Growth5 Blog

Tuesday, March 30, 2010

A Verizon iPhone? And 15 Features Apple Must Build Into OS 4

The Wall Street Journal reported today that Apple may be developing an iPhone for Verizon. The new iPhone is being developed to work on a CDMA network. Verizon Wireless and Sprint Nextel use CDMA technology.

What's exciting about the possibility of a Verizon iPhone is that it might actually be able to be used as a phone. Additionally, its apps, web browsing and email functionality could be used without any help. I have been on the Verizon network with my iPhone for quite some time via the Verizon MiFi for everything except calls. I love the MiFi, but it is frustrating to have to pay for it each month in addition to paying AT&T for a "network" I rarely use.

The move makes great sense for Apple and Verizon, not so much for AT&T. So long AT&T, I hardly used ya.

The Verizon iPhone wouldn't be out until late this year, presumably running OS 4. About a month ago, Business Insider talked to a handful of iPhone app developers and put together the following list of 15 Features Apple Must Build Into iPhone OS 4. Here's some of the items we can hopefully look forward to. Check out the article for details on each:
  1. Background processing for third-party apps
  2. Music API for background audio
  3. iBooks and the iBookstore
  4. An amazing mobile ad system
  5. Overhaul push notifications
  6. A better iPhone lock screen
  7. Text and multimedia messaging from within an app
  8. A unified inbox for all your email accounts
  9. Better access to the camera for augmented reality and photo apps
  10. Wireless sync to iTunes
  11. Important update to in-app purchasing for virtual goods
  12. Ways for apps to talk to each other
  13. Spotlight search within apps
  14. An App Store overhaul
  15. Support for more than one Exchange account

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Friday, March 19, 2010

Google TV

Google, Intel and Sony have teamed up to develop a platform called Google TV. The platform will bring the Web into the living room through a new generation of televisions and set-top boxes.

You can read all about it here. The highlights:
1. For Google, the project is a pre-emptive move to get a foothold in the living room as more consumers start exploring ways to bring Web content to their television sets.

“Google wants to be everywhere the Internet is so they can put ads there,” said one of the people with knowledge of the project.

2. For Intel, the effort represents a way to get its line of energy-efficient Atom chips, currently found in laptops, into TVs.

3. For Sony, they have struggled to retain a pricing and technological advantage in the competitive TV hardware market, this project is an effort to get a leg up on competitors.

4. The partners envision technology that will make it as easy for TV users to navigate Web applications as it is to change the channel.

5. Google intends to open its TV platform which they hope will spur the same outpouring of creativity that consumers have seen in applications for cellphones.

6. Logitech, which specializes in remote controls and computer speakers, will be utilized for peripheral devices, including a remote with a tiny keyboard.

7. The Google TV software will present users with a new interface to perform Internet functions like search while also pulling down Web programming like YouTube videos or TV shows from Hulu.com.

8. The technology will also allow downloadable Web applications, like games and social networks, to run on the devices.

9. Three years ago Google attempted to break into television advertising through a program called Google TV Ads, selling advertising on satellite, cable television systems and cable networks. Considered a flop so far.

10. The partners will face a crowded field. Microsoft, Apple, TiVo and start-up companies like Roku and Boxee, already stream video from Netflix, MLB.com and other Web sites directly to television sets. Yahoo is also promoting a TV platform that uses small software programs called widgets to use certain Web services.
Update: Shortly after posting, I received an email from Daniel Maxson of Newsy.com – a startup that "is a multi-source online video news site that monitors, analyzes and presents the world's news coverage." Daniel provided me the link to Newsy's video on Google TV which is embedded below and here.

Check out Newsy.com. Thanks Daniel and Good Luck to Newsy.com!


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Wednesday, March 17, 2010

Increase the Battery Life of Your Smartphone

My biggest problem with the iPhone is that it's on the AT&T network. That's why I got the MiFi from Verizon - I use it all the time.

My 2nd "don't like" about the iPhone is how short the battery life is. This article from the NY Times provides the following tips for extending the battery life of your smartphone. I want to pass these tips along because I read this article a week ago, have implemented the ideas and have seen decent results. Check out the full article for more details, here are the highlights:
1. Reconsider your network (if you can). C.D.M.A (Verizon) uses more power than a G.S.M. network (AT&T and T-Mobile). Perhaps T-Mobile would work. AT&T saves you power by dropping your calls (in my experience – not sure that's actually their strategy).

2. Dim It. Turn down the brightness of your screen, save power.

3. Stop Searching. Turn off Wi-Fi and headset features when you're not using them as your device will continue to search for them. You can also put your phone to sleep when you are in standby mode. Go to "settings" on the iPhone, "Manage Connections" on your BlackBerry.

4. Skip a Generation. If your G.S.M. 3G network is not available or the signal is weak, the battery will drain looking for it. Consider turning off 3G. If all signals are weak, turn off mobile capabilities to save power until you reach a better cell location.

5. Check Mail Manually. Turning off auto-checks every "X" minutes or "push" technology will save power.

6. Turn Off Everything. Put your phone into "airplane mode." It turns your phone into a music player and personal organizer. No emails or calls, but your battery will last longer. “In airplane mode and running just the alarm clock, your iPhone battery will last up to a week,” said Kyle Wiens, co-founder of ifixit.com.

7. Disable the Animations. One of the biggest users of power is Flash animation. If your device has Flash, you can disable it to save power.

8. Get an App to Aid You. Battery Go and myBatteryLife tell iPhone owners how much charge they have left and how that power translates into minutes of talk time, music, video and Web surfing.

NB BattStat alerts BlackBerry owners to the amount of battery charge remaining, as well as the battery’s temperature. (Hot batteries lose power more quickly.) The device can be set to vibrate or sound when a predetermined low battery level is reached.

9. Realize the End Will Come. Lithium ion batteries typically last between 300 and 500 cycles. “If your battery lasts only an hour after you’ve charged it,” said Anthony Magnabosco, owner of Milliamp.com, a battery replacement company, “you know its time is up.”
photo credit: Andy Chen/NYT

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Tuesday, March 16, 2010

Don't Be In a Hurry to Grow Your Startup Too Fast

In this Entrepreneur Thought Leader Lecture at Stanford University, Angel investor Ron Conway (over 500 investments) and fellow investor Mike Maples Jr. of Maples Investments discuss ways to stay competitive and make your money last.

Tip one: Don’t be in a hurry to grow your staff as fast as you might be tempted.

The short clip (3:36) embedded below and here, contains the following advice:
1. MM: "Companies that have low burn rates, buy themselves hugely better probabilities of getting lucky over time."

2. MM: "You've got to be willing to not be too formulaic about when do you turn over another card, you gotta be willing to really talk to people that you trust and get their sense of perspective about whether it's time to give up or time to be persistent. I don't think there's any other rule than keep the burn low."

3. RC: "A million bucks better last over a year, roughly... If you start with three people, at the end of year one you shouldn't be more than five or six, that's plenty. Companies are most productive when they're less than ten people."

4. MM: "One observation that complements low burn rates – having a customer development strategy in addition to a product development strategy... There's a really good book written by Steve Blank who started E.piphany, called The Four Steps to the Epiphany. The basic thesis of the book is that companies should do customer development in parallel to product development." And have milestones for both.

5. MM: "That's the brave new world of entrepreneurship: low burn experimentation done a lot, find out the winning answers, discard the losing answers, but don't scale until you know it works. Discover the business before you scale the business."


via VentureBeat's Entrepreneur Corner.
Thanks Grace!

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Monday, March 15, 2010

Sean Carton: 10 Modern Marketing Myths

In today's ClickZ article, Sean Carton takes a look at several (post) modern marketing myths and knocks them down. Please read the article for full explanations and supporting data for each. Here is a recap:
1. Social Media Belongs to the Young. "Look at the statistics on social media usage and you'll see that "the kids" are actually a lot less likely to use social media. Seventy-seven percent of mobile social network users are over 25 and 43 percent are over 35. More than 50 percent of Facebook users are over 35. As for Twitter, while the 24 and younger set make up the fastest growing segment of the services' users, 52 percent of all users are over 35."

2. Print Is Dead. "Print still has an important role in the overall marketing mix, as evidenced by studies such as this one that looked at catalog sales and found that print catalogs are still big drivers of revenue (because people like to browse print and then buy online). Print catalogs have a greater emotional impact than an equivalent product listing on a Web site. Every type of media has its place and is best used for what it's best at (the emotional impact of print or the ease of online purchasing)."

3. If You Want to Drive Traffic, Put All Your Money Into Online. "...this study (and many others over the years) shows, offline media is often one of the biggest drivers of online behavior. And, interestingly enough, broadcast media - TV and radio in particular - often builds the kind of awareness that consumers need in order to be driven to a particular site."

4. In Online Display Advertising, It's All About the Number of Impressions. "True, increasing your impressions will increase your exposure to your targets, but as John Burbank, CEO of Nielsen's online division so aptly puts it, dishing up lots of impressions isn't enough...you also have to serve and engage your target audiences in order to reach them online."

5. If You're Thinking Mobile, It's All About the iPhone. "...the iPhone only holds 25 percent of the smartphone market. If you only concentrate on the iPhone, you're missing out."

6. Video Games Are for Teenage Boys. "According to a recent report published by Deloitte, the popularity of video gaming is surging among older populations."

7. Mobile Advertising Is [Insert Adjective Here]. "There's data to show that mobile advertising far surpasses online advertising in terms of effective ROI (define). Then there are studies that demonstrate that a heck of a lot of consumers don't even know they can get online with their phones.

On the other hand, the Interactive Advertising Bureau says that mobile is fantastic for driving brand awareness, while other folks see mobile as the future of marketing.

Who's right? Probably everyone...and no one. Speaking of "mobile" as one homogeneous medium is wrong. There are a dizzying array of platforms, an alphabet soup of OSes, and huge variations in consumer sophistication when it comes to using these devices. Until the great "mobile wars" are over and we settle on a couple of OSes and comparable experiences across devices, it's wrong to take a monolithic view of mobile marketing."

8. It's Enough Just to Drive People to My Site. "It's not just enough to drive people to your site if you're looking to capture their information, drive sales, or generate response of any kind. To be effective, you need to match your landing pages to your campaign."

9. ["X" Social Media Platform] Is the Place to Be. "Even though one platform or site is big today, history shows that putting all your eggs in one virtual basket is a bad idea. Popularity rises and wanes in unpredictable ways that seem unlikely at the time but later come to light as audiences move on to the next big thing... [See Sean's Social Media Timeline as Exhibit A]

...But there's another issue, too: not all social media platforms are equal. They don't all share the same demographics, they're used for different things, and they're different in terms of consumer engagement. A Facebook status update isn't the same as a tweet (or vice versa), but both have their place in terms of conveying different kinds of information. Study what you're doing and use the right tool for the right job."

10. Everyone Else Is Doing a Better Job Than Me. Finally, there's the feeling that "everyone else" (whoever they are) is doing a better job than you when it comes to online marketing. They've got better measurement tools, more successful campaigns, and are more savvy about delivering ROI for their online media campaigns than you are...

...Never fear! If you peek behind the curtain, you'll discover that "more than 40 percent of marketers don't even know whether the social media tools they're using were capable of measuring ROI!" And that's just the people who were honest enough to share the fact they didn't know something - not an easy thing to admit.

Other studies make it clear that we're all still figuring this stuff out. Anyone who tells you that they know "the answer" is a fool or a snake oil salesman."

Sean is the Chief Creative Officer of our interactive agency, idfive.

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Thursday, March 11, 2010

Mobile Internet: Almost Three Hours a Day for Americans

MarketingCharts.com put together this post on Mobile Internet usage. Americans spend almost three hours online via their mobile devices each day, according to a new study of mobile internet use by Ruder Finn.

“Mobile phones have become the way people organize their lives - managing finances, connecting with friends, purchasing products - and this trend will only accelerate,” said Kathy Bloomgarden, Ruder Finn co-CEO.

The mobile phone is becoming the most powerful online device, and the faster businesses can adapt their services to harness consumer mobile intent, the more rapidly they can capitalize on understanding their customers to drive growth.

Some stats:
1. As of Q4, 2009 – 234 million people age 13 and older in the US used mobile devices.

2. 91% of mobile users go online to socialize. "Traditional" web users (desktop PC, laptop) go online to socialize 79% of the time.
Other activities users do on the mobile web:
3. 62% send and receive instant messages

4. 58% forward emails

5. 45% post comments on social networking sites

6. 43% connect with others on social networking sites
Mobile phone use differs by gender and age:
7. When shopping, men are more likely than women to compare prices (47% vs. 30%), but women are more likely to purchase (40% vs. 30%).

8. Men (79%) are much more likely than women (61%) to use their mobile phone to simply “escape.”

9. Youth (44%) are more likely to shop over their mobile phones than the average mobile user (35%).

10. Seniors (82%) are much more likely than the traditional user (64%) to use their mobile phones to educate themselves.
This is what your customers are doing online using their mobile device nearly three hours a day. What are YOU doing to reach them during this 18.75% chunk of their waking day. Are you targeting your marketing to these users where they are looking? If not, you're wasting your money and your shareholders money. Eventually you will hear from them about it, probably via a text.

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Tuesday, March 9, 2010

Myth: Social Networking is for the Youngsters

Our Chief Creative Officer, Sean Carton, forwarded these articles (Tech Crunchies, NY Times) reminding us that social networking / social media is not just for young people. Your audience, no matter the demographic, is involved in social networking – at home, at the office and especially on the go (mobile). The highlights:

Tech Crunchies
1. Nielsen presents an age-wise breakup of mobile social network users based on data for December 2009.

13-17 : 7%
18-24 : 16%
25-34 : 34%
35-54 : 36%
55-64 : 5%
65+ : 2%

2. Women use social networks on their mobile devices more than men 55% - 45%.
NY Times
3. Facebook now has more than 400 million active users, up from only 50 million as recently as 2007.

4. Facebook has attracted many “olds,” and they tend to stay put (AOL). More than 50 percent of Facebook’s members in the United States are 35 or older, and only 26.8 percent are 24 or under, according to an analysis of December visitors by comScore Media Metrix.

5. Economists use the term network effects to refer to the way the value of a product or service increases in tandem with the number of people who use it. If you’re one of only 10 people in the world with an e-mail account, its usefulness is limited; add a billion more, and the practical value of yours increases apace.

For an individual member, the most powerful network effects may be indirect ones that come from the huge number of unknown other people in the Facebook world. Their mass attracts, in turn, suppliers of complementary products and services.

For Windows, the enormous installed base attracted third-party software developers, which in turn drew more users. Apple’s iPhone has had a similar virtuous cycle. So, too, on Facebook, developers of applications like FamilyLink, Marketplace and iLike’s Music create a software universe with seemingly infinite choices. And that attracts more users — and still more developers.
Network effects is not an age-specific concept. Social networking is attracting users of all ages and keeping their interest. If your marketing plan doesn't contain at least some aspect of social media, you are probably advertising where a lot of people are no longer paying attention.

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Monday, March 8, 2010

Warren Buffett: Buy and Hold Forever (or as long as you can)

At some point here soon we will be blogging about the recently released Berkshire Hathaway annual shareholder letter – Mr. Buffett is always good for some tidbits of investing wisdom.

In the meantime, Financial Services Technology put together the chart below (click to expand) showing the companies in the Berkshire portfolio, what year they were purchased, and whether or not Berkshire owns 100% of the company (company names with the black background) or just a portion of the company (company names with the white background). The partial ownership companies circle is sized to show the % that Berkshire owns - the smaller the circle, the less Berkshire owns of that company.

The chart was created shortly after Berkshire announced its plans for their largest ever acquisition: Burlington Northern Santa Fe Corp ($26.5 billion). Buffett indicated he would need to sell some previous acquisitions in order to have enough cash to complete the transaction for the rail company and still have a "safe" amount of cash left over in Berkshire.

The sale of any assets goes against Buffett's "Buy and Hold Forever" philosophy, but being patient allows Buffett to make moves for companies like Burlington where he feels he can get significant long-term cash flow that he estimates will exceed the future cash flows in the businesses he needs to sell to make the deal.

Buffett's experience in insurance helps to drive his philosophy in equities. In Berkshire's insurance businesses, Buffett and his team are able to invest the "float" (premiums being held to pay future claims) which provides him with what he calls "pretty cheap capital."

When Berkshire buys entire companies, Buffett intends to invest the cash flow from those businesses annually – helping to compound his annual returns while simultaneously increasing the value of the same businesses. Buffett cares much less about what the value of Business X is today though because he never intends to sell it. But it's nice to know the value is there if he needs to.

Disclaimer: the chart below is not perfect, there are some typos, not all of the BH investments are on there, etc... but it does illustrate Warren Buffet's Buy & Hold Forever investing philosophy pretty well. This is not a man constantly flipping companies on speculation.

(Click to expand. When you get to the next screen if you see a little magnifying glass when you hover over the chart, you can click again to make it even larger and thus more legible.)



Thanks to Sean Cohen for forwarding this chart.
Thanks Ted for help with fixing/loading FST's chart.

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Friday, March 5, 2010

Guy Kawasaki: The Art of Raising Venture Capital

Greg sent me the embedded video clips below from Guy Kawasaki's blog on The Art of Raising Venture Capital. If you are an entrepreneur in the position of raising early stage capital, or you will be trying to raise capital at some point in the future, I strongly recommend you check out these clips. All three total just over 21 mins. [A 'heads up' - and I apologize ahead of time, there is a tiny bit of NSFW language sprinkled throughout the talk.]

Guy speaks about the Five (plus one) most important factors for raising capital from VCs – including how your pitch should be organized. Check out the clips below or at the link to Guy's blog above. If you don't have 21 mins, here is an overview of Guy's talk:

1. Do something worth funding. Can your business be sold for $100mm or more down the road? If not, you are not likely to get funded.

2. You can explain your business in 15 seconds or less. How good is the idea? Guy explains the 15 second concept as being like the site "Hot or Not" vs. a site like eHarmony. He wants to know right away how "hot" the idea is, he's not looking to date you or become your friend so he doesn't have time to sort through all of the various algorithms you've developed as to why he should invest (eHarmony).

3. It's a clean deal. No lawsuits, no relatives in your company (your uncle isn't the one putting the corporate docs together. No IP issues, etc... In the 2nd meeting, admit where you aren't clean - it will come out in due diligence anyway, better to be seen as up front and honest.

4. Like it or not, PPT is the standard for the pitch. Utilize the "10-20-30 rule" – 10 slides in 20 minutes and smallest font size you use is 30 points. When you have too much text in your deck, you are proving you haven't rehearsed your talk enough. When you are reading the text word-for-word from your slides, you are proving yourself to be "a bozo."

Here are the ten slides you should use:
Slide 1 Title slide: company name, contact info (email address, phone number, address).

Slide 2 Problem slide: what pain are you solving?

Slide 3 Solution slide: how are you solving that pain?

Slide 4 Business model: how you make money solving that pain.

Slide 5 Underlying magic: to the extent possible, list your underlying magic – doesn't have to be technology, could be the unique experience your team brings to the company, an exceptional skill set your team has, etc..

Slide 6 Marketing & Sales: how will you go to market (don't just say you're going to be viral, or that word-of-mouth is going to carry you as Guy points out that both of those factors are largely based on luck).

Slide 7 Competition slide: don't just do a matrix with your column having all the check marks vs. the comp companies having a couple. Guy thinks you should do a slide that shows what you can do that the comp companies can't AND vice-versa – what you can't do that that the comp companies can. This will show that you're honest, you understand the space and thus if you really have something, the VCs will believe you.

Slide 8 Team slide: most interesting companies have unproven teams, as a result, Guy feels this slide is not as important as most VCs will tell you.

Slide 9 Projections: one slide only. The most important part is not the # of the dollar amounts, it's the metrics used to get there. Guy adds one year to the next item on the timeline and divides all numbers by 100.

Slide 10 Status and time line: where is your firm now and where are you going?
5: Drill a lot of holes, it's a numbers game. It would be great to get money from Sequoia or Kleiner Perkins, but at the end of the day, you either got the money or you didn't and all money is green. Knock on a lot of doors.

6. Bonus factor, bring VCs a business where "the dogs are already eating the food." If you show up at a vc firm and you say, "using our credit cards and family money, about $100k total, we used MySQL, PHP, WordPress, and Ruby on Rails, we created this site, we opened it up. The first month we had 10k subscribers, the second month 20k, the third month 80k.

We need money for servers and to scale. We need an adforce because we have more impressions possible than we can have ads, we have excess inventory, we need money to grow.

Bring VCs a company that is scaling too fast, without question, you will get funded.

Part 1


Part 2


Part 3

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Thursday, March 4, 2010

Cage Free Data

Interesting article here on why Google is making it easy for users to leave Google. Their in-house "Data Liberation Front" (DLF) has one goal – Cage Free Data – "making it simple for people to leave Google's many services, taking emails, photos, and documents along with them." Highlights:
1. Google Docs now supports a download option wherein you can batch select multiple docs, Google will zip and email them to you as long as the zip file size is less than 2GB.

2. DLF team leader, Brian Fitzpatrick, started the project after realizing that despite Google President Eric Schmidt's continued dialogue about not locking Google users in, Google wasn't necessarily making it easy for users to leave if they wanted to.

3. Fitzpatrick says, "If you create a user base that's locked in, there's no way you're not going to become complacent."

4. "Google's data openness helps the company avoid this sort of public criticism in the event of service shutdowns, as when the company closed its Google Notebook product."

5. Nicole Wong, Google's Deputy General Counsel, commented that DLF matters to Google for two reasons: a) it provides control to users and b) "when we say our competition is one click away," initiatives like DLF prove that it's true.
It's great that Google is trying to keep data cage free (although not all data of course) but we need to remind ourselves that there are other motives involved. The quote from Google's counsel in #5b above probably should have said:
b) "when we say our competition is one click away, we have clearly demonstrated that we are not a monopoly and should not be mentioned in the same sentence with the word antitrust. Thank you."
FYI: Google will send you a DLF sticker...
Google: Our stickers are gorgeous full-color 3" x 5" vinyl stickers that look just as good on a laptop as they do on an egg carton, and if you'd like to get one, just send a self-addressed stamped envelope to:

The Data Liberation Front
c/o Google
20 W. Kinzie, Floor 9
Chicago, IL 60610

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Wednesday, March 3, 2010

Are You the CEO of Your Job?

The NY Times recently published this interview with Mark Pincus, CEO of online social game maker Zynga. I enjoyed his thoughts about "being the CEO of your job," what he looks for when hiring, and "O.K.R's" – here are the highlights from the conversation:
1. "One thing I did at my second company was to put white sticky sheets on the wall, and I put everyone’s name on one of the sheets, and I said, “By the end of the week, everybody needs to write what you’re C.E.O. of, and it needs to be something really meaningful.” And that way, everyone knows who’s C.E.O. of what and they know whom to ask instead of me. And it was really effective. People liked it. And there was nowhere to hide."

2. Did everybody want to be C.E.O. of something?

"There are people who want the comfort and structure of a job where they’re given tasks and told what to do. I think it’s actually a minority of people. The majority of people don’t want that, but I’d say that the companies I've built are full of people with something to prove."

3. "I also like to hire people into one position below where they ought to be, because only a certain kind of person will do that — somebody who is pretty humble and somebody who’s very confident."

4. "John Doerr [the venture capitalist] sold me on this idea of O.K.R.’s, which stands for objectives and key results. It was developed at Intel and used at Google, and the idea is that the whole company and every group has one objective and three measurable key results, and if you achieve two of the three, you achieve your overall objective, and if you achieve all three, you’ve really killed it.

We put the whole company on that, so everyone knows their O.K.R.’s. And that is a good, simple organizing principle that keeps people focused on the three things that matter — not the 10."

5. "I ask everybody to write down on Sunday night or Monday morning what are your three priorities for the week, and then on Friday see how you did against them. It’s the only way people can stay focused and not burn out. And if I look at your road map and you have 10 priorities for you and your team, you probably don’t know which of the three matter, and probably none of the 10 are right.

I can look at everyone’s piece of paper, and their road map shows every item you were going to do and your predicted results and actual results, and then the results are in red if you missed them, yellow if they’re close and green if you passed them. I think road maps are a great principle just for managing your life. It keeps everybody focused, and it lets me know what trains are on or off the tracks."

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Tuesday, March 2, 2010

Being Cautiously Optimistic When Raising Capital Doesn't Help

Yesterday I spoke with the CEO of a startup that was following up on why we chose not to go with them. I explained that although we thought they had a decent idea and a promising team, they had no specific plan for growth – no estimated timeline with milestones, etc... In fact, their only mention of the future was somewhat grim.

Granted, it's never easy to predict where your company will be in three months, six months, never mind three to five years, but I told him that I could absolutely guarantee that if there was no plan to get somewhere it would be difficult to raise money. Investors need some sort of context as to which point in the business time horizon they are investing, and where the business is trying to get to after their investment. This seems so obvious, but we see a lot of business plans that don't contain this info.

The CEO said that since they couldn't predict where they would be, they wanted to show that they were being realistic by not overplaying their future value – they wanted to be seen as cautiously optimistic. I politely told him they came across as overtly pessimistic and as a result left us with a lukewarm feeling about them, at best. I reminded him to let the potential investors discount the probability of a successful future, don't hamstring yourself.

The reason all of the "negative" legalese in subscription agreements is in the back of the documents is because if you led with it, you'd never raise a dime. "Our company is going to revolutionize the XYZ industry, but remember if for some reason our servers fail and we lose all of our data, we will be out of business within days. Also, please remember that through no fault of our own the Internet could fail and we would be doomed. Who's in?"

We recently posted about the 10 Skills an Entrepreneur Needs to Get Funded, see #5, Inspiration. See also, the Five Things I Wish Were in Your Business Plan - specifically #3 Milestones & #5 Value.

The CEO needs to inspire potential investors that they are partnering with a company on the move. "Here's where we started, where we've been, where we are now, and where we are heading. We are so excited about our future and the path we are on, you really should be a part of this!"

We learned first hand that being "cautious" and "realistic" doesn't win you any points or money – even during a market crisis. Throughout the tough capital raise environment of the last 18 months, it seemed like the management of a portfolio company was constantly lowering the value of the firm thinking that investors would see the "value" and make the investment. Turned out the complete opposite was true. Why? The cautiously optimistic/pessimistic value made the investment timeline seem less and less believable. "You were worth X 18 months ago, you're only worth slightly more than that now, how are you going to jump 50x in the next two years if you've only moved 1.5x in the last 18 months?"

"Um, because, you investors will finally come to your senses and see our real value?"

The company eventually went out at what they really believed the value of the firm to be and found it much easier to close on money. Investors believed in the updated path, it made sense. Achieved and upcoming milestones supported the higher value all along, the company had made the mistake of discounting themselves.

It's important to show that you are a realistic entrepreneur – you understand and recognize the potential pitfalls of your business, but I wouldn't lead with that. You can demonstrate that in the supporting info in the back of your deck / business plan. When you are presenting, being cautiously anything is not a smart move. You need to inspire. If at all, save the cautious for the Q&A when the VCs are testing your grip on reality.

Believe me, VCs have enough caution and pessimism to go around. You don't need to play that role, let the VCs, they are really good at it. Start with unabashed optimism and go from there.

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Monday, March 1, 2010

10 Reasons Your Marketing Message is Not Working

Grace forwarded me this article because it reminded her of the kind of messaging clients bring to us for help. The article points out the ten reasons as to why your messaging is not working (see the article for further info on each):
1. You're arrogant.
2. You're pushy.
3. You're rambling.
4. You're boring.
5. You're not believable.
6. You're not saying what people want to hear.
7. You're marketing in the wrong place.
8. You're putting the cart before the horse.
9. You're a one trick pony.
10. You're not making sense.
If you are writing a "how to" manual about your business and pretending it is your messaging, no one is going to care, unless they are starting a competing business and will use it to get started and then crush you.

The bottom line is, your marketing message is not about you - it's about your clients and their needs. Don't make the mistake of thinking it's about the attributes of your audience, it's about the circumstance your audience finds themselves in regardless of their attributes.

And don't forget it's not about the features you provide, it's about the benefit those features bring to your buyers. A lot of companies out there just list their features and hope the audience makes a connection to the benefits - they won't, they're barely paying attention.

Focus on the circumstance (the problem) your prospects face and demonstrate the simple solution (the benefit) you provide and people will pay more attention because after all, no one cares about you, they care about themselves and their problems.

They will care slightly more than not at all about you after you solve their problem, and they might even tell someone about it after - in the context of how awesome they are for picking you of course, but that's fine too. If you solve their problem more than once, you might just have a loyal customer - but you can't get there if you can't capture their attention first.

Thanks Grace.

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