a one percent clickthrough rate on each question. If I was able to reach three million followers, and kept half of them (1.5m), that means every tweet would get 15,000 visits. Five a day means 75,000 daily visits, and over two million visits a month--or close to 50m visits of two or three years. Some percentage of those two million would participate in Mahalo by asking or answering questions, and if that number is also .5 to 1%, that means I would get about 250,000 new members for my service. Each of those 250,000 new members would cost me one dollar, and I'm certain over their lives we would monetize them for much more than that.

Jason estimated his customer acquisition cost of doing a deal to buy a Twitter suggested users slot to be a dollar.  Customer acquisition cost is simply the cost of securing a new customer, member, or user.  And while not every startup is well funded like Mahalo and has $250k to throw around on a whim, there is an important lesson here. 

Customer acquisition cost is a key driver of any Internet business.

Especially so for early stage and growth stage companies.  It deserves deep thought and consideration.  While I might not buy into Jason's math and question some of the assumptions made to reach the customer acquisition cost in this instance, he walked through the logic.  Every entrepreneur running an Internet business needs to be able to do the same.  You can start with a very simple model.  If you have no history make some reasonable well thought out assumptions. Have data points and facts to back your assumptions.  Using services like Facebook, Google, and Twitter as examples and a basis for assumptions is a bad idea.  Yes, Web services need to grow virally and via word of mouth (the two are not one and the same) to be successful.  But at some point it is going to take more then that.   Just assuming 20% quarter over quarter growth rates won't cut it.  Nobody is going to buy into that assumption unless you are actually achieving 20% quarter over quarter growth rates. And then they are going to want to know how you are going to sustain it.

Customer acquisition costs is one of the three most important drivers of a SaaS business model (churn and recurring revenue being the other two), if you are going to build a successful Internet business you need to know customer acquisition marketing cold or find somebody who does.  It is the only way that you can cost effectively grow your business. 

As for Jason's offer?  He raised it to $500,000.

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Posted in Business, Entrepreneurship, Internet, Marketing, Startups

No One Seemed Worried About The Economy This Weekend

Feb 16, 2009

Moving around Atlanta this weekend you would never think that we are "in the midst of our greatest economic crisis since the Great Depression".  Traffic jams in the Buckhead shopping district during the day, the mall packed with people carrying shopping bags.  A small florist telling me business was good.  Traffic jams in Midtown at night.  Fine dining establishments packed.  $50 a plate main courses being ordered (not by me.)

On Saturday my wife stopped reading the paper.  Said it was nothing but bad news.  Sunday morning I read a little article in The Wall Street Journal by Bradley R. Schiller.  He is an economist.  Has written more then a few books on the subject.  An Amazon search brings 44 results.

The point of his article? That the current economic climate we are in is more like the 1981-82 recession then what happened in the 1930s.  Some of the facts according to Mr. Schiller.

Job losses. Current state 2.2% of work force.  1981 2.2% of work force.  1930 4.8%, 1931 6.5%, and 1932 7.1%.  The Great Depression had job losses between 2 and 3 times what we are seeing today.

Unemployment.  Currently sits at 7.6% and heading in the wrong direction.  1982 peak was 10.8%, where many predict we are headed.  During the Great Depression the peak was 25.2%.  Over three times as high.

Gross Domestic Product (GDP).  The Congressional Budget Office is predicting a GDP decline of 2% in 2009.  In 1982 GDP contracted by 1.9%. Pretty close. In 1930 GDP contracted 9%, 1931 8%, and 1932 another 13%. 

Car Production.  Now off 25%.  During the 30s off 90%.

Bank Failures.  Over 10,000 in 1933.  A couple of dozen last year.

Stocks.  37% now.  90% then.

Don't get me wrong.  Things are bad.  I am thankful every day that I can get up and go to a job that I love.  I know people that have lost their jobs.  I am concerned for them.  My family has cut back on its spending and I see others that are doing the same.  It is not fashionable to consume. 

However, based on what I saw this weekend I don't think the picture is as bad as it has been painted.  Mr. Schiller's statistics seem to back this up.  What about you?  Do you feel better or worse off then what you see and hear in the broad media landscape?

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Posted in Business
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