Startup Whisperer

Credit Crunch and venture capital

Some interesting data from the recent PriceWaterhouseCoopers MoneyTree report on trends in venture capital.  In Q2 2008, states that more than half of the US regions experienced a decrease in investment levels (both in number of deals and total investment).  Its not a surprise that later stage investments saw the greatest jump in total deal flow making up 31% of the total volume.  Total investment dollars for the quarter were basically flat YoY at $7.39 billion.  As a startup, you should be looking to adequately capitalize your company during this rough economic patch and the data does imply that earlier stage companies could have a more difficult time raising money in the coming quarters.   Although, you (early stage investor) no doubt have more flexibility with newer types of startup funding models like Ycombinator or angel funding.

Don't Be Spastic

When you are working on a startup, it is really easy to be myopic on your own venture.  Frankly, startups own much of your life in their early stages.  You tend to forget that not everyone may be moving at the same pace as you are.  I was reminded by this recently when I got a call from someone that wanted me to drop everything that I was doing and provide them some advice on fund-raising.
Some quick things to remember when you approach others for advice and help:

1. Everyone is busy - don't badger other companies, individuals, advisers,etc when you don't get a call or email back within 24 hours or more.  
2. Give more than get - if someone asks for your help, figure out a meaningful way to provide some feedback or insight.  Also remember that you have a day job, too. You can't spend hours upon hours at local Starbucks if its not related to your core business.  Structure your time so that you can do quick twitch types of help.  For example, agree to do email introductions or a quick 10 minute call.As long as you structure your time, you'll find that giving a little advice and help not only provides you with positive karma, but, that karma will eventually help you.  I remember getting this advice years ago from consummate networker, Keith Ferrazi.  In fact, he's now doing coaching around building relationships.
3. Be clear and precise - get specific about what type of help that you would like.  Don't call up another entrepreneur and ask them to review your marketing plan,carve up hours in a strategic review, etc.  Be specific.  Make sure that you are asking for something that can be answered in 10 minutes or less. 

You'll lose a lot of credibility if you are running around with your proverbial head cut-off.  Structure your communication with the relationships that you are trying to build in a structured and mutually symbiotic way.  Good karma will follow.

Run For The Hills?

In recessions you typically see a migration of ad spend from brand awareness to performance.  This has been true in the online world before and it will be true this time.  In fact, great companies emerge from recessions.  John Battelle's book Search chronicles Google's rise as a search provider during the bubble burst in 2001.  The good news is that you as a startup company have options. You've done the right things by now and have raised money (if not look at this post and this post).

Advertising is not dead and display advertising is not dead.  Nielsen reported recently that display advertising is down 6% Y0Y.  This is a great time for you to sell the value of your unique audience.  Again, I don't believe that display adveritisng is dead.  Adotas did a nice post on this recently.

For you consumer Internet folks reading this blog, now is the time for you to focus in your core proposition as a consumer internet brand.  If your team is solid, you'll come up with some exciting new ideas, products, and come out stronger next year.  Look to companies from the last recession for inspiration like Google and Specific Media (they invited the pop-under ad during the Web 1.0 bust).

BlogWorld Vegas: Affiliate Marketing Secrets for Blogger

Another panel that I enjoyed was the, "Affiliate Marketing Secrets for Bloggers" panel with affiliate super-stars:  Mike Allen (Shopping-Bargain), Shawn Collins, and Tim Jones.  The panelists echoed some of the main themes in the monetization tracks as well as non-monetization tracks that bloggers need the following strategies:

• Have a plan for the long-term
• Your blog is your brand
• Become and expert
• Share your space, write on other blogs

Each panelists focused on how affiliate marketing (referring products and services for a commission on everything that is purchased through your site) was a great opportunity for bloggers because of their vertical/hobby-like nature.  The panelists discussed some main themes for bloggers around affiliate marketing:

• Be careful with advertising, this is your brand
• Think like a business and set goals
• Create a business plan and follow it
• Look for retail and opportunities

There were some fun examples on how bloggers became more retail outlets around their passions.  Shmuel Tennenhaus, Affiliate market and youtube extraordinaire's vanitykippah.com was highlighted a fun, niche product that is finding an audience online.  

Once again, the themes around building your blog around an idea that you are passionate it about, a hobby that you can monetize, as well as being consistent and patient were highlighted.  The panelists also recommended doing feed outreach on twitter, facebook, stumbleupon, reddit, etc.  All of the panelists recommend that you should pick a couple of RSS aggregators (in order for it to be manageable).  btw, I also like finding niche RSS sites like YCombinator's Hacker News to promote this blog.

BlogWorld Vegas: How To Make Money On Your Blog

Hello from BlogWorld Vegas.  There is a lot of enthusiasm in the air.  The vibe hear reminds me of the scrappy, folksy entrepreneurs that you see amongst eBay Power Sellers.  The attendees are very engaged and their is a lot of business and enlightening discussion happening in and outside of the conference.

One of the first sessions "Making Money Online with a Blog" was a great sessions.  Dean Jutilla from WidgetBucks did a great write-up on that session.  Some of the real giants in the blogging space had some interesting insights into how all of us can better hone our blog publishing skills, including:

• Blog about a passion or hobby - it took well over a year for each speaker to build meaningful audiences.  They discussed how they have abandoned a ton of blogs because they were more oriented to making money than a subject that they were excited about.  Darren Rowse at problogger.net mentioned that his photo enthustiast site has been in the works for well over 2.5 years.  Eventually, the content and the hard work pays off.
• Acquire an audience - all of the panelists mentioned that you should not rely solely on RSS feeds and natural search results to acquire and retain your audience.  All of the panelists use email communication as a key part of their communication with their readers.  They mentioned a great service from aweber that packages up your posts into email form for your readers.  I know that I am going to look into that.  Also, many of the panelists mentioned that bloggers should develop an ebook.  Package up your posts into a PDF.  Its a great way to acquire email addresses which builds your overall customer base.
• Become a thought leader - all of the panelists are online marketing brands in their own right.  All of the panelists encouraged reaching out to other blogs (via comments), engage in online discussion forums around your topic, etc. 

It certainly helps WidgetBucks to engage with the thought leaders in the space, too.  Many of the panelists actually got tips from some online marketing thought leaders.  So, it definitely helps to engage thought leaders.  They will help you.

More posts to come.

Passion Gives You The Eye Of The Tiger

Famous investor and successful entrepreneru, Peter Thiel, recently was covered on TechCrunch saying that the best predictor of a startups success is the salary that he/she decides to pay themselves.  You could make the case that how hungry the CEO is creates an engagement and focus on the enterprise
versus someone who is paying themselves a hefty salary.  I agree somewhat with Thiel's point. But, isn't this really an operating tactic that stems from passion?  Passion around your company's idea is really what drives success.  It drives innovation.  It is what makes you get up in the morning.  You want to do something great. As part of that, I would argue the CEO of this kind of endeavor will most likely be hungry to preserve cash and focus on powering the business versus themselves.

What about the CEO that has tasted success but is still hungry?  Some of my recent meetings that I have had with some very well-known and successful entrepreneurs made me think about this.  Some of these gentleman were the eponymous heroes and/or brainchilds of some big companies.  Some are still fighiting and still starting up new and interesting ventures.  I think the key with these types of CEOs is that they feel that they have to be as successful as their last endeavor.  It matters to them.  I sometimes get visions of Rocky Balboa hitting raw meat training for the big fight against Apollo Creed (btw, a cool ESPN interview with Sly can be found here).  The key element in these discussions has been passion.  Passion around the idea, passion around creating a big idea and big business. 

Like Kane in Kung Fu

Catchy title but I have not been traveling much.  I haven't been venturing out on the speaking circuit for awhile.  With my wedding/honeymoon, fund-raising, family, etc.,  its been a busy summer.  I would love to catch-up with you at the following events if you are around:

40 under 40 event, Sept 18th
WTIA panel, Sept 25th:  Cashing In on Web Services: The Display Ad Model and Beyond
BlogWorld (email me directly for a discount on tickets), Sept 21st:  Beyond Adsense: Exploration of Practical Monetization Streams

Stop by one of these events and say 'hi'.

Bringing Sexy (Charts) Back

Pictures do speak louder than words.  I loved how Ross Perot could wax prophetic about the economy by dumbing down macroeconomic policy to a series of charts.  At the end of the day, there are a lot of different variables that drive your business. You should already have a ongoing communication to your Board and investors (and internally) around where you are at with your key performance indicators.  Packaging all of those up in way where everyone can understand it is really an art. 

My favorite example is Edward Tufte's famous work in which he visually shows the Napoleon’s failure in his advance on Russia as depicted in his (Tufte's) authoritative work ‘The Visual Display of quantitative Information’.  His work exemplifies how one can layer multi-variant data  in presentation
that tells a story explicitly.  "Explicitly" is a key.  How many times have we stared at an endless sea
of powerpoint charts that show data but don't actually inform us. 

For example, in our business we're focused on growing share and increasing the effective CPM.  We've "dumbed" down our roadmap by building a thermometer that layers in each initiative that increases eCPM as well as highlighting goal and stretch goals.  Its attached but I deleted all of the interesting bits just in case a competitor is looking at it.

Build explicit stories in the way that your report on your business.  Your job as the leader in your business is to summarize complex information so that better decisions that can be made or that ideas can be conveyed.