Win $150 worth Google AdWords credit for your startup from LaunchBit


LaunchBit is one of TSF’s fantastic sponsors (as seen in our sidebar). LaunchBit helps entrepreneurs get started by walking them through the process of building a startup.

I recently received an email from one of my contacts at LaunchBit, Elizabeth Yin, and she mentioned she’d like to giveaway $150 worth of Google AdWords to TSF readers. I’ve included the email below so check it out for your chance to win!

We’re rolling out a new tool to help entrepreneurs get traffic to their landing page super easy. We’re offering 2 lucky readers $150 in free Google AdWords credit using our tool.  

To win, a reader must:

• Have a LaunchBit Guide account (Normally $20, but TSF readers can get one for free be using coupon code: “STARTUPFOUNDRY”)
• Tweet by 6/14/2011 11:59pm PDT “I want $150 ad credit from @launchbit cuz…” [and add their own compelling reason] 

We’ll pick the 2 winners shortly after the deadline based on the most memorable truthful reason.  

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.

It sucks to build a startup with the “Google Method”


“We’re not making any money yet, but once we hit 100,000 users, we’ll be able to break even with ads!” an entrepreneur enthusiastically told me. As I listened to the entrepreneur passionately explain his plan to make his startup profitable, I realized that I’ve heard the same strategy repeated ad nauseum. I’ve started to call this misguided strategy the “Google Method” of profitability.

What is the “Google Method”?

The “Google Method” breaks down into a simple equation:
Free + Lots of users + ads= The Google Method.

There is nothing inherently wrong with this formula, but it’s a terrible model to try and shoehorn onto a bootstrapped business. One of the worst things your startup can do (for its bottom line), is to try and emulate Google’s methodology for revenue. You might gain a lot of users, but monetizing them will be incredibly hard. You’re essentially cannibalizing your own business.

Why does this suck for startups, but work for Google?

This is a classic example of knowing what type of business you’re actually in. For example, Google isn’t a search based company. They used search as an engine to break into the market, but they are actually an advertising company. Did you know that 97% of it’s revenue in 2009 came from advertising?

Since Google is an advertising company, they have different goals then most startups. Google has to play a different game. For an advertising company to stay afloat, they need as many eyeballs as possible. This is why the “Google Method” is so effective for them. Free gets a new Google service a lot of attention, while allowing their actual product (advertising) to flourish.

For a bootstrapped startup to keep its doors open, it needs cash. Giving away your main product and hoping to “make it up on volume” is incredibly dangerous. You’re giving away your main product without any sort of (financial) benefit to yourself. The metrics that Google uses will be fundamentally different than what your startup needs. Don’t blindly implement the Google Method. It’s most likely the wrong model for your startup.

Side note: Even though your startup may receive money from ads, you’re probably not an advertising company.

Is there a better way to build a startup?

Absolutely. I’ve realized that I hate to leave money on the table. If someone sees enough value in my product to pay me for it, I will gladly take their money. This is slightly unpopular in some entrepeunership circles, but have the audacity to charge from day one.

It’s a painfully simple method, but it’s something that’s hard to have the guts to do. If you believe you startup has real world value, let people pay you. Don’t chicken out by giving it away for free.

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.

The Transparent Startup Experiment: A weekly look behind the scenes of “Time Off”


“I love reading stories about startups raising money, launching, or being acquired, but I want to learn how to take my startup to the next level with marketing. Is there any good examples I could check out? Where do I even start?”

I received this email from a TSF reader a few weeks ago, and I’ve been trying to figure out the best resource to send him. I sent him Noah Kagan’s Marketing plan for Mint (which is required reading), but I didn’t feel like it was enough. I wanted to be able to dissect a startup from top to bottom and show actual numbers as well as the thinking behind each decision. Beyond that, I wanted something that would teach other startups how to have the same success.

A finished product, with no marketing

A few months went by, but I still hadn’t found a resource like I described above. I was about to give up on the idea until I met Ryan Smith. Ryan is a very smart guy who loves building products. In fact, he built Time Off, an application that let’s small businesses employees easily manage vacation days, as a side project. It integrates with Google Apps and is a solid product. The problem is, Ryan wasn’t sure how to market it. I asked Ryan if I could come on board with him to do the marketing, and use Time Off as a real world case study for TSF.

We’re going to build a transparent startup that will walk TSF readers through a basic marketing plan, and share our results. This project will be a fantastic real world example to discover and learn what tactics actually work for startups. I’m very excited to bring this to TSF readers via a weekly column. It will be a fantastic resource to learn from, and I’ll do my best to explain the thinking behind our decisions. Be sure you follow TSF on Twitter @startupfoundry and on Facebook to stay current with “Transparent Startup Experiment”.

To get the ball rolling, this is the game plan that we’re going to be executing starting next week:

Our Game Plan For Time Off:

Objectives
a) $2,000 a month (in revenue) in 6 months.
b) Write up in 2 major publications

Target Users
1) Small Business
2) Google Apps for your domain users

Metrics
a) Page views
b) Number of users who sign up for trial that we convert – Who’s paying for our product (identify industries to target).
d) Measure the impact of weekly articles about Time Off on The Startup Foundry.

Registration Process
a) It’s already fast (which is really good), but it needs to be polished
b) Look at implementing Chargify instead of Google Checkout.
c) Use 37signals model of pricing.

Branding
a) Logo
b) Home page redesign
c) Improve copy on home page
d) The sales page needs to be redesigned.
e) Email through @timeoffhq.com instead of @gmail.
f) Social Proof needs a higher visual hierarchy on home and sales page

Increasing paid conversions
a) 1 month trial instead of free
b) The visual hierarchy of the site pushes customers to the free version. Let’s change this.
c) Collect emails, and have regular content go out to paid users

Blank State
a) Improve “first run” experience after signup.

What do you think? As you look at the site, do you see anything we missed?

What It’s Like Being a COO at a Startup, with Jason Sew Hoy of 99designs


Engineers get a lot of coverage in the tech world (as they should) but I’ve been interested in other pieces of the startup puzzle. For example, I’ve always wondered what it’s like being a Chief Operating Office (COO) at a startup. Jason Sew Hoy was gracious enough to give me some of his time to share about his experience as COO of 99designs.com.

99designs.com is a marketplace for crowd-sourced graphic design. It connects designers from around the globe with customers seeking quality, affordable design services.

In this interview Jason walks us through his day to day life, what’s the biggest challenge he has to face, and the role creativity takes in a startup’s life. You don’t want to miss this.

What’s a typical day like for you?

My role at 99designs.com involves a lot of multi-tasking so what I do from one day to the next can be very different.

To give you a rough idea though, today my morning started off with our weekly marketing meeting, a 3-way conference call with staff from Melbourne, San Francisco and one of our founders in Vancouver. After this I made a coffee on our espresso machine and then spent the rest of the morning working through emails and yammer updates, as well as checking the performance of the business via our dashboard.

At midday I went down the road for pizza with managers from several other web startups in our building, including SitePoint.com, Flippa.com and Learnable.com. Given we’re all born out of SitePoint, we share the same culture and have a vested interest in seeing each other do well – it’s a very unique situation and awesome to be part of a group where knowledge sharing is an everyday occurrence.

After lunch, I attended an Agile sprint review with the development team. A core part of my role is overseeing product development in Melbourne, so I have several key meetings with the team during the week to ensure they have everything they need to keep moving with key projects. Today’s job was to review several demos from our engineers and approve features to be deployed to the live site.

Soon after this a customer called with questions about our design service, so I spoke to her briefly on the phone and answered her questions before getting back to prioritizing feature stories for our next sprint.

About mid-afternoon I then sat down with our Design team to review videos from the Guerrilla user-testing sessions conducted that morning to get feedback on a key part of the site. We then brainstormed ways to improve the design by making things simpler for customers to understand. Making notes, drawing on the whiteboard… it’s easy to get carried away with stuff like this and by the time we finished we were well into the evening.

What’s the difference between your role and the role of your CEO?


In general, my role as COO is to focus more on making sure our teams are executing our business priorities well and operating as smoothly as possible. Our CEO, Patrick Llewellyn is mainly focused on long-term strategy as well as pursuing sales & marketing opportunities. There’s some overlap of course but it’s no coincidence that our main points of focus also correlate with the location of our teams, with Pat leading the sales and support teams based in San Francisco while I head up our product development team based here in Melbourne.

What’s the most challenging part of your job?

One of the biggest challenges is building and maintaining a passionate, high-performing team, which isn’t easy in a fast-growing startup. Regardless of how badly we need a vacancy filled, we’re very fussy about who we hire. We look for individual brilliance and a passion for technology, as well as a strong cultural fit. Because we work with such new technologies, lack of direct experience isn’t always a deal breaker, but attitude and passion are extremely important to us. Sometimes it’s a hard call, but the principle we go by is that if it’s not a resounding yes, then it’s a no. It also helps when candidates are into coffee, foosball and Macbooks!

What’s the most exciting/enjoyable part of your job?

Without a doubt, the most enjoyable part of my job is hearing stories directly from customers and designers on how we’ve impacted their lives. From customers who’ve used 99designs to launch their business, to designers who now make a living off us after being laid off from their jobs, it’s the real people and the real stories behind our service that constantly inspire us to keep improving our service.

Imagine being a winning designer and being flown from Paris to the US by your customer, so that you can hand-paint your custom design on the wall of their office. Or being called by a high-profile design company and being offered an internship purely based on the strength of your 99designs portfolio. Or being able to maintain your livelihood as a talented designer recovering at home from a long-term illness.

Looking at the numbers, we’ve paid out over $20,000,000 in total to our designers and we’re currently awarding another $1,000,000 every month. It’s a huge amount of opportunity, but often it’s the individual stories that really capture the heart and give us that warm and fuzzy feeling inside.

How does one become a COO of a startup?

Good question. I think the thing about startups is that you have to be a jack of all trades, especially in non-technical positions. Drawing from my own background, I think the key skills that help me in my role are: high-level technical knowledge, an analytical metrics-driven approach to solving problems, ability to communicate well, a passion for business and a little sales experience. One other vital thing that a COO needs is a strong willingness to take ownership – in a lot of cases the buck stops with you!

How much involvement do you have with the other departments in your company — sales, customer service, engineering, marketing, etc.?

If I’m doing my job well, then I see myself being the glue that joins all the departments together. It’s crucial that we maintain a big picture view of what’s going on across the company so that we can provide the best possible experience to our customers and designers. It isn’t always easy with our staff being spread across different countries but frequent communication is the key!

How important do you think non-engineers are to technology startups? Do you find that there’s tension between engineers and non-engineers?

Engineers are great at building stuff, but they typically don’t like marketing and selling stuff or talking to our customers for hours on end – they usually just want to get on with it. That’s where the rest of our team comes in to back them up – everything from designers to marketing experts, to sales & support staff – and they’re a critical part of our ability to execute. Because we work so closely together, we don’t get any real buildup of tension – that all gets left on the foosball table!

What role does creativity play in your day-to-day job?

Creativity exhibits itself in many forms and it’s what our entire team strives for on an everyday basis. From product design, to thinking up new marketing angles, to planning our long-term roadmap, I find there’s always a creative way to approach every task. If it feels like an idea or a solution isn’t quite right then I push to come up with something better – in my mind that’s what being creative is all about.

For example, when we were nominated for a Webby Award in 2010 we had to think of a creative way to get our community to vote for us, so we promised them we’d make a video of us singing in the street if we won. Sure enough, our community loved the idea. They voted in spades and we ended up taking out the award despite some intense competition. I’ll always remember this as an example of how a little bit of extra creativity can go a long way… and what followed was one of the most entertaining days I’ve ever had at work. Check out our performance here!

—-
This is a guest post written by Steven. Steven is the creator of forlue.com – a community news website about business (aka Hacker News for Business News). Email: contact@forlue.com

 

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

Pitching your startup: Learn how to use a “Hook” to get press.


News articles are all about stories. A great article creates a personification of raw data into digestible, story-sized bites. For example, a headline that read “Precipitation levels dropped 10%” wouldn’t be nearly as interesting as “Fearing drought, farmers resort to watering crops by hand”.

Data by itself isn’t interesting. It’s the story that the data tells that’s important.

These same principles apply when you’re pitching your startup for coverage. You should always have a “Hook” ready. Wikipedia defines a “Hook” as:

“a musical idea, often a short riff, passage, or phrase, that is used in popular music to make a song appealing and to ‘catch the ear of the listener’.”

When I’m trying to figure out what startups I want to write about on TSF, I look for a solid hook I can work from. For example, when I interviewed Tim O’Reilly, I knew that he had a fantastic story on bootstrapping his company. This gave me a specific angle to leverage and helped me to know what sort of questions I should ask.

One of the easiest ways you can get noticed by writers (via email) is to have your hook be in the subject line. Let’s say you’re startup works with financial management. Instead of having a nondescript subject line like: “New web app launching soon”, you should write “How my startup allowed 10 users to retire 2 years early”. The second subject line provides a fantastic hook, and helps the writer know what sort of questions to ask you. Having a solid hook is crucial in making your startup stand out.

Stories with a good hook are incredibly easy to write about, are entertaining, and memorable. If you have a great product, data, and a solid hook, writers will be salivating to write about you.

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

How a band got into Y Combinator. The Earbits story (YC W11).


Earbits is a Y Combinator backed company that’s looking to replace Pandora for your music streaming needs. Unlike Pandora, users are completely free to skip songs, change channels, listen for hours on end, and even share tracks with their friends. Earbits has none of the same restrictions that Pandora has, and then on top of that there are no commercials. Earbits hasn’t signed the major labels yet, but they’re gaining traction. Earbits makes its money by letting labels, bands and concert promoter buy airtime, and display their own relevant ads during the broadcast.   If you’re listening to a band on Earbits, you’ll only be shown relevant ads by someone with a vested interest in that artist getting more exposure. For example, you might be shown an ad for an upcoming show that the band is playing. Essentially, Earbits is to music, as Google Adwords is to advertising.

I had the privilege of interviewing a co-founder of Earbits, Joey Flores. In this interview we talked about how Earbits identified a problem, their big turning point, and how his band made it into Y Combinator. You don’t want to miss their story.

Tell TSF how you got started.

My co-founder Yotam and I met in 2005 when he moved to L.A. from Boston and posted an ad for drum lessons.  At the time, I was Director of Marketing for Experian after they had acquired an affiliate network I worked at.  A few months after I started taking drum lessons from Yotam I told him that I had been performing slam poetry a lot and wanted to start a band where I would rap over jazz and funk.

We ended up putting a band together and deciding to record an album. Yotam said that he would produce the album, which he had done before, but that I had to market it. I was managing about $60M a year in performance marketing at Experian, so marketing an album sounded pretty easy.

When did you realize there was a problem?

Our album got great reviews and we could fill up smaller clubs here in L.A. We got invited to open for Grammy winners Arrested Development and it seemed like we had a product people liked. However, after about $20,000 in various marketing and touring expenses, we realized that for all the buzz about how easy it is to be a musician in the age of the internet, all of the services out there either help you sell products to fans you don’t really have, or claim to help you get fans but they really just rely on you to spam Twitter or otherwise try to achieve some viral effect.

Where did the idea come from?

One day, Yotam and I were in the car on the way to San Diego and I was complaining about how miserable I was marketing products I don’t care about – mortgage leads, etc. And Yotam says, “How do we do what you do, but for music?”

We kicked around some terrible ideas until finally he says, “The problem with marketing music online is that nobody can tell what you sound like from an ad. Give them 10 seconds of listening to you and they’ll know if they like you or not.”

Within about 10 minutes, we were rabid talking about turning radio into a performance “ad network”, with affiliate stations on hundreds of music sites, and good artists could just buy airtime like you would with Google Adwords.

It becomes painfully obvious that there is a problem when you explain to people that, in the age of the internet, bands still hand out fliers.  Fliers cost about $0.15 a piece.  Meanwhile, all you’re hoping for as a band is that someone actually takes that flier home and goes online to listen to you.

What was the big turning point for Earbits?

If you consider that Pandora tries to make $0.05 per hour in ads and commercials, and there are 15 songs played every hour, then we can introduce a band to a new listener for $0.01 and make 3 times what Pandora does, while providing massive value to artists.

Once we started telling that story, we got advisors on board from Google, EMI Music, and Yahoo! Music. We raised a bit of money from friends and family, started getting traction with bands and labels, and closed a partnership to power a country music channel for Nashville.com.

What was the Y Combinator interview like?

With these partnerships under our belt, I talked to a lot of the Y Combinator alumni to see whether YC was a good fit for us. They all assured us it was. I believe the quote was, “If you think you might need Y Combinator, you need it. If you’re not sure, you need it. If you’re positive you don’t need it, you probably still need it, but maybe not.”

We decided to apply and we got an interview. We walked in to the interview room, and I think it was Jessica immediately asked how long I had been growing my hair.  There were 7 of them on the other side of the table, and Ben, Yotam and myself on the other.  We all shook hands and started the interview.

A good YC interview is just a brainstorming session with about 6 questions thrown at you every minute in an excited flurry, where you’re trying really hard to answer them well but being cut off about 5 words into every sentence. If that’s happening and the tone is friendly, it means everyone is excited to be talking about your idea.

That being said, you have to wrangle in the conversation, especially if you want to demo your product. So someone would ask me a question and I would say, “Let me show you.” and they would keep going, and finally I just turned the computer toward them and said, “Let me show you.”

When we showed them Nashville.com’s country station, that pretty much sealed the deal.  They understood how we would solve the marketplace problem, and it made the whole thing very clear to anyone how excited country musicians would be to have their music on something like that.

We left and went to hang out at Yotam’s brother’s place in Redwood City. Ironically, I wasn’t at all nervous headed into the interview, but the next few hours were unnerving. Finally, Harj called us, said they wanted to fund us, we feebly tried to negotiate with them, and then took the deal.

What’s the biggest challenge you have going forward?

We’re solving a marketplace problem. We need content so that we can get listeners, and listeners so that artists want to work with us. I’m very happy with our progress in that regard. We have some big distribution deals coming up, and more and more labels are actually reaching out to us. So, I think we have plenty of struggles looking forward. Acquiring more mainstream music is just one of them.

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

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.

Why Carbonmade decided to bootstrap and go freemium

When I was studying design a few years ago, I discovered many of my peers were struggling to get a portfolio online. Many of them didn’t have the required technical knowledge to properly showcase their work. Some of them hired friends in the Computer Science division but their portfolios would grow stale because they didn’t know how to update them.

Carbonmade is attempting to solve that problem by taking care of the technical details while letting artists focus on their work. I had the chance to catch up with a co-founder of Carbonmade, Spencer Fry, to talk about the early days. In this interview we cover how Carbonmade identified a problem, how they determined pricing, and why the “freemium” model is working for them.

Were you bootstrapped or funded?

We bootstrapped Carbonmade because it’s all we know. I’d started a company previously called TypeFrag. Bootstrapped that as well. For me, it just makes sense to collect revenue from the start of your business and if you can’t collect enough of it then you shouldn’t be in business. It’s just a natural progression. Can’t sell enough of what you’re trying to sell? Then you’ve got to shutdown and try something else.

There are companies that can’t be built this way such as Facebook, Tumblr or Twitter where you need a large engaged group of users before you can make any money. To bootstrap you typically need a single user to be able to benefit from the service without having to connect with anyone else. That’s Carbonmade. A user can sign up and create their own online portfolio without needing other people in the system to benefit from it.

We get plenty of offers from investors to talk, but we’re doing well and not having a $5 million check has never held us back from doing what we want. If money is ever the thing holding us back then we might re-consider taking outside investment.

What problem are you solving?

Carbonmade solves a really basic problem. There are millions of creative people in the world, but many of them either don’t have the skills required to design their own online portfolio or the time. Using Carbonmade means they spend less time fussing around with their portfolio and more time focused on developing their artwork.

What’s the biggest challenge you’ve overcome while building Carbonmade?

The biggest challenge for us and for all companies for the most part is hiring. We’re very selective in who we hire. We’re looking for specific individuals that are self-starters, independent workers that don’t need constant handholding, and have built or designed web applications before.

We hired our first people in August 2010. Up until then the three of us worked on Carbonmade for nearly four years. We’re now eight and excited to continue to build out the nucleus of our team.

How did you identify that there was a market for an online portfolio?

We stumbled upon the online portfolio market. Dave and Jason created the first version of Carbonmade back in December 2005 as a tool for Dave to update his own portfolio. He was tired of having to manually update his portfolio every time he created something new. Together they built it ‒ without a sign up page at first ‒ and Dave’s friends bugged him to open it up for them.

I came on about a year later, but we still weren’t working on it full-time. We were consulting and working on other apps, but Carbonmade kept slowly gaining traction. Starting around early 2010 we were able to stop taking on new client jobs and focus our time and energy on developing and supporting Carbonmade. That’s when Carbonmade really started to blow up.

How did you determine pricing?

We experimented with having two pricing points early on: $9 and $15. We found that nearly everyone was choosing the $9 plan and the $15 plan was being neglected. There weren’t enough features to warrant having two paid plans, so we settled on $12, because we thought that $9 was too low.

The question you want to ask yourself is: “What would I pay for this?” $12 felt right to us at the time. The product has improved significantly since then, which makes us happy that the value of our product has risen, but the price has remained the same.

Have you had success with your freemium model?

People generally ask me about our freemium business model. I believe that giving away a taste for free is a great marketing strategy. With Carbonmade, the free model works for many users in the beginning but as their career develops and they start getting more work, they need to upgrade to take advantage of our paid plan features. We’ve had dozens of people upgrade after 1,000 days which is a significant figure. Forcing them to pay on day one may have kept them from signing up in the first place.

What’s difficult about having a freemium business model is determining where to set the restrictions. The free plan needs to be good enough that it doesn’t feel crippled, but not so good they see no reason to upgrade to the paid plan.

If you need to showcase your work, be sure to checkout Carbonmade.

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