Friday, June 13, 2008
Guest Speaker Series: Ted Leonsis
Ted Leonsis, one of the D.C. area's most successful entrepreneurs and business leaders, took some time out of his busy schedule to speak to the LaunchBox08 companies on June 12th. By sharing his personal experiences, Ted offered his wisdom about success and happiness to the LaunchBox08 entrepreneurs.
General characteristics of most successful entrepreneurs:
1. Young and not tied down. Launching a startup is a big risk. This risk is magnified when there are spouses, children, and mortgages in the picture. For that reason, many successful entrepreneurs tend to be younger and more able to accept risk.
2. Not a defensive bone in their body. In order to succeed, it is essential for an entrepreneur to take criticism and feedback from advisors and team members. Ted asks, "do you want to be right, or do you want to win?"
3. Obsessive about the product. Another commonality that Ted has observed in successful entrepreneurs is their zeal towards perfecting the product. At AOL, Ted would start every day by taking a tour of the service and correcting or improving any issues he encountered.
4. Built teams and partners based on an intense reflection about their strengths and weaknesses. Great leaders understand that they too have weaknesses, and they surround themselves with other great leaders who fill those gaps. Building teams and knowing as a founder what you are good at and where you need help is one of the most important characteristics of success.
5. Double bottom line: do well, while doing good. The best businesses are ones that create a win-win situation and help make the world a better place. This type of thinking is reflected in Google's "do no evil" mantra.
The pursuit of happiness. Ted has done a great deal of thinking and research about what makes people happy. His view is that happy people are successful people. As a result of survey information from over 50,000 households, Ted has found these five variables to be the most correlated with happiness:
1. Active participant in multiple communities of interest
2. Avenue for personal expression (there is a reason why there are 77 million blogs)
3. Empathy and gratitude
4. Volunteerism and giving back
5. Pursuit of a higher calling
General characteristics of most successful entrepreneurs:
1. Young and not tied down. Launching a startup is a big risk. This risk is magnified when there are spouses, children, and mortgages in the picture. For that reason, many successful entrepreneurs tend to be younger and more able to accept risk.
2. Not a defensive bone in their body. In order to succeed, it is essential for an entrepreneur to take criticism and feedback from advisors and team members. Ted asks, "do you want to be right, or do you want to win?"
3. Obsessive about the product. Another commonality that Ted has observed in successful entrepreneurs is their zeal towards perfecting the product. At AOL, Ted would start every day by taking a tour of the service and correcting or improving any issues he encountered.
4. Built teams and partners based on an intense reflection about their strengths and weaknesses. Great leaders understand that they too have weaknesses, and they surround themselves with other great leaders who fill those gaps. Building teams and knowing as a founder what you are good at and where you need help is one of the most important characteristics of success.
5. Double bottom line: do well, while doing good. The best businesses are ones that create a win-win situation and help make the world a better place. This type of thinking is reflected in Google's "do no evil" mantra.
The pursuit of happiness. Ted has done a great deal of thinking and research about what makes people happy. His view is that happy people are successful people. As a result of survey information from over 50,000 households, Ted has found these five variables to be the most correlated with happiness:
1. Active participant in multiple communities of interest
2. Avenue for personal expression (there is a reason why there are 77 million blogs)
3. Empathy and gratitude
4. Volunteerism and giving back
5. Pursuit of a higher calling
Guest Speaker Series: Jim Bankoff
Jim Bankoff, formerly the Executive Vice President of Programming and Products at AOL, gave a presentation entitled "How to work with big companies" on June 5th at the LaunchBox Digital offices. Jim spent 10 years at AOL in internet and content services and has been involved with many other successful businesses including Audible and Qloud. Today, he works with Providence Equity, a firm that invests in online media, traditional media, and web businesses (Nextag, Hulu).
Know what you are getting into. Working with a big company is taking a big risk. Big companies have leverage over you because if they don't make the deal, their business will continue. However, your company could be made or broken on that particular deal. For example, Microsoft partnered with IBM to license its operating system and the rest is history. AOL made a strategic decision early on to outsource search technology to Google when they were young and searching for credibility.
Five reasons to work with a big company
1. Marketing. Big companies have invested billions of dollars in their platforms, and while they might partner with you, it isn't going to be for free. Here are some considerations when it comes to a marketing agreement:
- Don't get carried away to the point that you are blind to the core metrics that you would use across distribution channels. Remember, it is just another marketing channel - like all others, it must be evaluated on its own merits (typically, cost per acquisition, lifetime value of customer).
- Brand positioning: Compromise might come in the form of minimizing your direct to consumer brand. Often there is a co-branded relationship where you alter your product to look a little more like theirs. This might involve minimizing your logo, traffic to your URL, etc. Understand what it is going to do to your brand, time and resources, and economics.
- Level of exclusivity - know what kind of tradeoffs you are making.
- Alternative channels - Increasingly, platforms are opening up and the emergence of APIs allows you to get viral by plugging into bigger entities. In doing so, you can achieve a lot of benefits of customer acquisition without much of a signed agreement except for the Terms of Service.
2. Selling to them
Companies might struggle to do both B2B and B2C well. Powering someone else's platform with your service will provide a big check, but could compromise your efforts. If you feel like you don't have a big viral or organic marketing, maybe it is a good idea to power someone else's community. However, know that big customers demand your time and attention and they can overwhelm you with questions and customer service.
3. Monetization
Ad-supported or subscription-supported models provide opportunities to piggyback on other companies' sales forces.
4. Technology
Companies are now building businesses off of technology infrastructure. The most obvious example today is Amazon. Always have market-to-market knowledge about who is making the next platform commitment (e.g. Android, iPhone, etc). All three big email providers are trying to open up their mail experience to allow businesses to expand the experience and take advantage of the platform.
5. Financing
While raising money has its obvious advantages, financing can also be a de facto way for a company to have a first look at buying you out. Consider whether other potential investors will find it to be a turnoff, and whether you are limiting your opportunities by choosing one partner over another. Alternatively, a startup can bridge the gap by offering warrants in the company - options that are given if the startup's value grows as a result of the partnership. It may also be helpful to include an "unwind" provision, which agrees up front to dissolve the partnership between both parties if it isn't successful.
Know what you are getting into. Working with a big company is taking a big risk. Big companies have leverage over you because if they don't make the deal, their business will continue. However, your company could be made or broken on that particular deal. For example, Microsoft partnered with IBM to license its operating system and the rest is history. AOL made a strategic decision early on to outsource search technology to Google when they were young and searching for credibility.
Five reasons to work with a big company
1. Marketing. Big companies have invested billions of dollars in their platforms, and while they might partner with you, it isn't going to be for free. Here are some considerations when it comes to a marketing agreement:
- Don't get carried away to the point that you are blind to the core metrics that you would use across distribution channels. Remember, it is just another marketing channel - like all others, it must be evaluated on its own merits (typically, cost per acquisition, lifetime value of customer).
- Brand positioning: Compromise might come in the form of minimizing your direct to consumer brand. Often there is a co-branded relationship where you alter your product to look a little more like theirs. This might involve minimizing your logo, traffic to your URL, etc. Understand what it is going to do to your brand, time and resources, and economics.
- Level of exclusivity - know what kind of tradeoffs you are making.
- Alternative channels - Increasingly, platforms are opening up and the emergence of APIs allows you to get viral by plugging into bigger entities. In doing so, you can achieve a lot of benefits of customer acquisition without much of a signed agreement except for the Terms of Service.
2. Selling to them
Companies might struggle to do both B2B and B2C well. Powering someone else's platform with your service will provide a big check, but could compromise your efforts. If you feel like you don't have a big viral or organic marketing, maybe it is a good idea to power someone else's community. However, know that big customers demand your time and attention and they can overwhelm you with questions and customer service.
3. Monetization
Ad-supported or subscription-supported models provide opportunities to piggyback on other companies' sales forces.
4. Technology
Companies are now building businesses off of technology infrastructure. The most obvious example today is Amazon. Always have market-to-market knowledge about who is making the next platform commitment (e.g. Android, iPhone, etc). All three big email providers are trying to open up their mail experience to allow businesses to expand the experience and take advantage of the platform.
5. Financing
While raising money has its obvious advantages, financing can also be a de facto way for a company to have a first look at buying you out. Consider whether other potential investors will find it to be a turnoff, and whether you are limiting your opportunities by choosing one partner over another. Alternatively, a startup can bridge the gap by offering warrants in the company - options that are given if the startup's value grows as a result of the partnership. It may also be helpful to include an "unwind" provision, which agrees up front to dissolve the partnership between both parties if it isn't successful.
Thursday, June 12, 2008
Guest Speaker Series: Tom Des Jardins and Dave Markley
Tom Des Jardins and Dave Markley, formerly of LightningCast, spoke to the LaunchBox08 group on June 3rd about architectural design, early stage technology platforms, and scaling requirements.
Virtualized servers are the way to go. Tom recommends outsourcing load balancing and not stressing about database scalability until a company has revenue. Instead, a startup should focus on having scalable services by building the appropriate architecture. As for hosting, a good service for startups is Amazon's Web Services - Enterprise Compute Cloud (EC2) and Simple Storage Service (S3).
Distributed development. Teams working in different places creates a new set of obstacles, which may outweigh the benefits. Tom believes that distributed development generally only works when you know who you are working with. Otherwise, it can be difficult for a small company to handle when it comes time for integration. Another consideration to acknowledge is that any hiccups or minor problems will result in a full day delay due to time zone differences. Finally, a startup should avoid any red flags resulting from ineffective relationships when it comes time to raise financing.
Top things to do when planning your IT. Use well-established technologies for your corporate services and save the cutting-edge stuff for your innovation. Don't bother running your own email - use Gmail or outsource instead. Don't waste resources on your intranet. Don't pay for marketing until you have real revenue.
Top mistakes made. Don't use fancy hardware - your battle is with the market, so don't bother having a religion. Avoid shareware documents - sending documents to your VC in formats that they can read is part of your job. If a deal sounds good to be true, then it is - be afraid of companies that offer options to pay for hardware.
Virtualized servers are the way to go. Tom recommends outsourcing load balancing and not stressing about database scalability until a company has revenue. Instead, a startup should focus on having scalable services by building the appropriate architecture. As for hosting, a good service for startups is Amazon's Web Services - Enterprise Compute Cloud (EC2) and Simple Storage Service (S3).
Distributed development. Teams working in different places creates a new set of obstacles, which may outweigh the benefits. Tom believes that distributed development generally only works when you know who you are working with. Otherwise, it can be difficult for a small company to handle when it comes time for integration. Another consideration to acknowledge is that any hiccups or minor problems will result in a full day delay due to time zone differences. Finally, a startup should avoid any red flags resulting from ineffective relationships when it comes time to raise financing.
Top things to do when planning your IT. Use well-established technologies for your corporate services and save the cutting-edge stuff for your innovation. Don't bother running your own email - use Gmail or outsource instead. Don't waste resources on your intranet. Don't pay for marketing until you have real revenue.
Top mistakes made. Don't use fancy hardware - your battle is with the market, so don't bother having a religion. Avoid shareware documents - sending documents to your VC in formats that they can read is part of your job. If a deal sounds good to be true, then it is - be afraid of companies that offer options to pay for hardware.
Guest Speaker Series: Adam Hanft
On May 30th, the LaunchBox08 companies took in the astute guidance of marketing guru Adam Hanft, founder of Hanft Unlimited. His presentation centered on marketing wisdom for startup companies and was filled with recent examples for entrepreneurs to study.
"The fox knows many things, but the hedgehog knows one big thing." - Archilochus. This quote, from an ancient Greek poet, embodies the attitude of a focused entrepreneur. By being better at less, startup companies can compete with big market leaders. An example of this principle at work is the Ning landing page, which reads: "create your own social network for anything," and displays two blank fields to get started. Adam favors pages with very simple aesthetics, a clear message, and a quick onboard process for users to get involved.
"SEO is the democratization of geography." On the Internet, location is in your hands. If you carefully and creatively develop an effective SEO strategy, you will reap great rewards in traffic. A great example of this is PlentyOfFish.com, a dating website optimized for SEO that drives an enormous amount of traffic and monetizes it.
Business models can't wait. Google is an outlier. A business model is just another way to say "my idea is important enough that someone is willing to pay for it." In this regard, entrepreneurs should pay attention to Chris Anderson, who argues that the future of business revolves around giving away products for free and surrounding them with value that comes from other offerings.
Find the pressure point. Every competitor has an Achilles heel, and every market has a "secret keyhole." A prime example of an aggressive marketing strategy that publicized this principle was Chemistry.com's "rejected by eHarmony" ad campaign, which exploited the company's history and value-driven filters. In addition, Yelp exploited the weaknesses of CitySearch by creating a site that focused on community and user-generated content.
Engage a passionate audience. In a best case scenario, you can let your users market for you. As a startup solving a problem of consumer need, you should be willing to sacrifice for your customers. For example, when Digg users posted stories with the code to crack Blu-Ray discs, the site decided to keep the stories up and posted a note to its users stating that they would rather serve them and take whatever consequences may come.
"The fox knows many things, but the hedgehog knows one big thing." - Archilochus. This quote, from an ancient Greek poet, embodies the attitude of a focused entrepreneur. By being better at less, startup companies can compete with big market leaders. An example of this principle at work is the Ning landing page, which reads: "create your own social network for anything," and displays two blank fields to get started. Adam favors pages with very simple aesthetics, a clear message, and a quick onboard process for users to get involved.
"SEO is the democratization of geography." On the Internet, location is in your hands. If you carefully and creatively develop an effective SEO strategy, you will reap great rewards in traffic. A great example of this is PlentyOfFish.com, a dating website optimized for SEO that drives an enormous amount of traffic and monetizes it.
Business models can't wait. Google is an outlier. A business model is just another way to say "my idea is important enough that someone is willing to pay for it." In this regard, entrepreneurs should pay attention to Chris Anderson, who argues that the future of business revolves around giving away products for free and surrounding them with value that comes from other offerings.
Find the pressure point. Every competitor has an Achilles heel, and every market has a "secret keyhole." A prime example of an aggressive marketing strategy that publicized this principle was Chemistry.com's "rejected by eHarmony" ad campaign, which exploited the company's history and value-driven filters. In addition, Yelp exploited the weaknesses of CitySearch by creating a site that focused on community and user-generated content.
Engage a passionate audience. In a best case scenario, you can let your users market for you. As a startup solving a problem of consumer need, you should be willing to sacrifice for your customers. For example, when Digg users posted stories with the code to crack Blu-Ray discs, the site decided to keep the stories up and posted a note to its users stating that they would rather serve them and take whatever consequences may come.
Thursday, June 5, 2008
Guest Speaker Series: Maggie Hatfield
Maggie Hatfield, founder of Big Lift Marketing and former Vice President of marketing for AOL's Digital Services business, visited LaunchBox Digital on May 29th to offer her advice on user interface design, testing, and marketing considerations.
First steps. Before developing a marketing plan, it is important to have a thorough understanding of the customer need that you are solving and the target market you are serving. It may be helpful to create an outline of needs, behaviors, and sites that they consume. In addition, analyze the competition and determine how you can differentiate your product. Knowing the answers to these core questions will provide guidance for UI design, testing, marketing, and decision-making for the business.
User interface design - baseline considerations. UI design and functionality must fit with the need that you are trying to solve. Maggie emphasized the need for a clear message that explains what the business does and the problem it solves at the top of the site or on the landing page. Ideally this should also be supported with your logo or any tag line that is developed. Additionally, it is important to get users engaged quickly after landing on the homepage. "Keeping core functionality above the fold is key," and the layout should be clean and easy to navigate.
User interface testing on a tight budget. One helpful method for UI testing is to begin with holding an informal focus group (think beer and friends) that will analyze wireframes or screenshots and engage in a broad discussion about the clarity and layout of the website. Once you have a working product, you can conduct an informal "UI lab" by gathering your friends together again or ideally people from your target demographic and providing them with a sheet of actions to do on your site. You can get valuable feedback from a group as small as just five people. In addition, Alpha/Beta testing can be useful to further refine UI and scalability issues, and it may be conducted on a closed invite-only basis or openly via driving traffic to your landing page.
Startup marketing essentials. After analyzing your target market and developing a compelling message that solves a need or problem, you should develop a marketing plan of action that scales with your business. Search engine optimization and social media marketing are low-cost ways to drive traffic to your business, but they must be done creatively and correctly to be effective. User-generated content can also increase engagement on your site by allowing for self-expression and content discovery as well as pointing out usability or functionality issues. Finding complimentary businesses who will agree to cross-link or embed widgets can also be very beneficial. When you are ready to ramp up your marketing efforts and allocate more funding, you should carefully test each opportunity to understand what is working before you roll out. This might involve testing keywords, display advertising, and affiliate marketing/ sponsorships against your baseline traffic rate. Internal and external web analytics are key to tracking usage issues, UI functionality, and analyzing traffic from different advertising options.
First steps. Before developing a marketing plan, it is important to have a thorough understanding of the customer need that you are solving and the target market you are serving. It may be helpful to create an outline of needs, behaviors, and sites that they consume. In addition, analyze the competition and determine how you can differentiate your product. Knowing the answers to these core questions will provide guidance for UI design, testing, marketing, and decision-making for the business.
User interface design - baseline considerations. UI design and functionality must fit with the need that you are trying to solve. Maggie emphasized the need for a clear message that explains what the business does and the problem it solves at the top of the site or on the landing page. Ideally this should also be supported with your logo or any tag line that is developed. Additionally, it is important to get users engaged quickly after landing on the homepage. "Keeping core functionality above the fold is key," and the layout should be clean and easy to navigate.
User interface testing on a tight budget. One helpful method for UI testing is to begin with holding an informal focus group (think beer and friends) that will analyze wireframes or screenshots and engage in a broad discussion about the clarity and layout of the website. Once you have a working product, you can conduct an informal "UI lab" by gathering your friends together again or ideally people from your target demographic and providing them with a sheet of actions to do on your site. You can get valuable feedback from a group as small as just five people. In addition, Alpha/Beta testing can be useful to further refine UI and scalability issues, and it may be conducted on a closed invite-only basis or openly via driving traffic to your landing page.
Startup marketing essentials. After analyzing your target market and developing a compelling message that solves a need or problem, you should develop a marketing plan of action that scales with your business. Search engine optimization and social media marketing are low-cost ways to drive traffic to your business, but they must be done creatively and correctly to be effective. User-generated content can also increase engagement on your site by allowing for self-expression and content discovery as well as pointing out usability or functionality issues. Finding complimentary businesses who will agree to cross-link or embed widgets can also be very beneficial. When you are ready to ramp up your marketing efforts and allocate more funding, you should carefully test each opportunity to understand what is working before you roll out. This might involve testing keywords, display advertising, and affiliate marketing/ sponsorships against your baseline traffic rate. Internal and external web analytics are key to tracking usage issues, UI functionality, and analyzing traffic from different advertising options.
Thursday, May 29, 2008
Guest Speaker Series: Tim O'Shaughnessy
Tim O'Shaughnessy, co-founder of Hungry Machine, led a discussion with the LaunchBox08 startups detailing strategies for developing social network applications. Tim gave insider tips to the group while chronicling the story behind his successful "Visual Bookshelf" Facebook application.
Choose a social space that you believe in. When choosing a social platform for your application, it is important to remember what the network is providing. For example, Facebook might have the most valuable base of users from a domestic standpoint, but it is probably also the most saturated with applications. Conversely, the Orkut network only consists of around 10% English-speaking users, which could present a challenge for US-based advertising revenue. From a user-acquisition standpoint, Tim notes that a network like Friendster (which is not a part of OpenSocial) might be valuable because fewer developers have gravitated to it, and thus there is less competition.
Pay attention to the important metrics. Daily active users, a common form of measurement, can sometimes be less reliable than conventional wisdom holds. The true metrics that make a business run will vary from business to business, and Tim finds that monthly uniques and time spent on each visit are the most helpful to him. Tim also recommends that developers spend a great deal of time conducting "A/B testing" and have at least one variable being measured at any given point in time.
Forecasting the future. Tim predicts that a great area of growth in Facebook applications will come from the onset of virtual goods, particularly when Facebook launches its "card-on-file" feature that will enable users to make purchases from their credit cards with one click. This will create a particularly compelling opportunity for developers to leverage the convenience of this new feature to drive sales within Facebook.
Choose a social space that you believe in. When choosing a social platform for your application, it is important to remember what the network is providing. For example, Facebook might have the most valuable base of users from a domestic standpoint, but it is probably also the most saturated with applications. Conversely, the Orkut network only consists of around 10% English-speaking users, which could present a challenge for US-based advertising revenue. From a user-acquisition standpoint, Tim notes that a network like Friendster (which is not a part of OpenSocial) might be valuable because fewer developers have gravitated to it, and thus there is less competition.
Pay attention to the important metrics. Daily active users, a common form of measurement, can sometimes be less reliable than conventional wisdom holds. The true metrics that make a business run will vary from business to business, and Tim finds that monthly uniques and time spent on each visit are the most helpful to him. Tim also recommends that developers spend a great deal of time conducting "A/B testing" and have at least one variable being measured at any given point in time.
Forecasting the future. Tim predicts that a great area of growth in Facebook applications will come from the onset of virtual goods, particularly when Facebook launches its "card-on-file" feature that will enable users to make purchases from their credit cards with one click. This will create a particularly compelling opportunity for developers to leverage the convenience of this new feature to drive sales within Facebook.
Friday, May 23, 2008
Guest Speaker Series: Haroon Mokhtarzada
Haroon Mokhtarzada, founder of Freewebs / Webs.com, stopped by the LaunchBox offices earlier this week to share his experiences and lessons learned with the LaunchBox08 teams. The successful Maryland-based web entrepreneur took a brief detour, completing a law degree at Harvard Law School while growing Freewebs into the massive website creation platform that has today served over 20 million users. Through sharing the story of his own personal journey, Haroon offered several main pieces of advice for young entrepreneurs:
1. "Launch early and quickly," Haroon advised the 8 LaunchBox startup teams. He emphasized the concept of conducting a "minimum-valid test" - just enough work product to see whether an idea is going to work or not. There is great value in receiving feedback at a very early stage, and in particular, user feedback is tremendously helpful in order to prioritize the addition of new features.
2. "Have a general analytic framework." One of the worst mistakes you can make as a new startup is to experience a sudden change in growth without understanding why. A great starting point to evaluate new concepts is to conduct an "A/B test" - using analytic tools like Website Optimizer and Google Analytics, it is possible to simultaneously test two different concepts or variations against each other.
3. "Your job as a leader is to inspire people to work towards that vision - and to make everything else look really small." There is always a challenge when working with a growing staff that has imperfect information, and so it is critical to get other people to believe in and want what is best for the product.
4. "Go longer on drive and intelligence, and shorter on experience." Haroon cautioned the LaunchBox teams about the potential risk of settling on satisfactory hires. The criteria should be simple: hire incredibly smart people who can get along with others, and who don't have an ego.
After providing insight into the beginning stages of entrepreneurship, an invigorating discussion followed and set the stage for the development of the innovative new ideas that will come to fruition at LaunchBox08.
