thought nuggets

In a course of just few days I have read two wonderful posts from my two favorite bloggers Marc Andreessen and Martin Varsavsky about applied note taking from Marc and tons of "thought nuggets" of Martin collected through Twitter and posted in 3 batches.....  Althogh very different, these posts have something in common - how to organize your thoughts and transfer them into bigger products. 

 

I keep on being impressed by insightfulness of Marc's writings and productivity and diversity on Martin. Both are CEOs of their companies and board members and advisers of dozens of other ventures...  Also, husbands and fathers of few children....

 

the question I have: do they sleep?

The Google Enigma

Matt Mullenweg, creator of Wordpress, links to a terrific piece from Strategy + Business called The Google Enigma. Is the search giant "a model or an enigma?" (This pub, from consulting shop Booz Allen Hamilton is one we reference from time to time. It's worth reading.)

 

read here

 

big thanks to Found+Read

good question to ask yourself before starting your company

via AkstheVC

 

Q: In your experience, what are the chances a talented entrepreneur will make $1M from his startup? (And no, I don't mean making $150K/year for 6 years and 8 months. :)

A: (Brad): I have no clue as it depends on many different inputs as to be an impossible question to answer simply (e.g. you need to know a lot more to determine anything that resembles an accurate analysis of the potential outcome.  However, this is a thought provoking question which I'll answer a different way then intended. 

If the goal of a talented entrepreneur is to make $1m from a startup, he should consider getting a job that makes $150k / year for 6 years and 8 months. Whenever I meet an entrepreneur that is focused on a specific economic outcome, I lower his chance of success because I think he's focused on the wrong thing.  By definition, an entrepreneur should be striving for a significant economic payoff.  Yet the economic uncertainty of entrepreneurship is so high and the range of outcomes so broad that an entrepreneur just has to believe that if he nails it, good financial things will happen.

The direct tradeoff between a specific financial outcome ($1m) and a salary over time ($150k * 6.667 years) doesn't really capture the essence of the financial trade in entrepreneurship.  In a success case, the $1m could turn into $10m, $100m, or even more.  Or $0.  The $150k * 6.667 is still going to be $1m. 

 

Which would you rather have ?  (a) 0 < x < $100m+ or (b) $1m < x < $2m?  If (a) you are an entrepreneur.  If (b) you should stick with your day job.

some funny HR math

sounds VERY familiar....... ahhhrrrrrrr

via Found + Read - read here

 

I have noticed some funny math in my startups over the years.

This funny math doesn't start until after VC funding — so to better explain it, I must first rewind the clock to our pre-institutional investor stage.

See, I do funding a bit different than other entrepreneurs. I launch the company myself. I form (some of) the team. We build the product. We get to revenues … and we even go profitable. In short: we get our ship lean, mean, and pumping efficacy from every valve.

Then we go get VC funding (less dilution, more control, etc.)

It's so predictable what happens next. Ya gotz some green in the bank and a newly formed HR department, replete with a salivating recruiter, brimming with job reqs to be filled. Go! Go Go!

Staffing at warp speed always scares the crap out of me.

I approve each new req. — queasy — because this new person will now solely be focused on what used to be 1/20th of my job. As I sign the req, I hope they will be better at "it" than me, care more about "it", and get more of "it" done.

But, in my heart, I feel the funny math coming on.

Each new person that gets added to a startup, instead of adding an integer worth of value actually temporarily subtracts value. The old person, instead of doing their old job, is now training the new person. Add a body and get less for your pleasure. 1+1= ½

Eventually you end up having more new people than you do old – I call this being "upside down". That is when the ownership problem starts to compound. Nobody has really been here long enough to know, or care, and once the "new job excitement" has worn off, accountability starts to dwindle. In my old company, this problem was pervasive. The more people we had, the longer it took for anyone to pick up the phone when it rang.

It won't always be this way. If you survive your terrible twos, you will eventually get more efficient with each new body. Slowly 1 + 1 = 1.25, then 1.50 and it probably never gets much higher than 1.75. With the exception of specialized industries like wholesale and investment banking, the most efficient companies in the world can achieve $1M of revenue, per employee, per year. Google is $1M, Dell is at $900K, Cisco $570K. The average of non-financial Fortune 500 is about $290K.

In my current company, I made a firm decision to combat the chaos of these mathematics from the outset – wielding the best weapon I have in business: honesty. I started warning people about it from day one. During "all-hands" company meetings, whilst folks munch pizza and hear about our financial numbers, I remind them " 1+1= ½". When I see five people in a meeting that only requires two, "1+1= ½" is all I have to say.

Way to succeed by believing into it

another great post from Found+Read.

 

Why Self-Delusion Can Help You Succeed

 

the author expands on delusions which can help you being successful

Will it Fly?

A great framework for evaluation of the new business ideas. Discovered through Found+Read (I love this blog!).

 

Executive summary (thanks to the same Found+Read people):

1. Tractability: How difficult will it be to launch a worthwhile version 1.0?
2. Obviousness: Is it clear why people should use it?
3. Deepness: How much value can you ultimately deliver?
4. Wideness: How many people may ultimately use it?
5. Discoverability: How will people learn about your product?
6. Monetizability: How hard will it be to extract the money?
7. Personally Compelling: Do you really want it to exist in the world?
   

Full article here

The Ideas People

Check this out

http://theideaspeople.economist.com/

Mobile Ads Will Go Big By 2010: IAB UK Survey

via MocoNews

 

By Carlo Longino - Thu 13 Dec 2007 03:15 PM PST

Mobile advertising will become a mainstream medium over the next three years, according to results of a newly released survey (warning: PDF link) from the Internet Advertising Bureau in UK. The IAB surveyed its members and garnered responses from 41 companies, with just over half of them coming from agencies. While its not a deep pool of responses, it does give some indication of how companies active in internet advertising view mobile. The full report can be downloaded here. Among the findings:

-- 41 percent of respondents say mobile ads will be mainstream in 2010, and 27 percent believe theyll make it to the mainstream in 2011, while 20 percent believe it will happen in 2008.

-- The ability to create one-to-one marketing relationships because of the personal and intimate nature of mobile phones is cited as the most popular reason why mobile ads will be successful. The ease of response, and the ability to target and make ads very relevant were also mentioned. More after the jump.

-- The main barrier to the respondents use of mobile ads was a lack of evidence of the success and effectiveness of the medium. While the demand for a clear-cut ROI is understandable, this is a bit of a chicken-and-egg situation: until mobile ads become more widely used, there wont be a huge amount of data about their efficacy. The push isnt just solely for volume, though, as marketers are also looking for standardized and consistent measurements.

-- Many of the same issues were cited as barriers to growth of mobile advertising, along with the issue of reach. Advertisers are looking for volume in mobile, just like in other media.

-- Its unclear what role operators should play. Some people believe operators shouldnt be involved at all. Others say they should play a supporting role, while some believe they should take the lead. This is a big question hanging over the sector. While plenty of big names and small companies are moving ahead with their plans, so too are operators, many of which see mobile advertising as a huge potential revenue stream. Both sides seem to be headed for a collision here, and the uncertainty of what operators will try do, or what theyll allow could be holding back some marketers from embracing mobile ads.

how you should run your business

Ignore how you "think" you should run your business.

Start running it the way you "know" in your heart you can run it.

Success will follow.

 

via Found+Read

Why should you spend time (and money) on design

via Found+Read

 

Why Design Matters, Too
Posted: 27 Nov 2007 09:01 AM CST

Let's face it, startup founders have their hands full with a multitude of issues, large and small. Most attention is placed on the nuances of business models, viral marketing, user acquisition, etc. But an often overlooked success factor in building a web business — or any business — is design. Good design can often tip the scales in your favor; make your company very hard to ignore. In this post, I'll explain a few important reasons why design matters so much.

1. Good design implies credibility
You only get one chance to make a first impression. When people visit your website, most won't go through a fact-finding expedition to figure out your Series A numbers, who your investors are, and what your story is just to decide if your company can be trusted. Initial trust is a gut-feeling. The easiest way to put your company on that path is via well executed visual design that shows you put some effort, and money, into delivering a first-rate and satisfying experience to your customers. They will notice. Ignore design and you risk creating distrust of your business from day one, and driving up that bounce rate.

2. Brand+1
There's no such thing as a 'neutral' brand experience. This little word is kicked around a lot and its meaning is often confused. Your company's 'brand' is how other people feel about your company. (Yes I said feel!) Put another way, it's what your customers say about you, not what you say to them. You might even call it your company's personality. For example, what do you think about Amazon.com? That's their brand. If Amazon has done a good job, what you think will match up with what they want you to think, also known as their "brand values." Every interaction between your company and your customer affects your brand in a positive or negative way. Well-executed visual communication can go a long way to providing the right takeaways.

3. Usability is life and death
In the world of web 2.0 and beyond, a UI is what turns an idea into a usable product. A well-executed, intuitive UI is what turns a usable product into a successful one– especially today when there are so many options available. There have indeed been successful pieces of software over the years that were poorly designed, but in these cases you can point to lack of competition, closed-standards, or sheer market power. Web 2.0 changes this, and is forcing companies to create simple and elegant solutions that create the shortest paths from start to finish for their tasks. This is especially true with free apps, where little is invested. The age of feature bloat and design by engineers, with all due respect, is over.

4. Design is a powerful business advantage
There's another adage about building a better mousetrap. Somebody had to design that mousetrap. For you MBAs out there, first-mover advantage is powerful, but great design by a second-mover can nullify it. Do you remember who released the first MP3 player in America? If you do, kudos, and you probably also know that they aren't around anymore. The Apple iPod was three years late to the game, has less features than competing devices (the Zen, and now the Zune as well), and yet completely dominates the market today. Why? An innovative UI in the clickwheel, and purely emotive and beautifully-designed branding that pioneered music as a necessary component to your lifestyle.

5. Connect with your customers emotionally
Design is one of the only ways you can connect with your customers emotionally. Design allows you to deliver visceral experiences that can affect people. Recent advances in neuroscience, specifically FMRI, have shown that people tend to act on emotion, then back it up with reasoning later (if at all). This revelation has spawned a whole new marketing movement, known as emotional branding. The vehicle is pure design. Emotional brands, says Marc Gobé, create "strong…personalities that closely match the aspirations of their customers" through "the strength of their culture and the uniqueness of their brand imagery." Apple is so successful at this that it spawned a book, The Cult of Mac. Facebook's new product pages are an excellent vehicle for emotional branding, too: people become 'fans'; when they publicly declare support for your product, they are saying your values match up with their own. You've connected with them emotionally. You've won.

Jason M. Putorti is currently the lead designer of Mountain View-based Mint.com, which makes software for online consumer money management. Prior to Mint, Jason founded an advertising agency and publishing company in Pittsburgh, Pennsylvania.

Sales: a Scince or the Art?

A post from from Seth Levine's VC Adventure saying it is science....

Other opinions?

Sales is a science, not an art

Andy Blackstone had a great comment to my post yesterday on Atul Gawande's New Yorker article about explicit behavior (in the case of the article, doctors using checklists). I've edited the comment slightly for clarity.

An important concept in the article is that the checklists are not aimed at a specific condition but at an overall process in the ICU. One of the objections I often encounter in my consulting practice is "my business is different" - I'd contend that at the process level that's most often not true. The resistance to adopting these checklists often comes from doctors that think the "art of medicine" is being threatened by the regimen of the checklist. In my practice, I see sales managers and salespeople with the same objection. In fact, as the article states, it is the reduction of the routine aspects of the process to the rigors of the checklists that enables the art to emerge. Finally, I was struck by the feeling of the doctors in the ICU that there was just no time available in the midst of their chaotic day to deal with checklists - a reaction I've seen in lots of business managers as well. This is a major barrier to implementing any new business process. The success of checklists in the ICU in not only reducing accidents, deaths, and costs, but in making the doctors time efficient, can be seen as new business processes are implemented as well.

It's the perfect lead in to some thoughts about what's wrong with many sales organizations – a topic I've been meaning to write about for a while). Sales, in my experience, is significantly more scientific than people typically give it credit for. And because people (sales professionals, CEOs, boards) don't always see sales that way, they let slide behavior that is counterproductive to the overall goals of the organization ( i.e., to sell more and – importantly – to sell with increasing efficiency and predictability). Specifically, the lack of a detailed and well documented process for sales results in:

• Salespeople wasting huge amounts of time on deals that are hopeless, because there's no enforced checklist that keeps them from continuing to pursue opportunities where essential events aren't being checked off
• Sales cycles that languish while salespeople have "good meetings" instead of checking off the next task on the sales process checklist
• Executive management, sales management, and BOD members searching for the magician that will improve the "black magic" sales situation instead of incorporating and enforcing process that ensures success independent of superstar performance
• Turnover in the sales organization but without improved performance
• A lack of predictability in sales performance (lumpy and generally random sales results)
• A stagnant pipeline – sales people can't handle as many deals as they should be because they're spending too much time on deals they shouldn't be working on and the deals themselves take longer than they should because they're not actually being pushed through a real process
• "Fuzzy" pipeline reviews (where every deal has a story associated with it, but where the basic questions of where the deal stands are never really answered)
  

High performing sales organizations have real rigor in their process and religiously enforce that rigor from qualifying leads, to initial contacts, to how they move a prospect through their pipeline to an extremely detailed "closing" list that guides an organization through the final stages of each close. They use this rigor to determine which leads to follow up on, what prospects are real, and what steps remain to a sale for each and every potential customer. They quickly put prospects onto a hold list when they don't meet specific near-term buying criteria and they generally have a good view of what's possible at the end of each quarter because they know exactly what steps remain for each prospective customer, who needs to sign off on what, and how they will (or will not) be able to make that happen in a timely fashion. Pipeline reviews are focused around where a prospect is in the sales process and are crisp reviews of each account (a few minutes is more than enough time to cover an account at a high level – spending more time than that is either wasting time or a sign that the "story" is covering up the lack of real progress or understanding of that account). Every sales person (not to mention the VP and CEO) can take you through the stages of an account, the "[insert company name] way of selling", and the closing process. In short, the entire company is on the same page around what it takes to turn a prospect into a customer.

All of this isn't to suggest that sales as a discipline and sales people as practitioners of that discipline don't possess skills that range far beyond the ability to check items off a list. To the contrary, skilled sales people are extremely nuanced in their ability to understand the buying patterns of their prospects, navigate the internal landscapes of customers and, of course, effectively convey the value proposition of the product they are selling. But sales people are human and – like doctors in an ICU – benefit from the rigor and oversight that is provided by process.

Thanks to Andy for sharing his thoughts on this subject with me in both his comment and in email (which I borrowed from liberally in writing this post). Head to his site to see more about the sales process work he does at Blackstone Associates.

when founder-CEOs do really well, that also increases the chances that they’re going to be replaced

HBS's web magazine Working Knowledge has another useful piece today that addresses the reasons why founding CEO's are so often replaced by their boards of directors. It also reveals a frustrating paradox: "when founder-CEOs do really well, that also increases the chances that they're going to be replaced."

The Founding CEO's Dilemma: Stay or Go? is based on a new work co-authored by Noam Wasserman, a professor of entrepreneurial management at Harvard, and Henry McCance, Chairman of VC firm Greylock Partners. We've highlighted a few important points, including the authors' Rich or King Test, which they borrowed from Onset Ventures. Take it to see if you're replaceable or irreplaceable founder.
Says Wasserman to Working Knowledge:

Typically, early in the life of a company—when it is developing its first product or service—the founder who conceived of the idea and began developing it is the perfect person to lead the company … However, when that milestone is reached … The challenges within the company change so dramatically…

Now, the product has to be sold: You have to create a sales organization, manage multiple functions, deal with customers, handle more complex financial issues, and deal with a very different set of challenges for which many founder-CEOs are not equipped. … it is precisely their success that has increased the need to replace them at this point.
Of course this pattern is exacerbated when a founder-CEO brings in outside investors. VC's, says Wasserman, "often make the assumption that the person who started the company is going to have to be replaced along the way, and may therefore have a quicker 'trigger finger.'"

Then Wasserman shares one way to tell if you are more, or less, likely to be replaced:
The Rich vs. King Test

We teach a case in our first-year entrepreneurship course on a Silicon Valley VC firm called Onset Ventures … called the "Rich versus King" test. It gets to this essential trade-off around what drives an entrepreneur: Is it the need to control the company (that is, to be King), or is it the drive for success, particularly financial success (Rich), which may require that the entrepreneur step aside once certain business milestones have been reached? Onset does not like to invest in founders who "want to be King" out of concern that they will not want to be replaced if such a step is required in order for the company to be successful.

The only founders who can assure their ability to continue as CEOs are those who don't raise outside money from Onset and its peers.
Of course, that outside money is often necessary to build a valuable company, so King-motivated founders usually have to give up a lot of potential growth to remain King. In the entrepreneurship class, I push students to think hard about why they are choosing to be founders to begin with, and then to make conscious choices that are consistent with those motivations. The founders who get into trouble are often the ones who make decisions without regard for "Rich versus King," and who therefore decrease the chances that they will achieve their goals because they haven't made choices consistent with their motivations.

 

via Found+Read

Ad Revenue Models

Question: (1) How do Web 2.0 companies like Feedburner make money?  (2) What makes a blogger or content provider select one network or blog community over another (i.e., are the bloggers themselves being paid or are they essentially working for free)?  (3) How is online media advertising different now than during the internet boom?

The most popular Web 2.0 revenue model is based on advertising. Publishers (blogs, media sites, etc) get paid by advertisers who advertise on their site. FeedBurner is an ad network and while it made some money off of licensing its platform to large publishers, most revenue came from the ads inserted into the feeds. This ad inventory comes from either the company's own direct ad sales force or from ad networks. Some of the ads are CPM based (impressions viewed) while others are CPC ($ per click...a la Google). The publisher generally keeps 60-70% of the ad dollars and the ad network gets 30-40%. So, if Motorola runs an ad campaign through an ad network like FeedBurner, they might pay $5-10/CPM (cost per thousand impressions). The ad network then takes that ad and serves it up on the various websites it has deals with. If the ads are viewed 1,000,000 times, Motorola would pay the network $5-10,000. The network would keep $2-4,000 and the publishers would get the rest. In the case of bloggers, they first pick which ad networks to go with (usually based on which drive the most revenue for the space given) and then approve different ad campaigns. They get a cut of those ad dollars.

More advertisers understand the benefit of online advertising and so, there are more ad dollars flowing into this space than during the Bubble. More importantly, Google has created an entire ecosystem based upon its CPC model where advertisers only pay when ads are clicked on. They feel there is more accountability since they only pay when an action is taken. Also, there is very little cost associated with running many of these publisher sites, so it doesn't take much to get to break even.

That said, the economy is likely sliding into recession and ad budgets will get slashed. CPC and CPA (cost per action) based revenue should hold up better than CPM based ones since there is a clearer ROI. In  2000, Yahoo saw its revenue plunge 40% in one year. When the cycle corrects, there will be quite a lot of carnage in the ad supported publisher world. Smart operators will get their costs inline and focus on driving the best possible results for advertisers.

 

Via Ask the VC

Ask The VC on Early Stage Board of Directors

Dick Costolo (aka Mr. Ask the Wizard) - the founder/CEO of FeedBurner (now a Googler) has another outstanding post up titled Early Stage Board of Directors.  In his delicious way, Dick talks through how he thinks about the potential composition of a Series A board and gives entrepreneurs some ammunition for their potential investors when they say "let's have a board with five Series A investors and no founders."

via Ask the VС

Van Gogh on personal productivity

Van Gogh's philosophy for producing good work:

"You have to eat well, be well housed, have a screw from time to time, smoke your pipe and drink your coffee in peace."

 

Via pmarca blog Via Reuters

PayPal Mafia

a great story of a great company with great people....

read here http://money.cnn.com/2007/11/13/magazines/fortune/paypal_mafia.fortune/index.htm

 

angels enjoy better returns than VCs?

from RedHerring.com

Angel Returns Outpace VCs'

 

At a time when many venture capitalists are retreating from early-round deals, a new study has found that angels, the earliest investors, are wearing solid-gold halos.

 

The study, sponsored by the Ewing Marion Kauffman Foundation and the Angel Capital Education Foundation, found that members of organized angel investing groups had an average 27 percent internal rate of return, or the annualized compounded rate of return. That compares with VC returns for all investing stages, which historically average in the mid-teens, said Robert Wiltbank of Willamette University,  one of the study's authors.

 

Overall, the angel groups investors posted a return of 2.6 times their original investment after 3.5 years. While 7 percent of the exits were home runs with returns of more than 10 times the investment, more than 52 percent of exits came at a loss. More than 60 percent of the angel investors at least broke even on their overall portfolio.

 

The study, conducted last spring and summer by Mr. Wiltbank, an assistant professor of strategic management, and Warren Boeker, professor of management at the University of Washington, asked the 539 participating angel investors to detail their investments as far back as they could. Sixty-two percent of the exits occurred after 2004, while only 8 percent happened before 2000.

 

Though other studies focus on angel investment activity, Professor Wiltbank said this is the largest to look at investment returns.

Professor Wiltbank said the study found that angels who took a more active roll with their portfolio companies fared better.

 

"You can see strong effects when investors do a little extra due diligence; and if they keep in touch with the ventures a couple times a month, the numbers are stronger," he said.

In Search of Inexperience

Great post from Guy Kawassaki's blog about fresh vs. serial entrepreneurs. Not that I agree with everything said (mind Martin Varsavsky, a founder of FON and tons of other companies before), it does give some bonus to the fresh startupers.

 

In search of Inexperience

 

TechCrunch published a great guest post by Glenn Kelman, the CEO of Redfin, called "Entrepreneur 2.0." It inspired me to piggyback on his idea that investing in "serial entrepeneurs" who have already been successful might not be all that it's cracked up to be and write this post.

Both our posts run counter to the theory that many entrepreneurs, wealthy from their previous smashing success but restless and too young to die (or become venture capitalists, which is roughly the same thing) are the best bets for the next big thing.

Superficially, it's hard to fault this "back the proven entrepreneur" theory. For one thing, from a venture capitalist's point of view, if you fund a serial entrepreneur and she succeeds, you "knew" that she was proven. If she fails, at least you backed someone for a good reason—that is, she was proven—so your limited partners shouldn't get too bent out of shape.

That's a lot better than backing a first-time entrepreneur who fails—then you are just stupid. (Also, if you back a first-time entrepeneur, and she's successful, you take the credit: "It's because of my hands-on coaching and guidance.") But, just as Glenn wrote, if you think about it, great, world-changing companies such as Hewlett-Packard, Apple, eBay, Microsoft, Google, Yahoo!, and YouTube were zero for three according to the official venture-capitalist spec sheet: Proven team, proven technology, and proven business model.

Hence, I would like to declare my support for Glenn's perspective and help him make the case that second-time entrepreneurs are not necessarily the be-alls and end-alls.

• Serial entrepreneurs try to prove that their first success wasn't a fluke. Rather than starting from the basis of technology ("isn't this cool?") or customers ("there must be a better way"), the reason for existence is "I'm going to prove that I'm talented." This is a bull shiitake reason for starting company compared to solving people's problems or changing the world.

• Serial entrepreneurs cannot distinguish between causation and correlation. The root cause of earlier success may have simply been blind, dumb luck, but few people realize this and even fewer will admit. Thus, they have the hollow arrogance of people who just go lucky instead of people who have been truly tested, and arrogance is a bad thing in entrepreneurs.

• Serial entrepreneurs are likely to use the same methods again. How can you fault them for using the same methods that made the successful the first time? For example, if they built a high-end computer the first time, they build a high-end computer the NeXt time. If they used dealers the first time, they use dealers the second time. If they gave everything away to get eyeballs and sold the company to a bigger, dumber, richer company, they try try that "business model again."

• Serial entrepreneurs don't (or can't) work as hard. When you have a 5,000 square foot house, a second house in Montana, a car made by a company whose name ends in "i," a spouse, and kids, attitudes change. Indeed, attitudes should change or people never grow up. However, it's one thing to work to survive and another to work for fulfillment. They can say they're just as hungry this time, but the point is that no one had to ask if they were hungry the first time.

• Serial entrepreneurs don't get smacked around enough. Life is good as a serial entrepreneur: they walk in, tell people that their last company was sold for a bazillion dollars, and now they're starting another one, and it's a privilege and honor to invest. Who's going to poke holes in their strategy when Sequioia, Kleiner Perkins, et al are issuing term sheets and ever lesser venture capitalist is sucking up? No one. And that's too bad because they won't get anyone checking their sanity.

• Serial entrepreneurs fill new, unfamiliar roles in their next companies. For example, in the first company the person was an engineer who became the vice-president of engineering who became the CTO. Just because you were good at writing designing chips doesn't mean you're CEO material in your next fabulous fabless chip company. As Glenn says in his post, "This means that what I used to be really good at — designing software — I don't do as much of anymore, and what I never had to learn how to do — manage people – I now do all the time."

• Serial entrepreneurs hire their buddies who were with them the first time. Thus, the entire founding team suffers from all the problems listed above. People who don't know what they don't know are few and far between, but a startup needs this kind of people to push the boundaries of what's possible in what ways. Ignorance is not only bliss; it's also empowering.

I once heard Mike Moritz of Sequoia explain what kind of entrepreneurs he wanted to invest in. I'm paraphrasing: "Guys under thirty who are building a product that they themselves want to use." Amen, baby! I vote for two guys or gals in a garage who are an unproven team, unproven technology, and unproven market.

Generic Range of Equity Desired By a VC for Round 1 or 2

Question: What's a completely generic range of equity a VC typically
wants for a round 1 or round 2 investment?

Most VC's will generally say they target 20-30% ownership in a company
to "make it worth their time". This means that if they invest $3m
early on, they expect the post-money to be around $10-15m and if, in
later rounds, they are investing $10m, they expect to have a $30-$50m
post-$.

Often, however, VC's will use the "percentage" threshold as a means by
which to increase money into a round or to get the valuation down. I
have seen a given VC say they need 25% ownership for deal (to get
valuation down) and do a more competitively sought deal at 15% two
weeks later. In the end, two things drive all of this. First, there
are legitimate minimum investment amounts a firm needs to have per
deal. A $500 million fund will never get its capital deployed by doing
$2m and $3m deals. They need to put $7-10m to play early and $20m+
over the life of the investment. Second, the valuation (and hence %
ownership) will be driven by attractiveness and competitiveness of the
deal. In the end, it is really about valuation (assuming their
investment appetite remains in a set range).

via Ask the VC

Sorry to talk so long...

Good point from Seth Godin's blog

I was at a gala a few weeks ago (featuring no less than ten speakers). At least 80% of them began their talk by saying, "I know you're hungry, but..." or "I know it's late, but..." or "I know you want to go home, but..." and then apologized for giving a speech.

If your speech needs to be prefaced by an apology...

don't give it.

That's why they call it giving a speech. It's a gift. If you have to apologize, it's no longer a gift, is it?

Our collective fear of public speaking has created a host of awkward situations and events. It's pretty simple: Be brief. Or don't come at all. Don't do anything you need to apologize for.

(and brief means sixty seconds, usually. That's enough to say hi, to say thanks and to move on.)

Top 10 Slide tips

Garry Reynolds, the creator of Jobs vs. Gates aestetics   summarises 10 tips of the great presentation:

 

1. Keep it simple

2. Limit bulet points & Text

3. Limit animations

4. Use high-quality graphics

5. Have a visual theme, but avoid templates

6. Use appropriate chars

7. Use color well

8. Chose your font well

9. Use video and audio [well]

10. Spend time is slide sorter

 

basically, its all easy..... make it right! :)

Just practice and keep on looking at the best presentations so far.... more great stuff to come!.... may be by you!!!

product innovation by Steve Jobs

Innovation is not about saying yes to everything. It's about saying NO to all but the most crucial features.

 

from Steve Jobs's private presentation about the iTunes Music Store to some independent record label people in June of 2003

7 lies that prevent Your Great Idea from becoming a Real Business

great motivation article from LifeRemix

 

Here is an executive summary:

 

7 common excuses for not starting a Real Business

1. I'm too busy right now. I'll start when I have more time.

2. After I get an MBA, I'll be ready to start up.

3. I hate sales.

4. I'll do some research after watching a TV show.

5. I don't know anything about business.

6. I don't have startup capital.

7. Before doing anything else, I need to write a business plan.

 

the full article will expand on all all those FUD (Fears, Uncertainties & Doubts) and will suggest strategies for overcoming those.

"Free is more complicated than you think"

a very insightful article from O'Reilly Radar

Peter Brantley sent a link to a great summary of Scott Adams' nuanced discussion of the tradeoffs in making Dilbert freely available on the web . The punchline: "Free is more complicated than you think."

Adams reports that putting Dilbert online for free

"gave a huge boost to the newspaper sales and licensing. The ad income was good too. Giving away the Dilbert comic for free continues to work well, although it cannibalizes my reprint book sales to some extent, and a fast-growing percentage of readers bypass the online ads with widgets, unauthorized RSS feeds and other workarounds."

This sense of tradeoffs in making content freely available is consistent with our experience at O'Reilly. We find that making a book freely available can help visibility and sales of a book on a little-known topic, but for a well-known topic or author, who benefits little from the additional exposure (like Scott Adams), it can have a slight cannibalization effect on print sales. So, as a beginning science fiction author, Cory Doctorow used "free" to build his career, while Stephen King found the results of his experiments with free to be disappointing. (I explored these tradeoffs in my article Piracy is Progressive Taxation.)

The point is that we need more than one model. There is no one-size-fits-all answer. Advertising is a great model for people who can create or collect content that will generate sufficient traffic to pay for itself on the limited revenue per view provided by advertising. But that takes far more traffic than most people realize. Asking people to pay works well when the potential audience is smaller, and the cost of creating the content greater than can be recouped by advertising. But even then, you need to use "free" to some extent to make sure people find your content. If content is locked up too tightly, it drops out of the internet conversation.

read the full article here

via O'Reilly Radar

back of the envelope valuation for start-ups

• Sound idea = $1 million
• Prototype = $1 million
• Quality management team = $1 – 2 million
• Quality board = $1 million
• Product rollout or sales = $1 million
• TOTAL potential value: $1 – 6 million

via Found+Read

When Failure Is a Good Thing

QUIZ time: What percentage of dot-com start-ups have failed?" an article in Strategy + Business asks.

 

The answer, the three academic authors write, is probably significantly fewer than you think.

 

While people typically guess that 90 percent of dot-com companies failed, the reality is that a random sample of all dot-coms that received venture capital financing in 1999 showed that about half (48 percent) were still in business five years later, write Tim Laseter of the University of Virginia's business school and David Kirsch and Brent Goldfarb of the University of Maryland.

 

check the full article on NY Times

 

3 things to consider, that ought to help to develop a successful start-up in recession time

1) Go global.

Why? Because the weak U.S. dollar means a strong opportunity for exports, where our goods will be cheaper and therefore more competitive.

2) Go global.

Why? Because strong foreign economies--think China, India-- means a ready consumer base overseas to whom you can sell your products and services.

3) Go global.

Why? Because the strength of the U.S. economy, and our own ability to spend consumer dollars, depends upon a continued strong job market. And that depends on U.S. companies having a global presence. So, you need to have a global play to contribute to continued strength in consumer spending, as well as to be able to benefit from it. OK, so you're thinking a small startup can't necessarily afford global outposts or global operations. So when we say "go global" we mean develop your Web-based business--or the Web-strategy of your business--to cultivate a global customer base. Do anything you can to give your company global scope. Found|READ, for example, has readers from all over the world. We'll be back later with some resources for where to get angel funds, and how to give your business global scope.

 

Thank you, Found|Read. Very encouraging!

Great encouraging article about serial entrepreneurs

Serial entrepreneurs and today's Silicon Valley

Several days ago, Gary Rivlin of the New York Times called me about a story he was writing about the brilliant Max Levchin of Paypal and Slide, and the general topic of serial entrepreneurs in Silicon Valley. The story came out yesterday; below are the notes I prepared for my conversation with Gary.

In a nutshell, Gary's question to me was: what makes serial entrepreneurs tick? Why do people like Max keep going and start new companies when they could just park it on a beach and suck down mai tais?

follow the headline link to read the full story.

via amazing pmarca.com blog

how to increase mobile content penetration

CBS's ( NYSE: CBS) Mobile EVP Cyriac Roeding said that a recent trip to Korea gave him the opportunity to observe how people there consume mobile content, and in particular, how much of it. On a subway trip, he saw people using mobile TV, surfing the mobile web, paying for things with their mobile, and more. His insight on what this means for the US mobile content market: "We need more subways in the US, and that would probably solve our problems."

 

via Moconews

BeyondVC Startup Cycle

NYC-based VC Ed Sim, on whether entrepreneurs should a) sell a startup on the hype of buzz, or b) double-down and build it to last. Sim's  BeyondVC Startup Cycle:

Sim concludes that selling at the peak of a Hype Cycle, such as we are in now, is the easier — and, therefore, possibly better — path:

1) [The] easier, less risky choice to make is [selling] at the Peak of Inflated Expectations/height of buzz…where an entrepreneur can maximize short-term value as acquirers will buy more on vision … than on business fundamentals.

2) If you decide to build for the long haul and go for the home run, it will take you a fair amount of effort and time to create the same value that acquirers will pay today; they will expect more [from] mature companies.

3) Companies that sell [at the Hype Cycle peak] may forego going big. [But] if they do not…they will have to live up to their hype in the future. As companies mature the valuation of a startup turns from pure strategic value to one where it is based more on actual revenue multiples and market comps.

 

via Found+Read

The $160 billion typo

Stanford student Sean Anderson was the guy who gave Larry Page the name of his search engine and company:

Sean and Larry were in their office, trying to think up a good name -- something that related to the indexing of an immense amount of data. Sean verbally suggested the word " googolplex," and Larry responded verbally with the shortened form, "googol ." Sean was seated at his computer terminal, so he executed a search of the Internet domain name registry database to see if the newly suggested name was still available for registration and use. Sean is not an infallible speller, and he made the mistake of searching for the name spelled as " google.com," which he found to be available.

Where does Sean currently work? Microsoft.

Quelch’s 5 Rules for Successful (global) Brands:

Via Found+Read: from Harvard Working Knowledge , marketing guru John Quelch on "How To Build a Global Brand"

1. The same positioning worldwide. (For F|R: this means in every market.) This provides a combination of functional product quality and innovation with emotional appeal. Think Coca-Cola.

2. A focus on a single product category. Think Nokia and Intel.

3. The company name is the brand name. All marketing dollars are concentrated on that one brand. Think GE and IBM. (F|R: Hewlett-Packard learned this the hard way!)

4. Access to the (global) village. Consuming the brand equals membership in a global club. Think IBM's "solutions for a small planet." (F|R says: replace "global club" with social network.)

5. Social responsibility. Consumers expect global brands to lead on corporate social responsibility, leveraging their technology to solve the world's problems. Think Nestle and clean water. (Or F|R might say: think Google.)

 

F|R = Found+Read.

power of community

a deal which value Facebook at 15bn or $300 per user

 

Microsoft has agreed to pump $240 million into the social network in exchange for a 1.6 percent equity stake and an expanded advertising relationship. The move is a coup for Microsoft, whose advertising platform will lock down access to Facebook's 49 million members, as it battles Google's advertising business. Facebook venture capitalists, which include Accel Partners and Greylock Partners, are positioned to be the envy of the industry:  The investment gives Facebook a $15 billion valuation.

Bootstrap or not Bootstrap?

Few tips of Bernard Lunn on what NOT to do when you're bootstrapping. 

1. Bootstrapping is NOT self-funding. "Real bootstrappers put in peanuts of their own money [and] fund with customer revenues."

2. Bootstrapping is NOT for the "build traffic and worry about monetization later" idea. If you can't see how to generate customer revenues right away, then get external capital (VC). This why bootstrapping is usually for selling to businesses, not to consumers.

3. Do NOT bootstrap and then raise VC. "Revenues won't impact the [VC] valuation nearly as much as you think…[so] bootstrap and then sell."

4. Do NOT trade equity for services. "The better vendors won't do it (they don't need to), so you get weak vendors who drop you when they get a cash deal."

5. Do NOT bootstrap to build a prototype and get funding. "That is viable [but] do it by moonlighting, or with friends & family money. But [this] is a "self funding bridge to VC." It is not customer-funding or bootstrapping.

Obviously Bernard has specific ideas about what bootstrapping is, and is not. By his accounting, Microsoft, Oracle, SAP and eBay all bootstrapped. I'm not sure I agree: eBay took VC money. (Bernard says eBay didn't need to; therefore, still a bootstapper.) But one important thing to consider, as Bernard notes: some businesses are ideal for bootstrapping (software) others are not (media).

 

via Found+Read

Try not to be that Pete

Startup's key assets

• The 1st most important asset remains the technology or website (including the people who build it.)
• The 2nd most important asset is the user base
• The 3rd most important is a startup's community

via Found | Read

Martin Varsavsky: Silicon Valley doesn´t exist

Interestingly enough, just few weeks ago while planning our anniversary trip to the US I was DESPERATELY looking for "tourist guides" to Silicon Valley... stupid and techie enough, I was running Google, Live, Yahoo and Ask with queries like "Silicon Valley tours", "what to see in Silicon Valley"... "Driving through Silicon Valley".... Guess what? - got nothing even near to what queries about "Death Valley" were yielding ....

SO: it looks that Martin is right and this pace does not exist!.....

....in spite of anything people say .... and of how bright and smart people of Silicon Valley are! :)

... and here is the Martin Varsavsky's post on the subj:

Silicon Valley doesn´t exist (do not read this if you live in Silicon Valley)

Posted: 21 Oct 2007 03:47 PM CDT

Silicon Valley doesn´t exist. If you live in Europe as I do and you dream of going to Silicon Valley as I used to, let me warn you now, there is no such place as Silicon Valley. Before starting Fon, and having so many friends and partners in Silicon Valley including famous Silicon Valley VCs Sequoia and famous Silicon Valley tech companies eBay and Google, I thought there was actually a place that Silicon Valley as much as there is a place as New York City. But if you go to Google Maps and you input Silicon Valley you will see that no concrete location comes up. So how can so many people refer to a place that not only does not exist but that nobody really knows where it begins and ends, and frequently confuse it with a more generic "Bay Area", which also people disagree as to where it begins and ends but it seems to encompass Silicon Valley plus other undefined places. After spending a week in Silicon Valley visiting companies in Cupertino, Mountain View, friends in Los Altos Hills, and different neighborhoods of San Francisco I think that it is time somebody tells the the rest of the world what Silicon Valley is an imaginary concept and not a geography. Silicon Valley is a dream, it is a trait as in "silicon valley creativity", or a personality "silicon valley attitude", or a career "silicon valley entrepreneur". In short, Silicon Valley is a lot of things and yet none of them are an actual geography.

Time managemenet for sales & CEOs

Time management advice by Jana Eggers from SpreadShirt

 

for sales

"[Spend] 1/3 of your time prospecting, 1/3 of your time moving deals through the pipeline, and 1/3 of your time closing."

and for CEOs

• 30% should be [spent on] customers+prospective customers and their use of your product with your team.
• 25% of your time should be with customers or key partners.
• 10% should be spent coaching and mentoring your team.
• 10% should be with your business's numbers.
• 25% should be spent working on tomorrow's vision and innovation… which includes recruiting and org work!

Raise money from VC or Angels?

from venturehacks

 

Should I raise money from VCs or angels, all things being equal?

There is no prototypical VC or angel. Instead of pitting VCs versus angels, consider their perceived pros and cons and choose the best available investor.

Angels are perceived to have less money, invest for fun, make their investment decisions quickly, and not ask for control. VCs are perceived to have more money, invest profesionally, make investment decisions slowly, and ask for control.

Seek a VC or angel who has follow-on capital to support companies in tough times, invests like his life depends on it, makes investment decisions quickly, and doesn't ask for control.

Companies that try to raise money from angels often end up raising money from VCs and vice versa. You can't tell where this road will take you until you start walking. Many VCs invest in seed stage companies with favorable terms—and many angels invest with onerous terms.

Finally, raise money from angels if you're hoping to sell your company quickly for $10M, with very little investment, and lots of capital gain for the founders. Most VCs are shooting for $100M+ exits. Either way, seek investors who agree with your definition of victory.

what makes you an effective manager

great summary on "7 Habits of Highly Effective Manager" from "Found+Read" blog.

Short and good summary or DOs and DONTs.

 

from Scot Rafer's lessons (found in Found + Read)

'Un-sexy' is good business.

This is a riff on a market principle Rafer picked up from a couple of his ancestors back east: one who ran Rafer's Kosher Meats; and his grandfather, who ran Rafer's Army Navy Surplus (both were in business in the 1950s, long before Rafer was born.) The idea here is that there is potential in furnishing a (seemingly) boring business that plenty of people need, but which few people want to do — a.k.a. stuff that ain't sexy. Which also means you're likely to have a reliable market for your business, and might not have so much competition — good!

Sequoia Capita: A Start-Up Check-List

http://www.sequoiacap.com/ideas/

List of clever advices from one of the most respected VC.

A must read

 

Glen Kelmann of Redfin: Build company in 10 steps

14-slide presentation on 10 steps important in setting up and building companies.

Worth taking a look

http://btc.montana.edu/meu/glennkelman/GlennKelman_files/frame.htm

Financial model of Redfin

a real-like financial model of RedFin, an online property brocker.

Definitely worth taking a look.

 

Comes from Guy Kawasaki blog with comments.

 

http://blog.guykawasaki.com/2007/10/glenn-kelmans-f.html

 

Enjoy!

The Role of an Early Stage Board of Directors

from Ask The Vc

Q: For a very early stage company (pre-funding), what role should the board of directors play?

A: (Brad). We've written about this a lot in the past. See the Board of Directors category on AsktheVC, the Board of Directors category on Feld Thoughts, and an article I wrote in the late 1990's titled Boards That Are Not Bored.

Your early stage board can cover a wide variety of roles, but fundamentally you want them to be strong advocates and support for what you are doing and what you are trying to create. They will help you with fundraising, recruiting, strategy, early founder issues, business partnerships, and a variety of other tactical things.

While there is a governance role with every board, the founders of an early stage company should not simply defer to the board. In all cases the founders should also be members of the board and collectively should view the board as a constructive group that is working together, rather than one where there are two separate entities ( e.g. "the board" and "the founders"). In addition, the "board" shouldn't be anthropomorphized (as in "the board wants me to do this") – your early stage board consists of people that each likely have a point of view, will contribute, but shouldn't "dictate."

I went back and reread Boards That Are Not Bored and continue to think it's one of the better articles I've ever written about boards. The construct of a Working Board still resonates with me, especially for a very early stage company.

These are boards that role up their sleeves and help the founders and management team of the company get the job done. They meet frequently, have animated, engaged discussions, and offer significant ongoing support and help to the key owners and managers of the company.

As a company grows and takes funding, these dynamics will change. A post funding board is different than a very early stage / pre-funding board. Both can be powerful, have huge impact (positive and negative), and are important. But – they are different.

intersting: flex scheduling

In his book "Creativity," Mihaly Csikszentmihalyi advises readers who want to find flow to take charge of their own schedules.

It is also possible the schedule you are following is not the best for your purposes. The best time for using your creative energies could be early in the morning or late at night. Can you carve out some time for yourself when your energy is most efficient? Can you fit sleep to your purpose, instead of the other way around?

The times when most people eat may not be the best for you. You might get hungry earlier than lunchtime and lose concentration because you feel jittery; or to perform at the top of your potential it may be best to skip lunch and have a midafternoon snack instead. There are probably best times to shop, to visit, to work, to relax for each one of us; the more we do things at the most suitable times, the more creative energy we can free up.

Most of us have never had the chance to discover which parts of the day or night are most suited to our rhythms. To regain this knowledge we have to pay attention to how well the schedule we follow fits our inner states—when we feel best eating, sleeping, working, and so forth. Once we have identified the ideal patterns, we can begin the task of changing things around so that we can do things when it is most suitable…Time is more flexible than most of us think.

Another advantage to flex scheduling: It lets you get away from the nonstop communication flow that occurs during "mainstream" hours. It's a lot easier to get things done when you're not constantly being pinged by others.

 

Google's video lecture on cluster computing

This submission contains video lectures and related course materials from a series of lectures that was taught to Google software engineering interns during the Summer of 2007.

 

Collections can be found here

Email Continues to be Misunderstood

via Techdirt

 

As we have noted here before, emails are very easily misinterpreted, which explains why online flame wars are infamously common. With the emergence of social neuroscience new findings have been published to further explain why emails often result in misunderstandings . Email is at a distinct disadvantage since it lacks the sensory richness of a face-to-face conversation. In a face-to-face conversation, we can judge the tone of the conversation by body language, gestures and tone of voice. So, left with only the words in an email, we are left to interpret the tone of the emails in a vacuum. But, never fear, there are ways to improve email communication. Since studies have shown that misunderstandings occur less between people who are familiar with each other, Professor Clay Shirky recommends to start communication face-to-face and then move on to email. Even saying "Hi" every morning goes a long way to facilitating the social glue. Long touted as the true "killer app" of the Internet, email has definitely improved communications -- that said, it's critical to recognize the differences of this medium and be sensitive to the challenges that it brings.

The fiction of 20%

from A VC

It’s a “given” in the venture business that in order to compensate a venture firm for all the time and energy they are going to put into a particular investment, they need to own at least 20% of the company and ideally 30%.

I hear it all the time.

“We won’t do a deal unless we can own 20%”

“This term sheet has us at 22% which is well below our target ownership of 25%”

“I can’t make a venture return owning just 15% of the business”

To which I say RUBBISH. Just because you WANT to own 20-30% of a business doesn’t mean you NEED to own 20-30% of the business.

The Flatiron program that I still manage owned about 14% of comScore when it went public. 14% of comScore is worth about $120 million today. I don’t want to get into confidential data about how much we invested and how much we took out, but I will say that it was a fantastic investment. I think that is fair compensation for the eight years I put into that investment. And let me tell you, I worked as hard on comScore as any deal I have ever worked on.

Union Square Ventures owned about 14% of TACODA when it was sold to AOL. We returned more money to our investors on that one single investment than they had invested to date in our entire fund at the time of the sale. That sounds like a venture return to me.

Those are two recent examples. But I could go on and on. I have made vastly more money on companies where our firm owned 15% than on companies where our firm owned 20% or more.

To some extent the desire to own large chunks of companies is related to the size of the funds that many venture firms manage. A $120 million position in a recently IPO'd company might not be that interesting to a fund that is managing billions of dollars of investor's capital. But it sure is interesting to me.

One of the things we are doing in the venture capital business by raising ever larger fund sizes and amassing larger pools of capital under management is creating problems and then making them the entrepreneur's problem.

And so we tell the entrepreneur that we need 20% of his or her company to solve our problem. I don't think that's right. I've said this before and I am going to say it again. The scarce resource in the venture capital business is great entrepreneurs with cutting edge ideas willing to work 100 hour weeks turning the ideas into businesses. The scarce resource is not capital and yet we are optimizing our businesses to be able to manage ever larger sums of capital.

I want to optimize our businesss to be able to back more and better entrepreneurs. And so I think its fine to start with significantly less than 20%. We often start our investments off with 10% or less and build our ownerships over time. We have one company in our portfolio where we started with about 5% ownership and are now close to 20% and if we do our job right, we will end up with close to 25%. But we earned the right to get there by investing early and often and scaling our investment with the entrepreneur's capital needs.

Don't get me wrong, I would love to own 25% of a company or more. But we don't make it a requirement. Our requirement is being able to get into the best deals, work with the best entrepreneurs, and be able to generate $40-50mm in proceeds when a deal works and return the fund, $125mm in our case, on the very best deal in the fund.

And you don't need to own 20%+ of a company to do that. I have 21 years of venture capital investment data to prove it.

quote of the day from 'found and read'

Luck is just the product of many other entrepreneurial qualities, such as: boldness; inventiveness; motivation; honor; and leadership. Think about this the next time you feel 'lucky,' or are tempted to dismiss someone else's success as 'lucky.'
– Founder Ursula Schwuttke, in the conclusion to her earlier post, Risk Everything .

Venture Hack: how to create a market for your shares

Hack: Create a market for your shares

 

from Venture Hacks

VoodooVox Cashes In on Calls

Creator of audio 'banner ad' network dials in $8.1 million for expansion as it awaits the dawn of advertising-supported mobile phone calls.
by Ken Schachter

VoodooVox, whose system for inserting audio advertising into phone calls could become the foundation for free cellular service, has landed $8.1 million in capital from a stable of blue-chip venture capitalists, the company said on Tuesday. The series D round was led by Softbank Capital with participation from prior investors Apax Partners, Village Ventures, and Steamboat Ventures, Disney's venture capital arm. As technology giants such as Apple, Google, and Microsoft extend their franchises to mobile devices, voice has become a new flashpoint in the battle for audiences and profit. And the battle is clearly on: Apple has raised its flag on the mobile map with its new iPhone. Google has launched an experimental free telephone search service and is expected to roll out its own "Gphone" or a specification that would allow others to create one. In March, Microsoft, whose mobile operating system already resides on some phones, acquired voice search provider TellMe Networks in a deal estimated at $800 million.

 Find out more in today's top story.

Universal flowchart - use it for most of your life decisions

 

form here who found it here, who found it here

Why Facebook went west

Turned down by a local venture capitalist, two Harvard students look to Silicon Valley for funding instead. The result: Boston misses out on an online phenomenon worth up to $6 billion.

 

from Boston.com - the full article here

Entrepreneurs: Never Forget, Distribution is King

Nothing happens in business until something is sold used.
[of course after it's used, something has to be sold]

 

an interesting article from Matt Moor's Blog

Great presentation on key points to focust at when launching the new web project

10 Future Web Trends

Written by Richard MacManus / September 5, 2007 / 33 comments

Good reading about (suggested) future trends in Web, namely: \

 

1. Semantic Web

2. AI (Artificial Intelligence)

3. Virtual Worlds

4. Mobile

5. Attention Economy (hm....)

6. Web sites as web services

7. Online Video / Internet TV

8. Rich Internet Apps

9. International Web

10. Personalization

 

read the full article here

Facebook Opens Up To Public Search

One of the great features of Facebook was privacy. You could be assured that what was in Facebook remained in Facebook. However, that illusion might be ending soon.

Tonight, Facebook launches a "public listing search" which allows anyone to search for a specific person. The company says that the information being revealed through these listings is minimal and much less than the information available to someone logged into the Facebook network.

A public search listing provides, at most, the name and profile picture of any Facebook member that has their search privacy settings set to "Everyone." It will show less information about a person than results of a search performed by someone logged in to Facebook. We wanted to give people who had never come to Facebook, or who are not currently registered, the opportunity to discover their friends who are on Facebook.

read the whole story here

Freakonomics on correlation of height and earnings

The Most Surprising Thing I Learned Today

By Steven D. Levitt

The most surprising thing I learned today comes from the opening paragraph of a paper by Anne Case and Christina Paxson:

In late 19th Century Europe, adult height was attained at age 26.

This is just one reminder of how radically life has changed in the last 100 years. At least in the developed world, we have moved from a life of subsistence to a life of luxury.

The rest of the Case and Paxson paper, titled "Stature and Status: Height, Ability, and Labor Market Outcomes," is interesting, too. Dubner tangentially mentioned this paper in a post a while back, but I think it deserves even more discussion.

It is well documented that tall people tend to hold high-status jobs and earn high wages. There are many possible explanations for this: height is a useful job attribute for some reason; other people mistakenly think tall people are more intelligent than they really are; being tall in high school gives you the confidence to succeed in the work force; etc.

Case and Paxson suggest a completely new explanation for the link between height and high wages: taller people earn more because they are smarter on average. They document that, as early as age three (before schooling has had a chance to play a role), taller children perform significantly better on cognitive tests. These higher scores persist through childhood. I find their evidence pretty convincing — though this is not good news for my four year old son, who is currently in the 5th percentile for height, just like I was at his age.

It is not often that someone tackles a commonly-researched problem and is nonetheless able to offer a new and convincing alternative explanation. I offer them the highest compliment I can think of: I wish I had thought of that!

Observations from 10 months at a strartup

via Tortoise and Achilles

 

Observations from 10 Months at a Startup

I have been working at a small California software startup for the past 10 months. Approximately two months before I joined, the company obtained 8 million in venture capital. In the past 10 months, I've seen 4 million of that burned away to little effect; the company size shrink from 25 people to 7; and the entire management layer replaced, from CEO to team lead; I've seen 4 valuable and skilled hackers leave of their own accord as a direct result of personality conflicts, and have seen other workers laid off; the first version of the software failed completely, and a second attempt is underway, launching in September.

This is a brief, anonymous post about some of what I have noticed during my time here. I come from a technical background, and am strongly interested in startups. I joined my present company seeking to experience the fabled startup life. These observations come from my present company, mainly regarding the management of the startup. My current job is the first startup I've worked for after my time as a comp.sci undergrad, then research student at various labs.

My notes comes from my experience in a single startup, a very small sample pool. I don't pretend what I write applies to all people or startups, and I would love to hear any thoughts or feedback about these ideas. No doubt my own personal biases come through in all of these notes, I'd love to have them pointed out.

My position: I started out in the company doing web development (JS, CSS, HTML). As the then-server-team left, I gradually took over the bulk of backend duties. I have installed and maintained the company's Linux app and database server clusters; Amazon EC2/S3 integration; and its RIA backend/event model/integration. I daily program in Java, Actionscript, Ruby, and Javascript; occasionally in a few others. I consider myself a skilled hacker, and I believe those who work with me would agree.

Observations at a Startup

1. Some people will just get something done; other arrange a time for the team to discuss it.
2. Losing employees is a large productivity drain on the remaining employees. Morale is vital.
3. Venture Capitalists will take a heavy hand in corporate affairs, replace people often, without ever having met the development team, or understanding the effect on morale.
4. Be wary of marketing people who don't back up their recomendations or plans with numerical evidence. The marketing industry is a hive of snake-oil sellers, and it rubs off on nearly everyone involved.
5. Patents are primarily marketing. Venture capitalists like to talk about them.
6. If a CEO is too cheerleader-like, employees will stop taking him or her seriously. If there are problems, the development team wants to hear about them, hear viable solutions, and walk out of the meeting feeling inspired. That's a tough job, but it what a CEO is paid to do.
7. Management will talk about loyalty, but freely fire people; loyalty is supposedly valued, but never specially rewarded, leading to heavy skepticism of management whenever the word is used.
8. Managers are under high pressure for deadlines; especially if they have no technical abilities, and thus have no control over the situation. Having no control always, in any situaion, will result in heavy stress, and likely a resulting interference in technical matters they don't fully understand, and lead to anger. Hackers should understand this, and especially managers themselves should. I've personally seen such behaviour result in two good hackers leaving a small, 6-person development team company.
9. Good leaders must be emotionally stable at deadlines. They cannot ever act panicky or lash out at team members without seriously harming the productivity of the team. They should be serious and positive; off-hand comments that insult people will be remembered, and I've seen repercussions happen after six months. Everything has a cost.
10. I've come to believe any leader of a technical project should have a technical role in the product. As in, writes code.
11. A CEO or management officer without technical abilities should never hire a technical manager because of his supposed technical abilities. Ask the development team for advice.
12. Anyone bullshitting about technical abilities they don't have may gain temporary status points; a month later it will earn you contempt from everyone who knows what they are doing. If you don't have a technical background in something, don't try to pretend.
13. Venture capitalists don't understand technology, even those investing in software startups.
14. Beer is an underrated tool in software development. The after work beers have gone a long way in maintaining team morale.
15. Having an off-site CEO is a bad idea in a small startup. Try your damnest not to create a management vs. development dichotomy -- something that is all to easily done. It hurts everyone involved.
16. Even technically strong people don't necessarily work efficiently. I've seen people who are technically excellent, but don't focus on the right problems, and get less done because of it.
17. People who read a lot of books, both fiction and non-fiction, are usually very good at whatever they do.
18. Dedicated job titles lead to hands-off attitudes, and often resentment.
19. Good hackers won't put up with most of the above, and leave. The good hackers who don't leave will lose enthusiasm and trust in the company, and be far more likely to leave in the future.
20. People who are good at the Unix command line are worth their weight in gold. Not Gnome users, true command line hackers who understand grep, awk, Perl, etc, and how to tie them together and get things done.
21. Management mind-games don't work. This is especially true in a small, close-knit startup group.

Eleveator Pitch Cheat-Sheet

through Universtity of Minesota

Positioning a product requires a pyramid of messages from lengthy proof statements at the base to a product name or logo at the tip. The messages at the top of the pyramid are used to communicate the product essentials when the message receiver has almost no time, e.g. the name of your product on the package when the product sits on a crowded shelf. The messages at the bottom are used when the receiver has more time, for example a venture capitalist reading a business plan. Just below the top is the elevator story. This is the 2-sentence, 15-second story about your product that you would use if you happened by chance to be in the elevator with a VP or VC who was in a position to fund the next stage of your project and you only had a very short time to get your message out. For this deliverable, you will create a 2-sentence elevator pitch for your product using the method described in "Crossing the Chasm" by Geoffrey A. Moore. Moore's method is very structured, but surprisingly effective. Please follow exactly for this deliverable. The essence of the story is to answer five questions: (1) who is the product aimed at? (customer segment), (2) what problem does it solve? (problem), (3) what category of product is it? (category), (4) what/who is the competition? (competition), and (5) what is the key differentiator? (differentiation). The pitch is set up in this order using the trigger words on the left: For: Target customers Who: Need or opportunity or problem The: Product/Service name Is A: Product category That: Key benefits/reason to buy Unlike: Primary competitive alternative We: Primary differentiation Here is an example if we were pitching the new products course to prospective students. For: engineering and business students Who: want to become product development leaders The: New Product Design and Business Development Program Is A: nine month course That: takes teams of engineering and business students through a real-life, comprehensive product development process working with a client company to create a working prototype and a comprehensive business plan Unlike: design courses in the engineering school and marketing courses in the business school We: offer the opportunity to work on both engineering and business tasks with teams that combine engineering and business students, and the chance to work on a real product that is important to the client company. Here's what this elevatory story looks like in deliverable form For engineering and business students who want to become product development leaders, the New Product Design and Business Development Program is a nine month course that takes teams of engineering and business students through a real-life, comprehensive product development process working with a client company to create a working prototype and a comprehensive business plan. Unlike design courses in the engineering school and marketing courses in the business school, we offer the opportunity to work on both engineering and business tasks with teams that combine engineering and business students, and the chance to work on a real product that is important to the client company. Or, here is an example for a consumer product company For professionals who need access to their information while on the go, Palm Computing is a technology company that provides hand held devices for mobile information access. Unlike laptop computers companies, our products are low-cost, compact and easy to use. Notes: The elevator story is two sentences, no more and no less. The start of the second sentence is "Unlike". The target customers must be specific. For a medical product, there might be separate elevator stories that start, "For hospital purchasing agents...", "For interventional cardiologists...", "For cardiac patients...". The key benefits and primary differentiators should reflect the key value proposition for the target customer. Put yourself in the customer's head and list what will influence their adopt or purchase decision. For the last phrase, rather than "we", you may use "our product" or the product name. Suggestion: Have the company review your elevator story before delivering to class. And, have every person on the team memorize the elevator story. One person will recite your story in class on the due date.