LSQHA Blog Reviews

The gaming industry continues to see phenomenal growth - from console systems to social games. The 12 million subscribers of Blizzard's World of Warcraft - once the giant of gaming - now seems small compared to the 80 million Farmville players. Farmville's maker, Zynga was recently estimated to be worth $5 billion - a valuation that appears to bode well for investors and for startups. But are games good buys? Can gaming startups attract the investment they need? Sponsor Gaming industry consultant Nicholas Lovell recently wrote a post on the blog Gamasutra where he suggested "Four Reasons Why VCs Won't Fund Game Companies." Lovell's arguments are as follows 1. VCs don't invest in projects Lovell contends that game developers are good at creating (and even at pitching) projects, but that VCs don't necessarily care what makes a good project - in other words, what makes a good game. "Investors care about businesses; developers show them projects." 2. Investors want to see a running business, not an idea 3. VCs want sustainable businesses Lowell writes, "Traditional games developers are really difficult for any investor to fund. They look like quite late-stage businesses: they may have hundreds of staff, millions in turnover and a proven track record. But fundamentally, they are always just one deal away from bankruptcy. They look like startups from a risk perspective but are like late stage investments from a reward perspective." 4. History sucks The history of the gaming industry is full of failed businesses, and as such VCs find the investment there to be risky. Arguably, investors' opinions might be changing, particularly given the rapidly increasing popularity of social games. While traditional console games and MMORPGs require significant investment and substantial development time before a game is "live," social games are, arguably, "lighter." With the growth in virtual goods and virtual currency, even "free" social games, as Farmville and the like have demonstrated, can become vastly popular and very profitable. Discuss

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Do VCs Like Games? Gaming Startups and Investors

The Website Taste Predictor is a new Twitter tool that analyzes your Twitter account in order to recommend websites you would like. The project uses Twitter's OAuth authentication protocol to access your Twitter account so you don't have to enter in your username and password in order to try it out. How exactly it works, we can't say. There's no "about" page, "FAQ" or other explanation. In fact, there's not even a credit as to who made it, only a URL. But the URL is a big hint: it's hosted on the MIT.edu domain underneath the subheading ~peretti. And just who is ~peretti? Only the co-founder of the Huffington Post and the viral tracker BuzzFeed , Jonah Peretti . Sponsor New Twitter Tool From HuffPo and BuzzFeed Co-Founder? Peretti is a graduate of the MIT Media Lab, has taught at NYU and the Parsons School of Design, consulted for major brands like Sony Pictures and Procter & Gamble and created several viral experiments like the Nike sweatshop email and FundRace.org . However, he's best known for co-founding BuzzFeed , The Huffington Post , ContagiousMedia.org , and the Eyebeam Open Lab . So if this "Website Taste Predictor" is also his creation (we've contacted him to confirm), you know it's not going to be your run-of-the-mill Twitter tool. For what it's worth, we're nearly 100% sure about Peretti's involvement. The tool is hosted under his account on MIT's servers , he tweeted about it back on April 7th and he responded personally to a comment about it over on Digg (the fact that this post never hit homepage it a testament to all that is going wrong over there). However, while these clues seem to point to Peretti as the creator, you can never be too sure. We'll wait for an official word and will update accordingly. Website Taste Predictor in Action So what does the Taste Predictor actually do? Well, it doesn't just parse your Twitter history to spit back a list of links you've tweeted. That would be too easy. It appears to delve deeper than that to function as a true recommendation engine. Whether it looks at keywords, follower lists or sites related to those you post links to, we can't be sure, but we do know this: the app gets it right on the money. And I mean downright scary right. In my case, for example, the list returned included a large group of sites I read regularly consisting mainly tech-focused blogs and mainstream media sites plus a handful of sites I've been known to check out less often. What I don't know is how it figured out that I've been known to gaze at the occasional lolcat , fail photo , web comic or celebrity

Last week brought two major announcements from Twitter. On Thursday, the company announced an official application for BlackBerry. On Friday, Twitter announced that it had purchased Atebits, the makers of the iPhone app Tweetie . Over the weekend, there was substantial discussion and a fair amount of hand-wringing by third-party developers, many expressing their frustrations about the company's direction. Attempting to reassure developers in advance of next week's Chirp conference, Twitter API lead Ryan Sarver responded by email to some of these concerns. Sponsor Certainly Twitter isn't the only company at the center of debates about control of a platform (Apple, Google, and Microsoft come to mind), but in light of the flurry of responses to Twitter's moves, it is worth considering some of the (perhaps contradictory) lessons for startups that can be gleaned from the past week's events. Find your niche : Much of the third-party development on Twitter has served to address gaps in the original product: mobile clients, URL shorteners, photo sharing, and search for example. As VC and Twitter investor Fred Wilson argued in a blog post early last week that tipped the hand, perhaps, to where Twitter was headed, there is still room for the development of "killer apps" in social gaming, enterprise, and analytics. Innovate and adapt : Find your niche, but then be prepared to innovate and adapt. Some have suggested that Twitter's acquisition of Tweetie might not bode well for other Twitter clients like Seesmic and Tweetdeck , unless the two can continue to innovate. By adding new features unavailable via the Twitter website, and by linking streams from Facebook and LinkedIn, they have established themselves as more than just a Twitter client - but the pressure is certainly on for these to continue to distinguish themselves from the official Twitter applications. "Of course we're hole fillers," Seesmic founder Loic Le Meur admits , explaining that while that's a good place to start, it isn't the right place to end. Look beyond the platform : As Mark Suster writes of both Twitter and the iPhone, it is important to think beyond the platform, contending that startups should not think of Twitter "as a business but rather as a channel." In other words, a platform like Twitter should be a used as a way to reach customers but, unless you're Twitter, should not be the vehicle itself. If this is the " inflection point " for Twitter, the tasks for startups will be to learn the lessons from this critical juncture in the platform's history, balancing the sometimes contradictory needs for specificity and flexibility and innovation and stability. Discuss

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What Can Startups Learn from Last Week's Twitter Announcements?

As part of my ongoing Online Strategy Roundtables , this morning I worked with three new entrepreneurs, each at a different stage of validating who their customers are and building their businesses accordingly. Two have e-commerce businesses, which I love. In fact, my Forbes column tomorrow will discuss the shift from brick and mortar shops to e-commerce and how such businesses are so well poised for Web 3.0. Main Street America is changing as small business owners move online and get rid of the expensive real estate costs. Sponsor Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies and writes a business blog, Sramana Mitra on Strategy . She has a masters degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her three books, Entrepreneur Journeys , Bootstrapping, Weapon Of Mass Reconstruction , and Positioning: How To Test, Validate, and Bring Your Idea To Market are all available from Amazon. Her new book Vision India 2020 was recently released. Mitra is also a columnist for Forbes and runs the 1M/1M initiative. Up first was Ellen Sinreich and her company Green Edge Workshops . Ellen is a consultant with expertise in sustainability and real estate. Based on her practice, she has designed some workshops that enable employees to develop strategies that will drive down a company's carbon footprint. She is looking to reach mid market companies in her geographic region (New York), but to date has no customers. Clearly this is a business that has yet to be validated. I believe Ellen is trying to reach too broad a market based on her experience. I recommended she narrows her value proposition to align better with her expertise by targeting companies that deal with facilities and building issues. She asked for advice on finding clients and unfortunately there is no obvious way to find clients when you are a consultant. What worked for me early on was using my personal network for referrals and I suggest she does the same to connect with her target market. Later on, while discussing the Entrepreneur Journeys methodology, I also suggested that folks should read the Finisar case study in Entrepreneur Journeys Volume One to get a good feel for what it takes to get a business off the ground through consulting, and then build a product company through that process by getting close to customers, while generating cashflow all along. Finisar, for those of you who don't know, went public in 2001 at a $5 billion market cap, and was largely a bootstrapped case study. Danny Wong presented Blank-Label , an e-commerce site that allows men to co-create and custom design dress shirts at affordable prices. This site was launched five months ago and has seen a steady increase in sales but has not yet hit its stride. While Danny is well-versed in SEO traffic optimization, he needs to narrow his market to target the exact psychographic interested in being this involved in buying shirts- in other words, style conscious men. I recommend he target his PPC campaigns to the more fashionable zip codes across the country and to go slowly. I believe focusing all their efforts on the correct psychographic will make all the difference. This is a business for a small niche market, but definitely worth building. Catherine Wood Hill gave a heart-felt presentation of La Grande Dame , an e-boutique for plus-sized women that she started with her mom. Having launched a year ago, and with thousands of customers already, this business has been well validated. Their target is women between the ages of 30 and 55 who are looking for high-end designer clothes in sizes 14 and up. I like it when a business is so tightly focused. This allows you to do so many things inexpensively through the Web. We discussed ways to fine tune customer acquisition so the business can scale faster. She said their PPC advertising has never yielded a good return on investment, so I suggested that she targets the most affluent zip codes in the country. I also suggest she continues to do more PR and all the SEO marketing, blogging, Tweeting, etc., that she is already doing to reach more customers. I believe this has the potential to become a very large business. I did research on this segment myself when I ran Uuma, my personalized fashion company for busy, professional women which Ralph Lauren was interested in acquiring in 1999. The roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million ( 1M/1M ). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ Methodology which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. You can find the recording of this roundtable session here . Recordings of previous roundtables are all available here . You can register for the next roundtable here . Photo by Svilen Milev . Discuss

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Startup Strategy Roundtable: Web 3.0 and E-commerce

In a memo released yesterday , the White House made it significantly easier for federal agencies to use everything from social networks to online forums. But with the newfound freedom comes a surprising caveat: User ratings and rankings on those services, the new guidelines warn, "should not be used as the basis for policy or planning." In other words, a million Americans can Digg or retweet an important blog post, but government officials shouldn't use that popularity as an indicator of the post's value. Sponsor That's not always a bad thing considering that a dedicated group of like-minded people can game a casual voting system. But the voice of a social network corresponds to real people in the real world. A recent study , for instance, found that Twitter chatter accurately forecasts box-office revenues. As a whole, the new guidelines [ PDF ] were sorely needed. Social media and other online activities fell under a law that arduously dictates how agencies handle written materials. Under the new guidelines, online activities are now considered a "public meeting," which gives agencies much more freedom to blog, hold virtual meetings or even run contests. That freedom comes with a stipulation. The memo was written by the White House's Office of Information and Regulatory Affairs administrator, Cass Sunstein. In it he explains that agencies should "exercise good judgment and caution when using rankings, ratings, or tagging" because they aren't "statistically generalizable." That's true, but it doesn't mean they're worthless. John Zogby, founder of polling firm Zogby International, told us last year that if you keep in mind that social networks don't necessarily represent the entire scope of the American people, then the data from them has "tremendous, tremendous value." At least 66% of all federal, state and local governments now use social media. It's still early in the current midterm election cycle, but candidates are already investing heavily in social media; Facebook, Twitter and YouTube are the rule, not the exception. Those candidates will take their online communities with them to Washington when elected. Where else would they expect to get input on public policy than from that same community of voices? Discuss

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White House to Federal Agencies: Beware Social Media Ratings and Polls