Jeff Clavier's Software Only

Building a startup is easier said than done

Russ, aka Russell "Mobile Monday" Beattie, was in good form last Friday, he has given us a couple of interesting posts (rants ?) on the development of startups in this (argh, I am going to say it again) Web 2.0 world: Where’s The Ambition ? and Making Money ?

I suggested a few days ago that we should stop pontificating about Web 2.0, and focus our energy on building great companies, but Russ opens threads that I can not help but commenting upon.

Here are a few thoughts, that were actually discussed at TagCamp during the business model discussion:

• Value: whatever functionality you offer to users/clients, make sure that it generates value (as I call it, instant gratification) in the minimum amount of time, clicks or effort. Make it easy to do complex things, and super easy to do easy things. And avoid the technobabble if you target the average Internet user.
• Business: the business model is ultimately what will make a company prevail, or fail. Generating an insane amount of page views gets you good advertising, having a clear segmentation of users and behavioral/attention data gets you great advertising. And you have do to better than just relying on AdSense revenue – as in building a direct relationship with advertisers and sponsors.
• Passion, but with clarity: startups fail, founders make mistakes, that comes with the territory. If you truly believe that you have a shot at creating something different, go for it. The worst that can happen is failing, and learning from it. But please, don’t fall in the trap of thinking that you can create a market for yourself by largely replicating what current market players do and adding a couple of new things. Differentiation has to be substantial, not marginal.

On the categories which “don’t have legs”, I disagree on the following:

• Scrape Engines: there are a number of verticals where these can create value. Health, Jobs, Travel, Real Estate are all very large markets where at least one player can reach a reasonable if not substantial size. Yes, Craigslist has blocked Oodle but that does not mean the end of that industry, merely the fact that a proper dialogue on economics and processes has to take place.
• Social Anything: there will be more success stories, beyond MySpace, for the simple reason that most new services will include a social element. The key however is to make sure that an application delivers value even if I have zero friends/connections/contacts in my network, the social element bringing value add.
• CMS and RSS: there are still white spaces in these nascent segments.

Now let’s go back to work. 

Update: some of these aspects were actually discussed in the inaugural VentureWeek podcast, and buddy David Hornik’s more recent podcast on Bubble 2.0 Revisited. Both worth listening (and subscribing to). I’ll take part of VW #2 with David, Brad Feld and Dave McClure – re the world of Search. Should be fun.

Images of TagCamp

I spent part of the week-end at TagCamp, hanging out with a bunch of geeks and entrepreneurs – only attending a couple of sessions but really enjoying all the conversations I have had. I also led a brainstorming on potential business models for Web 2.0/consumer companies. Mike Arrington joined us and recorded the session, and made it available on CrunchNotes (I have not listened to it yet, and don’t know how this turned out).

Some posts I wrote recently contain some data points relevant to the discussion we had:  The Facebook unplugged at Stanford ETL, Data points regarding Google AdSense versus Yahoo! Publisher Network and Categories and Players in Contextual Advertising.

Thanks to Rohit Kahre and Michael Tanne for leading the organization of TagCamp.

   

     Michael Tanne and                      Scott Beale                  Before the first session
           Rohit Kahre

           

Kaliya aka Identity Woman                 TagCity                       Stowe Boyd on a Segway
                                                                                        (for the first time he said)

TagCity was an interesting experiment: all TagCamp participants could name up to 10 of their favorite cities, and pile up a small plastic box to represent their “votes”. At the end of the exercise, the tallest piles were London, Tokyo, San Francisco and Paris.

Tag: tagcamp

SimplyFired: the contest returns

The first SimplyFired contest had seen about 1,000 entries, and a winner who was fired for eating a piece of pizza without being invited to do so.

A new contest is up – with some great prizes, and this time the challenge is to submit short videos about… being fired.

My friends of SimplyHired, the organizers of the contest, have been kind enough to invite me as a judge, so I look forward to viewing these entries.

Here are the contest rules, and do watch this video when you have a minute to spare.

The Facebook unplugged at Stanford ETL

I have attended last night's session of the Entrepreneurial Thought Leaders (ETL) program featuring Mark Zuckerberg, the Founder and CEO of the Facebook, and Jim Breyer, Accel's Managing Partner who is sitting on the board of the company after his firm led a $13M round of financing (at a rumored $100M-ish post-money valuation).
The Terman auditorium was close to full to hear these two share their stories and experiences about the Facebook and its stellar growth. I have written about it in the past right after their financing, and actually this post is one of the most visited on my blog. Also check out their TechCrunch profile (and do read the comments from Facebook users).

Before I get into the actual session, here is an update on their metrics – which are (increasingly) stunning:

• 5M+ registered users
• coverage of 45% of US colleges (a total of 2,000 - representing 8M students)
• 80% penetration among students of colleges that are on the platform
• 10th most visited Internet site in the US
• 5.5B page/views a month (230M page/views a day)
• 8.5M unique visitors
• signing 20,000 new users a day
• repeat usage: daily 70%, weekly 85%, monthly 93% – can you think of another site that sees 93% of its registered users coming back every month ?

Mark Zuckerberg started the Facebook during his sophomore year at Harvard, in order to have a directory of students on campus in which they could list their profile, their activities and essentially what is going on with their lives. The application became popular beyond Harvard, and other colleges started requesting it.

Mark said that he has not conceived the Facebook as a social network  – which is a community application, it is a directory that he considers a utility that students use in order to find information which is socially relevant. Product development is about optimizing the application on scale and user experience, and adding new functionality: for example, they just added the ability to upload an unlimited number of photos. Expectation is that about 10 to 15% of the people on the network will upload photos.

One of the early design trade-off was to partition users by schools, and limit the visibility of profiles at school level. The decision was made in order to make the environment safer for their users, especially since 30% of them list their cell phones in their profiles. This contributed to an increased privacy, and a relative limitation of the number of  “lurkers:“ who are crawling other sites like MySpace.

On the reason why the first generation of social networks failed (as compared to MySpace and Facebook), he thinks that they have not focused on providing a set of utilities to their audience, they were merely about creating connections. They also had issues of scalability that plagued their growth.

Mark’s team is younger than most entrepreneur teams (many are under 21), and was originally made up of some of his college friends. The company has since quadrupled, and now has 40+ employees. They had started hiring engineers after Mark had built the first version of the site in a couple of weeks (note that he is a psychology major) and worried about scaling it. At some point they got an office, and had to face the issue of organizing the company and its product development, particularly in order to start releasing features in parallel as opposed to serially. Mark learned then the difference between managing dorm friends and employees who had to serve a community, and advertisers. Employees can’t be only engineers: finance, business development, sales became necessary functions to add.

The Facebook is recruiting heavily (Stanford) grads and experienced staff. Their primary criteria is raw intelligence, and alignment with the company’s market and culture. They actually don’t insist on raw development talent – more sheer interest and ability to get things done.

On international expansion, Marc explains that Facebook has to go  beyond internationalization and figure out the cultural implications of moving into markets like Europe, China, Japan,… The strategic choice so far has been to develop a high school product in the short term.

The session then moved into a Q&A with the audience that you can find in the extended post.

In a very timely way, Bambi Francisco has made a video interview of Mark Zuckerberg, which provides this data point about the original investor in the Facebook:

In the fall of 2004 former-PayPal-CEO-turned-hedge-fund-manager-and-angel-investor Peter Thiel -- whose fund is up 60%-plus this year -- gave Zuckerberg $500,000 to buy servers to support the growing audience base at Facebook. Thiel told me it's one of the best, if not the single best, venture investments he's made.

The video of the session is now available on the ETL website.

John Battelle interviews Omid Kordestani

I recommend reading John’s interview of Google’s Omid Kordestani, who also spoke at the Web 2.0 conference (see SearchViews’ account). Omid was the first sales/business person to join Google in 1998, and runs sales and global business development for the search&advertising giant.

There are some interesting nuggets of information in this piece:

• [Kordestani]  has to manage relationships with agencies that want more control over their clients' campaigns and with publishing partners who see Google as a prime source of online revenue -- and a long-term threat to their media businesses.
• Once [Google] proved that the text ads on Google could be successful and not interfere with the search experience, then it really turned into a science. We applied auction theory to maximize value -- it was the best way to reach the right pricing, both for advertisers and for Google. And then we innovated by introducing the rate at which users actually click on the ads as a factor in placement on the page, and that was very, very useful in relevance.
•  Right after the [dot-com] collapse, people were cynical about online advertising. But we monitored our traffic and the click-through rate of the ads. It quickly became apparent that AdWords was working. The model was perfect because people were willing to try something out for $1,000 and see if they could get enough leads to justify additional spending.
•  The measurability of online advertising will extend broadly to all areas of media. You have companies spending billions of dollars on television. As more and more consumers adopt technologies like TiVo, I think you'll be able to have much more useful forms of advertising -- more targeted, more measurable, and with new pricing models. Just imagine if we made it possible for our advertisers to quickly publish relevant ads that could range from the local plumber on one end to Super Bowl commercials on the other.
• As a matter of practice, Google will work with advertisers in any way they want to work with us, whether directly, through a traditional agency, or through a specialty search-engine marketing firm. Google sees agencies as crucial. Agencies create and execute marketing strategies for their customers, and Google helps them execute those objectives.

As an increasing number of consumer Internet companies rely on advertising as the primary, and sometimes unique, monetization mechanism, it is important to understand how they did it. Their key words: traffic, reach, breadth, relevance, measurability, ease of use, new pricing models.

Even if Google is delivering stellar results, there are still many areas of opportunities that will require new targeting and delivery mechanisms – for example to efficiently advertise in podcast, videoblogs, short form videos that will proliferate on Video iPods and cell phones, etc. On that front, it is just the beginning.

Les Blogs II: the first draft of the agenda is up

The program of Les Blogs II is now up on the blog, in draft form. This is going to be a great event with a great crowd, and I am really looking forward to hanging out with my homies (the west coasters) who will make it to Paris, and meeting French and European entrepreneurs.

I will be leading a session on VC investments that I dubbed "The Good, the Bad and the Ugly". I am planning an open conversation between the audience and my panelists: Om Malik, David Hornik and Tristan Nitot from Mozilla Europe. The topic I suggested:

Social Media and more broadly, Web 2.0, have seen a flurry of activity over the past 18 months: startups creation, VC financing, mergers and acquisitions, established players jumping in the fray,... This panel, made up of key witnesses of the Web 2.0 phenomena, will take a retrospective, and sarcastic, look at key trends in this "frothy" market, and where it might go from there.

The addition of Tristan will also allow us to cover open source opportunties and investments as well.

Remember that the number of places are limited, and so you should proceed with registering over here.

I just heard on Loic's podcast (in French) that only 10% of attendees are French, which is great because it shows that there is interest throughout Europe, but on the other side I would expect a stronger participation  from the "locals". Come on guys!

Tag: lesblogs, lesblogs20

Naked Conversations: why corporate blogging is for you - indeed

As already mentioned, I had the pleasure of reviewing a galley proof of Naked Conversations, by my friends Robert Scoble and Shel Israel. I had followed the development of the book on the blog, but because of the medium, and the fact that a book chapter is much longer than a typical post, I had a tendency to fast read most of them. Like Neville Hobson, I find that the printed book format is just much more appropriate to engage in focused reading.

I found the book practical, easy to read and grasp. The real test will be to get the feedback from complete corporate blog newbies, as to what/how much they learned from it. Since I have now been blogging for about 18 months,  I have read/heard of/witnessed many of the recent stories that are mentioned in the book – but I still found it a useful reference. I also learnt about some anecdotes on what happened “before” (before as in before I started reading blogs regularly).

The 200+ interviews that Shel conducted have generated a lot of useful data points that “ground” the theory developed throughout the book: done right, blogging is beneficial to businesses – reach, customer service, visibility, credibility,  and in a few cases revenues, have increased, sometimes substantially.

The most useful chapters for me were “Thorns in the Roses”, “Doing it wrong”, “Doing it right“ and “How not to get dooced” – because they cover a larger number of tips, suggestions and missteps made by corporations that readers will hopefully learn from.

I noted a number of interesting quotes, but the one that resonated most with me is the following (from the “Thorns in the Roses” chapter):

Another thorn is what we call the “echo chamber”. Blogging can fool you. You may think that you are conversing with the world, when it’s just a few people talking frequently, back and forth to each other, creating the illusion of amplification. The echo chamber can deceive a business into thinking it is either more widely successful or further off the mark than it is in reality, because a few people are making a lot of noise. Always remember that the people who comment and link most often are the ones with the most passion on a subject.

Posted by: softtechvc on Buzznet

All in all, a very useful book that I would recommend to established bloggers as a reference, and to executives who are still wondering what to do about this “blogging thing”.

I was actually lucky to hang out with Shel at Blogon, and Robert in the Valley, so I could get them to sign my galley proof. Both  told me that this was their first autograph. One can only guess that this was just the first of many thousands they will sign in the coming month following the release of Naked Conversations.

Congratulations again for completing the project, and best of luck with the promotion.

By the way, there is a couple of "Doc Searles" typos in the proof .

Web 2.0: let's stop the debate and let's go build great companies, shall we ?

Ever since Tim O’Reilly offered a well constructed definition of “Web 2.0”, we (and I am as guilty as others) have gone into a bubble of derivatives, rejections and now flat-out derision. Chris Pirillo offered the last strike with his "Web 2.0" Doesn't Mean Anything Yet.

"Web 2.0," much like the terms and technologies that envelop it, is perfect for elevator pitches and business plans. The desire to slap a name onto this renaissance is only human nature... even though nobody can agree on where we're going or what we're doing or what it is! We're in the middle of a movement, my friends - let's just enjoy it. Let's just mold it into whatever it gets molded into. "This" is a renaissance - and it won't be properly defined until it's well past us. Stop arguing over what it is and what it's not - just get on with creating things, sharing information, and generally trying to make this world a better place.

Let’s just say that Web 2.0 is useful term to represent this current generation of Internet companies, and get on with it: building sustainable companies that might eventually run into interesting short term opportunities depending on “market dynamics”. But you can’t push it and only build features, as David (Hornik) spells it out in  Built To Be Bought (Bubble 2.0) (do check out the comment from Dick Costollo, the CEO of FeedBurner).

So how about we stop arguing and go build great companies.

Search SIG: brief wrap-up on the Mobile Search session and two podcasts

I have been flat out since the meeting took place 2 weeks ago, but it is still worth me belatedly posting about the Search SIG session on Mobile Search. We had 340 (!!!!!) people at the Googleplex, joining us for a discussion, and a set of demos, on Mobile Search.

David Weiden, our host, led his panel through a number of the issues related to that market which includes voice calls made to 411 services – $1B worth of annually. We benefited from having different points of views from 2 startups (Chaboodle Networks, 4INFO), 1 carrier (Cingular Wireless) and 2 large players (Yahoo, Google). These last two notably gave us a number of “can’t comment on that” on some astute questions of our audience. We’re grateful to David for doing a great job as the host of the evening and to our panelists, Elad, Jack,Mark, Mihir and Ted, for their participation.

Once again, we need to thank Google for hosting this event, and welcoming us as they did at their HQ. At least 20 volunteers were on deck to welcome our attendees, sign them up, show them around, and make sure that we can move in this massive crowd very swiftly. A particular thank to Pramod Shintri and Kelli Hugues for their relentless efforts, and patience – you guys totally rock. As I said at the end, the bad news is that “we’ll be back”.

We got some coverage of the event from fellow bloggers:

• Ho John Lee: Mobile Search = US$1 billion 411 calls per year
• PaidContent.org MocoNews: Mobile Monday at the Googleplex
• Tangent Mobile: they actually recorded the session and made this podcast available. Thanks guys!

Talking about podcasts, Doug Kaye over at ITConversations just released the podcast of the session on Audio Search that took place last September at Yahoo (via new client Loomia). Thanks to Doug, team ITC and John Furrier for recording the show.

Tag: searchsig

David Beisel on Seven Questions Employees Should Ask Before Joining a Startup

David Beisel is bringing to us another great post in his Startups series: Seven Questions Employees Should Ask Before Joining a Startup.

As usual, very relevant and worth a read for anyone considering joining a startup. Amusingly, a friend of mine asked me the same question last night, as she interviewed today with the CEO of a young venture-backed company. I would add:

• How is the company positioned in its ecosystem: client/users, partners/channels, competitors ?
• What are the 3 top reasons for clients/users to buy/use the company's products/services ?
• How are our competitors funded ? If there is a major difference in stage or size of funding, enquire about the future financing strategy ?
• If the position is a senior one, ask to meet the VC/board members - if ever they were not part of the hiring process.

I had the pleasure to meet David face to face at Web 2.0, after reading and commenting on his blog for a while. Definitely a great addition to your blogroll.