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Why Startups Need to Know When to Ignore Their GPS

cgseo — Tue, 27 Apr 2010 21:45:00 +0000

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

cgseo — Tue, 27 Apr 2010 20:30:00 +0000

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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Marshmallows and Spaghetti: How Kindergartners Think Like Lean Startups

cgseo — Fri, 23 Apr 2010 22:50:00 +0000

As an avid podcast subscriber I have dozens of audio and video programs feeding into iTunes daily, but one recent submission from the TED Talks video podcast caught my eye because of its parallels to lean startups. Tom Wujec, author and fellow at Autodesk, presented at TED 2010 back in February, and his talk, "Build a tower, build a team," is now available online. Wujec conducted a team building experiment with all types of people, from business execs to kindergartners, and the results he presented were surprising, to say the least. Sponsor The activity, known as the marshmallow challenge , was borrowed by Wujec from Peter Skillman, VP of Design at Palm . Small teams are given 18 minutes to build a free-standing structure made of dry spaghetti, one yard of string, one yard of tape and a marshmallow, which must be placed on top. The team wins by creating the tallest structure of all the groups participating. What Wujec discovered is that this simple game revealed some fascinating insights into how groups collaborate. Wujec has conducted this experiment with over 70 groups of "students and designers and architects, even the CTOs of the Fortune 50," he says. Most teams quickly break into roles and plan their structure, and then spend the remaining time building it before quickly and gingerly placing the marshmallow on top as time expires. More often than not, the structure pitifully fails as the marshmallow is added, leaving the team with a pile of spaghetti and no time to try again. "So there are a number of people who have a lot more 'uh-oh' moments than others, and among the worst are recent graduates of business school. They lie, they cheat, they get distracted, and they produce really lame structures," says Wujec. "And of course there are teams that have a lot more 'ta-da' structures, and, among the best, are recent graduates of kindergarten." "Design truly is a contact sport. It demands that we bring all of our senses to the task, and that we apply the very best of our thinking, our feeling and our doing to the challenge that we have at hand." - Tom Wujec Wujec says that business school grads are taught to seek out and execute the one correct solution their challenge, while kindergartners practice the iterative prototype and refine process, much like the methods of lean startups. The kids would build, test and repeat until they found a structure that worked, and most times, he says, they built the tallest and most interesting structures. Another interesting fact uncovered by these experiments is that incentivizing the teams didn't improve their structures, it actually made them worse. When Wujic offered the winning team a $10,000 software prize, not a single group was able to create a standing structure; however, when we returned to the same students later, they understood the need for iteration, and produced structures well above the average height. What startups can take away from the marshmallow challenge is that bigger teams and higher incentives are no substitute for having the right skills and the right process in place. Wujec found that larger teams performed increasing worse than smaller teams, and incentivizing them with a reward did not make up for the fact that they were not using the right process. As Wujec adds, every business challenge has its own "marshmallow," so consider bringing some kindergarten-minded people onto your startup team. Photo by Flickr user John-Morgan . Discuss

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Marshmallows and Spaghetti: How Kindergartners Think Like Lean Startups

Weekend Reading: Mobile Marketing, by Cindy Krum

cgseo — Fri, 23 Apr 2010 17:00:00 +0000

One of our favorite new trends here at ReadWriteWeb is the quickly growing field of mobile technology and how we can take more of the Web along with us when we leave our computers. Because of the expanding popularity of smartphones and mobile data use, startups these days need to develop plans for marketing their brand on mobile devices at very early stages of their development. Cindy Krum, CEO of Rank-Mobile , a consulting firm focused on mobile marketing and SEO, is the author of this week's featured read, Mobile Marketing: Finding Your Customers No Matter Where They Are . Sponsor With chapters on mobile advertising, mobile web development and search engine optimization, Krum's informative book is a great resource for first time entrepreneurs looking to take advantage of the mobile platform. There is also an entire chapter to the iPhone, a testament to the device's influence on the mobile Web space. "The iPhone has brought mobile Web access and mobile search to the masses," writes Krum. "The iPhone represents only 8% of the mobile handsets but roughly 75% of the mobile search, and iPhones now account for one out of every 333 Web hits worldwide. The desire for Web access and Web search was always there - it was just being slowed by the bad user experience that other mobile phones provided." "The desire for Web access and Web search was always there - it was just being slowed by the bad user experience that other mobile phones provided." - Cindy Krum Krum also includes case studies from prominent businesses which have used mobile platforms to market their products. These include Nike , Nationwide Insurance , Land Rover , Visa , Corona Beer and CNN . I was disappointed to not find any mention of the efforts being made by numerous companies to use augmented reality for mobile marketing, but the book does include the use of quick response (QR) codes . Various types of bar codes and QR codes are described, as well as case studies of companies that put the technology to practical use. The book itself even joins in the QR fun by including a ScanLife EZ Code on the back cover. ScanLife is a mobile application and short code provider that allows companies to market specifically to camera phones. Users take a picture of the code using a ScanLife app and can be redirected to various forms of mobile content. The strange thing about the book's implementation of the ScanLife code is that it failed to include any mobile-specific content. After scanning the code with the ScanLife app on my iPhone, Safari launched and took me to the book's homepage. Yes, Safari on the iPhone is a fully capable web browser, but it would have made more sense to create a website optimized for the iPhone's smaller screen. A similar code I found while on a recent trip to Las Vegas took me to a special mobile promotion page with a video and special hotel rates. The lesson to be learned here, and from other forms of mobile marketing, is that the content used should be native to the devices it is being viewed on. Simply adding a link to your normal webpage on a mobile device is not making the best use of the technology. The marketing the hotel used in the above example was a much better implementation because it provided me with exclusive content that was also optimized for viewing on a smaller screen. It isn't enough to market to mobile phones; companies must be sure to make the content unique and native. Much more can be learned from the book and from the advice provided straight from the CEO of a company in the trenches of mobile marketing. Research shows that smartphones could become used more than personal computers in just a few short years, so getting ahead on mobile marketing strategies is an important step for any early-stage company. If you want to learn more about mobile trends, be sure to register for our ReadWriteWeb Mobile Summit on May 7th in Mountain View, California. Photo by Flickr user William Hook . Disclosure: A review copy of this book was provided to ReadWriteWeb by Pearson Education and Que Publishing . Discuss

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Weekend Reading: Mobile Marketing, by Cindy Krum

Mozilla Contacts Releases Facebook-Integrated Version with New "Person URLs"

cgseo — Fri, 23 Apr 2010 15:49:40 +0000

Mozilla Contacts , the experimental project from the organization behind the Firefox web browser, has released a new version of their Contacts add-on which introduces Facebook integration. Previously , Mozilla Contacts allowed you to import your various address books spread out across the web (think: multiple email accounts, Twitter friends, LinkedIn colleagues, Plaxo contacts, Mac OS X address book, etc.) into the web browser itself - in this case, obviously, Firefox. Once there, the combined address book information could be used in form autocompletion everywhere across the web and more. Now, an updated version of Mozilla Contacts (download link) introduces a number of new features, most notably integration with Facebook Contacts and something called a "person URL." Sponsor Import Facebook Contacts into Firefox Mozilla Contacts' ability to sync with your Facebook Contacts come via the brand-new Facebook Graph API (application programming interface), which allows the Firefox add-on to import all your Facebook friends into the web browser itself as it does with the other services supported. However, this integration is still a little iffy, warns Michael Hansson, an engineer in Mozilla Labs , on a blog post about the release. "You may need to Refresh your connection to Facebook on occasion to make it work properly," he says. Person URLs Also new in Mozilla Contacts 0.3 is experimental support for "person:" URLs. This intriguing feature lets you look up anyone in your various contact lists or anyone on the web just by typing a URL in your address bar. After doing so, Firefox will combine the locally-stored information in the web browser with web-based information retrieved from the Internet to return a profile page about that person. You can try it now by typing person:mhanson@gmail.com or person:http://facebook.com/btaylor , for example, into your Firefox browser that has the updated Contacts add-on installed. Also New in 0.3 Other additions in version 0.3 include support for Yahoo! contacts, autocompletion of HTML5 input fields (with "email" and "tel"), enhanced search capabilities (including new discovery modules for Webfinger, HCard import, Google Social Graph, Facebook, Gravatar, Yelp, Amazon and Flickr), automatic combination of data discovered on sites that support standard automatic discovery mechanisms like HCard, RSS and ActivityStreams and finally, support for non-contact people in the AwesomeBar. Discuss

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Mozilla Contacts Releases Facebook-Integrated Version with New "Person URLs"

Altimeter Report: Social Marketing Analytics (Altimeter Group & Web Analytics Demystified)

cgseo — Thu, 22 Apr 2010 17:57:01 +0000

A Collaborative Effort Between Two Firms: Web Analytics Demystified and Altimeter Group It’s just been over a month since we published the Social CRM Research paper (over 36k views on slideshare) and we’re continuing our cadence here at Altimeter Group of publishing widely available reports under the spirit of Open Research. This time, it’s different, we’ve aligned with who I feel are the smartest team of web analytics minds in the space, John Lovett (ex-Forrester analyst) and Eric Peterson (ex-Jupiter analyst) both of the Web Analytics Demystified firm. Stemming from Altimeter founder Charlene Li’s (ex-Forrester Analyst) framework, we co-developed this framework, and put our collective minds to work on measuring the rapidly changing social media marketing space. This self-funded research effort resulted in a thorough methodology as we interviewed over 40 ecosystem influencers. Interested in learning more? Attend the no-cost webinar by registering. Industry Challenge: ”I can’t measure social media ROI” Marketers around the globe are ranging from toe dipping to jumping all the way into the social marketing space –yet most lack a measurement yardstick. While experiments can fly under the radar for a short term, without having a measurement strategy, you run the risk of not improving what you’re doing, justifying investments, and the appearance of being aloof to upper management. To be successful, all programs (even new media) must have a measurement strategy, and we’ve done just that. Finally, A Measurement Framework Based on Business Objectives If you’re familiar with the Altimeter frameworks of developing a social strategy based on business objectives, then you’re in good shape, as this research report is the natural extension of the business objectives we put forth: Dialog : involves starting a conversation and offering your audience something to talk about while allowing that conversation to take on a life of its own Advocacy : activation of evangelism, word of mouth, and the spread of information through social technologies Supporting : customers may self support each other, or companies may directly assist them using social technologies. Innovation : The business objective of innovation is an extraordinary byproduct of engaging in social marketing activity. Our framework is a common denominator, yet if you’re already measuring converted leads, or actual sales from social media, great! Yet In this meaty report, which we hope you share with your marketing and analytics team, has actual KPI formulas which you should start to use as the start of your own cookbook. Altimeter Report: Social Marketing Analytics View more documents from Jeremiah Owyang . A Nod To the Community Spirit We’re putting a big stake out there, in order to further the industry to come together around a common set of KPIs and metrics, but we realize we don’t know all the answers. In the spirit of Open Research , we want this to be an open framework (we’ve even licensed this under Creative Commons) to customize it and make your own for non-commercial reasons with attribution. If you’ve ideas on how to improve it such as new KPIs, vendors, or approaches, we’re listening, and will incorporate and improve this community body of knowledge for all to benefit. Related Links I’ll link to others that extend the conversation, feel free to embed the slideshare on your own site. John Lovett, my co-author, on the Web Analytics Demystified Blog . Note, they used their branded report template, but the content is the same. The Altimeter Blog (cross posting) Christine Tran is the lead researcher on this report, she writes a smart blog Lithium’s Phil Soffer, VP of Product Marketing, has shared it from the Lithium Blog

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Altimeter Report: Social Marketing Analytics (Altimeter Group & Web Analytics Demystified)

Are Windows of Opportunity Quickly Narrowing for Startups?

cgseo — Wed, 21 Apr 2010 21:40:00 +0000

Earlier this week, we reported on the fact that the first quarter of the year saw venture capitalist investments drop from the end of last year , but start at a higher rate than the beginning of 2009. In the article we mentioned the boom and bust cycle that is found in economics, which in America has been marked by the dot-com bust at the turn of the century, and the financial crisis of recent times. These two downturns are part of a cycle of ups and downs seen throughout history, but could they be getting shorter and more frequent? Sponsor Peter Bodine, managing director of Allegis Capital , recently guest blogged on Entrepreneur Corner over at VentureBeat and provides an interesting angle on the current state of venture valuations and how it could signal a quickening boom and bust cycle. As he sees it, the high prices recently placed on a few startups echoe those seen before the dot-com bust. " Blippy , only four months old, is reported to be worth about $38 million. Quora , a massive user-created question-and-answer site that is still beta-testing , was estimated at roughly $86 million in its most recent round. And the buzz is that Foursquare will be worth at least $80 million after it completes the round it's currently negotiating," writes Bodine. "There is a lesson in all this for startups. If you are demonstrating noticeable success, seek additional funding now, not later." Bodine anticipates a drop in VC funding this summer, a time he says is a common slow period for VCs, and warns that startups late to the game could "miss the action" and end up competing with more companies later in the year. The summer is a popular time for incubators, and many companies exit these programs and seek funding in the fall and winter, so Bodine suggests going after capital now if your startup has any measurable progress. VC, M&A and IPO numbers have been suffering in the last few years with the economic crisis and have been difficult to forecast. M&A numbers broke records in the first quarter of 2010, but IPOs continued their near non-existent levels. VCs raised their lowest amount of funding in an opening quarter since 1993, but invested a healthy amount . One could call this atmosphere unstable, but I'm not so sure that it will collapse again in the middle of the year. Following the dot-com bust, the VC market steadily climbed back to the levels we saw in 2007 and 2008 before the housing failure, and I wouldn't be surprised to see similar gradual growth throughout 2010. It is unlikely that the yearly figures at the end of 2010 will be impressive in comparison to earlier years, but this year should be an improvement over the lows seen more recently. There are certainly risks involved with founding a startup and seeking funding in this economy, but hey, what would startups be without taking a few calculated risks in hopes of being rewarded? Photo by Flickr user garymalkn . Discuss

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Are Windows of Opportunity Quickly Narrowing for Startups?

Startups Continue to Hit the Accelerator on Job Creation

cgseo — Wed, 21 Apr 2010 19:10:00 +0000

Throughout the economic downtown of the last few years, which is only now slowly beginning to turn around, there have been few industries that continued to create jobs and support the economy. We've mentioned before (as many others have ) how the government should be doing its best to foster more entrepreneurship, one of the few areas continuing to create jobs, and Wednesday the National Venture Capital Association and StartUpHire.com job board released data supporting these suggestions. Sponsor According to a combined press release from the two organizations, StartupHire.com saw a 16% increase in job postings in the first quarter of 2010 from the end of 2009. The service says over 13,000 new jobs were posted in Q1 at an average of 4,400 per month, but is quick to note that its numbers represent only a fraction of the actual job creating in the industry. "As positive as our job numbers are trending, the aggregate venture-backed job growth is even greater - perhaps double what StartUpHire.com currently captures," says Steve Fredrick, founder of StartUpHire.com. "It is critical that our government recognizes the power of these companies and support venture investment so that we can continue to build more companies and hire more Americans." According to other studies referenced in the press release, public companies that were once venture-backed currently employ 12.1 million people, and current venture-backed companies employ roughly another half million people. NVCA president Mark Heesen believes startups and entrepreneurship are going to play a large role in the nation's path toward financial prosperity. "The start-up company engine continues to churn, serving as a critical source of new jobs and opportunities for thousands of Americans," says Heesen. "Our country's entrepreneurial spirit combined with access to risk capital will continue to drive this economic recovery." Unfortunately, legislation from Washington has been a little schizophrenic in terms of helping startups and entrepreneurship. While a Startup Visa bill that could increase the amount of foreign entrepreneurs creating jobs in America was introduced earlier this year, proposed financial regulations could hamper Angel investing and make it harder for companies to get funding. Hopefully further evidence, like that seen Wednesday from StartUpHire.com, will help to influence legislation to help promote entrepreneurship, and entrepreneurial education. Photo by Flickr user YtseJam Photography . Discuss

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Startups Continue to Hit the Accelerator on Job Creation

Thinking Inside the Box: Eric Ries On Creating Startups Within Large Organizations

cgseo — Mon, 19 Apr 2010 22:00:00 +0000

Every now and then we hear the story of the entrepreneur who left his or her steady job at a large company to follow their dreams and create a startup, but we aren't all as daring and brave to quit steady work, especially in a time of economic uncertainty. If you have the entrepreneurial itch but aren't in a situation that would allow you to sacrifice your day job, there are still ways you can scratch said itch and bring innovation to a "startup" within a larger company. Sponsor This morning I talked with Eric Ries , the driving force behind the " lean startup " movement, which encourages high efficiency and meticulous metrics tracking within entrepreneurial ventures. Ries, who is often asked to speak on the subject, says he noticed a trend among some of the people attending his talks. Many managers from large companies were coming to his sessions to learn what they could, because, as Ries discovered, the principals of lean startups can exist within larger corporations that are attempting to innovate. "A startup is a human institution designed to create something new under conditions of extreme uncertainty," Ries told ReadWriteWeb. "There is nothing in there about the size of the company, or what industry you're in, or whether you're the manager of a division or if you're two guys in a garage, its just about the conditions in which you operate." As he points out, there are times in larger corporations when divisions are created to work on a new project, and similar rules and guidelines for managing that project which come from startups can be used here as well. Ries says that managers, like entrepreneurs, are taking risks on new ideas, and when they create a new division, they are essentially investing the company's time and money as a VC would invest funds in a startup. "The more I started to work with those managers I started to notice that they were having very familiar sounding arguments," Ries says. "The arguments between a venture-backed entrepreneur and a venture capitalist are almost exactly the same word for word as between these 'intrepreneurs' and their CFOs because the same issues come up." One of the ways larger corporations can implement entrepreneurial innovation into their businesses is to allow for what Ries calls "innovation inside the box," or a fenced off sandbox for experimentation with new products. By creating a place where employees with ideas can test a tweak to a feature, or where new ideas can be built within certain constraints, companies can greatly increase their potential for innovation. "The real value is [this] starts to catalyze change because by changing the way you work you start to accelerate that feedback loop and that can become the basis for making other changes," Ries says. Unfortunately, most larger corporations aren't allowing for this open sandbox of innovation within their companies, and choose to buy up technology and talent from startups. Ries agrees that many entrepreneurs get frustrated working inside a larger company, but he says the combination of these entrepreneurs with a walled off innovation playground could provide for some amazing innovations. Companies could also benefit from the addition of a sandbox by inspiring their existing employees to be innovative, instead of wrangling up entrepreneurs from a startup, which would save them money in the end. "They have this idea that a certain alchemy will happen that 'if I bring these special people into my organization, they will teach my regular people how to be special,' and that's just a formula for breeding resentment," Ries told ReadWriteWeb. "If the people doing the acquiring had more of a theory about how entrepreneurship is supposed to work they could start to think of better ways to plug an acquired company into the larger organization, taking advantage of what they're good at without destroying it." If you're a budding entrepreneur or a manager at a large company, there is an excellent chance to hear from Ries and others on these concepts and others this Friday at the Startup Lessons Learned conference in San Francisco. If you can't make it to the Bay Area, there are simulcasts occurring Friday in nearly 50 cities worldwide, many of which are free or very inexpensive, so RSVP and bask in the lean startup goodness. Photo by Flickr user longhorndave . Discuss

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Thinking Inside the Box: Eric Ries On Creating Startups Within Large Organizations