Friends Don’t Spam Friends

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Yesterday Facebook made their big announcement about their advertising platform.  Facebook is selling ads that display people’s profile photos next to commercial messages that are shown to their friends about items they purchased, voiced an opinion about, or perhaps a FB app that is itself an advertising play.

According to The New York Times  Facebook is going to message me when my friends opt-in to sharing what they are doing:

"For example, going forward, a Facebook user who rents a movie on Blockbuster.com
will be asked if he would like to have his movie choice broadcast out
to all his friends on Facebook. And those friends would have no choice
but to receive that movie message, along with an ad from Blockbuster."

Mark Zuckerberg said in the announcement that “nothing influences a person more than a recommendation from a trusted friend."   Facebook is stepping over the line of permission I have given them while hiding behind the wall (pun intended) that they are not initiating the action, my friends are. 

And if you start sending boatloads of advertising related messages around Facebook you will find yourself less trusted with at least one fewer friend.

Stammy thinks Facebook apps killed Facebook.  Maybe.  I think social advertising is a much more dangerous move for the company.

November 7, 2007  |  Comments  |  Tweet  |  Posted in Internet, Marketing, Web/Tech

The Right Steps

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In a recent post Rick Segal had a link to an old article about the steps JLA Ventures goes through when they are making an investment.

An observation.  Most entrepreneurs skip step one.  Which make them stumble at step three.

You need to read Rick’s post, understand the steps, and put one foot forward at a time to get to the end goal of closing a deal.

And BTW, here are the steps to join ATDC.

November 6, 2007  |  Comments  |  Tweet  |  Posted in atdc, Venture Capital

The Best PR

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Number one rule of technology marketing is that word of mouth is the number one source of new customers.  Now do you generate word of mouth?  By turning an organization on its head and empowering those closest to the customer do do the right thing.

Why am I writing this post?  Because  Ben McConnell over at the Church of the Customer Blog has a great article on the subject which is partially quoted below.

"…real PR, is generated at the root levels.

The root levels are the clerks, the sales people, the support staff,
the receptionist, the call center people, the on-site technicians and
consultants, or the police officers, the clerks at the government
offices, or the nurses who take your temperature and blood at the
hospital. It’s their work that generates real PR.

The best PR comes from the smallest of actions by the root-level
people. They smile when they first meet you. They call you by your
name. They compliment competitors. They don’t blame you for their
system’s misgivings. When forced to make a decision, they always,
always, always do the right thing, even if it’s not in the economic or
political interests of their employer. They break the rules when it’s
obvious they must.

That’s real PR. It’s the total sum of stories people tell about you."

You have to have mechanisms in place to drive the behavior in your employees that you want your customers to see.  Mostly these are things that make employees love their jobs.  It comes through in their customer interactions. 

So you want happy customers talking about you in a positive manner?  Create happy employees.

November 5, 2007  |  Comments  |  Tweet  |  Posted in Marketing

Candid VC

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This morning Alan Taetle spoke to a nice crowd at the TAG/ATDC Entrepreneurs Society on the state of venture capital funding in the Southeast.  It’s hard to believe that I have known Alan for over 12 years since he hired me in the early days of MindSpring.

First and foremost Alan talked a bit about the types of companies Noro Moseley invests in.  The real short story is Noro Moseley, likes to be first institutional money in early stage, early growth technology, healthcare and business service companies in the Southeast.

Alan then went on to discuss the state of venture investing on the South, or "what keeps him up at night." 

Big concerns on the national front.  Silicon Valley’s share of venture investment is growing, thus far in 2007 reaching over 50% of the total invested for the first time in several years.  He is also a bit worried that early stage venture capital investing is currently out of favor with big institutional investors.

Alan thinks Atlanta has a lot going for it.  A strong Internet security ecosystem, a good stock of serial entrepreneurs, interest by national VCs in the region (Sequoia was even in town last week), emerging strength in new media and alternative energy industries, forward thinking companies such as Turner, Synovus, and Weather.com showing some leadership, and a great university system.  Many of the things I have discussed before.

He also thinks we have some issues.  Over the past few years we have lost a slew of companies to acquisitions, and lack institutional capital in the region.  Again, right on both counts.

Of course the most interesting thing Alan talked about what needs to happen to change th    ings.  Here’s his list:

1.  Create the next set of flagship companies.  He used to think EarthLink would lead that charge.  Not thinking that anymore.
2.  Re-engage the ‘one hit wonder" executives.
3.  Companies and those that invest in them need to be patient enough to wait for the IPO, focus on building a great enduring company not on a near-term exit.
4.  Remove the stigma around partial founder liquidity during institutional investment rounds so that founders are not running scared and can be patient.

Alan stated that Noro Moseley was looking to take care of the last point in the companies that they invest in and in a somewhat rare show of candor in a room full of people stated that Noro aspires to be Austin Ventures. 

I don’t know much about that, but if you are looking for a smart venture capitalist to sit on your board, Alan would be a guy to reach out to.

November 1, 2007  |  Comments  |  Tweet  |  Posted in Venture Capital

Quote of the Week

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"Even if Microsoft does outbid Google in a testosterone-driven rage,
moreover, Google will still win.  Why?  Because Microsoft will overpay,
too–wildly–and won’t get much for its money.  Facebook will no doubt
extract other concessions (great pricing on ad sales, full control,
etc.), and then will probably take Microsoft’s money and turn its
back."

Henry Blodgett

With all due respect and hearty congratulations to Facebook for securing $240 million at a $15 billion valuation, there is no way that Facebook is worth that number on an economic or even strategic basis.  But as I said when the first Micosoft/Facebook deal was announced, when you try to steal the ruby slippers the Wicked Witch of the West is coming after you.

October 26, 2007  |  Comments  |  Tweet  |  Posted in Quotes

Oh Atlanta

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Brand Atlanta has rightfully decided to dump the "Everyday is an opening day" campaign that they have wasted millions on.

The replacement.

"City Light, Southern Nights." 

Great job folks.  Another distinctive, rolls right off the tongue slogan.  First thing that popped into my mind?  A porn shop I pass on the way to photog class.

Several years ago when Atlanta developed the three O’s of boundless opportunity, inspired optimism, and universal openness I thought they had created a pretty good messaging platform.  Why do they keep messing up the execution.  Could it be because they are still using Lattimer Moffitt (no Web site to link to, that says boatloads right there), an agency involved since the inception of Brand Atlanta? Perhaps.

Not just to be Mr. Negative Boy, here’s a suggestion.  A free suggestion at that, that won’t cost millions of dollars. Introduce another O.  Oh Atlanta.  As in the Little Feat song.

"Oh Atlanta
Oh Atlanta
I said oh, oh Atlanta
I got to get back to you"

It builds on the O’s, it is distinctive, and it is memorable.  If you know the song it will be in your head for the rest of the day.  Contemporize the song with newer artists/execution and you would have a winner.

October 24, 2007  |  Comments  |  Tweet  |  Posted in Marketing

Email Me

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I don’t like Facebook messaging.  It’s really an annoying process.  I get an email telling me there’s a message waiting for me at Facebook.  I have to click a link, go to Facebook to read the message and reply.  It’s a two step process.  Good old email is a one step process that is much more efficient.

Why does Facebook not put the users content in the email message they send to me?  They want me to return to Facebook to drive page views. I don’t care about their page views.  They should just put the message in the email they send and the sender’s email address in the reply field so it works as easy as email.

In the past day I have received more than five Facebook messages.  They are too time consuming.  I just installed the Email Me Instead app on my profile.  If they does not stem the tide I am turning off notifications.

October 23, 2007  |  Comments  |  Tweet  |  Posted in Web/Tech

Double Quote of the Week

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“When it comes to taxes, Barack Obama is no Jack Kennedy.”

The Wall Street Journal.

The Journal’s assessment is based on the Illinois Senator’s announcement that he wants to to nearly double the captial gains tax to 28% and the quote below:

“The tax on capital gains directly affects
investment decisions, the mobility and flow of risk capital . . . the
ease or difficulty experienced by new ventures in obtaining capital,
and thereby the strength and potential for growth in the economy.”

John F. Kennedy, 1963

I don’t venture much into politics at FoG but I gotta tell you, I am not going to vote for anyone that wants to increase the capital gains tax and urge folks in the technology startup community to do the same.  Here’s why.

First and foremost having a low capital gains tax encourages risk taking and investment.  Conversely, having a higher rate will discourage these activities.  Venture capital hurdle rates will increase.  Thus investment and the availability of capital to start new ventures will decrease.  As someone involved in the world of technology startups, this outcome is not something that I can support.  Moreover, this is particularly damaging to the economy because studies indicate that small businesses create anywhere from 50 percent to 80 percent of all new jobs in the United States.   The Cato Institute has much evidence to support what I have outlined here.

Beyond that, at the macro level, there is no guarantee that an increase in capital tax rates will actually produce an increase in tax revenues.  While they don’t cite the source, The Wall Street Journal claims that for the past 40 years capital gain tax increases have been associated with a decrease in tax revenues.  It seems that when capital gains tax increases are put into effect investors rush to unload many of their holdings before the change takes effect.  They also have an incentive to hold onto a current investment longer to avoid paying the tax.  Like the venture investor, the hurdle rate for individual investors to make a new investment increases.  According to  Strategas Research, after the 1986 Tax Reform Act increased the capital-gains tax
rate from 20 to 28 percent, capital gain tax revenue remained depressed for nearly a decade thereafter with the higher tax rate in place.  What broke the slump?  President Clinton’s cut back to 20%.

Getting things a little more personal, the financial markets immediately incorporate the higher tax rate into their models.  An increase in the capital gains tax rate will result in  lower stock prices.  I know this is overly simplistic and some tax wonk is welcome to correct my logic, but given that a 5% capital gain tax cut of 2003 resulted in a 10% increase in stock values one could surmise that a 13% increase in the capital gains tax would result in a 26% decrease in stock values.  I don’t know about you, but I don’t want to see that.

And I won’t vote for anyone that wants to double the capital gains tax.

October 19, 2007  |  Comments  |  Tweet  |  Posted in Quotes