Rocking your Hustle and Customer Service LaunchRock style


This is a guest post written by Will Lam. Will is the Founder and Chief Date Officer of Date Ideas and Curator of the Startup Digest in Toronto.

I am user number 52 for LaunchRock and the level of customer service I received (even though I haven’t paid Jameson and the Launchrock team a dime.. yet!) was amazing. This is an account told through my experiences using Launchrock’s viral launch landing page and should serve as a great example of how startups should be treating every email, signup, lead and ultimately every customer they have.

This day in startups, a key differentiator and dare I say competitive advantage is the amount of hustle and outstanding customer service you’re willing to put in to win over customers and creating evangelists.

Sure, having algorithms, automated emails or outsourcing to India can help to a certain degree but there’s nothing like “wow factor” of experiencing customer service above and beyond the call of duty – especially from the founders. It can have an immense and measurable impact on your users and the growth of your company.

Some background:


Like many others at the time, I was blown away by the number of sign ups that Fork.ly and UseHipster.com got through their viral landing pages. Of course LaunchRock saw the power of the viral landing pages built their prototype in a weekend at Startup Weekend Philadelphia and hustled like nobody’s business.

After reading the TechCrunch article on them, and since was planning to launch my startup as well, I figure I should try to get in on it as well.

I reached out to Dan Martell of Flowtown and he made the intro Jameson Detweiler (thanks Dan!!), one of the Founders of LaunchRock and that’s when things got started.

Making yourself available to customers any way you can

Emails, Instant Messaging, Phone Calls, Skype, Google Voice. Those were the ways I was able to get in touch with the LaunchRock team. Hell, if I proposed communication through carrier pigeons, I’m pretty sure they’d be down for it as well.

Originally, I only thought the dialogue would go so far as. “Hey, here’s the invite code, you’re all set up. Figure it out yourself and have fun.”

Through corresponding thorugh email, talking on the phone, skyping, Google voicing it and GChat, he helped me get set up ASAP. Here’s a pic of the emails and his signature:

Now, I’m assuming he didn’t make this level of service and support available to only me. If I was user number 52, what about the other hundreds of Launchrockers? Of course this sort of customer service doesn’t “scale” but it certainly doesn’t hurt to try and create a fantastic experience.

By guiding me through the process, and being super attentive, he had me won over. I’m sure he did something similar to other early adopters. By doing so, he had essentially created an army of evangelists for Launchrock.

Moving lightning fast

There’s nothing quite like getting a quick and thorough response to answer a barrage of questions that makes a huge and lasting impression.

Through each email correspondence, Jameson sometimes got back to me 10 minutes later and within 24 hours latest. This is all while coding up a storm, building out features and running on lack of sleep.

Sometimes he reached out to me to see everything was okay because I hadn’t configured my LaunchRock page yet.

Creating evangelists

After having some chats with Jameson, he asked me for help to write a guide for him to help other LaunchRockers get set up. Of course I agreed, thinking to myself he brilliantly used the psychological principle of reciprocity. By helping me out, I turn was compelled to help him out.

Hell, in addition to that I’m writing this post about the Launchrock team just because I was so damn impressed and wanting to share my story about them.

Here’s a mini-interview I did with Jameson through email:

What was your mindset/attitude from the get go after you were (I’m assuming) barraged with requests to get a LaunchRock invite after the “TechCrunch effect”?
We just kept on doing what we started at the Startup Weekend, going as fast as possible. As it became clear that we had something that people wanted, we had to focus on scaling that out which was not only a technological problem but also a distribution problem. While we’ve grown from the referral program, I’ve personally paid a lot of attention to building our brand and being in the right place at the right time.

One thing we decided to do was to go to SXSW and actually took a pretty big risk and spent a good bit of money on various promotions there. I was comfortable doing that because I knew that our target audience was there and that we had a product people wanted. So getting eyes on it meant that we would get users.

And we did get eyes, both in Austin and from the press that resulted, but to be honest, we really didn’t know that we hadn’t wasted a lot of money until about a month later when I realized that a lot of people were telling me that they found out about us at SXSW.

The other thing that we did was focus on being helpful as much as possible through our blog, support and by responding to people who reach out to us. A little secret, if you ask nicely, we’ll probably let you skip the line.

I think that building a good community and making it easy for people to care about your product and support it is more valuable than anything else you can do.

How are you scaling your efforts with your team and managing iterations/workload (outside of meeting with people)?
This is a hard one, and I’m not sure I can answer it on paper. I can say we’ve struggled a bit because everything kind of happened at once before we even had a real business. Thankfully, I thrive on that kind of scenario. I love the pressure and the need to prioritize things because you’ll never get anything done. One of my hobbies is maximizing my personal productivity through technology, processes and good management techniques. I can’t really distill everything here, but you can find out more about how I think about these types of things on Lessdoing.com. I don’t write there much these days, but my good friend, Ari Meisel, who I started the blog with still does, and if you dig into the archives, you’ll get a good feel for how I operate and think.

What was your approach in terms to me (since I’m a total stranger) after I was referred to you by Dan?
We try to respond to everyone and treat them as if they’re a friend. Sometimes it takes some time. (Our support backlog is pretty big right now, but that’s a problem we’re actively solving.) We will always get to you though. Occasionally, things slip through the cracks.

We also always try to make time for people even if it’s just a 5 minute phone call about how to best use LaunchRock. If you send us an email and ask us to look at your copy, we will.

We think you should treat everyone like you would you like to be treated if you were in their shoes.

How have you gone above and beyond the call of duty to deliver “fanatical” customer service?

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

From media darling, to selling out: 10 mistakes I made with my startup.


This is a guest post written by Elias Chelidonis. Elias is a web entrepreneur and blogs at thewebcitizen.com, the guide for the web citizens.

Launching a web startup has been my passion since the early 2000’s while I was working on my MBA in the USA. I was fascinated by the speed of how quickly things moved online (and the whole business process in general). I knew I had to get involved. The internet bubble had just burst, but there was a strong momentum of young and passionate people eager to develop the next AOL, Excite or Webvan ( For those who are young enough these were the hot e-businesses of the time ).
After I had a few unsuccessful attempts to launch a serious scale business (and was actually about to quit trying), the idea of online file storage came to me. I decided to launch Orbitfiles.com, and it appeared I was at the right time and place. We launched in early March 2006 and on April 23rd 2006 our service was one of the most talked about web properties, and we were even on the first page of Digg.com. For those who remember, Digg.com at that time was the today’s Twitter, once you hit first page, you were rewarded with a huge wave of traffic! Servers crash and you get gazillions of visitors. We were not expecting things to move so fast. Our service recovered in 5 days and the hit started to cool down.  By the end of May 2006, I got a call from Google for potential acquisition as at that time they were planning to launch Gdrive. Unfortunately, nothing came from it.

It was an unforgettable journey, and I thought I would share 10 critical mistakes we made ( taking full responsibility as I was the CEO )  that I will not repeat for my upcoming startup (Hint: I will be a storage guy forever ).

Here are some of the mistakes we made

  1. Paid too much attention on web design. NO-ONE CARES as long as it is visually acceptable. What it counts the most is the design of the interface, UI. Make it simple enough that even a 10 years old kid can navigate and find all the info it needs. Although, we had this correct initially, we decided to change the UI to a more web2.0 style and the whole thing messed up, was too complex and the rest is history. Average user’s brain remembers only easy things. Tip: If you say “Wow, our platform rocks, very smart “then it means only you can use it but if you say “Oh man, it looks so damn stupid “then bingo!!! Keep it too simple.
  2. We had a solution for everyone, consumers, businesses, free users. This is acceptable in the beginning till you find your way and create momentum (build back links, traffic) but later you must decide what you stand for in your users mind. The reason is that it will help you allocate all your resources to this target market. In our case free users were abusing the system (as often happens) creating server slow down to business users, the two different target groups’ needs were in contradiction, it just does not work. You must decide whom you want to serve at some point. No such thing as all you can serve.
  3. We had very low prices. This was one of the most crucial mistakes, initially we thought the cheaper we are the more users we will attract. Well, we did, all the spammers, abusers and people who thought for $5 a month can own half the universe. Do your math and charge wisely, your prices will also determine your target group. Higher prices attract higher quality customers that require less support and are less demanding because they know that nothing is free.
  4. Focused on growth and not profitability. If you decide that for the next year you will focus on building a big audience, you need to consider these 2 factors:
  5. Does your business require heavy bandwidth usage – Online file storage services require huge bandwidth by nature, which means huge bandwidth bills. We started with just $100/month of bandwidth and in just 2 months the bill was $15,000/month.
  6. Funding – If you have deep pockets then got for it, if not, focus on profitability. I know your chances of becoming the next big hit are small but that is life.
  7. Do not fall into the trap of Facebook, Youtube, these are exceptional cases of exceptional entrepreneurs. Have them as your dream goal but be realistic on what you can achieve.

  8. We did major changes in the user interface without asking our users first. Huge mistake as we were smart enough (sarcasm) to change the entire UI so when users logged in, it was a totally new platform for them. Digg.com and Myspace.com did that and now are suffering. Humans hate change, so do your changes wisely and not at one time and most importantly survey your users before proceeding.
  9. Did not hire support team and did not have in place a good support platform. By not having sufficient revenues due to mistakes 2, 3, 4 we ended up doing the support. It is ok at the beginning but as the business grows you need a support team. As a result we got so tired doing it so we gave up and ultimately users start to vanish in a matter of days. We had a huge drop of 15% month to month in the conversion from free to paid users ratio after we became sluggish in customer support.
  10. For at least a year, our great customer support was the main driver of the business growth. We were replying to most of inquiries within a day and this had a huge impact on the brand, trust, reliability and free viral marketing. One great lesson learned is that you need to reply to your customers requests instantly, I do not say answer and solve their issue because this may take few days or may not be achieved but you need to show that them you acknowledge the issue, this has an enormous effect to your brand.

  11. Wasted time trying to be acquired. During the early web2.0 mini bubble everyone wanted to be acquired so we ended up wasting almost 2 months trying to find a buyer. What we managed to do is lose focus of our core business and ultimately give up. You build a business to solve a problem and grow this business to a profitable entity and not be acquired. If it comes is acceptable but do not look for it unless you are the next Twitter.
  12. Did not have a good backend system. This is very crucial since it is the head of the entire business. It needs to be consisted of functions that help you have full control of your business at any time. For instance, include key metrics such as total number of users, total number of free users, total number of paid users, total number of users per subscription plan, total number of uploaded files (in our case) total number of each type of files ( docs, images, videos etc. ), total server space used and percentage of remaining space left.  In terms of functions keep it simple, you do not need too many details, being able to search a user based on username or email and view all its data it is fair enough.

Customer contact

Another key feature not to be forgotten by any means is a good mailing system so that you keep in touch with your users.  This must be in place from day 1 because as your user base grows it will be harder to integrate. You can either enable API from major newsletter services like Mailchimp or build a system from scratch. It does not need to be too complex since it will be for internal usage only, send mail to all users; send mail to specific groups (paid, free) and some good tracking stats would be just great.

  • Did not keep in touch with our users. By not having a good backend system we could not keep in touch with our users on a regular basis, so as a result our brand deteriorated and ultimately was hard to bring them back. We attempted to extract all users’ names and emails once a month from the system and use a mass mailing script to keep in touch with them. Having to do it for few thousands is ok but for close to 500,000 users is hard to keep up.

Initially we thought that is ok if we do not email users since we were hardly getting emails from other web services but the truth was the exact opposite. At the first newsletter campaign we increased monthly revenues by 15%, the reason? People who signed up a year ago had forgotten our brand since there was no communication. But to achieve that you need a great product above all.

  • Had too many features. Initially things were going fine, we had only 4-5 core features and people loved it. We messed things when we wanted to add more features. When we re- launched the service in March 2008, the platform was so cumbersome that was hard for users to navigate with so many features and most importantly none really knew what we stand for. Stick to 4-5 features, make them simple and do not fall into the trap of too many features, versions.
  • Although most of these mistakes can be eliminated ( not all of course ) by listening more carefully to your customers and seeing what other successful start ups do, there are some mistakes which were simply not possible to be avoided. Many times I tried to connect some pieces of the puzzle and see how I could had predicted that the service would hit Digg.com first page and buy more servers in advance but nothing made sense. I guess experience is hard to substitute.

  • How fast your business can grow – I do not believe majority of startups know that (forget exceptions), you get that gut feeling with your next entrepreneurial attempts. One key issue that would make me believe now that my next venture would possibly skyrocket is the offer itself. If you say to yourself “this is an insane proposition “then the chances are high because to create huge impact you need to create a huge disruption in your market. I still could not believe that is possible from 5000 unique visitors a day till April 23rd, the site would get 50,000 in just few hours. How would I solve this now? I would move on the cloud, probably AWS or any other provider from first day so the business can scale with no server upgrade and downtimes. This was the most crucial mistake we did, all pieces were in place, great product and a great momentum from social media but our infrastructure was not ready. Five days off service are good enough to have this momentum disappear.
  • Be prepared for the unexpected – In an April Sunday morning back in 2006 I was unable to login to our admin system, after trying for few times I decided to contact the dedicated server support (today is the second largest cloud hosting provider). The reason? The overnight shift employee had mistakenly erased the entire server data. I thought that is, our dream is over but later I realized that the day before we had backed up the whole server because we were planning to move to our own network. If this had happened the night before everything would be over. I would never believe this could have happened, so from now on do occasional backups depending on your data volume.
  • How service would be a year from launch date – Things change so fast when you finally get this growth momentum that is hard to predict how your business would be in a year from now. The only compass you can rely on is your users, they are the ones that would tell you where the market moves and it is your decision whether you want to follow or now (if everyone says more free space more free features does not mean that you need to do that, use your brain first). You may have to change your prices, subscription plans or even revenue streams as you gain more experience and understand what works best for your business.

Things eventually did not end up as we were planning and we decided to sell off in mid 2009. It was an amazing journey with a lot of mistakes that made us lose trust with our users but also with the satisfaction that built a great product people still love using. We finally lost a good chunk of money and this is due to our mistakes. Don’t repeat them.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Angel Investors Need to Get Their Hands Dirty


This is a guest post by Jason Lorimer. Jason is an entrepreneur @CulturaHQ, advocating on behalf of those with the ambition to do more than just entertain ideas.

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
— Mark Twain

The Low Hanging Fruit is Picked Clean

In the post-internet age — out of all the ambitious would-be entrepreneurs in the world, only a small percentage of them are being well served by the early stage venture capital system.
Serving that select few – say 5% (some say less than 1%) of entrepreneurs who have some technical savvy and can clearly communicate their idea — these funding-seekers kept the early stage capital engine running without anyone having to get their hands too dirty. Now, with a number of different early stage investment and incubation vehicles to serve that same small percentage of entrepreneurs, there are simply not enough early stage companies that fit into that mold and too many entities vying for the attention of the relatively few that do. These capital providers are now finding themselves, instead, in the humbling position of having to compete and eventually market themselves to those best packaged investment opportunities.

Instead of competing with each other and with the highly desirable incubators, they should change the hunting game.

Those Damn Incubators

Good for that small, elite percentage of entrepreneurs — and bad for Angels – incubators are cropping up everywhere – becoming the go-to for the savviest of entrepreneurs with refined concepts.

At first, Angels’ knee-jerk reaction to this change inferred that they believed they either were left to watch incubators feed on their game – or compete.

And competing is likely the path of most resistance.

It is difficult for Angels to compete on deal terms with an incubator because they typically are founded by proven entrepreneurs, have large panels of mentors and provide an environment that promotes collaboration.

Incubators are very seductive, if an entrepreneur gets accepted into one of these programs, especially the likes of Y Combinator and Tech Stars, they are going to go regardless of what an Angel is offering. They see their chances for success as greater with an incubator. Whether that is true remains to be seen.

And here Angels made another play.

When it became clear that competing with incubators was futile, Angels moved to position themselves as advocates for these programs. Solid logic here: Let the incubators work with the start up — get a viable product in market and you will be there on graduation day ready to cut a check. This strategy has two flaws, one more significant than the other.

First, not all incubators are created equal. The proliferation of the incubator or accelerator as they are now more fashionably referred to is upon us. There are now hundreds of programs out there. When the smoke clears, all the early stage capital sources are going to be competing to get access to deals from the same handful of these programs.

Second, instead of working together to hedge your risk and share deals, Angels are forced into competing with one another because of a shortage of what have to date been considered viable deals to invest in. While this may bode well for the entrepreneur in the short term, over time, what will essentially become a price war is bad for the entire system of early stage capital.

One need only look at the announcement that Yuri Milner, Managing Partner of Digital Sky Technologies, investors in the likes of Facebook, Groupon and Zynga, to find a case and point
for both of these issues. Mr. Milner, using a separate entity, aptly named the Start Fund with partner Ron Conway, decided to make a blind, blanket investment of $150K into each and every single accepted applicant in this years Y Combinator class. They removed the possibility of having to compete with other funds for the attention and deal flow of the most well-known accelerator in the US.

A lot of people, both within the investment community and outside of it, balked at this idea – seen as a reckless and ultimately unnecessary way to invest. Those people are likely short-sighted and are missing two key points that it would seem the Start Fund fully understands:

1. He who invests first controls the deal going forward.

2. See point #1

Remember, one win pays for all the losses. That is the fundamental model at play in early stage investments and subsequently the logic behind the incubator. One Facebook pays for 9, or in their case, 900 companies that fell flat. The people that invested in the seed round for Facebook are sitting pretty right about now as they were first in line to invest in each subsequent round of capital infusion.

Investor and all around smart guy Chris Yeh has a great guest post on Tech Crunch about how the Yuri Milner/Y Combinator deal affects the ecosystem as a whole. He talks at length about the idea of investing first. I highly recommend giving it a read.

Enter the Big Boys

Adding insult to injury for the average Angel investor is the emergence of the biggest of players like Google and Microsoft into the early stage equation. Without knowing Mr. Milner personally I would also have to guess that the catalyst, at least in part, for making what has been considered such a bold move is the Googles and Microsofts getting aggressive in this space.

These large companies, with the resources to catapult about any entrepreneur into the life they are after, have started to position themselves along side Angels in the deal-flow and they’re offering the accelerator programs perks like exclusive access to certain technologies and customers. These programs in turn using the same to help better position themselves to get applicants from the best of the best start-ups.

For these big organizations, positioning themselves in this fashion is also a way to identify and get their hands on great developers through early acquisition. Development talent being something there is a great shortage of right now.

If You Can’t Join Them — Beat Em’

In the end, there are simply too many of these programs and not enough entrepreneurs that fit the mold investors have come to rely on: technical founders who can not only clearly communicate their idea, but also build the minimum viable product and prove it in market prior to taking on a seed round.

It is likely that we will now begin to see a series of unsustainable strategic partnerships between investors and the accelerator programs. Don’t be surprised if it starts to get gimmicky or, for better or worse, you start to see government subsidies playing a major role.

All of this is a temporary band-aid on what is fundamentally a market problem that only a new model can fix.

A new way of doing things that takes into account the other 95%.

That group is made up of entrepreneurs who may not be able to code and often times are not able to quickly and concisely convey their idea at first. These ambitious, intelligent people make up the largest opportunity for early stage investors to ever come down the pipe. The only catch is that Angels are going to have to get their hands a little dirty. Angel investors who still insist on playing a primarily passive role must evolve or face the fact that like many of the industries they invest in, a fundamental shift is forcing formerly sustainable parties out of the ecosystem in which they are a part.

Don’t Overshoot the Mark

Some individuals are already partnering up with fellow investors and entrepreneurs to form their own accelerator programs. There are seed funds with an advisory board of some kind and space from which entrepreneurs can work. While you will likely see some successful ventures born this way, I would argue this is too short-sighted thinking — skating to where the puck used to be if you will.

These programs still serve the same small percentage of entrepreneurs and leave the largest market untapped. All at a time where cost of entry is nominal and problems to solve using inexpensive technologies are abundant. In terms of opportunities to build products and platforms people can find utility in — to participate in and add value to their own experiences — we are just getting started.

I don’t expect every investor to roll up their sleeves and partner with entrepreneurs to build and run companies in the earliest and most important phases of a start up. It is my position that the next evolution of this industry is in strategic relationships with hybrid development teams. Teams with the ability to cost effectively and efficiently build, incubate and iterate new ventures to a pre-scale position. One where the investors capital is most useful and for that matter — measurable.

Vested Deployment Teams

To be clear, the answer is not in going out and finding a design/development team. Hiring them to work with your entrepreneur(s) will often be throwing money down the drain. A lot of money.

In the end it is not a question of quality, but of motivation. A typical developer or digital agency as the larger ones are being called is in the business of building solutions for their clients and charging more per hour than it costs them — simple math. Some of these companies take on certain side projects on an equity basis but without focus, any start up, no matter how good the idea or the team is doomed. Ideally, the deployment team you work with would, like us, work exclusively in vested relationships.

Create a vested deployment team of your own, employ an incubation staff or call us.
Just make sure you are doing something to get out ahead of the shift in this industry and soon.

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

What startups can learn from a LivingSocial marketing misstep.


This is a guest post by Jason Lorimer. Jason is an entrepreneur @CulturaHQ, advocating on behalf of those with the ambition to do more than just entertain ideas.

Recently I was working out of one of my favorite Philadelphia coffee shops and I had the pleasure of meeting a young woman who works for the Adventures vertical of Living Social.
This venture, formerly Urban Escapes out of NYC was acquired by Living Social late last year.

This person who I very much enjoyed meeting and whose anonymity I will preserve herein, overheard me on the phone talking about an upcoming trip up to NYC to visit a client in the “Daily Deal” space. Naturally in working for Living Social, my chatter perked her ears. The conversation began with her asking me if I was running a deal with Groupon and having me explain that I work with early stage companies, some in the social commerce space. The discussion continued focused mainly on the shift towards experiences over discount vouchers and how that is being driven by two main factors:

  • Business owners are being inundated with pitches to host deals from dozens of daily deal companies each month. All of them with virtually identical offerings.
  • The widely held perception of business owners is that those who opt-in for a daily deal are simply discount hounds, never to return. I disagree but this is the perception.

I talked a bit about how I felt the industry was moving towards discount as a secondary motivator with experience as the thing that drives the opt-in. I also spoke of WAAG, a recently launched venture out of NYC that leverages this premise to connect those who wish to network themselves offline with small businesses and brands who want to host events at their locations.

My new friend was very enthused about the adventures Living Social was promoting. She made them sound like good fun. As we were talking, I ran a Google search to find the home page for Living Social Adventures. Clicking around a bit on my laptop, I could not for the life of me find a place to enter my email to be notified. Perplexed, I asked:

Me:
Where do I opt-in to get invited to the adventures?

Anonymous:
You don’t.

Hmmm….It turns out that you have to go to the main site and opt-in to receive the daily deals in order to get the adventures invites.

I have no way of knowing what was on the minds of the executives at Living Social when they acquired Urban Escapes and re-branded it as Adventures but it would seem to me they are missing a huge opportunity to bring new people into the fold. The much larger marketplace of people open to the idea of passively participating by opting-in to receive invites to cool new social experiences but are not so keen on the idea of using a discount voucher at their local pizza shop. Now, certainly the master list of email addresses should be leveraged for Adventures but why not market it separately? Send a few timely emails to all existing users asking them if they wish to receive adventures in their area but focus on driving new membership to adventures specifically and then cross market those people into the more profitable daily deal list.

Living Social trails Groupon, their biggest competitor at almost every turn. The Adventures play  is an opportunity to stand out to the larger portion of the public and businesses, both sick of the daily deal speak. Use some of that advertising budget to really push this new, experience based vertical and take a chunk of new market share in the process.

 

Embracing Chaos: Random Participation and the Web


This is a guest post by Jason Lorimer. Jason is an entrepreneur @CulturaHQ, advocating on behalf of those with the ambition to do more than just entertain ideas.

It’s been more than a year since the video chat site Chat Roulette took the world by storm. The mainstream media jumping at the chance to expose the site to the public while many of the sites early users were much more interested in exposing themselves. The hype around the site has died down and the traffic has flattened out. It seems the young founder was not prepared to leverage the phenomenon he created with this platform for random interaction. None of us would have been I suspect.
I very much view the overwhelming public interest in this simple chat site as an early indicator of peoples willingness to participate in random interactions as a way to increase the return on their experiences. There are plenty of less well known examples of this like that of Japans’ Ogori Cafe where you get what the person in front of you ordered for lunch or the application I use as a screen saver in Map Crunch. It takes random Google Street View images and rotates them randomly at your behest or on your behalf. Most of what exists to date would be widely considered novelty but that is about to change.

In the post-internet economy, people have access to whatever they want, wherever they are.
Their ability to participate passively in exchanges where they can add their own value to things they buy and services they use will be essential. Experience based commerce will become the standard practice across industries. Companies competing to create and package compelling experiences in a world where the lowest price is accessed easily from our cell phones and the concept of scarcity is abolished by platform marketplaces where people can buy and sell from each other directly, all but eliminating the ability for brands to control the perception of one or more of their products being rare and thereby valuable.

Take Etsy for example. I am a big fan of this platform filled with handmade products from
around the world and as such, often post ideas for their site. In this case, a simple function focused around a prominently placed button would randomly populate an artisans profile, complete with their available products. This fun and productive interface would expose
vendors to additional prospects and customers to interesting products they might have not otherwise have had occasion to search for. All this in a mostly passive way, taking the existing behavior of window shopping and leveraging it to increase sales.

I am extremely surprised that social networks have not embraced randomness to any notable degree as of yet. Think of randomly populating a fellow student from your high school on Classmates.com or an available member of the opposite sex in your area on Match.com

Think about mobile commerce melding with social in a random and ultimately profitable way.
One example would be taking the the much talked about Groupon Now application which while pin pointing your exact location, asks you simply: Are you Hungry or Are You Bored, then populates deeply discounted deals for businesses on the platform by distance on your phone.
The same basic application could be used to match people interested in the same categories, currently in the same vicinity. So, essentially you could click a button and be matched with a person or people and a deal. You could mutually choose to accept the occasion or pass right from the phone. Something randomly fun to do and someone to do it with, all in a few clicks.

How would you work randomness in to your model to improve your customers experience?

 

For more startup news, follow us on Twitter @startupfoundry or on Facebook.

Calculating your customers lifetime value (with code)


This is a guest post written by Auston Bunsen. Auston is the organizer behind SuperConf, an awesome conference for web entrepreneurs which I had the privilege to attend in February. If you’re in the South Florida area, make sure you go next year!

I watched a Mixergy interview with Jason Fried [link] and at one point he talked about how they (37Signals) hired a data guy to generate metrics, more specifically Customer LTV.  Andrew asked how LTV  is calculated & if there was software available to help figure it out.

This is my answer to that question. It’s how I’ve done Customer LTV calculations & segmenting at companies I’ve worked with/at. Hope it’s useful!

Disclaimer: Code may not be 100% working & some of this stuff is very lego-like. Take this with a grain of salt, it’s just how I do my LTV stuff.

The Customer Lifetime Value Formula

For a SaaS startup today, the formula in it’s simplest form is as follows.

Customer LTV  = Revenue Per Month * Number of Months being a customer

Getting The Necessary Data

If you’re lucky, you will have a record (in a table or datastore) of all payments (& hopefully declines) that a given customer has made.

If you don’t have this you may be able to get it from your payment gateway via their API. If you can, do yourself a favor & do a retroactive import of this data & store it on your servers. It’s important!

Once you have this data, you can just create a script to run through all customers & generate an average LTV. Here is an example in SQL:

Segmenting Your LTV

For more meaningful metrics, you’ll need more data than just your LTV.  You need to be able to properly separate customers with High LTV’s from customers with Low LTV’s. To do this, simply add a “group by” & “order by” to the above SQL statement:

That covers how to get a granular look at your customers & their lifetime value. But now that you’ve got that, you’re probably going to want to see where the bad customers came from. Conversely, you might have some intuition that certain traffic has a lower or higher LTV than others. Basically, you’ll want to go deeper.

Deeper Segmentation

If you’d like to segment your customers by traffic source/medium/campaign, you need to get that data somehow & analytics like Google/Clicky don’t have granular data export (each visitors ip/browser/os) in their API. So, you will need to collect that data & somehow pin it to customers record at the time of signup. You might have to update your database/store to accomplish this. It’s actually really simple to do, just grab the url params & pass them through to the sign up page. Here are a couple of examples…

in Python (django):

in PHP:

Once you do that, things get fun; you can:

1. Mash up data from google analytics with your own data by using their API [link].
2. Segment your customers by sex, age group, education, marital status, etc using the Rapleaf API [link]
3. See if customers in certain cities or states have higher LTV (using SQL)

Tons of fun with data

With the above information, you can create dashboards for realtime campaign tracking (or just dashboard widgets, like one for geckoboard [link]), daily emails with metrics, create upsells to your customers based on LTV (in order to raise low LTV or increase revenue in high LTV customers), re-focus your marketing/pr efforts where they will make the most impact based on historic data & if you’re really nerdy (& smart) run ML/Pattern recognition on your data to find patterns that may be interesting.

If you’ve enjoyed reading this, you can follow the author on Twitter @Bunsen.

For more startup news, follow us on Twitter @startupfoundry.

How About We Disrupt Online Dating


This is a guest post written by Jason Lorimer.

When I first read about a NYC start up called How About We, I was doubly stoked.
First, I have an affinity for East Coast entrepreneurs being one myself and then add in the
concept that someone was finally out to disrupt the sluggish and otherwise dull online dating vertical — I did a little happy dance in the confines of my office.

My cheer was short lived as I came to learn over weeks of watching their activity that they are seemingly another start up in a long line that start with supremely disruptive ideas only to end up creeping towards the middle. I’ll come back to this particular company and how I think they can have a tremendous impact in the coming months but let’s take a cursory look at the online dating space: All but wholly owned by E-Harmony and Match for over a decade, this market is just now turning ripe with the wide spread acceptance of internet dating as a social norm. It is likely that most everyone reading this has met or knows someone who has met and had a relationship of some measure through an online dating site. While there are a considerable number of niche sites, the foremost freemium player and even a few that border on strange, I could not find a single company that was out there taking a stand that people can get behind. Solving a problem that exists in a world where online networks are the base of our social operations. That is, bridging the online/offline divide in an engaging way. Motivating people out from behind their monitors in a mostly passive way. The company I single out herein, their name rings these attributes. It breathes simplicity. I absolutely love it. Unfortunately my affection ends there. The truth is that this company seems to be doing just enough differentiation to get the attention of their largest counterparts. Which seems to have worked as they are all rumored to be implementing similar “plan making matching” features.

Look no further then the advertising How About We has implemented to see how halfway out of the box they are positioned:

“It’s the Modern Way to Date”

I don’t know these guys and the people I have met in the course of doing business say they are very sharp. I am sure they are. It is a great opportunity. I do not single them out for any other reason then they are the closest among the infiltrators to making a significant dent on the market by providing real utility for people. I think they will grow no matter what they do if for no other reason then the online dating inclined are looking for a new place to park their profile. I do not however imagine they will bring new people into the process though and that is what you need to do if you want to have success that won’t just be copied by the competition. Bring a half million new people into the process and you will have the biggest companies in the space banging down your door to buy you. The market is flat. It needs new customers. It needs you to innovate.

The model I would design for How About We would be all of two pages. A registration page with a fun 45 second video explaining why the service rocks along with a button to log in via Facebook. See how social travel site GTrot does the log in with FB Connect flawlessly.
Notice how they say underneath  — “No need to register. Just connect with Facebook.”

Upon clicking the button and approving the terms from Facebook, the now fully connected visitor would be taken to a real time stream, complete with FB profile photo and their fellow visitors suggestions for things they would like to do. You could sort at the top of the stream by the typical filters like distance, age, etc but sorted right in the stream. Clicking on a name would show their FB profile in a new window and you could contact them by shooting them an email that you would mask on their behalf.

When the user is ready to post their own suggestion for something fun to do together, it pushes out to their FB wall with a url back to the site. Other interactions could push as well. Say there were functions that let you advocate for another persons suggestion by clicking “Cool”. This gesture meaning that you are not in that area or so inclined to attend with them but you still think their idea rocks.

You get the idea. Simple, socially integrated and ultimately disruptive.

I know what you might be thinking — only log in with FB connect, no profile hosted on the site, leaving the site, people want to keep profiles separate, etc. Yes, this will turn some people off — exactly my point. It is not the people you turn off you should need be concerned with. Those people already use other dating sites. It is those new ones you can turn on you want and will make the bigger players want you too.

Think about it.


More about Jason Lorimer:

Jason is an entrepreneur @CulturaHQ, advocating on behalf of those with the ambition to do more than just entertain ideas. He builds things armed with an insatiable curiosity and a healthy dose of impatience. Developing socially integrated platforms where people can participate and add their own value to their experience, Jason and his team transform pre-internet business models into post-internet companies that scale.

At the office, when he is not working with partners to incubate their early stage ventures, he posts on his blog and loves kicking around ideas with other entrepreneurs from around the world. Occasionally disconnected from the world wide web, Jason is a music lover and amateur artist with several creative outlets including photography and painting.

You can find Jason on Twitter: @CulturaHQ

For more startup news, follow us on Twitter @startupfoundry.

Startup Marketing 101: 5 Reasons Why You Need to Feed Yourself


Imagine you are sitting down at the dinner table and you have a big juicy steak right in front of you. You have a fork and a knife laying right next to the steak.

Do you:

A) Ask the person next to you to feed you
B) Stare at the steak and wonder why it’s not gravitating towards your mouth
C) Use the Fork & Knife to feed yourself

Simple Question right?  Now let me rephrase this question.

You just launched a web startup.  Do You:

A) Send an e-mail to every relevant blogger in hopes of getting covered
B) Stare at your website and wonder why there isn’t much activity
C) Start a Blog and bring traffic to your startup (e.g, feed yourself)

Stop trying to get other people to feed you, and feed yourself.

Here are some ways a blog can help your startup, feed itself:

1. It gives other people a reason to link to you multiple times

The keyword here is multiple times.  If you don’t have a blog why would they blog about your startup twice?  It’s the same startup it was 3 months ago.  If you have good content, they will link to different blog posts bringing attention to your main site (your startup website) that it otherwise wouldn’t garner

2. It gives you another reason to tweet

You know that saying: “I tweeted to let you know I blogged” ? It couldn’t be any truer.

It’s not “I tweeted to let you know that my website is still up and nothing has changed in the past few days, but in case you missed my tweet the first time here it is again and don’t worry I’ll remind you again in a few days to my websites existence”.

3. It gives you a platform to launch your next startup

What happens when this startup fails?  What happens to your customers that were loyal to you and not your startup?  If you don’t have a blog, they don’t know where to go next & they will have no idea that you even had a next startup.  When you do launch your next startup, use your existing readership to be your beta testers.

4. It gives you something to do when there is nothing else to do

Everyone has those “OK, What Now” moments after launching their website or while waiting for something out of your realm to be implemented.  Write down what’s on your mind and post it.  Get it out there.

5. It’s FREE!

WordPress is your friend. Use it. Stop trying to get other people to feed you, and feed yourself.

What other ways has your startup been able to “feed itself”?

Follow the author on twitter @robbieab.  

For up to the minute startup news – follow us on twitter @startupfoundry

A look back at Arrington’s 2005 “Web 2.0 Companies I couldn’t live without”


In December of 2005, Michael Arrington of TechCrunch put a list together of his favorite web 2.0 companies he couldn’t live without. That was almost 5 years ago, and we decided it would be fun to see how the startups are fairing in in 2011.


BlogLines

I’ve actually never heard of bloglines until I read this post, but apparently it was planned to shut down on October 1st, 2010, but then Merchant Circle acquired it and re-launched it, so the website is still up.

Bloglines was essentially a RSS reader and a news aggregator ,and I can see why Arrington couldn’t live without it back in ’05.  For a news junkie, it had everything you needed.  According to the Mashable article, the founders said that Twitter & Facebook basically killed the service.  Maybe their is some minor validation in “RSS is dead” after all?  I still rely on RSS for my iPhone news consumption, but I agree twitter & facebook is where I get my latest news.

Here are some of the awards they received, according to their Wikipedia page

  • Included in Time Magazine’s Top 50 Web Sites for 2004[6]
  • Voted Best Blog/Feed Search Engine by the Search Engine Watch Awards in 2005[7]
  • BusinessWeek’s Best of the New Web[8

Del.icio.us

We all know the story of Delicious and Yahoo, so there’s not much explaining that needs to be done regarding this. In 2005 it was strong, and I think it is still going strong until Yahoo officially decides to end it.  There are a lot of competitors out there in the bookmarking business, but I still don’t see the need for it to be honest.  I ended up with thousands of bookmarks, and I never found myself looking back for saved bookmarks. If I needed something, I just google it and blam there it is.

However, maybe i’m not the perfect user of this tool.  Someone inevitably asked what the alternatives to delicious were on Quora. One that came up that was slightly different then the rest was PearlTrees.  I’ve tried it, and I’ve tried to like it and I just can’t.  It just seems like so much work just to organize bookmarks or websites, or whatever in the world it is trying to organize.

But, delicious was very relevant in 2005 and I think still very relevant in 2011.

FeedBurnerAcquired by Google in 2007 for $100MM, I can confidently say that feedburner is still very relevant in 2011. RSS is not dead, and I’m fairly sure every one that uses RSS for their blog has it connected through feedburner.  It provides detailed analytics on your RSS subscribers, and i’m not sure who the competitors are in this space.  So I take back what I said.  Maybe RSS isn’t dead!!??


FlickrAnother Yahoo acquisition that is still loved by everyone, but can probably have been more successful if they grew the site properly.  I personally think it could have pivoted into some sort of Facebook, but Yahoo just didn’t see it that way apparently.  Regardless, it is still safe to say that flickr is still very very relevant and loved by many users.  I don’t use it much, but I know that a lot of my friends and colleagues do.  Facebook has very much so jumped into the photo space, but Flickr still remains to be loved and probably still a web 2.0 app that people can’t live without.

MeasureMap – I had to Google this one and after a few searches I figured out that Google bought them and the site now redirects to Google Analytics.  It was supposed to be analytics for your blog.  This one is hard to say if it is “still relevant” or not, because not many people got to see what it was like.  Google analytics is obviously very relevant.

Memeorandum – This one I also had to Google and soon figured out that it was the early days of TechMeme.  It seems to be that the tech section of memeorandum had evolved into a full site of its own and needed its own memorable URL.  Hence we have techmeme.com. This is also a site I don’t use, but I’ve seen a lot of articles regarding techmeme.com and is still very widely used by the tech community.


NetVibes – I used to love netvibes, and since twitter / facebook I’ve fallen out of love with it.  It has an awesome interface and I think it was / is is a leader on how to design a clean interface for a personalized home page.  It is still very relevant now and there has been a lot of coverage of netvibes on techcrunch

OmniDrive – From their wikipedia page: “Omnidrive was an online storage company with a single multi-platform product that aggregates storage into a single place.” Sound Familiar?  Well, it is now defunct and even if they were still around, Dropbox would be some stiff competition.  This actually brings a smile to my face, and should give everyone hope that you can still do something that another company failed at.  This also means that you should give Dropbox a LOT of credit for not only surviving, but being an essential service for almost anyone who uses a computer.


Pandora – I actually prefer grooveshark as my place for music, but it is still way behind Pandora in terms of usage.  It has some stiff competition with last.fm and grooveshark, but it was a must have in 2005 and it is definitely a must have in 2011.


Skype – In 2005 it was a must have, and 2011 it is definitely not going anywhere even if Google is part of the competition.  It’s a well known and very used international product, and still is a mission critical app for a lot of people around the world.  I’m sure Arrington wouldn’t disagree with that.


Technorati – I’m kind of torn on this one.  It’s definitely not a “must have”, and I’m almost thinking it falls under the not relevant category.  It’s original intention was for real time blog search, but I’m not sure that’s what technorati is used for.  It has a lot of content from various blogs and has a lot of its own original content.  It’s borderline a content farm.  Google has its own blog search engine and again Twitter & Facebook have taken over where people get their content from.  Do I think arrington still uses technorati?  My guess is no.


WordPress – The platform that currently powers thestartupfoundry.com.  Is it a must have? Abso-freaking-lutely.   I honestly don’t know what I would do without wordpress.  It’s easy to use, it’s customizable and it’s robust for power users.  It’s up there with Dropbox.  I wasn’t using it in 2005, but I can imagine it has approved greatly in 5 years.  Arrington: Spot on.


Yahoo Maps –   This one actually confuses me as why Arrington chose this one over Google Maps.  I originally thought that the only reason he chose this one was because Google Maps wasn’t “invented” yet.  But, alas I was wrong.  Google Maps was launched in February of 2005, thus giving Arrington almost 10 months to use it.  I distinctly remember when Google maps was originally launched, it killed the competition in terms of user interface with their slick Ajax usage.    In terms of relevance, this one is definitely not relevant.  It’s used by people who don’t know any better and just get directed their because their homepage is .

Follow the author on twitter @robbieab.  For up to the minute startup news – follow us on twitter @startupfoundry

How one startup successfully sold physical products – The Sticker Mule story.

I first heard about Sticker Mule through a comment on our site regarding real world startups.  I was in a desperate lookout for startups that actually make or sell physical products, and Anthony Thomas brought to our attention his startup: Sticker Mule.

Below is an excerpt of the interview:

Who you are, and your role in the company
I’m Anthony Thomas, one of the co-founders of Sticker Mule. I focus on product development & marketing and I do a lot of customer service too.

In two sentences or less, what does sticker mule do?
Sticker Mule makes it easy to buy custom stickers.

Where did the idea come from for sticker mule?
I have a close friend who is a retired operations manager that used to oversee large scale manufacturing operations. He had just bought his first computer at age 70 and was showing it to me. I decided to show him Zazzle and within a few minutes he was joking that we should build our own Internet-based manufacturing company. The next day he called me and put up $50k to get started.

We were actually incorporated before we settled on making stickers. At first we had plans to do multiple sites, but that was an overly ambitious idea. Sticker Mule ended up being the first project we got off the ground and now we’re obsessed with being the best sticker printer you’ll ever meet.

Give us a run through of the first 6 months of sticker mule. How did you market the site, what problems did you run into, etc.
We got lucky with our marketing efforts. Our team digs design, open source, and rails so we thought it’d be fun to make friends in these communities. Immediately after launching, we reached out to bloggers and conferences in these spaces. Word started to spread, sales went up and we got lots of positive feedback so we pushed harder.

I say we got lucky because these communities have really been responsible for our growth and we didn’t realize upfront how this would turn out. g takeaway is that outreach efforts work best when you have a genuine desire to connect with people. We really want to be thought well of by these communities and I think that’s been obvious to all the people that have helped us along.

Our biggest mistake was contracting a firm to help with SEO/marketing. We cut them after a few weeks and never implemented any of their ideas. In retrospect, it’s essential for startup founders to do as much as possible on their own initially. You have no way to evaluate if hired help is performing without making an attempt on your own first.

What initial costs did you have to get it up and running since you are a “real world” startup.
We had $180k in initial investment that was contributed by the founders. To get setup we spent about $150k.

Are you bootstrapped or funded
Technically, we are bootstrapped since all of the investment is from the founders. We have not taken any “outside” funding.

Are you profitable?
Yes, we’ve been profitable for the last three months. All of our cash is being invested back into the company to keep up with growth. We have no plans to get rich quick. We like what we’re doing and want to see it become a big deal.

What’s the hardest part about running a company with physical assets? How do you minimize the risk on costs.
Honestly, our biggest challenge isn’t physical assets. As our demand grows we just buy more machines at prices that provides a reasonably quick payback (1 – 2 years). Our bigger challenge is managing development costs and direction.

We do as much development as possible in house, but contract out more complex ideas. It’s easy to waste development time and money pursuing vaguely worded feature specifications. To keep focused, we design everything upfront before writing code. That gives us an opportunity to think through ideas and, in some cases, throw them out before wasting development effort.

What advice do you have for others who have considered starting a company that produces physical assets or goods. how is it different then a pure software company.
#1 Don’t build an e-commerce store

Build an application that sells your product; not an e-commerce store. Enabling purchases is only one goal of your web site. You should also be developing features that assist with customer service, help your marketing and engage visitors so they want to talk about you.

#2 Don’t outsource the job of building your Internet presence.

As a founder you need to be personally familiar with what it takes to get your name out. Traditional companies that sell physical goods consider Internet marketing a technical skill that they need to contract out. The problem is, if you’ve never personally done it you have no way to tell if you’re getting value from who you hire.

#3 Find an awesome designer and put them on your core team.

Good design makes every other aspect of your business easier. It helps reduce customer service inquiries, makes outreach easier and gets people talking about you. Consider every screen and interaction an opportunity to excite and educate your visitors.

Check them out at http://www.stickermule.com. Follow the author on twitter @robbieab.

For up to the minute startup news – follow us on twitter @startupfoundry