Startups

Quote of the Week

Jul 10, 2009 in Entrepreneurship, Quotes, Startups

"The idea that you cannot build an important tech company outside of Silicon Valley is 'a crock of shit'."

Fred Wilson

Ignore Everybody Social Project

Jul 08, 2009 in Fun, Presentations, Startups

Tonight I had the pleasure to be a guest speaker along with Bill Nussey of Silverpop at the Shotput Ventures weekly dinner meeting. I gave an updated version of my "Startups in 12 Quotes" presentation. It was actually titled "Startups in 12 Quotes". The reason for the change is at the end I pulled out my recently finished copy of Ignore Everybody and read three choice quotes from the book. And then I announced the Ignore Everybody Social Project.

You see I took Hugh MacLeod up on his secret evil plan to get a signed copy of the book. True to his word he sent it and thus I have two copies. I am quite sure the intent of this promotion was to create a pass along effect. I just decided to formalize the pass along of my copy.

Here's the deal. I gave my unsigned copy to Nelson. It is well marked with the passages that I found of interest. It has my name and the date I completed reading it on the inside cover. I instructed Nelson to:

Mark his favorite quotes in the book.
Put his name and the date he completed it on the inside cover.
Pass the book along to someone else who agrees to participate in the project.
Come to this post and leave a comment with his fav quote from the book and the name of the person he passed it along to.
Rinse and repeat.

We will do this until Shotput's demo day where the book will be passed along to the next participant. It would be really cool if we could get one person from each Shotput company to participant before then.

We will then go through steps one through four again among the broader Atlanta startup community. At that point we will have a unique community created social object.

Rock on.

People's Choice Contest Voting Open

Apr 13, 2009 in Startups

The GRA/TAG Business Launch Competition has opened it's People’s Choice Contest. The top two companies receiving the most votes will become “wild card” presenters in the semi finals of the competition. Last year one of the company's that emerged from the People's Choice Contest Made it to the finals so it is a great way for a company to advance.

After viewing the presentations you can vote for your favorite. I went through them all. BeMyAd's catchy jingle got my vote.

Voting is open until April 29.

Quote of the Week

Apr 03, 2009 in Entrepreneurship, Startups, Venture Capital

"As soon as it's written, every business plan is wrong. Good entrepreneurs recognize this, and tend to build agile teams that can quickly respond to early market information in order to identify a real business model and minimize risk."

Josh Koppleman

In a great Yogi Berra wisdom for startups article. There are really two main points to the article. One, entrepreneurs need to "pivot" or change their initial strategy and vision. Two, you need to know what inning the game you are playing is in so that you can act accordingly.

And don't forget, venture capitalists do not read business plans.

The Internet is Infected

Mar 29, 2009 in ATDC, Internet, Startups

Tonight on 60 Minutes Lesley Stahl will be reporting on computer viruses and botntets that propagate on the Internet and infect PCs, which enable their creators to do all types of evil things via remote command and control. The show airs tonight, should get some good ratings - it's right after the NCAAs. And if information security alone is not your thing Lebron James is featured on another segment in the show. Leslie Stahl previews her report below.

Damballa, an ATDC startup protects businesses from targeted attacks used for organized crime contributed to the show. Not sure what information from Damballa is going to be used on the show but the fact that 60 Minutes is doing a segment on it is huge. The mainstream market is taking an interest in and being educated on the potential impact of botnet armies.

Update: Here is the segment.

Calacanis' Customer Acquisition Cost Math

Mar 24, 2009 in Business, Entrepreneurship, Internet, Marketing, Startups

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.

Twitpay Secures Seed

Mar 19, 2009 in Angels, Internet, Startups

AtlantTech reported today that Twitpay has raised an undisclosed round of funding.

Twitpay, the second Startup Weekend Atlanta company to secure seed captial (Skribit being the first), is a simple way to send payments via Twitter. The service is powered on the backend by Amazon Payments. Twitpay went live two weeks ago.

Twitpay has been featured on CNN, The New York Times, and Time. Most recently Twitpay was listed as the second of 99 Essential Twitter Tools and Applications.

With all the media attention and a little money in the bank, founders Don Brown and Michael Ivey are now focused on gaining some traction.

Mr. Money Wings is happy.

Disclosure: I am Twitpay advisor and stockholder.

Startups: The Early Stage

Mar 18, 2009 in Entrepreneurship, Startups

This is the third in a series of articles that discusses the stages of a startup. Previously the concept stage and seed stage were covered. Today the early stage is addressed.

As one may can surmise from the intro, the early stage is the third stage of a technology startup.

The key element being addressed in the early stage is market development. Proving that the product is valuable. That customers are willing to pay for it and/or use it.

If you are proving that the product is valuable for the most part it is built (a product is never fully built and development is never "over", but that is a topic for another day). Product development is focused on refining the product. Creating a complete product. A commercial grade product.

The business focus is on sales and marketing. Getting sales and usage to trend upward. Developing customer relationships. Continuing to get user feedback. Building a pipeline. Traction. Using word of mouth to spread the word about the company and product. Focusing on key influencers. Refining the go to market strategy. Continuing to refine the business plan and replacing assumptions with what you are actually seeing as the business rolls out. Some larger corporate infrastructure elements come into play for when the company hits the growth phase.

The team is growing. A well rounded management team has joined the founders. There are employees. Maybe seven or so in the beginning of this stage. Typically 20 - 30 people in total mid early stage. More if the company continues to blossom. These employees enable a startup to accomplish much more, much faster then in earlier stages. They also bring a new set of issues that need to be addressed. There is a real board of directors. This means the CEO has a host of bosses that he or she needs to manage.

Revenues are growing. More than the $500,000 in the seed stage. Maybe a $1 million. Or there might not be any revenue at all. A very rare breed. Regardless, you are starting to see significant use traction. Web plays have 1 million unique visitors or more.

Intellectual property protection activity is becoming more sophisticated. The IP strategy developed in the seed stage is being implemented.

Funding obtained during this stage is between $1 million and $5 million. It could be more. The funding comes from serious angels, angel networks, or more often then not, VCs. As always, bootstrapping remains an option, but if its "time to go" outside investment may be the best strategy. The valuation range remains broad. Say $2 million to $10 pre-money. Funding most likely takes the form of preferred equity. It's the first stage where VCs generally play. The Series A. To an entrepreneur that has been at it for two years things don't seem early at all. To the VC it is. This causes a great deal of frustration to entrepreneurs. Potentially the most important point in this whole series is that first stage venture capital investments go to the type of startups at the operational stage described above the vast, vast majority of the time. If a startup does not possess the characteristics of an early stage company it should think long and hard before attempting to raise funds from venture capitalists. My advice is don't worry about venture capital. Build your business. If you do that venture capital will find you.

The early stage lasts from one to two years.

Get to the point where you are generating $4 or $5 million in revenue at a 200% plus growth rate and things get exciting. Did I just mention the word growth? I did. That is the next and final stage of a technology startup.

Regator: The Blog Aggregator For Everyone

Mar 14, 2009 in Startups

This past week I had an opportunity to sit down and have lunch with Scott Lockart and Kimberly Turner, the founding team of Regator (they left co-founder Chris Turner at home to code). Regator is a horizontal human powered blog aggregator. Kimberly is the the human editor of the service. She selects all the blogs that are included on the Regator service. In an effort to keep the quality of the content high she is very selective about the blogs that are included on Regator.

When Regator released their private beta last summer TechCrunch described the service as a "blog reader for the masses... best suited for users who aren't interested in heavy-duty blog reading." As a pretty heavy consuming blog kinda guy, I dismissed the service for personal use. Since then the company had a launch party, a facelift, a nice profile in the Atlanta paper, and participated in Startup Riot.

It was Scott's presentation at Startup Riot that made me start thinking of Regator in a new light. Within the first 30 seconds of his talk Scott mentioned "information overload." Information overload has been a subject of keen interest for me for quite some time. Most the the approaches that I have seen to overcome this for RSS feeds have been filter based thus far. Is editorial the solution? It works for Techmeme in a single vertical. Regardless, I believe in the short-term the answer to info overload may lie in organization versus filtering or semanitcs. As Tufte says "There is no such thing as information overload, only poor design."

Will Regator get me reading RSS feeds again? I don't know. But I am going to be spending a little time with it to see. And a little time with the Regator team to see if I can help them move their company along.

If you want to give Regator a whirl, the Demogirl walk through is a good place to start.

And those crazy Regator crocs are going to continue their partying ways. They have partnered with Mashable to bring a Mashable Mixer to Atlanta on May 14th.

Echo: Changing Our World One Block At A Time

Mar 07, 2009 in Entrepreneurship, Fun, Startups, Web/Tech

Yesterday I spent one of the most exciting 30 minutes of my week talking with Lila King and Karyn Lu of Echo. Echo is an art and civic journalism project that will produce and collect stories tied to physical locations throughout Atlanta.

Karyn and Lila believe everyone has a fascinating story to tell. The interview below gives a little peek into the Echo story.

Karyn and Lila won $10,000 in seed money from the New Media Women Entrepreneurs. During the day Lila leads the online team behind CNN's iReport.com where Karyn is the user experience lead. It's great to see this kind of big thinking emerge from the people behind the scenes at the established media companies in Atlanta.

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