Startup Whisperer

10 Technology Predictions From The Startup Whisperer

Here are my 2009 technology predictions.  It was getting harder and harder since my post is starting to look a lot like everyone else's posts.  I look forward to a better year for the world in 2009.  Drum roll please…

Video Finally Takes Off
Overall consumption of video increases significantly on Web.  I have been saying this since my days at AtomFilms but it really does happen in 2009.  Video advertising is finally going to get some traction.  Higher quality will bring more eyeballs. There are some even better video predictions from my friend Alex Castro of Delve Networks (in full disclosure, I am an advisor to his company).  His are spot on.  I do disagree with his prediction that YouTube will lose market share.  I think they'll grow from their current market share of videos watched from 37% to 45%.

More ad networks versus less
Contrary to a number of predictions, there will be more ad networks versus less.  With 80% of the ad supply being sold thru indirect channels there will be more than less ad networks.  There will be better control over supply by publishers and everyone on this Comscore list (View this photo ) will be there by the end of 2009.  Anyone who is building unique IP will have a chance at an acquisition.  Yield technology in advertising is going to be a big theme in 2009 since all other forms of targeting are basically commodities. 

Everything is simpler and smaller
We don't have the IT budgets that we once did.  Smaller and simpler devices will take off.  For example, industry sources say more than 11 million netbooks worldwide were sold in 2008, up from just around a million in 2007.  Netbook sales will easily double in the new year.  Also, the majority of all phones next year will be smart phones (over 50%).

The giant sucking sound
There are going to be tons and tons of consolidations in the technology space.  Big guys will buy big guys.  Small guys will merge with small guys.   Small guys will get bought by big guys.  There will be a lot of great deals out there for companies with capital. 

It’s cooler to start a business than a rock band
There are massive layoffs and the economy is bad.  Per the above, when consolidation happens, unemployment increases.  People are only an hour away from registering online for a new business.  That combined with free SaaS (Software As A Service) software and easily registering for a domain name -- you've got the makings of a business.  There is an estimated 27.2 million small businesses in the United States and they employ 40% of high tech workers.  New small business registrations will grow by one or two points in 2009.

The future is cloudy
2009 will be the year of cloud computing.  The companies that benefit are:  Amazon, Hewlett-Packard,  Sun Microsystems, IBM, and Microsoft. In addition, SaaS takes off even more.  With the worldwide economy in trouble, lots of layoffs, and pockets that are bare, SaaS  will take off more than ever as measured by overall consumer adoption of the Internet business population. 

Windows gets its mojo back
Windows 7 will ship on-time (not in 2009 for an SP1 but it will be solid enough to get their mojo back).   Vista will feel like a bad hangover.  Windows 7 will be faster, more usable, and introduce some cool virtualization features.  Google will start to OEM an OS to PC manufacturers but Windows 7 and Microsoft's business juggernaut will successfully relegate it to a minor initiative.

Microsoft buys Facebook
Facebook realizes that it needs a revenue stream.  Microsoft needs a platform to grow search share.  Facebook and Microsoft do a deal to change the search marketplace by integrating better social search.  The valuation gets a major haircut from their $15 billion valuation (crazy 100x sales valuation).  The deal gets done at big (crazy?) multiple at 20-25x or around $10 billion.  Microsoft can buy 100 more little companies to try to grow search share or do a big deal.  Plus, Microsoft shouldn’t let Google hook their FriendConnect initiative around such a large social hub like Facebook.  They ditch buying the Yahoo search business and look to change the search game on the social side.

Microsoft buys Yahoo searcch
...And then they buy Yahoo's search business.  Deal is done in May of 2009.

** The following Seattle-based companies will be acquired in 2009:  BuddyTV, Visible Technologies, EvoLanding,  and Urban Spoon.  M&A in 2009?  Heck, it can happen and these companies have gotten scale and have relatively low invested capital.

2009 should be really interesting.

IRS Deadline For Section 409A Compliance is Tomorrow

I have written about the exciting topic of 409A compliance before on the Seattle 2.0 site.  Our company has just gone thru a series of additional work to ensure that all of our compensation-based agreements (like stock agreements, executive compensation agreements, etc) within the company are section 409A compliant.  Here is an interesting brief from Wilson Sonsini.  The deadline is tomorrow and I am calling this out to other startups.  Per the Wilson post there are some hefty penalties, including:

    * Violations are extremely costly for employees, particularly in California, which imposes an additional 20 percent state penalty tax atop the 20 percent federal penalty tax (thus, the effective tax rate on amounts includible into income as a result of a Section 409A violation can range up from 80-90 percent or more).

    * Employers usually make representations and warranties regarding Section 409A compliance in acquisition and financing documents.

    * Section 409A disproportionately affects key management and sales employees, who are more likely to participate in arrangements subject to Section 409A.

    * Noncompliance with Section 409A can permeate through broad-based employee benefit plans (e.g., stock plans and severance policies) and, as a result, employers can encounter pressure to "make whole" many employees from the costly tax ramifications of Section 409A.

    * If an employer's plans/agreements are subject to Section 409A, internal business administration (e.g., human resources, payroll, and legal departments) will need to monitor various aspects of compliance with Section 409A.

You might want to take a pass with your attorney to make sure that you are in compliance.

I Am Entering The Twitter Dojo....Help!

I just did a post on Seattle 2.0 entitled, Twitter Baptism.  I would appreciate any input on the article. I need to be better schooled in the ways of the Twitter.  WidgetBucks' own online PR wonk, Dean Jutilla read this post and sent me some suggestions.  He uses Tweetbeep to get alerts to mentions of our company as well as competitors.  Sort of like Google Alerts for Twitter.  Very cool and you should check it out.  Dean also turned me onto a fascinating stream call @themediaisdying.  It is a real-time stream of the death of tradtional media.  It is truly interesting and shocking.  With all of the traditional publications moving online, you can read in real-time the major tectonic shifts of this market change happening. 

The Era Of Simpler Gadgets?

Damon Darlin of the New York Times wrote an interesting article entitled, The Year of the Simpler Gadget.  The article highlights such gadgets as the Flip Camcorder, Wii, Apple iPhone, and others.

I strongly believe that we are on a path to build more simplification into our lives.  My previous post was about simple applications.  There will be a new era of simpler gadgets.  Apple has certainly led the way with novel product design combined with software that works extremely well together.  I remember years ago before the concept of plug-and-play had become commonplace playing around with different components, configuring different networking stacks (the world didn't used to be all TCP/IP-based), etc so that you could connect disparate devices as well as to connect to file servers computers. 

On a personal note, one of my favorite gifts in recent years was a Tivoli Sirius Radio.  Primarily because it caputres a vintage style and the engineering is just darn easy.   You plug it in and it basically works right away.  Basically like plugging in any radio. 

I think we're all going to see a slew of cheaper, more simplistic devices that optimize experience over configuratability.  We simply don't have enough hours to mess with the multitude of tiny devices that enter into our lives.  Last time that I checked, technology is supposed to improve our productivity.

I Am Still Beautiful

I just did a post on Seattle 2.0, entitled "Don't Hate Me Because I’m Beautiful."  In the blog post, I refer to the classic 80's Pantene commercial featuring Kelly LeBrock as inspiration to list out my favorite audaciously beautiful online applications.  Here are several more that I personally couldn't live with out that are just gorgeous:

• Netvibes - the king of all start pages.  My entire RSS reading life is encapsulated in their visually, appealing and low-work effort UI.
• Etsy - they manage to frame non-traditional retail information (homemade goods) in way that makes it fun and interesting to shop.  

• UrbanSpoon - I am not sure what the business model is, but, its a great site for all of you foodies and the iphone application is pretty darn cool.  Pretty novel use of the iphone and they have this cool feature that lets you shake the iphone to determine your favorite restaurant, as the describe it as "part Magic 8 Ball, part slot machine."

• Seeking Alpha compiles financial information in a way that is just wonderfully packaged to be digested in meaningful bits.

What are some of your favorite online applications that can stand up to the Pantene test.

Flat Is NOT The New Up (My First Post For AlwaysOn)

I have started to contribute to the blog, AlwaysOn.  Here is my first post, titled "Flat Is NOT the new up." Check it out and let me know what you think.

All I Want For Christmas Is A Batman Mask

My friends and family know that I am obsessed with Batman.  So, if you are wondering what you could get me this year, Wired has a great article on all of these cool and rare Sci-Fi props that are for sale.  The Batman Begins cowl starts at a mere $20,000. 

Scrooge Should Read This Post

Check out this post that I just did on Seattle 2.0 called, Even Scrooge Knows How to Party.

Great Startup Advice Slides

This is one of the best, most condensed set of startup advices slides that I have ever seen.  Kudos for referencing quotes as diverse as Buddha and Steve Jobs.

Startups Are Marathons

This is a post that I did last week on the Seattle 2.0 blog. 

I just finished my third half marathon this past weekend.  As I was huffing and puffing along the course, I realized that there are a lot of similarities and parallels in running a business, especially when it comes to startups.  To prepare for a race, I typically take several months to start training.  It’s important to focus on strength training, cross training, and then to slowly ramp up your mileage each week leading up to the race.  This half-marathon was different for me because I didn't do much training (about 5 weeks) and I trained too hard – this resulted in an injured patella muscle (knee pain). I finished the race and enjoyed the experience but was disappointed with my time and am consequently  moving around the office with the agility of John McCain at a Town Hall debate. 

I was reminded that – similar to training for a race – fantastic companies aren’t built overnight.  They take time, patience, and the ability to pace oneself (and employees) while on the path to success.  Hopefully some of these business training tips will be helpful for you:

1.       Be constant and consistent.  It’s important to have a regular workout regimen with specific types of training that gradually builds your body up to race day.   You must remain consistent in your business as well.  Some examples include constantly reviewing your company performance metrics, employees performance to objectives on a weekly basis, and reviewing your strategic plan on a regular (quarterly) basis, etc.  This allows you to go the distance, and to take advantage of serendipity and varying market conditions.  Here are some tips that I wrote awhile back on the Startup Whisperer on this topic.

2.       Focus on what’s important.  Your race training should be focused on the things that will achieve your goals.  The same goes for your company, including both its good and bad aspects.   For example, if there is a problem area with your company, ask yourself are you doing the best job to fix it.  I should have focused on strengthening my knees for the race but I ignored this obvious detail.  Maybe you’re not dealing with someone at your company that is a poor performer or losing sight of a key competitor.  Maybe you are doing too much (like over-training)?  It’s also important to consistently evaluate (and even celebrate) your company’s strengths.

3.       Sprint when you are ready.  It’s important to be a fast mover in your business.  But, you can't immediately move from jogging at a slow pace to sprinting an entire race unless you train for it.  In running, you do what is called interval training, which is basically mixing sprinting with a slower pace over a period of time—this will generally get your body used to and ready for running faster.  In startups, if you haven't built an organization that can speed up the tempo when needed then you never will be able to demand it on the fly.  You have to practice it and have employees who are ready for it.  On the other hand, expecting a constant sprint from your employees can cause burn out. Think about the things that you can do that make you into a sprint organization.  Is your development process designed to be agile?  Do you have an infrastructure that supports signing up more business, more bandwidth, etc., and are you currently hitting small project dates? 

Lastly, the most important aspect is to respect the distance.  You can't go from running 3 miles to a marathon in a month.  It takes awhile to build a great company.  Don’t get frustrated if you don’t get immediate results.  There are always more races and more training to do.  Enjoy the run.  Enjoy the journey of your startup.  I now go back to icing my knees.