Growth5 Blog

Thursday, April 30, 2009

The Country Music Marathon: Mixing Passions Promotes Marketing

Now a decade old, the Country Music Marathon demonstrates a key marketing principle: Mixing Passions.

If you like to run and you like country music, you were in Nashville last weekend, pounding up and down the rolling terrain of the Music City. In all, more than 32,000 runners competed, colorfully clogging the city's arteries and flooding the economy with millions in tourist cash.

The marathon's incredible success - for the competitors, the city and the promoters - feeds on both running and music. Country music performers were strategically placed around the course to entertain the runners. Makes no difference that the runners only heard a few bars of a song as they dashed by; the creative combination of the two passions was enough to bring them to Nashville. (As if to compensate, all runners got into an evening concert free. )

If your service or product can be linked to another activity or idea that people love, consider the link. It might just give your marketing legs.

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Are You A Twitter Qwitter?

According to a Nielsen survey, 60% of users that sign up for Twitter don't come back the next month. They are Twitter Qwitters.

I am not a Twitter Qwitter because I never started. Why? I am not convinced I need to update people with what I'm doing. I use this blog to update people with what I'm paying attention to, they don't care what I'm doing.

I'm sure there are people out there that are great at Twitter. They are doing interesting things and thus have interesting tweets that people enjoy following. I am just note one of them. Not on the tweet side or the bird watching side.

This article in today's WSJ suggests Twitter's growth is five steps forward, three steps back because of the Twitter Qwitters:

1. A Nielsen survey reports that more than 60% of users who sign up for Twitter don’t return to the site the following month. So while Twitter’s traffic has catapulted to 6 million unique viewers each month, only 40% of new users actually stay to play.

2. a February interview with Charlie Rose, Twitter founder and CEO Evan Williams acknowledged that helping new Twitterers navigate the Twitter can be a challenge. “It`s very simple, although not obvious,” he said.

3. Nielsen Online CEO John Burbank says Twitter’s utility is still being developed, and users are waiting for it to add more of a clear-cut benefit to their lives... “I’m both surprised and not surprised by these numbers, because you do look at the growth they’ve had, and you expect that people are really finding value, but then you look at the nature of all the tweets that are published, and you say, well, maybe it’s not as valuable as maybe people hoped it was going to be.”
Am I missing out on something by not using Twitter? If you feel strongly enough about it, let me know.

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Tuesday, April 28, 2009

Who Are Your Sneezers?

One of the five key rules of building effective "buzz" is knowing and using "connectors" -- people who will tell your story to other folks -- especially the right ones.

At a meeting I was facilitating the other day, one of the participants called his connectors "sneezers." They, he said, are the "super connectors" -- the people who, when they sneeze, give other people colds.

Think about who your "sneezers" are. Are you keeping in touch? Do they know your story?

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Monday, April 27, 2009

First to a Billion in Annual Revenue: MySpace? Facebook? Twitter? Nope, Tencent

-Facebook hit 200 million users recently, their estimated revenue for 2009 is somewhere around $500 million.

-MySpace's CEO stepped down after 2008 revenue was disappointing: estimated at $600 million.

-Twitter is experiencing massive growth and probably not much revenue yet.

Meanwhile, it was Tencent, the Chinese web portal that runs Qzone (probably the largest social networking site in the world) announced $1 Billion in 2008 revenue. What can these Western companies learn from our friends in the East?

This article from China Business News offers some insight. Here are some of the highlights:

1. As ad sales slump in the recession, only approximately 12 percent of Qzone's revenue stems from online advertising with the rest coming from virtual item sales such as applications and avatars... online budgets in China are largely spent at four large news portals, which earn the majority of online ad revenue. This forces most "smaller" portals to find more innovative ways to monetize their traffic.

2. While Chinese social networks started out as mere clones of existing sites, they've managed to innovate the business models to create a very lucrative market by cementing the relationship between application developers and the site's user base.

3. Facebook may be afraid to become a marketplace for applications, because they are reluctant to be labeled as a social gaming network or a social app store. Instead, they are a self-styled guru of dynamic human interaction. If they opened up their platform to become an apps store, their major revenue streams would put them into a pigeonhole, calling their $15 billion valuation into question. They obviously don't want to be labeled as a "gaming platform" either, and don't want to fully depend on selling digital trinkets.
As MySpace tinkers with music, mobile and other services to increase their revenue, and Facebook figures out ways to place ads in feeds of user activity, Tencent & Qzone have proven that money can be made outside of advertising (88% in fact).

But I don't think that any of our US companies need to look all the way to China to figure out how to monetize their users. They need only to stop by Cupertino, CA and have a visit with Apple. This is a company that has learned to grab revenue from its "users" every which way. Music, music players, music player computer phones, music player computer phone apps, and I've heard they sell straight up computers as well.

Apple had $8.6 Billion in revenue last quarter. And without all of that time-consuming social networking stuff. ;-)

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Thursday, April 23, 2009

How Productive Are Your Meetings?

Yesterday we talked about an application called Tungle that sounds like a great tool for cross-platform meeting scheduling for your internal team and clients, vendors, etc...

But what about the meetings themselves. Are most of your meetings a highly productive use of your time, your staff's time, your clients, vendors?

Seth Godin blogged about meetings awhile back, here are his recommendations to improve meeting productivity:

  1. Understand that all problems are not the same. So why are your meetings? Does every issue deserve an hour? Why is there a default length?
  2. Schedule meetings in increments of five minutes. Require that the meeting organizer have a truly great reason to need more than four increments of realtime face time.
  3. Require preparation. Give people things to read or do before the meeting, and if they don't, kick them out.
  4. Remove all the chairs from the conference room. I'm serious.
  5. If someone is more than two minutes later than the last person to the meeting, they have to pay a fine of $10 to the coffee fund.
  6. Bring an egg timer to the meeting. When it goes off, you're done. Not your fault, it's the timer's.
  7. The organizer of the meeting is required to send a short email summary, with action items, to every attendee within ten minutes of the end of the meeting.
  8. Create a public space (either a big piece of poster board or a simple online page) that allows attendees to rate meetings and their organizers on a scale of 1 to 5 in terms of usefulness. Just a simple box where everyone can write a number. Watch what happens.
  9. If you're not adding value to a meeting, leave. You can always read the summary later.
I agree with many of these recommendations, particularly #2, #3, #7 & #9.

#2: It's ok to have a 7-minute meeting if you've accomplished what you've intended to. If you're the organizer, let everyone know that's all that's needed, ask if there are any questions, then, class dismissed.

#3: I'm working with our teams to give as much advance notice as possible for meetings, what it's about, what is meant to be accomplished, what is every one's homework, what items are to be explored/decided on, and how much time should the meeting take.

#7: Meeting organizer (or someone assigned) should keep meeting moving, go over every one's homework, push for the necessary decisions and decide on next steps. Same person should send out the summary of these items following the meeting; which may include the proposed agenda for the next meeting, homework, etc... as mentioned in #3 above.

#9: Only invite the people that are necessary to accomplish the meeting's goal. If you you don't follow this policy you are proactively deciding to waste people's time. Good rule of thumb: if they don't have homework, they may not need to be there.

Reminder again: It is in fact okay to have a 7-minute meeting. You can get a tremendous amount of back and forth accomplished in that time frame, and remember, that same back and forth via email could take a week and go nowhere. Sometimes it's better to get together quickly, get input from the team, make some decisions, plan next steps and move on.

As Seth recommended, you could have this quick discussion standing around the conference room table, or in the kitchen, or wherever.

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Wednesday, April 22, 2009

Tungle: The Answer to Cross Platform, Cross-Company Meeting Scheduling?

Web Worker Daily posted a blog yesterday about Tungle.

What is Tungle?

Tungle is a "calendar accelerator" that allows you to:
  • easily schedule meetings with anyone
  • share calendars inside or outside your company
  • allow others to schedule meetings with you
Our holding company has 4 internal companies (each with their own calendars), portfolio companies with their own calendars and of course clients, vendors, etc... We have debated on whether or not we should switch our own companies to Google Calendar, but even so, we would have portfolio companies on different systems. It seems like Tungle might be a solution to this problem.

Tungle currently supports Outlook, MS Exchange, Google Calendar, LotusLive (notes), iCal & Entourage and multiple platforms including Windows, Mac, and various Smartphones.

Some other highlights from the article:
1. User interface issues that Tungle addresses:
  • users want to be able to use their favorite calendar, productivity or social networking tool, not just Outlook
  • invitees should not be required to register with the service in order to respond to a meeting request
  • invitees require context-related help to guide them through the scheduling process
  • users wanted privacy options for calendar sharing: full details, busy/away status or no sharing
2. Features:
  • “Expert” and “Wizard” modes for meeting scheduling
  • context-sensitive “bubbles” that provide additional guidance to new users responding to a meeting invitation
  • time-zone adjustment for each participant’s geographical location
  • use of Google Maps to find meeting locations (for example, a convenient Starbucks) from within the “Location” field
  • BlackBerry, iPhone and other smartphone compatibility
  • a “Meet With Me” mode, where clicking on a button embedded in a web site or email link immediately takes the visitor into Tungle to schedule a meeting

3. One of the most interesting things Tungle learned through the beta testing period was that the tool actually makes meetings happen earlier, especially when three or more participants are involved. Using Tungle, the decision on a meeting time is accelerated, because a meeting that may have taken two or three days to schedule with multiple email exchanges can now be set up within a few hours.

4. Going forward, Tungle plans to incorporate the service into social networking platforms as well as collaboration and conferencing tools such as Webex and GoToMeeting.
After watching the online demo, the feature that caught my attention is the one that will allow me to drag my calendar openings to select my avails, then when I send the invite to say 3 other people, they will see those avails and pick which of them work best for them. Each time someone updates their avails the next person has fewer options (avails update concurrently as this process is taking place). The last person to respond basically sets the meeting by the avail they choose, then the meeting is booked... without the endless back and forth. This feature alone is worth giving it a try.

If we end up using Tungle, I will let you know how it works for us so you can decide if it might work for you.

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Tuesday, April 21, 2009

What Makes Messaging Viral?

If any of you watched Celebrity Apprentice a couple of weeks ago, you learned not once, but twice how NOT to make a viral video. Both teams videos were so bad and un-viral, the corporate sponsor, All Laundry Detergent, decided not to post either video online, but instead chose to make new videos with Melissa and Joan Rivers that got a whopping 3,456 views in its first week of airing.

According to Dan & Chip Heath in the May 2009 issue of Fast Company, there are 3 reasons why these videos didn't work. They believe the following three "secrets" are the active ingredients in making messaging viral.
1. The messaging must be emotional. "The French psychologist Bernard Rimé has found that people almost compulsively share emotional experiences (both positive and negative), and the more intense the emotion, the more likely they are to talk about it."

2. The messaging must contain some element of public service. Passing the message along will save your life, save you money, brighten your day by making you laugh, etc...

3. The messaging must contain a trigger. "A trigger is an environmental reminder to talk about an idea. For instance, a golf tournament is an excuse to trot out your public-service info about the state of Tiger's knee, and a cup of coffee reminds you to talk about Starbucks's no-decaf-after-noon policy."

"If you want people to talk about your product or service, you need to ratchet up one of these three traits. Consider a 360-year-old Finnish company named Fiskars, which makes orange-handled scissors. If ever there was a viral-marketing challenge, it's scissors -- a product with all the sizzle of a RAM upgrade. Brains on Fire, a brand-identity firm based in South Carolina, helped Fiskars find the emotion. "We knew we had to move from a product conversation to a passion conversation," said Spike Jones, the firm's "firestarter." Jones and his colleagues realized there was one community that was indeed passionate about scissors: arts and crafters.

They found four arts-and-crafts zealots and christened them "Fiskateers." Then Brains on Fire asked the Fiskateers to select additional compadres who would support other people in their crafting hobby. (Notice the added public-service element.) Since the project launched, there has been a 600% increase in online mentions of the Fiskars brand."

I have added Made to Stick by Dan & Chip Heath to my reading list. I'll post the highlights once I've read it.

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Friday, April 17, 2009

Fred Wilson Talks Venture Capital, Media & More

"A VC" by Fred Wilson of Union Square Ventures is one of my favorite blogs. He covers interesting topics both inside and outside the vc space. You can tell Fred is a super bright guy who still does his homework (in addition to relying on his experience), which I appreciate.

Recently, Fred spoke to a group of NYU & Columbia students at InSite. The hour plus talk/Q&A is here in 9 parts on YouTube - if you are in the vc space or are an aspiring entrepreneur, I recommend you check it out.

Some highlights:

1. Early in Wilson's career, his boss told him there were 3 terms that must be attained in every venture deal:
a) liquidation preference
b) preemptive rights: the right to participate pro-rata in future rounds &
c) the right to a board seat
2. "I don't think that the amount of time that you invest in a specific portfolio company has a lot of correlation to the return that you get. I think the quality of the management team and the quality of the market opportunity has a lot to do with the return that you get."

3. "The most important skill set in the vc space is networking. The most successful vc's are the ones that are hyper-connected."

4. "I look at early stage vc investments as 'options' not securities. A third of investments in early stage are worthless, a third we'll get our money back, a third will have some value."

5. Part 6 of 9 (below) includes an informative discussion of Paid Media vs. Earned Media.

Paid Media - defined as the "traditional" current $500 billion worldwide industry: media fees, creative, media buys, etc...


Earned Media - defined as media that you earn but don't have to buy: PR, word-of-mouth marketing, social media, etc...

Check out Wilson's deck for the Ad Age presentation on Earned Media here.

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Thursday, April 16, 2009

HP Launches Gabble & Why Beta Works

HP recently launched Gabble.

What is Gabble?:
Gabble is a private, web-based service that enables you to connect with important people in your life using video. Gabble has many cool benefits:

Private: Only those people invited to a private group can view videos in that group.
Easy: Simple registration and no download required
Flexible:You can use just about any computer or mobile device to record and view videos.
Trusted: Your video service will be managed by HP, one of the largest trusted IT companies in the world.

From the NYT:
...unlike Google’s YouTube service, which is geared to sharing with the masses, only people invited to your Gabble group can view your videos.

H.P. thinks that its orientation toward privacy will appeal to families uncomfortable making their home videos public and to businesses that want to use videos as a collaboration tool.

Of course, you can tweak the privacy settings on YouTube or Facebook to do much the same thing. But H.P. says that defaulting to private videos makes life easier on the average person. Make of that argument what you will.
HP is testing a variety of online, "cloud-like" services to see what sticks. If they "go viral and take off quickly" they will support them, if they don't, they will take them down quickly. This video experiment could drive HP's networking and storage gear businesses.

This is another example of how the scalability of the Internet allows a company like HP to test business concepts for a period of time relatively cheaply and if they take off, great, if not, they move on to other ideas.

Sure, HP can put more money towards these "test" projects than a majority of companies out there, but in a lot of cases these "tests" can be conducted on a small budget.

Test/Beta is a great way to see if your idea has legs without blowing through your whole budget. Beta allows for immediate feedback from your audience so you can adjust your product on the fly, find out what specifically the audience is enjoying about your product (and what they're not), what price points work in what combinations, can the product be distributed better, what marketing is being responded to, etc...

We tried this "test" launch with one of our portfolio companies awhile back and although the economy/bailout has hurt the company's overall success, without the test a lot more money would've been lost going down paths of development that we now know would've never worked.

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Tuesday, April 14, 2009

Mosquitos Were Mostly Safe Until Bill Gates Got Involved

I attended a barbecue over the weekend and was reminded of an article about mosquitoes I read recently. Where's your laser gun when you need it.

A few years ago, on behalf of the Bill and Melinda Gates Foundation, Bill Gates asked Nathan Myhrvold, a former Microsoft Corp. executive who now runs Intellectual Ventures LLC., a company that collects patents and funds inventions, to come up with new ways to get rid of mosquitoes.

The goal was to combat malaria, "which is caused by a parasite transmitted when certain mosquitoes bite people. Ended in the U.S. decades ago, malaria remains a major global public-health threat, killing about 1 million people annually. Efforts to eradicate the disease languished for years until recently."

At an Intellectual Ventures brainstorming session in 2007, Dr. Lowell Wood, the architect of the 'Star Wars' missile defense system, suggested using lasers on mosquitoes just as the US had used lasers to protect our citizens from Soviet missiles.

"Soon Dr. Wood, Dr. Kare and another Star Wars scientist teamed with an entomologist with a Ph.D in mosquito behavior and other experts. They killed their first mosquito with a hand-held laser in early 2008.

We like to think back then we made some contribution to the ending of the Cold War" with the Star Wars program, Dr. Kare says. "Now we're just trying to make a dent in a war that's actually gone on a lot longer and claimed a lot more lives."

The lasers can detect mosquitoes by their wing-beat. They are currently working on fine-tuning the power of the laser to make sure it kills mosquitoes but leaves other insects and humans unharmed.

"The scientists envision their technology might one day be used to draw a laser barrier around a house or village that could kill or blind the bugs."

And then once malaria is dealt with, hopefully we can pick up the mosquito laser device at a store near us.

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Quantifying the Value

Can you quantify the value that you offer your customers?

Traditionally, marketers draw the bright line between features and benefits with two simple questions. If it answers the question "What?", it's a feature. If it answers the question "So what?", it's a benefit.

Some go even further and argue that if it doesn't have a good answer to the question "What's in it for me?" (WIIFM), it isn't even a benefit at all.

Increasingly, in these difficult times, there is a further question: "How much is in it for me?"

Sales and marketing professionals who usually stopped at WIIFM are finding that they are losing to others who can quantify the benefits more clearly. It's especially challenging for professional and financial services professionals trying to sell intangibles like "experience" and "client service."

For example, imagine two large banks promoting their "global reach." Is the bank with offices in 80 countries more attractive than the bank with offices in 50? How much?

How about an accountant with 15 years of experience? Is he or she more valuable than one with 10 years? How much?

Consider a charity that serves 2,000 needy persons per year. Is it more worthy of a donation than one that serves 1,800?

The recession makes life tougher for anybody trying to sell anything. That's the downside. The upside is that it forces those of us who sell to explain our value proposition better.

And that's a good thing.

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Monday, April 13, 2009

How Much is a Trillion?

Who would've thought that the word "trillion" would just roll off our tongues so casually when talking about money. When President Obama or Tim Geithner or Ben Bernanke speak publicly about the economy and taxpayers help, the word "trillion" is commonplace. How bad is it when politicians put the word "only" before a number and the word "billion" - is that supposed to make us feel better? put together the graphic representation below. The images do a great job of providing context as to how much money a trillion dollars really is...

"We'll start with a $100 dollar bill. Currently the largest U.S. denomination in general circulation. Most everyone has seen them, slightly fewer have owned them. Guaranteed to make friends wherever they go.


A packet of one hundred $100 bills is less than 1/2" thick and contains $10,000. Fits in your pocket easily and is more than enough for week or two of shamefully decadent fun.


Believe it or not, this next little pile is $1 million dollars (100 packets of $10,000). You could stuff that into a grocery bag and walk around with it.

$1,000,000 (one million dollars)

While a measly $1 million looked a little unimpressive, $100 million is a little more respectable. It fits neatly on a standard pallet...

$100,000,000 (one hundred million dollars)

And $1 BILLION dollars... now we're really getting somewhere...

$1,000,000,000 (one billion dollars)

Next we'll look at ONE TRILLION dollars. This is that number we've been hearing so much about. What is a trillion dollars? Well, it's a million million. It's a thousand billion. It's a one followed by 12 zeros.

You ready for this?

It's pretty surprising.

Ladies and gentlemen... I give you $1 trillion dollars... (our red-shirted friend/guide is standing at the bottom left corner)

$1,000,000,000,000 (one trillion dollars)

Notice those pallets are double stacked.
...and remember those are $100 bills.

So the next time you hear someone toss around the phrase "trillion dollars"... that's what they're talking about."

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Thursday, April 9, 2009

Will You Pay For News Online?

Charlie Rose had an interesting segment about digital media yesterday.

The President & CEO of the Associated Press, Tom Curley, addressed ideas for how he feels his firm can get paid. Arianna Huffington, Founder & Editor of the Huffington Post offered that if companies like the Associated Press put walls around their content, people will go elsewhere.

Huffington argues that consumer habits have changed and companies like the Associated Press need to come up with new models that address those changes.

3:55 Huffington: "...I am confident that the only new models that will succeed will be those that embrace the 'link economy' - that embrace the internet. Any model that fights it, any model that tries to create walls is not going to work. In fact, I recommend very highly... anybody trying to make this work... read a book by Clayton Christensen, the Innovator's Dilemma, how do you deal with disruptive innovation. The internet is disruptive innovation, if you try to pretend that you can go back to the old world it's not going to work."

5:00 Curley: "There's a theory out there that all we have to do is make our stuff available and there will be enough traffic, there will be enough audience and we'll get proper compensation for that... I think most of us knew that free was never a business model that could really make it. The (business) internet experience for most has been a bomb. Unlimited competition, unlimited inventory, a bad customer experience, very difficult to hold a brand."

9:00 Curley talks about the industry needing to be paid differently because the advertising dollars won't be there. He explains how the AP plans to "hold back" information to get people to pay for it.

10:22 Huffington talks about consumer habits changing, they won't go to "one place" for news, they want to get their news wherever they are on the web.

16:45 Curley argues that someone is going to need to pay for the enormous cost of getting the news from the White House, Afghanistan, Iraq or wherever the news happens so we can get the news back and out to the world in a matter of minutes. "It's about a fair deal, and it's time that it ($) came back to the people that are doing the work."

I would recommend that the AP look very closely at what it is their clients/audience wants. It is not a good idea to try to force the old news distribution system onto the current audience in an effort to get paid. What is the benefit to that audience? Does the AP think the audience will be forced to accept the old system because there is no alternative? Curley should look at his own quote at the 5:00 minute mark - the internet provides: "unlimited competition, unlimited inventory, a bad customer experience, very difficult to hold a brand."

I think Charlie Rose had the best quote of the piece when speaking to Curley at 11:15 "..the reality you have to face is how people are seeking out the news that they want and how they are using a digital revolution to find it in a different way. And that if in fact you change that what has become to them free you are risking something that may very well be your own downfall."

Click the play button in the bottom left corner below to watch the full 17:47 segment.

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Flying to Quality

It's a global trend. When times are tough, people pick quality first. They invest in Treasury bills. They shop for better cars and homes. Somehow, when every penny counts, people think more about how they spend or invest their money. It's called "The Flight to Quality."

So, explain this: why do some companies cheapen their products and services in a downturn? True, people look harder for value when times are tough, but less quality at a lower price is not a "deal."

"We have to do more with less," everybody says, but they don't mean it. They mean less with less. And they're going to deliver it with a bad attitude. Count on it.

So if you want to position yourself to make good money -- in bad times and in the better times that are coming -- all you have to do is deliver good value when everybody else is delivering junk.

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Wednesday, April 8, 2009

Time Capsule

You should check out Apple's Time Capsule.

What is it? It's a server, wireless router, network coordinator, print hub, background wireless back-up machine and more.

What does it do?

Automatic backup with Time Machine.

Time Capsule works automatically with Time Machine in Mac OS X Leopard to create the perfect no-hassle backup solution. There are no cables, and you can back up all the computers in your home to a central location.

Storage icon
Server-grade storage.

The massive 500GB or 1TB server-grade hard drive gives you all the capacity and safety you need for backing up all your Mac computers.

Networking icon
Easy wireless networking.

Connect your DSL or cable modem to Time Capsule, then quickly set it up with the easy-to-use AirPort Utility, which is included for both Mac OS X and Windows. Within minutes, you and up to 50 others can use your Mac computers or PCs to surf the web, stream video, share photos, and more — without wires.

Dual Band icon
Simultaneous dual-band Wi-Fi.

For maximum range and compatibility, Time Capsule works simultaneously on both the 2.4GHz and 5GHz bands, allowing all the devices on the network to use the most efficient band automatically. And Time Capsule uses the latest 802.11n wireless technology so you can enjoy up to five times the performance and up to twice the range of 802.11g wireless networks.

Guest Networking icon
Guest networking.

Now you can set up a separate Wi-Fi network with a separate password for your visitors. Simply enable the new guest networking feature, and your guests can use the Internet but can’t access other parts of your private network, such as your computers, printers, and attached hard drives.

Drive Sharing icon
Wireless drive sharing.

Time Capsule also works great as a wireless hard drive, whether you have a Mac or a PC. It sets up in a snap, giving you a networked hard drive you can use for storing and sharing all kinds of files. If you're a MobileMe member using a Mac with Mac OS X Leopard, you can even access the files on the drive over the Internet.

Printer icon
Print without wires.

Print documents, photos, and more from any room in your home or office to a central printer connected to Time Capsule via USB. (See system requirements.)

Security icon
Strong security and access controls.

Protect yourself with the built-in firewall and industry-standard encryption technologies including WPA/WPA2 and 128-bit WEP.

AppleTV, iPhone, iPod touch icon
Works with iPhone, Apple TV and more.

Time Capsule works with Mac computers, PCs, iPhone, iPod touch, Apple TV, and virtually all 802.11a/b/g/n Wi-Fi wireless devices — all at the same time.

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Tuesday, April 7, 2009

Google Goes VC

I heard last summer that Google was thinking of opening a venture fund. I found out for sure last week when one of the best designers I've ever worked with, Hoby Albright, forwarded me this article from the NY Times the day before Google's official announcement.

Google Ventures, eh? I don't know. Perhaps Google should stick with acquisitions. As all you venture capitalists already know, the VC route takes a certain patience and expertise that large corporations have very little of - especially when these ventures have little affect on their bottom line over the long-term.

Last July, when Google was making noise around starting a VC fund, Union Square Ventures partner Fred Wilson wrote a post arguing that "venture investing is not the best use of a corporation's capital."

His two main points were:
  • "The best talent in the venture industry doesn't work in large companies and won't work in large companies."
  • "Corporate investors don't really share the profit motive with the entrepreneurs."
Here are Wilson's excellent arguments from that post:
  • All businesses are about talent and the best talent in the venture industry doesn't work in large companies and won't work in large companies. So corporate venture investors start with a big talent handicap and eventually face employee churn in their venture groups.
  • And to make matters worse, corporate investors don't really share the profit motive with the entrepreneurs. Let's say Google (or any other corporate VC) invests in a startup and buys 20% of it for $3mm. Let's say that startup is a huge success, sells for $1bn and Google (or any corporate VC) makes $200mm on the deal. None of the employees who made that investment get rich. The founders of Google and the CEO of Google don't get rich (they are already but that's not my point). The company "gets rich". But Google makes $1.5bn of pre-tax profits every quarter. So this big win generates another 12-13% to the bottom line, but just once. It's not a recurring gain.
  • And that's the big problem with corporate structures for venture investing. One time gains in corporations don't make anyone rich. Wall Street ignores the gain. The company can't put the gain into the pocket of its management. So it just doesn't matter very much.
  • Corporations have other motives for doing venture capital. But those motives aren't particularly well aligned with the founders, managers, and financial investors. So there's always tension in a corporate venture investment and it's not always healthy.
  • Please don't get me wrong. There are corporate investors in many of our portfolio companies. Six of our eighteen active and announced portfolio investments have corporate investors in their capital structures... We like working with corporate investors in the right situations and we'd certainly love to work with Google considering all that they bring to the table.
  • But I do think that venture investing is not the best use of a corporation's capital and that it is inevitable that it will produce sub-par returns at best and significant losses at worst. And as a Google shareholder, I'd prefer to see them do something else with all that money they are making.
It seems like it would be easier for Google to acquire a firm that has the tools/know-how developed already and just bolt it on than it would be to gamble with startups that churn thru capital and may or may not develop into anything that Google needs for itself or can make a decent profit from as an investor.

As a Google shareholder myself, I would rather they stick to acquisitions that are aligned with their growth strategy as a corporation and contribute to future earnings over the long-term. If they want to get in the VC space they should develop a fund of funds approach and hire an expert to allocate the capital to existing VC firms.

Along those lines, as a VC firm, if Google Ventures would like to invest in any of our portfolio companies, of course we'd be happy to work with them.

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Monday, April 6, 2009

The Hole in New York

From my hotel room, I look down into the hole that was the World Trade Center. Caterpillars grind their way through the mud, day and night, scratching at the scar that just won't heal.

New Yorkers, somehow always able to step around the ugliness in their city on their way to discover its many beauties, scurry up and down the sidewalk as if the defining disaster of this young century never happened. They duck into the gleaming towers around the hole, trade derivatives and complain about the market.

And I can't help thinking how much has gone down this hole. Thousands of lives all around the world. Billions of dollars. Countless billions of hours of wasted time.

And for what? Do you feel any safer now?


Jamie Dimon's JPMorgan Chase Shareholder Letter

Jamie Dimon's JPMorgan Chase annual shareholder letter is an excellent read. JPMorgan made nearly $6 billion in 2008, down from $15 billion in 2007.

Here are some highlights from the letter (also embedded below):

1. "We didn't write option ARMs (adjustable rate mortgages) because we did not think they were a consumer-friendly product. Although we made plenty of mistakes in the mortgage business, this was not one of them."

2. "...we deliberately avoided the structured collateralized debt obligation (CDO) business because we believed the associated risks were too high. Structured finance in its most complicated forms has largely disappeared after unleashing a myriad of problems on the financial system. They will not be missed."

3. "Simply put, we still follow the financial commandment: do not borrow short to invest long."

4. TARP: "...while it is easy to criticize the timing, marketing or consistency of the effort - we also recognize how hard it is to act boldly in difficult and dangerous times... We hope that our leaders will continue to be bold and brave in seeking solutions to these once-in-a-generation problems."

Starting on page 14 Dimon comments on the crisis. He tackles its causes, the response and what to do going forward to prevent another one.

5. Dimon goes into detail on what he feels caused the crisis:
  • The burst of a major housing bubble;
  • Excessive leverage pervaded the system;
  • The dramatic growth of structural risks and the unanticipated damage they caused;
  • Regulatory lapses and mistakes;
  • The pro-cyclical nature of virtually all policies, actions and events; and
  • The impact of huge trade and financing imbalances on interest rates, consumption and speculation.
6. "Basically the whole world was at the party, high on leverage - and enjoying it while it lasted."

7. "Clearer heads will understand that much of this was not malfeasance - our world had changed a lot and in ways that we didn't understand the full potential risk. But when the panic started, it was too much for the system to bear."

8. "Perhaps the largest regulatory failure of all time was the inadequate regulation of Fannie Mae and Freddie Mac."

9. "Too many regulators - with overlapping responsibilities and inadequate authorities - were ill-equipped to handle the crisis."

10. "The real measure of strength for a country - or a company - is not whether we have problems but how we learn from them, overcome them and emerge better for it."

Here is the letter:
2008 Jamie Dimon Letter to JPMorgan Chase Shareholders on Scribd

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Friday, April 3, 2009


Okay, I'm 60 today.

I was born before commercial television. When polio was a big problem. When Ike was just a general. Several wars, hot and cold, ago.

People congratulate me, as if three-score is a big accomplishment. But all I had to do was put one foot in front of the other, and here I am.

On the other hand, lots of other people deserve to be thanked. They raised me and taught me and paid me and supported me and loved me and worked with me and tolerated me and played with me and even listened to what I had to say.

For me, surviving to 60 is no big deal. They deserve the congratulations.


T. Boone Pickens: The First Billion Is the Hardest

I just finished reading The First Billion Is the Hardest: Reflections on a Life of Comebacks and America's Energy Future by T. Boone Pickens.

Pickens is the billionaire (barely these days) oil tycoon from Texas who is now developing wind farms and is pushing his energy plan.

I read this book for two reasons:

  • I like to learn how other entrepreneurs navigated their path to success; Pickens has had to start over a few times and each journey was an interesting read
  • I wanted to learn more about alternative energy and Pickens' plan to reduce our dependence on foreign oil. He has been ahead of his time in the past, and has been with this initiative as well, our country will soon be forced to catch up.
The book is strewn with "Boone-isms" - sayings that remind me of the ones Pickens' fellow Texan Ross Perot used way back when during his campaigns. Must be a Texas thing. Here are a few that caught my attention:

  • Be willing to make decisions. That's the most important quality in a good leader. Don't fall victim to the "ready-aim-aim-aim-aim" syndrome. You must be willing to fire.
  • I told a friend, 'This is the kind of market that builds character.' He looked at me and said, 'If it gets any worse, you'll have more character than Abe Lincoln.'
  • I find the more generous I am, the more I get in return, and the more I get in return, the more generous I am.
  • A fool with a plan can outsmart a genius with no plan any day.
  • Show up early. Work hard. Stay late. Work eight hours and sleep eight hours and make sure they are not the same eight hours.

The most helpful Boone-ism to me: "Action leads to more action." In economic times like we are experiencing, sometimes it feels like the right thing to do is to take a "wait and see" approach, and be more cautious. As Greg reminded us yesterday, the time for action is now. We need to be more aggressive, more proactive vs. reactive, get out there and go after it. If we're not doing that, what are we doing?

I recommend this book for entrepreneurs. If you want to learn more about alternative energy, read Pickens' plan online, skip the book.

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Thursday, April 2, 2009

NOW Is the Time

There's an old saying that the best time to plant a tree is 30 years ago....and that the second best time is NOW.

Add this note to the thousands that have pointed out that this is the time to invest in the market, to reach out to your customers, to invent a new product, and to launch a new career. So why aren't more people doing just that?

Low energy. They don't call this a Depression for nothing.

It's just soooo hard to move when there seems to be so little traction available.

Yet there is opportunity everywhere. If you want some for yourself, you don't need inspiration, credit, or an engraved invitation. Just move. And if the traction is bad and you slip, get up and try it again.

"Nobody rings a bell when the market hits bottom," is the oldest saw in financial services.

Well, ding.

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Time Management/Self Control Help via software

How often do you check your email throughout the day? Does it ever get in the way of work you are supposed to be doing? How about time on Facebook?

Sometimes when we need to focus on a project, it's hard to allow ourselves to not be interrupted by ourselves... email, Facebook, Twitter,, etc...

From Wired: "Eyebeam Lab's Steve Lambert, creator of Add-Art and co-creator of the New York Times spoof, released an application over the weekend that solves the problem: SelfControl, a simple open source program for Mac OS X that prevents you from resorting to well-worn procrastination techniques by blocking access to websites and e-mail servers.

"I made it because I found I checked my e-mail almost subconsciously, even when I wanted to focus," said Lambert via e-mail. "It was just too easy."

SelfControl runs a blacklist to which you can add specific sites, incoming mail servers or outgoing mail servers. This lets you customize the program to block only your personal time sinks while maintaining access to whatever you need for work or school.

"For example, you could block access to your e-mail, Facebook and Twitter for 90 minutes," reads the description, "but still have access to the rest of the web."

If any of you out there use this, please let me know if it works for you. I won't be able to download it any time soon, I have too many emails to catch up on.

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Wednesday, April 1, 2009

Top Ten Hedge Fund Managers for 2008

Disclaimer: the amounts these managers made are real, although it looks like it, this is not an April Fools' joke!

From Alpha Magazine:

"Times may be tough for most folks, but not for the top moneymakers on Alpha magazine’s eighth annual ranking of the world’s highest-earning hedge fund managers. They took home, on average, an anything but average $464 million apiece in 2008. Four hedge fund managers took home more than $1 billion each. Altogether the 25 highest-earning hedge fund managers made $11.6 billion, making 2008 the third-best year on record since Alpha began compiling its exclusive ranking.

Alpha uses two components to calculate earnings: the managers’ shares of their firm’s performance and management fees, as well as gains on their own capital invested in their funds."

The index below is a guide to the profiles of this year’s top-earning managers. Click on the bolded names below to read the top 11 hedge fund managers' profiles.
Rank Name Firm Name 2008 Earnings
1 James Simons Renaissance Technologies Corp. $2.5 billion
2 John Paulson* Paulson & Co. $2 billion
3 John Arnold Centaurus Energy $1.5 billion
4 George Soros Soros Fund Management $1.1 billion
5 Raymond Dalio Bridgewater Associates $780 million
6 Bruce Kovner Caxton Associates $640 million
7 David Shaw D.E. Shaw & Co. $275 million
8 Stanley Druckenmiller Duquesne Capital Management $260 million
9 (tie) David Harding Winton Capital Management $250 million
9 (tie) Alan Howard Brevan Howard Asset Management $250 million
9 (tie) John Taylor Jr. FX Concepts $250 million

*John Paulson has made piles of cash off of the credit crises. "As early as 2005, he was shorting risky pools of collateralized debt obligations and buying credit default swaps on the cheap. Last year he persisted in his bearish ways, which added enormously to his already huge pile of wealth. Although he didn’t repeat his eye-popping results of 2007, when he led the top-earner list with a $3.7 billion payday, most of his funds were up by double-digits, including the biggest — Paulson Advantage Plus — which surged 37.6 percent net of fees."

Where is Paulson looking in 2009? He recently invested $1.3 billion in gold.

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Twitter, MySpace, Digg & Facebook: The "Real" Numbers

Since it is April Fools' Day, these "scientific" charts seem appropriate.

The site Brainz did some excellent overview charts of the various popular networks. Again, not scientific, but it it feels right...

[hat tip: VentureBeat]

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Crisis of Credit Visualized In Simplest Terms

If you don't understand why we are in the mess we are in, take next 11 minutes and 15 seconds to watch Jonathan Jarvis' masterful explanation. Seriously, it's extremely well done and easy to follow.

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

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