Why Startups Need to Know When to Ignore Their GPS
Have you ever found yourself ignoring the directions of your car’s GPS in order to get somewhere faster or more efficiently than it can calculate? Me too. Chances are when leaving point A, you plugged in the address of point B, and a route was calculated on how to get from one to the other. The problem is, things come up on the route from point A to point B that may cause you to divert from your path such as construction, road closures, traffic, side trips you need to make or neighborhoods you may choose to avoid driving straight through. Sponsor Startups make similar diversions, but the directions they are straying from are those of a product roadmap. Roadmaps are projected out for months, if not years, to give a company a strategy to most effectively grow their product. But just as there are reasons we ignore our GPS, there are reasons for startups to alter their roadmap. Spark Capital partner Bijan Sabet has worked with dozens of startups on project roadmaps, and recently he wrote about the importance of driving off course when necessary. Sabet recalls and example of this from his experience working with Boxee’s Avner Ronen . “I remember our first board [meeting], Avner shared a product plan for the next twelve months. Then, before the very next board meeting he shipped a bunch of new things that weren’t on the roadmap,” writes Sabet. “He would see opportunities in the market, listen to his users and then create and launch. And that approach paid off and continues to pay off.” If startups come up with a product roadmap and proceed to put their heads in the sand while they follow it unwaveringly, they will more than likely fail. So much is learned from testing products and receiving feedback that being unwilling to change the plan is a death sentence. This quality is so important for entrepreneurs that Sabet says he looks for it specifically when investigating possible investments. “I’m more interested in learning if the founders have the talent and desire to move, innovate and create quickly,” he says. The lesson here seems obvious, but there have been cases where startups are devoted to their roadmaps and revenue projects to a point where it affects the success of the company. Like some driving directions, there is no most optimal route for every startup to succeed, so the willingness to turn left when your GPS says right is an important decision to know how to make as an entreprneur. Photos by Flickr users Marcin Wichary and sporst . Discuss
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Why Startups Need to Know When to Ignore Their GPS
Angel-Backed Companies More Likely to Succeed, Says Harvard Study
A new study published by professors at the Harvard Business School shows that angel-backed companies are more likely to succeed and show more growth than those funded by venture firms alone. Researched and written by William Kerr and Josh Lerner, the report found that companies with angel funding see between 30% and 50% higher growth figures in terms of website traffic, are more likely to survive for four years, and are also in a better position to receive further rounds of funding. Sponsor Angel investing itself has seen large growth over the last several months with the creation of various organizations, events, firms and legislation to spur it on. We’ve discussed the Open Angel Forum series of events, the creation of “Super Angel” firms , the curated Venture Hacks AngelList , as well as current legislation both helping and hurting angel investments. Angel investing has become more common, and as this report shows, this is largely due to the value and success it tends to breed. But why are angel investments the secret sauce for some companies? As the report points out, its the intangibles that angels bring to the table that could be playing a large role in company success. “Access to capital per se may not be the most important value-added that angel groups bring. Some of the ‘softer’ features, such as angels’ mentoring or business contacts, may help new ventures the most,” the report says. One of the other reasons that companies could tend to be more successful with angel funding is because of the human face placed on the investments. Angels are usually investing in companies at an early stage, and are investing their own capital in the company. Entrepreneurs may be more likely to work that extra bit harder when they know they are playing with the personal cash of an actual person, not the collected funds of an entire firm without a human name. The reputation of the angel could play a large role as well, both for the attitude of the people running the company, and for the audience they are looking to attract. Most angels tend to be successful entrepreneurs themselves, and thus are likely well known in the startup scene. The chance to sit and talk with these investors, let alone receiving funding from them, is likely a treat for most entrepreneurs, so they may be more likely to be more careful with their money. Additionally, when the public hears of a new startup that may not immediately interest them, the mention of particular angel investors can change their mind. As angel investors mature, they build their own personal portfolio of companies they noticed and provided early funds for, so when company XYZ launches with angel funding from an influential angel investor, that alone can attract people to the product. I know personally that I have looked into startups I otherwise would have largely ignored simply because an important angel investor was certain they’d be a hit. “Some of the ‘softer’ features, such as angels’ mentoring or business contacts, may help new ventures the most.” – Harvard Business School report Since some companies receive early financing rounds from angels, it is also logical to assume that when working with a limited amount of cash, the entrepreneurs may be more focused on doing more with less. A company that bursts out of the gate with large amounts of VC firm funding may spend it slightly more haphazardly, whereas a company running on limited angel funds may adopt leaner practices and take baby steps toward success and future funding. As the report mentioned above, the “softer” features provided by the angels are also a large help to the companies. In his email newsletter yesterday, angel investor Jason Calacanis discussed loyalty and how he goes to bat for the people who are loyal to him and his companies. He mentioned that whenever he invests in a company, he immediately becomes an evangelist for that company and it’s founders, doing all he can to promote it. This may not be the same for all angels, but when influential investors like Jason get behind your company, they do their best to make sure good things happen. I would be interested to see similar data from this report that compares companies with solely angel funding versus those with more traditional VC firm funding mixed in. The influence of angel investors is significant, but I would think the angels alone are not enough to create more successful businesses at a higher rate. But the lesson here is, if your startup has the opportunity to include some angel investors (especially at the early stages), it would seem like a wise decision to go ahead with. Photo by Flickr user Brooke Anderson . Discuss
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Angel-Backed Companies More Likely to Succeed, Says Harvard Study
Is it Time for Facebook to Make Opt-In the Default?
Facebook’s Open Graph API is getting some negative attention in Washington today. Four democratic U.S. senators, Charles Schumer, Michael Bennet, Mark Begich and Al Franken, sent a letter to Facebook’s founder and CEO Mark Zuckerberg earlier this morning, asking for clarification about the privacy implications of Facebook’s latest initiatives. Specifically, these senators complain about the company’s new policy to allow third-party developers to store data for more than 24 hours, Facebook’s Instant Personalization feature and the social network’s new initiatives that make more of its users’ personal information public by default. Sponsor Washington and Facebook Privacy The discussion in Washington mostly centers around the fact that Facebook’s new Instant Personalization service is opt-out . Facebook’s current partners – Microsoft’s Docs.com , Pandora and Yelp – automatically get access to a subset of your personal data whenever you visit their sites while you are logged in to Facebook. According to the senators, Facebook now shares “significant and personal data points that should be kept private unless the user chooses to share them.” U.S. senators : “Significant and personal data points that should be kept private unless the user chooses to share them.” In his response to the senators’ concerns, Facebook’s VP of global communications Elliot Schrage argues that these new products are “designed to enhance personalization and promote social activity across the Internet while continuing to give users unprecedented control over what information they share, when they want to share it, and with whom.” Facebook : We “give users unprecedented control over what information they share, when they want to share it, and with whom.” This discussion comes down to Facebook’s decision to make many of its latest features opt-out instead of opt-in. Currently, Facebook is only testing Instant Personalization with a small number of hand-selected partners. Facebook’s ambition , however, is to turn itself into the hub for personalization on virtually every site on the Internet, so this small group of partners could soon grow exponentially. This – combined with the end of the company’s 24-hour limit on storing data by third-party developers – could potentially pose a serious threat to its users’ privacy. Opt-In vs. Opt-Out There is a reason why Facebook is currently using opt-out as its default. After all, this guarantees Facebook the largest possible user base for these features and the best possible user experience for those who want to use them. Making new features opt-in exposes Facebook to the (very real) possibility that not enough users sign up and that the reach of its current and future initiatives will be very limited. On the other hand, if its users really wanted to these features, wouldn’t they just opt-in if asked? And if these features turn out to be really useful, wouldn’t word about them spread across Facebook like a wildfire? Should Facebook Make Opt-Out Its Default? Given the Beacon fiasco from 2007 – and the recent discussion around how Google handled the launch of Buzz – however, we have to wonder if Facebook simply didn’t learn its own lessons. Facebook already hosts more private information about its users than any other site on the Internet. Given the company’s current trajectory of exposing more and more personal data, it’s probably time for the company to establish a consistent policy for how it plans to handle personal data in the future and make it very easy for users to opt out of any new initiatives that will expose more of a user’s data to third parties in the future. If you want to make sure that Facebook developers can’t access your personal data, here are Sarah Perez’s excellent instructions for how to opt-out . Discuss
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Is it Time for Facebook to Make Opt-In the Default?
Millions of People Now Get Live Streaming Video Sent to Their Phones
Live video, from around the world, streaming right through the phone in your hand: that’s pretty incredible. It’s not science fiction anymore, it’s now something that millions of people have experienced. San Francisco’s Justin.tv announced today that almost one and a half million people have downloaded the company’s live-video-stream-viewing app to their iPhones in the first month it’s been available. From Leo Laporte’s This Week in Tech , to the Future of Money conference, to a lot of content I don’t care to watch, Justin.tv is definitely getting traction. This isn’t the only company fast finding a lot of consumer interest in mobile video streaming, either. Sponsor Competitor Ustream made a similar announcement when it hit the iTunes store in January, saying more than one hundred thousand people downloaded that app in its first 24 hours. Ustream has Justin Bieber content, which you may consider an asset or a liability, depending on your perspective. (Personally, I just love Justin Bieber. I know he loves me back and I want him to be a part of my family. ) The point is: People love live streaming video to mobile handsets. Justin.tv said today that it has made major stability updates to its app (sometimes these things still feel like tin cans with string between them), and added push notifications to alert users when their favorite live shows are broadcasting. The iPhone app already contributes about 20% of the company’s total new account sign-ups. We don’t know how many downloads the Ustream app has seen since it first entered the iTunes app store and was featured prominently there, but if we assume that the same one half of one percent of users will have rated the Ustream app as have rated the Justin.tv app, then Ustream would have seen well more than 11 million downloads so far. Presumably if the app had in fact passed 10 million by now, we would have heard about it. The moral of the story, though, is that live streaming video sent to mobile phones is here and people like it. Live video broadcasting from mobile is much, much less popular of course, but content creation is always less popular than consumption. It’s exciting to imagine how a more mature mobile, live-streaming video market will look. I’m ready to watch all kinds of things happen live on my phone. Discuss
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Millions of People Now Get Live Streaming Video Sent to Their Phones
Hugo Chávez to Make Terrorist Threats, er, Join Twitter
After getting the short end of the Twitter stick, Venezuela president, Hugo Chávez, called it ” terrorism ,” ” a battle trench” and a “current of conspiracy. “The Internet cannot be free!” he proclaimed. Since he has taken six television channels he didn’t like off the air and imprisoned reporters , who knew what he would do? Well, it turns out he intends “to open his Twitter account soon to wage the battle online,” according to Diosdado Cabello, Venezuela’s chief telecommunications regulator. Sponsor With Venezuela’s once invincible-seeming oil-economy now in the toilet and his approval rating diving below 50% perhaps El Jefe feels he has no choice. Since mass media in Venezuela is under constant threat from its strongman head of state, his opponents and critics have monopolized the microblogging platform and that platform is becoming popular. Reuters outlined its recent growth. “The microblogging site has seen an explosive rise in usage in Venezuela to more than 200,000 active accounts. With growth of over 1,000 percent in 2009, Venezuela now has one of the highest rates per capita of Twitter users in Latin America.” The moment you shut people up, you no longer speak for them. This has started to dawn on some of Chávez’s once-vocal partisans. It may take longer for those whose solidarity is limited to their Che t-shirts. May I suggest you Sharpie #FreeVenezuela across yours? Top photo from Open Democracy Bottom photo by Corey Harmon Discuss
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Hugo Chávez to Make Terrorist Threats, er, Join Twitter