Why You Don’t Need a Startup Genie

Let’s pretend you hit the startup lottery and Paul Graham wants to help you with your startup. Here’s the catch: Paul tells you that he will only do one thing to help startup succeed. For the purpose of this exercise think of Paul as a magical startup genie. What would you have him do?

Perhaps you need help with your sales funnel. Or maybe you’re struggling with a high level strategy. Perchance your UI is riddled with Comic Sans and you’d like his artistic eye to help redesign the front end. Find a problem that (if solved) would increase your business 10x.

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The Netflix price increase, the “Startup Playbook”, and my own hypocrisy

Last week Netflix announced that they were increasing their prices in September. A very vocal customer base took to the internet to share its displeasure with the news. Some revolting customers even threatened to cancel their subscription unless the price increase was reversed. People were simply furious at Netflix.

“It’s ridiculous” I half-heartedly complained to a friend over lunch. “Netflix is essentially removing features and then making me pay to get them back. This whole pricing fiasco feels like they are just running an experiment on us”.
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Solution Zero – Don’t Over Think Your Startup

This is a guest post written by Jason Lorimer. Jason builds things on the internet and writes about post-internet market opportunities and those who squander them. Check him out on his blog.

 

“Entrepreneurship is neither a science nor an art. It is a practice.” – Peter Drucker

I get asked from time to time what I believe makes someone an entrepreneur and invariably I respond by saying that an entrepreneur is someone who sees a problem and says:

I can fix that.
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No Better Money Spent Than on a Domain Name – The Coupons.com Story


In today’s Internet-based world, naming your new business and selecting a domain name can have a huge impact – and may help lead to a billion dollar valuation down the road. A few days ago, Steven Boal, CEO of the hugely successful Coupons.com, sat down for a rare video interview with DomainSherpa to talk about his company’s experience with domain names.

On June 8th, Coupons.com announced a $200 million investment that valued the company at $1 billion. Not a bad payoff for low “seven figure” investment in the domain name just 11 years earlier.
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The Worst Case Scenario is that No One Cares About Your Startup


“Can a product be built?” is now an irrelevant question for the majority of startups. Services like AWS, EC2, and Rackspace, let you build scalable services that would have been impossible to build a few years ago (unless you raised millions of dollars). Now any decent programer can feasibly build a product that can scale to tens of thousands of users (or more) from their garage. The game has completely changed in a few short years. The playing field has been leveled.

The most pressing question a startup now must answer is “Should this be built?”.

It’s much easier to be concerned about the “good problems” (how is this going to scale to millions of users) than the real problem – “What if no one cares?”.

I learned this lesson the hard way:

Should I build this product?

Do you have any customers?
When I was in college, I worked in the Admissions Office to help pay my way though school. I learned the ins and the outs of the Admissions department. I studied our marketing materials and would often ask potential students what they thought of our advertising efforts. I did this for about a year. I believed I knew exactly where my schools strengths and weaknesses were in promotional materials.

Fast forward a few months to when I had my own company that was working on mobile applications. I decided it would be a great idea to leverage my experience working in an Admissions office to build an iPad app that solved all of their pain points. After all, I did believe I had a good grip on the industry.

I sunk a good month and a half into the project. I mapped out an elegant custom infrastructure that would scale effortlessly. I polished it up and I got a meeting with the head of an Admissions office.

That’s when the bombshell hit. With all of my customer infrastructure, the finished product was going to cost 5 times what a college was willing to pay. I had to completely retool, move to a generic infrastructure, and simplify some of features to make it financially viable for schools.

Lesson learned: Infrastructure doesn’t make you special. If it works and is reasonably responsive, it’s going to be fine for the vast majority of people. As a nerd, this broke my heart but as an entrepreneur, it was a joyful discovery.

Is it the right time for this product?
It’s possible that you can have a fantastic idea, but the market might not be ready for it. One thought exercise I use is this: “If I had the product finished right now, could I call around and get a paying customer today?” If you believe the answer is “yes”, call them immediately and those lines of communication for when you’re ready to launch.

The worst case scenario is that no one cares about what you’ve built, and you’ve saved yourself some serious time. Figure out if your startup should be built before you worry about infrastructure.

Technical scalability has essentially been solved for most startups. These problems have been solved well, and are cheap to use. Don’t waste a lot of time on re-inventing the wheel. Focus on your app and the things that set you apart, not the commodities.

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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?

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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.

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Hacker News and drive by traffic: How to make the most of your startups launch


“How are you going to market this?” I asked Entrepreneur X after being being thoroughly impressed by a demo of his startup. “I’m going to hit the front page of Hacker News.” he eagerly replied.

It was an unusually cold April day, and I slowly sipped my coffee while waiting for him to finish explaining his marketing plan.

A curious silence fell over our conversation so I gently prodded “And then what are you going to do?”

More silence.

At that moment it occurred to me that some entrepreneurs believe you only have one big day of traffic to make it big. Here’s the ugly truth:

Hacker News doesn’t create sustained traffic.

Look at the graph to the left. This is what a typical Hacker News traffic spike looks like. Notice how quickly the traffic drops off after a day or two.

Hacker News is fantastic for gaining general exposure quickly, but because it isn’t specifically focused on your niche, most of your traffic will be “drive by traffic”. It’s a nice, temporary traffic bump but it should just be the beginning of your marketing efforts. Find where your (specific) customers are and focus your time there. Traffic won’t be nearly as high, but your conversion rates will be astronomically higher.

This doesn’t mean you should completely ignore Hacker News, it’s just important that you understand it’s place.

The dates have been changed by my source’s request.

Capitalize on hitting the front page.

Ask yourself this question. “If I were a first time visitor, would I have any reason to tell my friends about this site?”

Since most visitors coming from Hacker News won’t be in your target market, you need to develop a “stadium pitch”. Chet Holmes describes a stadium pitch as a way to “Offer prospects something of value outside your product or service . Something important to THEM.”

By doing this you are getting your claws in visitors that might not initially be interested in your product and you’re giving them something interesting to share. A great example of this is Mint. Mint did a fantastic job of providing value to potential customers even if they weren’t interested in signing up yet. They had a fantastic blog that was pumping out interesting financial information consistently. If you cared about money at all, you wanted to read their blog (even if you didn’t use Mint yet). You can read more about this in Mint’s Marketing Plan.

I’m a big fan of Hacker News, it’s just not the end all for marketing your startup.

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.

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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?

 

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