tag:blogger.com,1999:blog-21596718497034627852024-03-13T01:45:14.792-07:00Launching Tech VenturesJustinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comBlogger234125tag:blogger.com,1999:blog-2159671849703462785.post-15998539602990267442013-07-29T02:19:00.002-07:002013-07-29T02:19:47.101-07:00How to Prevent Having a Defective Telephone Headset<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg510f-YyVcrRp_M7r1i3Vi-Or5is1JfTCsZoLIdmBQmFWT4QxDOAY8TlkI4ShuUb4njeGgSriIIA9kLitZkide2_hNQ2ksSytiUW2ZgX0oqhXG1Ui2knzoDx1CTOFbvBbjkAoORn_LHvzn/s1600/Headset+Accessories+I+Plantronics+Headset+Accessories+I+OfficeLife.png" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg510f-YyVcrRp_M7r1i3Vi-Or5is1JfTCsZoLIdmBQmFWT4QxDOAY8TlkI4ShuUb4njeGgSriIIA9kLitZkide2_hNQ2ksSytiUW2ZgX0oqhXG1Ui2knzoDx1CTOFbvBbjkAoORn_LHvzn/s200/Headset+Accessories+I+Plantronics+Headset+Accessories+I+OfficeLife.png" width="105" /></a></div>
<div style="text-align: justify;">
More than a century since the telephone was invented; it has now become one of the greatest necessities of mankind. Without it, people located on different parts of the globe would not be able to connect to one another. It is also with the help of the telephone that the Internet was developed in its early stages. </div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
Nowadays, telephones are not just used in homes, but also at work. In fact, some companies buy thousands of telephone models in order to cater to their clients. The BPO (Business Process Outsourcing) industry has also made wonders for this device. Call center representatives use telephone lines for hours just to provide the services their clients need. And they would not be able to do that without a decent headset. </div>
<div style="text-align: justify;">
<br /></div>
<div style="text-align: justify;">
<a href="http://www.officelife.com.au/">Buying a telephone headset</a> is easy, but maintaining it is another thing. Here are some tips to prolong the life of your headphone:</div>
<div style="text-align: justify;">
<br /></div>
<ul>
<li>Never place it near areas with magnetic fields – Just like other electronic devices, your headset may also become damaged if placed near areas with magnetic fields such as television, microwave oven, and other appliances at home. </li>
<li>Keep it away from any form of liquid – Liquids are the mortal enemy of anything that runs with electricity – and that means every device you have at home. There may be waterproof mobile phones, but I haven’t heard about waterproof headsets yet. </li>
<li>Don’t just throw it away – Some people take their gadgets for granted. When they are done using it, they would just throw it on some hard surface without even thinking that it might cause defects or dents. </li>
<li>Try your best not to sit on it – According to statistics, one of the most common <a href="http://forum.xda-developers.com/showthread.php?t=1538164">causes of defects of a telephone headset</a> occurs when it is sat on accidentally. You may not notice it, but the more often this incident takes place, the more damage it causes to your device. </li>
<li>Do not overstretch it – Some headsets, especially overhead ones tend to be overstretched just to fit someone’s head. This is not advisable because it may loosen certain areas which may cause problems in the long run. That is why it is not recommended that there are more than five people who use the headset regularly. </li>
<li>Read the manual – It is imperative that you read the manual before and even while using the device. There may be some situations where you need to figure out exactly how to use the headset. </li>
<li>Keep it away from children – This point more or less speaks for itself. Children are known to be ‘natural destroyers’, especially in their toddler years. As a precaution, keep your gadgets away from them.</li>
</ul>
<div style="text-align: justify;">
These are just simple tips you may follow in order to prevent having a defective or damaged telephone headset. If you are part of a company then it is definitely your job to keep your headsets in pristine condition. On the other hand, if you have one at home then you should also take care of it so you don’t need to buy another in case it gets damaged.</div>
<div class="MsoNormal" style="margin-bottom: 0.0001pt; text-align: justify;">
<span style="font-family: "Tahoma","sans-serif"; font-size: 12.0pt; mso-bidi-font-size: 11.0pt;"><o:p></o:p></span></div>
Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-36731287917795242302012-09-23T18:42:00.001-07:002012-09-23T18:42:05.532-07:00Find Cheap Car Insurance Online<div style="text-align: justify;">
Car insurance is an important source for each and every car owner to possess. In addition to being essential to condition law, motor insurance handles an individual in case of a vehicle accident by reduction of the buying price of having to pay regarding car accidents for your automobile as well as the other drivers. If you want assist with selecting the right auto insurance in your case, after that continue with the tips in the following paragraphs.<br /><br />Incorporating value for the vehicle isn't a advantage, in order to lower your insurance plan. An enjoyable stereo system method, wheels and hued glass windows may look good traveling reduce the street, however this extra worth will probably be shown within your monthly charges. Make it simple, if you would like lower insurance policy commitments.<br /><br />If you're at present included in a vehicle insurance coverage and eventually understand the identical insurance plan for any far better expense, don't begin the sale right away. Plenty of motorists may quickly switch sides when they start to see the cash involved, nonetheless they by no means bother to find out the contract details. Organizations attract a person along with the commitment of low responsibilities, yet cause you to absent in insurance coverage, thus continually be tired from the fact.<br /><br />When you are seeking at auto insurance, be it to purchase a brand new coverage to be able to restore an existing one, be familiar with just what the state minimal needs tend to be. The majority of states require a certain level of responsibility, so you need to ensure that your policy does not are unsuccessful of the specifications.<br /><br />A good way to decrease the price of your <a href="http://www.carinsurancerates.com/" target="_blank">car insurance</a> coverage is as easy as traveling significantly less. Many motor insurance organizations provide special discounts with regard to motorists which use their own cars beneath a dozen,000 a long way annually. Nevertheless, don't let yourself be tempted to lay regarding your usage, since the car insurance business may obtain resistant in order to document any sort of accident declare.<br /><br />To search for the the majority of your money can buy any time prices auto insurance, be sure to take into account the accessories which can be offered with a few recommendations. It can save you about pulling costs along with unexpected emergency kerbside assistance which is included by some insurance firms. Other folks offer discount rates once and for all motorists or even which includes several automobile within your plan.<br /><br />You have to just be sure to cancel the insurance in order to switch your car insurance carrier. In this way you can be assured to go out of upon good phrases with the firm you happen to be eliminating with simply just in case you convince you and wish to come back to all of them. This may additionally prevent you getting ended for non transaction which could affect your credit.<br /><br />When you are getting old, you need to possess your eyesight checked out regularly. Several says help to make mandatory eye testing essential for any mature license. This can maintain your individuals that are around a tiny less hazardous even if your trouble does not need the test, become protected and also have that done by your self.<br /><br />Be aware of the amount of insurance your vehicle financial company requires. Many creditors and lessors require "full dental care protection ideas," meaning insurance policy, and also comprehensive and collision coverage. You will most likely must buy insurance policy together with greater protection limits as compared to people decided through your state minimal insurance coverage legal guidelines to meet the loan supplier.<br /><br />The best way to reduce your cost inside your car or perhaps truck insurance coverage is they are driving your car or truck more infrequently. Plenty of present day best motor insurance businesses provide special discounts to clients regarding low-mileage, incentivize people to get their automobiles parked. When you can stroll instead of push, you will get top quality exercise and reduce the insurance.<br /><br />Know very well what aspects have an effect on your vehicle insurance costs. These important aspects inside figuring out your automobile insurance costs are grow older, sex, and genuine document. Better prices receive to less-experienced motorists, as well as guys generally. Any admission that can take points from your permit may even result in a rise price. </div>
Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-60735622045845001082012-09-22T02:50:00.002-07:002012-09-22T02:50:58.061-07:00How To Find Cheap Payday Loans Online<div style="text-align: justify;">
When searching for the least expensive pay day loans you will find you can find things you ought to do.<br /><br />If you are looking for affordable payday advances you are in for any big surprise. Payday loans generally speaking are not cheap. People running payday advances organizations realize that you will need cash plus a charge high rates of interest.<br /><br />Whenever you go through the interest rate charged with regard to pay day loans you will see that they are more than 520% or maybe more. You can easily go shopping for the cheapest payday loans online on the fact that you can find a huge variety does not mean it actually inexpensive.<br /><br />Once again people that away from for pay day loans and payday cash developments simply no that you'll require funds right away. Anyone which needs cash right away could be rooked.<br /><br />Generally you will get low-cost payday loan provides which are 5 or even 10% cheaper than others and you will furthermore discover some which are less than 50% but after your day you'll pay a whole lot for your capability of being capable of getting someone to give you cash in move forward.<br /><br />Generally, the particular costs and then for any payday loan organization bills you a person is approximately 20% from the pet cats defense, time period although for every $100 which you borrow you will need to pay out the payment of $20. Think with that. That's higher than normal teas for anything at all.<br /><br />Bear in mind, online <a href="http://www.easyonlinepaydayloan.com/" target="_blank">payday loans</a> are there to assist you when you are in a bad situation and require cash fast. Processing charges will take from one business day to 2. Usually they require absolutely no appraisal of creditworthiness because you're pay check can be used as security.<br /><br />Regardless of which company you utilize for pay day loans, take into account that there are limits and state regulations on rates that may be billed through payday loan organizations. The subsequent will be the list of rates that are authorized legally.</div>
Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-40972015621098825892012-03-22T11:44:00.001-07:002012-07-26T01:54:39.242-07:00Can RTR maintain the Cinderella magic?<span style="font-family:Arial, Helvetica, sans-serif;"><i>by John Smith-Ricco</i><br /><br />Despite the obvious duplicability of its business model, <a class="zem_slink" href="http://www.renttherunway.com/" title="Rent the Runway" rel="homepage" target="_blank">Rent the Runway</a> has aggressively protected its position as first-mover through investment in <a class="zem_slink" href="http://www.wikinvest.com/industry/Technology" title="Technology" rel="wikinvest" target="_blank">technology</a> and operations management. Providing women with the “<a class="zem_slink" href="http://en.wikipedia.org/wiki/Cinderella" title="Cinderella" rel="wikipedia" target="_blank">Cinderella</a>” moments that accompany wearing otherwise inaccessible designer <a class="zem_slink" href="http://en.wikipedia.org/wiki/Dress" title="Dress" rel="wikipedia" target="_blank">dresses</a> may be Jen and Jenny’s mission, but their company’s expertise lies in the less sexy areas of <a class="zem_slink" href="http://www.wikinvest.com/metric/Inventory" title="Inventory" rel="wikinvest" target="_blank">inventory management</a>, quality control and maintaining high utilization rates of each garment.<br /><br />Rent the Runway was the case I anticipated the most as a student in Launching Tech <a class="zem_slink" href="http://www.theventures.com" title="The Ventures" rel="homepage" target="_blank">Ventures</a>. The RTR story is wonderfully hopeful, a feel-good <a class="zem_slink" href="http://en.wikipedia.org/wiki/Master_of_Business_Administration" title="Master of Business Administration" rel="wikipedia" target="_blank">MBA</a> cautionary tale on the type of success risk-averse capitalists might miss out on by taking the safe route [insert finance/consulting/CPG career path here]. Rent the Runway has the potential to democratize the world of luxury ready-to-wear. However, in order to maintain the “magic” and keep would-be competitors at bay, RTR must avoid becoming <a class="zem_slink" href="http://www.tjmaxx.com/" title="T.J. Maxx" rel="homepage" target="_blank">TJ Maxx</a> for the <a class="zem_slink" href="http://www.google.com/finance?q=NASDAQ:NFLX" title="NASDAQ: NFLX" rel="googlefinance" target="_blank">Netflix</a> generation.<br /><br /><b>Technology is not enough</b><br />Hyman appropriately acknowledges that technology is at the core of the company. This poses a problem if a competitor were to enter the space with better technology in the form of faster turnarounds, better size matching, etc. So far this threat is unrealized, but one can imagine there are retailers and other players in the fashion ecosystem whose current expertise might overlap with and surpass that of RTR.<br /><br /><b>Fashionistas are fickle</b><br />The technological advantage that Rent the Runway currently enjoys may undermine its appeal among its most discerning customers. The business model is such that higher utilization of dresses yields more profits. In class, I opined that dresses are seasonal and therefore not utilizable year round, but learned that a significant fraction of inventory did not follow seasonal pattern. Furthermore, RTR purposefully leaves out dresses’ release dates (e.g. Fall 2010) so that dresses can be used year after year as trends start in New York and drift from the coasts to the heartland, thus spreading fixed costs even further.<br /><br />While a Marchesa gown from a three-year old collection may be fine for the consumers in middle America, the 25 year old Manhattan PR girl may not be so impressed. Since RTR’s original focus groups included “it” girls and “almost it” girls from Harvard an Yale, I suspect this discerning consumer still comprises a sizeable portion of sale and it would be a disservice to alienate her. Doing so will commoditize the service and invite competition on the basis of technological execution rather than the elusive Cinderella wow.<br /><br /><b>Relationships matter</b><br />Ultimately, I’m still quite optimistic in my outlook on RTR. They have a head start on technology and by maintaining strong relationships with key design houses the team can keep the “it girl” consumer engaged. The key will be to avoid profitable shortcuts that will damage the brand in the long term.<br /><br />There’s nothing wrong with being the TJ Maxx for the Netflix generation; <a class="zem_slink" href="http://www.google.com/finance?q=NYSE:TJX" title="NYSE: TJX" rel="googlefinance" target="_blank">TJX</a> (the holding co. for Marshalls and TJ Maxx) has an impressive $30Billion market cap and its stock has outperformed the market over the last two years. However, if Rent the Runway is to be a premium service it must continue to deliver cutting edge fashion while using technology to make the overall operation more profitable. </span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-37321700979505472162012-03-19T18:49:00.000-07:002012-04-16T23:05:03.949-07:00Rocket Internet – Clone Factory or Execution Champion?<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Paul Chong</i><br /><br />Last Thursday, Oliver Samwer, co-founder of Rocket Internet, visited HBS campus with the purpose of luring talented MBAs away from traditional careers in consulting and banking, and instead, join one of his many internet startups around the world. In the lecture theatre, it was standing-room only, with over a hundred students packing in to hear Oliver speak. After a thirty minute rant, Oliver openly took questions from the audience. Despite the constant barrage that Rocket has recently received in the media, it was difficult not to feel at least some respect for the achievements Rocket has made over the last five years. <br /><br />To understand the furor and attention that Rocket has attracted, it is important to first understand its business model. From its website, Rocket is a self-proclaimed VC fund; but that doesn’t quite capture the full gambit of its activities. Perhaps more accurately, Rocket could be described as an execution machine, dealing in business model arbitrage across geographies. Others might describe it more succinctly as a factory that produces startup clones in new markets. At its core, Rocket appears to take the latest internet craze, typically from the US, replant the idea in a new geographic market, and provide the funding and support that enables the idea to scale rapidly.<br /><br />Based on Rocket’s business model, it’s not surprising that many innovation purists have come forth with scathing criticisms. In one recent interview on TechBerlin, Jason Calacanis (its host) derided Rocket as “copycat thieves”, and accused anyone working for Rocket as “selling your soul to the devil”. A bit melodramatic, perhaps, but still a representative illustration of how Rocket has irked many in the global startup community.<br /><br />Setting aside for a moment what one thinks of replicating startup ideas, it is difficult not to be impressed by the growth and value created by Rocket. From Oliver’s presentation, it appears that Rocket has amassed over one billion dollars in funding, operates in 42 countries, and employs over 20,000 people. This is not to mention the many successful exits (at a strike rate of 80%, apparently) that have create hundreds of millions of dollars for the Samwer brothers and their investors. All of this in only a few short years.<br /><br />Now, to address the issue of replicating startup ideas: is it that ethically dubious to take other people’s ideas and replicate them in new markets? After all, a key take-away from many entrepreneurial classes at HBS is that ideas are cheap, and good execution is how value is created. Also, how different was it for Google to supplant Yahoo!’s leadership in search engines, well after Yahoo! had defined the basic business model? The tech industry is scattered with similar examples (think, Baidu, Mercado Libre, Living Social, to name but a few).<br /><br />In my opinion, there are few things to be more respected than risking one’s livelihood in the pursuit of an original idea. However, praise must also be shared with those who execute effectively, and lawfully create value for themselves and their stakeholders. As Oliver put it, “not everyone can come up with the next Facebook . . . but every individual can focus on executing well and create value through doing what he/she is naturally good at”.<br /><br />Comments and criticisms to this blog post are welcome.</span><br /><div><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div><div><br /></div>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-37283374557726984082012-03-19T18:48:00.001-07:002012-07-26T01:53:15.942-07:00Three things a PM needs to succeed in a B2B company<span style="font-family:Arial, Helvetica, sans-serif;"><i>by Jenny Hepworth</i><br /><br />The other day we had <a class="zem_slink" href="http://www.rottentomatoes.com/celebrity/ben_foster" title="Ben Foster" rel="rottentomatoes" target="_blank">Ben Foster</a>, VP of <a class="zem_slink" href="http://en.wikipedia.org/wiki/Product_management" title="Product management" rel="wikipedia" target="_blank">Product Management</a> and <a class="zem_slink" href="http://en.wikipedia.org/wiki/User_experience" title="User experience" rel="wikipedia" target="_blank">User Experience</a> at <a class="zem_slink" href="http://www.opower.com/" title="OPOWER" rel="homepage" target="_blank">OPOWER</a> come talk to us. It was a useful discussion, and got me thinking about some of the differences between product management in a <a class="zem_slink" href="http://en.wikipedia.org/wiki/Business-to-business" title="Business-to-business" rel="wikipedia" target="_blank">B2B</a> versus B2C setting. Here I’ll discuss some of those differences, and the implications for <a class="zem_slink" href="http://en.wikipedia.org/wiki/Product_manager" title="Product manager" rel="wikipedia" target="_blank">product managers</a>.</span><br /><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;"><b>1. In B2C, your users don’t have to use your product</b></span></blockquote><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;">This is why there’s been so much crappy enterprise software built in the past. In a B2C space, everything you build has to be useful, useable and probably beautiful (though the most popular newspaper online, the <a href="http://www.dailymail.co.uk/ushome/index.html">Daily Mail</a> proves this isn’t always necessary). If you fail to create a great experience, there’s plenty of other places your users can spend their time, in contrast with the B2B world where your audience is almost certainly captive once the product’s been sold.</span></blockquote><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;"><b>2. In B2B, you sell the product, in B2C it has to sell itself (nearly)</b></span></blockquote><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;">In B2B you’ll likely have multiple contact points with potential customers before they convert to a sale, so processes and marketing assets must be developed, tested and refined to pull leads down the funnel. For a B2C product, the focus will be much more heavily focused on SEO, SEM and virality, with the goal being to convert a prospective customer the first time they hit your site. Again, this points to creating a useful, useable and probably beautiful product.</span></blockquote><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;"><b>3. You can’t make mistakes in B2B…</b></span></blockquote><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;">With millions of potential users in the B2C space you can end up with a really delicious omelet by breaking a few eggs in the early stages of <a class="zem_slink" href="http://en.wikipedia.org/wiki/New_product_development" title="New product development" rel="wikipedia" target="_blank">product development</a>. The cost of mistakes/failure is generally low, either because it only affects a tiny percentage of your total potential user base (so most of the people you care about will never hear about it), or because the task at hand isn’t mission critical, or both. However, in a B2B space your total potential user base is probably many, many times smaller AND you’re much more likely to be performing tasks which have a material impact on your user if mistakes are made.</span></blockquote><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;"><b>4. …Which is cruel, because compared with B2C you’re wearing a blindfold</b></span></blockquote><blockquote class="tr_bq"><span style="font-family:Arial, Helvetica, sans-serif;">With a <a class="zem_slink" href="http://en.wikipedia.org/wiki/Consumer_product" title="Consumer product" rel="wikipedia" target="_blank">consumer product</a>, you can release, test, learn and iterate based on relatively large datasets from very early on in your product development process. For most B2B products there’s no such luxury, given that you’ll have far fewer users, and it’s a much harder sell to bring them on board.</span></blockquote><span style="font-family:Arial, Helvetica, sans-serif;"><br />In light of these differences, I see three big take-aways for product managers in a B2B environment versus a B2C environment (and I’m interested to hear others, so please comment).<br /><br /><b>Create discipline internally</b><br /><br />Given that you have a captive audience there’s less incentive to ensure your product is useful, usable and probably beautiful, beyond what is required to make a sale. This lack of external pressure on old school enterprise software giants has opened up fantastic opportunities for B2B companies with a B2C attitude towards user experience. A great B2B PM therefore has to have the discipline to create an environment for great products to be built without the stick of short term user flight in order to prevent new entrants taking customers in the long term.<br /><br /><b>Manage greater tensions within the organization</b><br /><br />Given that you have to sell the product, <a class="zem_slink" href="http://en.wikipedia.org/wiki/Project_management_software" title="Project management software" rel="wikipedia" target="_blank">PMs</a> will not only have to manage tensions with engineering and design, but also with a sales force. Most frequently, this means calls from sales for customized features which deviate from a product roadmap. PMs must not only have a good sense of when to customize (if ever) but also be able to bring the organization with her once the decision has been made.<br /><br /><b>Work more closely with customers</b><br /><br />Given the lack of data available to inform iterations and the lower tolerance for mistakes, PMs need to work even harder for feedback from users. <a class="zem_slink" href="http://www.svpg.com" title="Marty Cagan" rel="homepage" target="_blank">Marty Cagan</a>* recommends setting up a Charter User program, whereby you persuade a collection of 5 or so companies to act as customers as you develop your product. They get the chance to add their input into a product with the potential to solve important problems for them, and you get invaluable insight into their needs and behaviors. They’ll also make great references when it’s time to start selling. Note: make sure they understand from the beginning you’re not building custom software especially for them – you’re building a broadly applicable solution.</span><br /><div><span style="font-family:Arial, Helvetica, sans-serif;"><br /><br /><i><span style="font-size:x-small;">* How to Create Products Customers Love, Marty Cagan, 2008</span></i></span></div><div><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-2020065269738296362012-03-19T18:40:00.001-07:002012-07-26T01:52:43.887-07:00Crossing Boundaries<span style="font-family:Arial, Helvetica, sans-serif;"><i>by Jake Cusack</i><br /><br /><a class="zem_slink" href="http://maps.google.com/maps?ll=37.91,40.24&spn=0.1,0.1&q=37.91,40.24%20%28Diyarbak%C4%B1r%29&t=h" title="Diyarbakır" rel="geolocation" target="_blank">Amid</a> the conversation of copycat start-ups and cloning vs. originality in <a class="zem_slink" href="http://www.wikinvest.com/concept/Emerging_Markets" title="Emerging Markets" rel="wikinvest" target="_blank">emerging markets</a>, there is a related but perhaps more ethically palatable opportunity to profit: transferring <a class="zem_slink" href="http://www.wikinvest.com/industry/Technology" title="Technology" rel="wikinvest" target="_blank">technologies</a> across traditionally disconnected sectors and domains.<br /><br />Some brief vignettes to frame this discussion:</span><br /><ul><span style="font-family:Arial, Helvetica, sans-serif;"><li>A historic example is how <a class="zem_slink" href="http://www.palantir.com/" title="Palantir Technologies" rel="homepage" target="_blank">Palantir</a> took the <a class="zem_slink" href="http://en.wikipedia.org/wiki/Fraud" title="Fraud" rel="wikipedia" target="_blank">fraud-detection</a> techniques developed for complicated datasets at <a class="zem_slink" href="http://paypal.com" title="PayPal" rel="homepage" target="_blank">PayPal</a> and founded a separate company that improves counterterrorism and intelligence analytical methodologies. </li><li>A future example, I believe, could be taking social media analytical tools developed for <a class="zem_slink" href="http://en.wikipedia.org/wiki/Marketing" title="Marketing" rel="wikipedia" target="_blank">marketing and brand</a> management firms and using them as a tool for making investment decisions at fundamental value-based investment firms. </li></span></ul><span style="font-family:Arial, Helvetica, sans-serif;"><br />The long-standing divisions between the public and private sectors, between emerging and <a class="zem_slink" href="http://en.wikipedia.org/wiki/Developed_market" title="Developed market" rel="wikipedia" target="_blank">developed markets</a>, have limited transfer of relevant niche technologies. These divisions become even more dramatic when examining the divide between particular sub-sections. For instance, the systems used for intelligence analysis in the government have not cross-pollinated with investment due diligence tools, even though they face similar data collection and analysis challenges. Technologies already developed can be leveraged for applications in new domains.<br /><br />These opportunities, which could be considered a form of intellectual arbitrage, have several appealing facets: </span><br /><ul><span style="font-family:Arial, Helvetica, sans-serif;"><li>They provide an opportunity for entrepreneurs with unique but well-rounded backgrounds, who might traditionally think themselves poorly equipped to compete with mainstream engineering/product management/business development talent in the most developed markets. </li><li>They often focus on sector <a class="zem_slink" href="http://en.wikipedia.org/wiki/Vertical_market" title="Vertical market" rel="wikipedia" target="_blank">verticals</a> that are too small to be worth the full attention of the best technology provider in a particular sector, who therefore may be more open to a licensing or partnership agreement than they would in the case of a emerging-market copycat. (This is a distinction in the attractiveness of a partner who increases scope of verticals served versus a partner who only increases scale of total customers.) An analogy might be made here to the numerous developers who build on a given platform or ecosystem – the difference here is that that the underlying partner is one who has previously not operated in a platform capacity, and indeed may be focused on very tailored enterprise solutions in a different vertical. </li></span></ul><span style="font-family:Arial, Helvetica, sans-serif;"><br />Elaborating on the second point, in attempting these kinds of tech transfer, the first major choice that must be made is between partnering or replicating the given technology. This decision depends on the nature of the potential partner: How mature are they – do they realize a need for outsourced business and product development or do they think they can do it all themselves? What is the likelihood of disintermediation – how much unique <a class="zem_slink" href="http://en.wikipedia.org/wiki/Internet_Protocol" title="Internet Protocol" rel="wikipedia" target="_blank">IP</a> are you bringing to the equation that would be prevent the partner or your potential clients from later going direct? How badly does the partner want to maintain developmental control/branding? Many of these considerations favor seeking out big companies that have settled on a particular identity and do not want to stray into new verticals. However, these same types of companies can be sink holes of time and resources in the potential partnership stage before revealing themselves to be dead-ends.<br /><br />My own belief, in full disclosure, is that there is an enormous opportunity in such creative bridging between previously unrelated domains, and to that end have co-founded a company which specializes in this line of work. Such tailored solutions can scale well within the new vertical, and the uniqueness of expertise required (because the two now connected domains had minimal previous interaction) creates high barriers to entry. </span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-47917787892430863732012-03-05T09:31:00.001-08:002012-07-26T01:52:31.800-07:00Fred Wilson comes to Harvard Business School<span style="font-family:Arial, Helvetica, sans-serif;"><i>by <a class="zem_slink" href="http://bostonvcblog.typepad.com/" title="Seeing Both Sides" rel="homepage" target="_blank">Jeff Bussgang</a></i><br /></span><br /><div class="separator" style="clear: both; text-align: center;"><span style="font-family:Arial, Helvetica, sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjED4ruuU0x6jFA0b9haXtMhN1TkNttD4nOMIQNrAj11KoDjevC0N6Esp8pq-V-D6UjuIBw3odSSokmy7lDd_VuFndGCltEd3q1ImJnYpwysjkeCWYnK4BRarEnc7u3ShUDF6F2gk0ERqc/s1600/bussgang_Wilson.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjED4ruuU0x6jFA0b9haXtMhN1TkNttD4nOMIQNrAj11KoDjevC0N6Esp8pq-V-D6UjuIBw3odSSokmy7lDd_VuFndGCltEd3q1ImJnYpwysjkeCWYnK4BRarEnc7u3ShUDF6F2gk0ERqc/s400/bussgang_Wilson.jpg" border="0" height="400" width="400" /></a></span></div><span style="font-family:Arial, Helvetica, sans-serif;"><div style="text-align: center;"><br /></div></span><br /><div><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div><span style="font-family:Arial, Helvetica, sans-serif;">For the second year, <a href="http://www.avc.com/">Fred Wilson</a> of <a class="zem_slink" href="http://www.unionsquareventures.com/" title="Union Square Ventures" rel="homepage" target="_blank">Union Square Ventures</a> was kind enough to come to <a class="zem_slink" href="http://maps.google.com/maps?ll=42.36722,-71.12253&spn=0.01,0.01&q=42.36722,-71.12253%20%28Harvard%20Business%20School%29&t=h" title="Harvard Business School" rel="geolocation" target="_blank">HBS</a> to meet with the class <a href="http://platformsandnetworks.blogspot.com/">Professor Tom Eisenmann</a> and I co-teach called Launching Technology Ventures. <a href="http://bostonvcblog.typepad.com/vc/2011/02/fred-wilson-comes-to-harvard-business-school.html">Similar to last year</a>, it was a terrific session.<br /><br />I started the class off by encouraging the students to live tweet the entire 90 minute session. The Twitter stream (which you can see <a href="https://twitter.com/#%21/search/realtime/hbsltv">here</a>, using the hash tag #hbsltv) nicely captured our dialog. The class is made up of 100 "start-up ninjas", half of whom will start their own companies in the next year or two and half of whom will join <a class="zem_slink" href="http://en.wikipedia.org/wiki/Startup_company" title="Startup company" rel="wikipedia" target="_blank">start-ups</a>. The class covers the fundamentals of lean start-up theory, seeking product-market fit, and scaling challenges post product-market fit. We do not have a final exam. Instead, students need to write two blog posts, comment on two of their classmate's posts and participate in a business model excercise modeled after <a class="zem_slink" href="http://steveblank.com/" title="Steve Blank" rel="homepage" target="_blank">Steve Blank</a>'s "business model canvass" exercise at Stanford. You can see the <a href="http://launchingtechventures.blogspot.com/">course blog here</a>.<br /><br />A few of the takeaways that struck me:</span><br /><ul><li><span style="font-family:Arial, Helvetica, sans-serif;">Fred observed that failure is typically a valuable and powerful experience - forcing introspection, humility and an extra drive to prove something to others. He observed that the entrepreneurs he has been most successful with typically had a major and personally defining failure in their career. </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;">He repeated a comment that we drew out from last year's conversation, which I particularly like: "Start-ups should be hunch-driven early on and data-driven as they scale". What was interesting was discussing the profile of the entrepreneur that has good hunches - often they come from outside the domain, yet are obsessed with the opportunity to disrupt the new field with a fresh perspective. </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;">We discussed the role of gate-keepers in start-ups. Fred is skeptical of businesses that involve gate-keepers. In fact, he encouraged the students to look for industries that have gate-keepers, and compete directly with them (e.g., education). </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;">When evaluating whether you want to join a company, think like an investor. Conduct extensive due diligence on the team, the product and the market opportunity. Ask yourself whether you would invest your money in the company before deciding to invest your career. </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;">Entrepreneur and start-ups have many varied models for success. Don't try to follow someone else's model. Stick with your personal passion and your authentic leadership model. If you don't have your own start-up idea, go join a 50 person company and leave when there are 500 employees. And if you have an idea and no one can talk you out of it, <a href="http://bostonvcblog.typepad.com/vc/2011/01/should-i-become-an-entrepreneur.html">go be an entrepreneur</a>. (Interstingly, Fred confessed that if he could have done it over again, he wishes he had joined a start-up for the first 10 years of his career.) </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;">We had an interesting dialog about the various start-up ecosystems - <a class="zem_slink" href="http://maps.google.com/maps?ll=37.37,-122.04&spn=1.0,1.0&q=37.37,-122.04%20%28Silicon%20Valley%29&t=h" title="Silicon Valley" rel="geolocation" target="_blank">Silicon Valley</a>, <a href="http://bostonvcblog.typepad.com/vc/2012/02/what-makes-the-boston-start-up-scene-special.html">Boston</a>, <a href="http://www.avc.com/a_vc/2009/10/the-what-makes-nycs-web-startup-scene-special-talk.html">NYC</a> - and how long it takes to build that ecosystem. Our mutual friend <a class="zem_slink" href="http://www.feld.com/wp/" title="Brad Feld" rel="homepage" target="_blank">Brad Feld</a> has written extensively about this topic and is <a href="http://www.feld.com/wp/archives/2011/12/startup-communities-creating-a-great-entrepreneurial-ecosystem-in-your-city.html">writing a book</a> on it that should be coming out shortly. </span></li></ul><span style="font-family:Arial, Helvetica, sans-serif;">At the end of the class, Fred had an encouraging perspective for <a class="zem_slink" href="http://en.wikipedia.org/wiki/Master_of_Business_Administration" title="Master of Business Administration" rel="wikipedia" target="_blank">MBAs</a> around the world, not just in today's classroom. He observed that the start-up community is all the richer due to the contributions of MBAs. Just be sure not to be arrogant about your knowledge or degree - instead, put your head down and do great work!</span></div><div><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div><span style="font-family:Arial, Helvetica, sans-serif;"><br /></span></div><div><span style="font-family:Arial, Helvetica, sans-serif;"><span style="font-size:x-small;">(Reposted from Seeing Both Sides, <a href="http://bostonvcblog.typepad.com/vc/2012/02/fred-wilson-visits-with-the-hbs-start-up-tribe.html">http://bostonvcblog.typepad.com/vc/2012/02/fred-wilson-visits-with-the-hbs-start-up-tribe.html</a>.)</span><br /></span></div>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-55830621063170947252012-03-04T10:14:00.001-08:002012-07-26T01:52:16.459-07:00Later-Stage Pivoting: Preemptive Turnaround Management?<!--[if gte mso 9]><xml> <o:documentproperties> <o:template>Normal.dotm</o:Template> <o:revision>0</o:Revision> <o:totaltime>0</o:TotalTime> <o:pages>1</o:Pages> <o:words>482</o:Words> <o:characters>2751</o:Characters> <o:company>Harvard Business School</o:Company> <o:lines>22</o:Lines> <o:paragraphs>5</o:Paragraphs> <o:characterswithspaces>3378</o:CharactersWithSpaces> <o:version>12.0</o:Version> </o:DocumentProperties> <o:officedocumentsettings> <o:allowpng/> </o:OfficeDocumentSettings></xml><![endif]--><!--[if gte mso 9]><xml> <w:worddocument> <w:zoom>0</w:Zoom> <w:trackmoves>false</w:TrackMoves> <w:trackformatting/> <w:punctuationkerning/> <w:drawinggridhorizontalspacing>18 pt</w:DrawingGridHorizontalSpacing> <w:drawinggridverticalspacing>18 pt</w:DrawingGridVerticalSpacing> <w:displayhorizontaldrawinggridevery>0</w:DisplayHorizontalDrawingGridEvery> <w:displayverticaldrawinggridevery>0</w:DisplayVerticalDrawingGridEvery> <w:validateagainstschemas/> <w:saveifxmlinvalid>false</w:SaveIfXMLInvalid> <w:ignoremixedcontent>false</w:IgnoreMixedContent> <w:alwaysshowplaceholdertext>false</w:AlwaysShowPlaceholderText> <w:compatibility> <w:breakwrappedtables/> <w:dontgrowautofit/> <w:dontautofitconstrainedtables/> <w:dontvertalignintxbx/> </w:Compatibility> </w:WordDocument></xml><![endif]--><!--[if gte mso 9]><xml> <w:latentstyles deflockedstate="false" latentstylecount="276"> </w:LatentStyles></xml><![endif]--><!--[if gte mso 10]><style> /* Style Definitions */table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Times New Roman"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;}</style><![endif]--><!--StartFragment--><br /><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><i>by <a class="zem_slink" href="http://en.wikipedia.org/wiki/Jesse_Garcia" title="Jesse Garcia" rel="wikipedia" target="_blank">Jesse Garcia</a></i></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><i><br /></i></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;">The challenges of a later-stage pivot are BIGGER than thoseof an early-stage pivot.<span style="mso-spacerun: yes;"> </span>Thestakes are bigger, and a <a class="zem_slink" href="http://en.wikipedia.org/wiki/Company" title="Company" rel="wikipedia" target="_blank">company</a> that is achieving scale has already foregone asignificant amount of flexibility and nimbleness.<span style="mso-spacerun: yes;"> </span>More than ever before in the company’s life, innovation thatis more than incremental becomes very challenging.</span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><a class="zem_slink" href="http://www.chegg.com/" title="Chegg" rel="homepage" target="_blank">Chegg</a>, the online textbook renting platform, is currentlyundergoing a late-stage pivot that builds on its <a class="zem_slink" href="http://en.wikipedia.org/wiki/Core_business" title="Core business" rel="wikipedia" target="_blank">core business</a> into anexpanded <a class="zem_slink" href="http://en.wikipedia.org/wiki/Market_analysis" title="Market analysis" rel="wikipedia" target="_blank">market opportunity</a> with a new <a class="zem_slink" href="http://en.wikipedia.org/wiki/Business_model" title="Business model" rel="wikipedia" target="_blank">business model</a>.<span style="mso-spacerun: yes;"> </span>Since thetextbook renting business is <a class="zem_slink" href="http://en.wikipedia.org/wiki/Capital_intensity" title="Capital intensity" rel="wikipedia" target="_blank">capital-intensive</a> relative to other onlinebusinesses, the company faces unique challenges in <a class="zem_slink" href="http://www.startuplessonslearned.com/2009/06/pivot-dont-jump-to-new-vision.html" title="the Pivot" rel="homepage" target="_blank">the pivot</a> process.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><span style="mso-spacerun: yes;"><br /></span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;">While pivoting at a later stage in the development of a techventure like Chegg is not exactly a turnaround situation, turnaround opportunitiescan lend some important insights into the challenges encountered in such asituation and the expanded skill set that a manager may need to be successful.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><span style="mso-spacerun: yes;"><br /></span></span></div><div class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span class="Apple-style-span" style="font-family:inherit;">Length of the <a class="zem_slink" href="http://www.rottentomatoes.com/m/runway" title="Runway" rel="rottentomatoes" target="_blank">Runway</a><o:p></o:p></span></b></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;">Like in any change situation, the amount of time availableto execute a late-stage pivot is very important.<span style="mso-spacerun: yes;"> </span>Usually, the amount of cash available to support theoperations of a business is the first issue that comes to mind when thinkingabout the amount of time left before a company has to shutter its doors.<span style="mso-spacerun: yes;"> </span>For a tech venture that has decided todo a late-stage pivot, having enough cash to pivot will most likely mean needingto raise more money.<span style="mso-spacerun: yes;"> </span>For manyreasons, including the capital intensiveness of the business model or howleanly a venture has been run, a company may not have the cash resources toexecute a late-stage pivot.<span style="mso-spacerun: yes;"> </span>Giventhe heightened risk profile of the company, raising money at this point willlikely involve a down round in terms of valuation.<span style="mso-spacerun: yes;"> </span>In turn, a down round involves a slew of headaches that the companyfounder / manager will have to grapple with.</span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><br /></span></div><div class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span class="Apple-style-span" style="font-family:inherit;">Operational andFinancial <a class="zem_slink" href="http://www.tnt.tv/series/leverage/" title="Leverage" rel="hulu" target="_blank">Leverage</a><o:p></o:p></span></b></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;">Leverage can severely complicate a late-stage pivot.<span style="mso-spacerun: yes;"> </span>A company that has crossed the chasmand has begun to scale the business, such as Chegg, has likely startedincurring fixed costs that enable it to benefit from economies of scale.<span style="mso-spacerun: yes;"> </span>Also, it may have already raised debtfinancing.<span style="mso-spacerun: yes;"> </span>Whether operational orfinancial in nature, leverage limits a company’s nimbleness and exacerbatesboth the company’s cash needs and the potential decline in valuation during apivot.<span style="mso-spacerun: yes;"> </span>Hence, undertaking a late-stagepivot requires a management team with both conviction and humility.<span style="mso-spacerun: yes;"> </span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;"><span style="mso-spacerun: yes;"><br /></span></span></div><div class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span class="Apple-style-span" style="font-family:inherit;">Re-sizing andRe-alignment<o:p></o:p></span></b></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family:inherit;">A company that has begun scaling has likely achieved bothproduct-market fit and, to some extent, alignment between its strategy andorganizational structure.<span style="mso-spacerun: yes;"> </span>A late-stagepivot, if large enough, implies taking a few steps back and unraveling some ofthe progress made along these lines.<span style="mso-spacerun: yes;"> </span>This may involve layoffs and new hires, even at the management level,asset sales, and significant resource re-allocation.<span style="mso-spacerun: yes;"> </span>Managing the re-sizing and re-alignment of a company whileensuring that it is moving ahead fast enough on the new opportunity can be verychallenging, requiring a talented management team.</span></div><!--EndFragment-->Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-21918508036707537812012-03-03T08:59:00.002-08:002012-07-26T01:51:39.381-07:00The LTV challenges in Education Entertainment<span style="font-family:Arial, Helvetica, sans-serif;"><i>by Cyrena Chih</i></span><br /><br /><span style="font-family:Arial, Helvetica, sans-serif;">Ever since I was 12, I wanted to help kids globally and make them smile. As I grew up, the “How” started to take various different forms. Over the last two years at <a class="zem_slink" href="http://maps.google.com/maps?ll=42.36722,-71.12253&spn=0.01,0.01&q=42.36722,-71.12253%20%28Harvard%20Business%20School%29&t=h" title="Harvard Business School" rel="geolocation" target="_blank">HBS</a>, I have started to gain a more refined view. I’ve headed down this path of applying gamification to education. Why can’t learning be the most engaging and fun-filled experience in this day and age? <br /><br />After looking at the <a class="zem_slink" href="http://en.wikipedia.org/wiki/Child" title="Child" rel="wikipedia" target="_blank">children</a>’s online education and entertainment (<a class="zem_slink" href="http://en.wikipedia.org/wiki/Edutainment" title="Edutainment" rel="wikipedia" target="_blank">edutainment</a>) space for over four years, I still can’t tell you the direct answer. Even nine intelligent people with education passions struggled at a Harvard Ideabomb this week with the same problem. As a result, I decided to look at the challenges and barriers for edutainment through a Launching Tech <a class="zem_slink" href="http://www.theventures.com" title="The Ventures" rel="homepage" target="_blank">Ventures</a> lense. </span><br /><br /><ul><span style="font-family:Arial, Helvetica, sans-serif;"><li><b><a class="zem_slink" href="http://en.wikipedia.org/wiki/Product_marketing" title="Product marketing" rel="wikipedia" target="_blank">Product Market</a> Fit for who? </b>The definition of PMF is “demonstrating demand from early adopters with solid profit potential”. In the world of edutainment does it mean creating something parents will pay for their kids, something schools will pay for or something kids will want their parents to pay for? The profit side of things often become acutely focused on parents or schools as a source of funds. The challenge here is that the children are the real consumers although they have zero purchasing power.</li><br /><li><b>Demonstrating PMF</b>. In the world of children, the demonstration part becomes an even larger barrier. Existing <a class="zem_slink" href="http://en.wikipedia.org/wiki/COPA_%28gene%29" title="COPA (gene)" rel="wikipedia" target="_blank">COPA</a> regulations limit the amount of information, data collecting and tracking permitted on kids (anyone under the age of 13).<sup>1</sup> Therefore collecting reliable, defensible and <a class="zem_slink" href="http://en.wikipedia.org/wiki/Statistics" title="Statistics" rel="wikipedia" target="_blank">statistical data</a> on child engagement or education becomes very difficult on a large scale. For edutainment efforts, this increases the time and cost investment for <a class="zem_slink" href="http://en.wikipedia.org/wiki/Most_Valuable_Player" title="Most Valuable Player" rel="wikipedia" target="_blank">MVP</a>. Even conducting surveys on children is very difficult, since parents often can’t accurately depict their child’s actions. Furthermore, in-person surveys require <a class="zem_slink" href="http://en.wikipedia.org/wiki/Parent" title="Parent" rel="wikipedia" target="_blank">parental</a> approval and ideally have children in separate spaces so their responses aren’t affected by their parent’s expectations. Given how difficult it is to accurately conduct consumer testing with children, it makes false negatives a lot more likely with this demographic. Overall the ability to demonstrate demand and fit for children is drastically harder.</li><br /><li><b>Scaling versus safety</b>. What many people often forget with children’s products is: the consistent level of quality and trust the product has to reach and maintain. In developing a new product, this often means longer development timelines to accommodate the testing and infrastructure required to ensure safety. If you don’t want to “know” anything about your customers (the children) and choose to turn a blind eye, then you can plead ignorance if and when things go wrong. (For example facebook is technically meant for adults even though children are a significant proportion).<br /><br />But if you really want to address and engage children, then turning your back on them won’t build a better product. For kids-focused companies, a lot of investment and time is spent on determining safe COPA compliant standards for security, potential moderation facilities, etc. Scaling quickly often requires either a lot of resources to ensure safety or greater exposure to risk. With children, it just takes <u>one</u> incident to ruin the brand and trust of an entire company.</li><br /><li><b>Where is the Teach in the Ying and the Yang?</b> In most startups we’ve see there are already competing tensions between engineering and product, as explained by <a class="zem_slink" href="http://www.avc.com/a_vc/2009/03/hacking-education-continued.html" title="Fred Wilson" rel="homepage" target="_blank">Fred Wilson</a> in his <a href="http://www.avc.com/a_vc/2010/05/the-yin-and-yang-of-product-and-engineering.html">blog post</a>. However in edutainment industries you have a third dimension – the educators who want to ensure the learning effectiveness. All three have very different priorities that have their own priorities but must be able to communicate and work productively together and resist a standstill.</li></span></ul><span style="font-family:Arial, Helvetica, sans-serif;"><br />Are these just some of the reasons why developing children’s edutainment products are that much harder?<br /><br />Notes:<br /><sup>1</sup><span style="font-size:x-small;"> <a href="http://www.ftc.gov/privacy/coppafaqs.shtm">http://www.ftc.gov/privacy/coppafaqs.shtm</a></span></span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-52730764463265277352012-03-03T08:59:00.000-08:002012-04-16T23:05:04.383-07:00Aiming for a Black Swan<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Daniele Diab</i><br /><br />If failure means shareholders losing most or all the money they invested, then the failure rate for startups is 35%. If failure refers to failing to achieve the forecasted ROI, then the failure rate is 75%. Finally, if failure is defined as not hitting a projection, then the failure rate is greater than 90%. “Failure is the norm”, concludes Shikhar Ghosh, senior lecturer at Harvard Business School.<sup>i</sup><br /><br />It is therefore important to understand the reasons for failure.<br /><br /><b>Reason #1 – Market issues such as the entrepreneur builds a vitamin and not an aspirin.</b><br /><br />One of the major reasons for failure is that there is no market or little market for the product that is built. This can be translated into the fact that the total market size is actually not large enough or that the value proposition is not attractive enough for the target buyer to convert to purchasing. It could also be explained by bad market timing: the market might not be mature enough to accept a particular solution. As an entrepreneur, you therefore have to always ask yourself: “Why this product? Why now?”<br /><br /><b>Reason #2 – The entrepreneur fails to effectively test the underlying business assumptions.</b><br /><br />Startups frequently fail because of the lack flexibility of the entrepreneur to change direction when needed due to psychological biases such as optimism bias or confirmation bias such that people have a tendency to interpret information in ways that validate their hypotheses rather than assess them in an objective manner. Additionally, they can be fooled by sunk cost fallacy considering expenses that have been incurred and cannot be recovered. These factors kick in and blind entrepreneurs in ways that prevent them from realizing that some base assumptions of their business are false or from factoring in objectively the market feedback they receive. This in turn leads to a late or no pivoting resulting in an eventual failure.<br /><br /><b>Reason #3 – Too much funding! Yes, not too little, but too much funding!</b><br /><br />Too much funding is one of the main problems that lead to startup failure. Running fat covers up all the problems and critical issues that a company faces, giving room for errors and mistakes. Too much funding also makes it more difficult to create a sense of urgency at the company level allowing management to focus on things that are not necessarily important catering to a market that they think they could predict rather than focus on the current state of the world. Furthermore, too much funding often results in inefficient hiring where the benefits of having a small team are lost and communication and iteration become more complicated tasks. In the article “Being fat is not healthy,” Fred Wilson explains that “…the success rate of fat companies versus lean companies is stark. [He has] never, not once, been successful with an investment in a company that raised a boatload of money before it found traction and product market fit with its primary product”. <br /><br />But let’s not be discouraged by these numbers… Let’s keep shooting for the stars, aiming big and high, though leaving some room in the back of our mind to remember the top reasons for failure, keeping them on our watchlist and trying to avoid them to best set ourselves up for a Black Swan event.<br /><br /><sup>i</sup> <span style="font-size: x-small;">Why Companies Fail—and How Their Founders Can Bounce Back, Carmen Nobel, March 7th, 2011</span></span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-25818560874713843302012-03-03T08:58:00.003-08:002012-07-26T01:51:19.080-07:00The Late-Stage Pivot: Some Considerations<span style="font-family:Arial, Helvetica, sans-serif;">by Jocelyn Whittenburg<br /><br />“<i><a href="http://bit.ly/2xwgE7">If and only if we can’t find any market for our current vision is it appropriate to change it</a></i>.”<br />—<a class="zem_slink" href="http://www.startuplessonslearned.com/" title="Eric Ries" rel="homepage" target="_blank">Eric Ries</a><br /><br /> <a class="zem_slink" href="http://en.wikipedia.org/wiki/Exploit_%28computer_security%29" title="Exploit (computer security)" rel="wikipedia" target="_blank">Pivoting</a> is a natural part of running a start-up. The lean startup theory and hypothesis-driven entrepreneurship practically demand that the entrepreneur pivot at some point in the early stages of the business. Usually, pivoting is referred to as something that a founder does in order to achieve product-market fit. Once the founder finds product-market fit, it’s time to scale. Or so the theory goes.<br /><br /> However, are there situations where it makes sense to pivot after product-market fit has seemingly been achieved? The textbook rental service <a class="zem_slink" href="http://www.chegg.com/" title="Chegg" rel="homepage" target="_blank">Chegg</a> is currently in the process of such late-stage pivoting. Chegg began as a rental service for physical textbooks and is just now beginning to feature e-textbooks, homework help, and flashcard apps on their website, looking more like a portal for <a class="zem_slink" href="http://en.wikipedia.org/wiki/Student" title="Student" rel="wikipedia" target="_blank">college students</a> than a textbook rental site. Arguably, Chegg achieved product-market fit with their rental service (see Steven Carpenter’s TC Teardown: <a href="http://techcrunch.com/2010/06/05/teardown-chegg/">http://techcrunch.com/2010/06/05/teardown-chegg/</a>). If we believe Mr. <a class="zem_slink" href="http://en.wikipedia.org/wiki/Eric_Ries" title="Eric Ries" rel="wikipedia" target="_blank">Ries</a>’ quote above, it is inappropriate for Chegg to change their <a class="zem_slink" href="http://en.wikipedia.org/wiki/Business_model" title="Business model" rel="wikipedia" target="_blank">business model</a> as they’ve already found a market for their current model. What considerations should be taken into account when pivoting post product-market fit? Here are some questions a founder should ask him / herself:<br /> </span><br /><ol><li><span style="font-family:Arial, Helvetica, sans-serif;">How will your investors react? They invested in your original business and may not be willing to risk a change since the original business model has proven itself out. Investor reaction will also impact your ability to raise the funding necessary to pivot. </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;">How will your customers respond? In Chegg’s case, they are pivoting from a proven current customer behavior (<a class="zem_slink" href="http://en.wikipedia.org/wiki/Renting" title="Renting" rel="wikipedia" target="_blank">renting</a> physical textbooks) to a hypothesized future customer behavior (using e-textbooks and participating in an online student education center). What if the hypothesized behavior never materializes? Will you lose current customers by pursuing this new pivot? </span></li><li><span style="font-family:Arial, Helvetica, sans-serif;">How will the pivot affect you and your employees? At a time when a start-up is supposed to be focused on scaling (post product-market fit), a pivot introduces an added layer of complexity. Suddenly management and employee attention is divided between how to scale the old business while also trying to achieve product-market fit with the new business. Can the organization realistically achieve both goals? Can it achieve both goals and still function as a lean organization? </span></li></ol><span style="font-family:Arial, Helvetica, sans-serif;"><br /> Clearly, there are many stakeholders to take into consideration when attempting a late-stage pivot. Pivots that occur before product-market fit has been achieved create less friction: investors want the firm to pivot so they can make money, customer opinion is less relevant because there are likely few customers, and the employees want the firm to pivot so their equity is worth something. However, successful late stage pivots can offer multiple benefits to the firm:<br /></span><br /><ol><span style="font-family:Arial, Helvetica, sans-serif;"><li>Late stage pivots can pre-empt competition or imminent changes in consumer behavior. In the case where a start-up knows with some certainty that their market is changing, the firm may need to pivot in order to remain relevant. In the case of Chegg, it is a very reasonable assumption that their market (students) will transition to using e-textbooks in the near future, so a pivot to e-textbooks, although late-stage, may be necessary. </li><li>Late stage pivots may help a company cross the adoption chasm (from early-stage adopters to mainstream). A company may achieve product-market fit with their target consumers, but, in doing so, may realize that their <a class="zem_slink" href="http://en.wikipedia.org/wiki/Target_market" title="Target market" rel="wikipedia" target="_blank">target market</a> is but a small niche within a much bigger market. A pivot at this stage can allow the company to move past the chasm and into a larger market. </li><li>Late stage pivots can improve the monetization model for a start-up. In particular, if a start-up has a particularly lumpy revenue model (e.g. due to seasonality) or if the business model has high fixed costs (e.g. inventory), then a pivot to a model with smoother revenue or lower fixed costs may be hugely beneficial to the business in the long run and help pre-empt competition. </li></span></ol><span style="font-family:Arial, Helvetica, sans-serif;"><br /> Late stage pivots can offer large benefits to <a class="zem_slink" href="http://en.wikipedia.org/wiki/Startup_company" title="Startup company" rel="wikipedia" target="_blank">start-ups</a> who handle them correctly and pivot for the right reasons. In reality, the line between scaling and pivoting is blurry. Is Chegg’s move to e-textbooks and a student platform really a pivot or is it simply scaling the business? When <a class="zem_slink" href="http://www.renttherunway.com/" title="Rent the Runway" rel="homepage" target="_blank">Rent-the-Runway</a> began renting accessories and selling cosmetics, were they pivoting or scaling? Sometimes start-ups need to start with a simple business proposition like renting textbooks in order to achieve the scale and data needed to realize a larger vision. As Eric Ries puts it: <br /><br />“<i><a href="http://bit.ly/2xwgE7">Successful startups change directions but stay grounded in what they've learned. They keep one foot in the past and place one foot in a new possible future.</a></i>”</span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-6932359424438693652012-03-03T08:58:00.001-08:002012-04-16T23:05:04.675-07:00If they come, I will be successful<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Felipe Arias</i><br /><br />In one of our first classes, the issue of when to test the profit formula of a startup’s business model was raised. For me, this debate continued throughout many of our case discussions and guest visits. The issue came to a head when Fred Wilson encouraged startups to focus on the core user experience and adoption over monetization issues early in a lifecycle. With examples such as Facebook and Twitter, an entrepreneur looking for a category defining business could lean on investor backing and big valuations to scale more quickly and then find the right revenue model later. He did temper the recommendation by saying that category defining startups can be as rare as unicorns, and others may need to look for monetization earlier.<br /><br />Still, I feel that too many startups are leaving the profit formula on the backburner and use “advertising revenue” as a plug on financial projections. As an example, Aardvark projected a $38.48 CPM in order to have a positive operating margin. In contrast, Trip Advisor with its strong conversion rates for expensive products generates CPMs in the mid-teens. Having super premium advertising rates while still providing a large amount of impressions is very difficult.<br /><br />As a result, companies that lean solely on advertising, including successes such as Facebook, Yelp!, and Cheezburger, see revenue per engaged member from $1 to $3 annually. Getting to a 3:1 ratio of Lifetime Customer Value to Customer Acquisition Cost with those metrics seems very difficult as well. Moreover, as demonstrated in the Mochi Media case, the scale necessary to produce meaningful revenue (let alone profits) from advertising can be immense. Based on these assumptions, an untested profit formula that will rely on advertising revenue in the future seems unlikely to succeed.<br /><br />Why, then, do very smart investors encourage very smart entrepreneurs to chase “unicorns” that will steal the imagination (and the time) of the user without taking any of their money? The answer, for me, is that success is based on valuations and not profits, at least for the time being. While I do believe that advertising dollars will continue to shift towards higher ROI medium, it has not yet been proven to me that simply having a lot of users and a lot of user data means that an online property has a high ROI on advertising. However, current valuations seem to take spent time as a strong link towards future profits. If there was a “bubble” in tech startups, valuing on users and time spent seems to be the issue for me.<br /><br />As a result, I look for hope in another of Fred Wilson’s comments wherein he advised to look for a revenue model that makes more people want to use the product. He gave an example of Pinterest potentially providing ecommerce for items that are included in linked photos. Such value creating ecosystems are the perfect example of a business model that aligns the customer value proposition, profit formula, go-to-market plan, and technology and operations management. As I move forward from this class, my search for unicorns will center on finding this perfect alignment and not on finding the perfect user experience. I feel it is only a matter of time before valuations seek alignment over users as well.</span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-33496314414330475612012-03-03T08:58:00.000-08:002012-04-16T23:05:04.580-07:00Does Retail Need a Diet? Applying Lean Principles to the Retail Industry<span style="font-family: Arial, Helvetica, sans-serif;">by Xing Wang<br /><br />In Rent the Runway, we saw an example of how a startup created a new concept within retail and successfully applied lean methodologies to learn and become a successful business. As someone who is not going into a startup post graduation, I’ve been thinking a lot about how to apply some of the concepts we have learned throughout our class to more traditional corporations. More specifically, while I think lean methodology has diffused somewhat into big technology companies (i.e Google), they have not yet been applied as often as they should in the more traditional retailing industry. I think a lot of the concepts of a lean startup are relevant, particularly as retailers face the ever-increasing threat of competition from online channels. <br /><br /> A startup is many times required to operate on lean principles because they lack the resources available to larger companies. Although retailers often have the ability to throw massive amounts of money or manpower to launch a new product or enter new markets, it’s often not the most efficient way to go about it. By adopting the mindset of lean – emphasis on hypotheses testing with minimally viable products, learning, and pivoting as needed, retailers can become speedier and better achieve product-market fit. <br /><br /> Some examples of how retailers could adapt lean principles include: </span><br /><ul><span style="font-family: Arial, Helvetica, sans-serif;"><li><b>Product Testing</b>. Traditionally, fashion companies test new product lines through product concept tests (aka focus groups) AFTER the product is completed. At that point, changing the product is both timely and costly. Determining product-market fit at an earlier stage through the use of MVPs would be a more efficient manner to approach this problem</li><br /><li><b>Going too big too fast</b>. When retailers look to take a major initiative, i.e. entering a new international market or extending a product line into baby or men’s products, they will often do a lot of up front research on the feasibility of success, size of the market potential, etc. Once they make a decision, they allocate a budget to it and enter the market with a major move. Switching to a mindset of developing key hypotheses to validate, and finding the most minimal way possible to test those hypotheses might be a better approach. For example, instead of opening up a large store in Japan after analyzing the potential of the opportunity, think instead of how to use smoke tests online or perhaps staging a pop-up store instead to test if the hypotheses on what is needed to make the venture succeed are correct. </li></span></ul><span style="font-family: Arial, Helvetica, sans-serif;"></span><br /><div><span style="font-family: Arial, Helvetica, sans-serif;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span></div><span style="font-family: Arial, Helvetica, sans-serif;">The main problem with applying lean principles to retailers are the processes that govern retailers. Retailers often have entrenched process for how to “get things done’ within the company that have been “the way” for years. For example, the expectation in retailers is often to have annual goals laid out for a division with a budget and targets assigned to that particular department. Adopting a lean mindset within that framework means bringing in a level of uncertainty towards the future that is not supported by the current structure. In another example, the IT systems in retailers are often very complex and rigid. With lean principles in place, the IT systems need to be able to quickly create small tests and capture results – i.e., ability to create a quick smoke test on an e-commerce page’s homepage or ability to quickly change a page to do A/B tests. The IT organization needs to be able to adapt to this change in their role and adapt whatever process of interaction there is between the product group and itself. <br /><br /> To switch to the lean mindset requires a change in cultural norms within the organization, starting with support from the top. Another thing to think about might be separating out an internal group that focuses on applying lean methodologies and allowing them to run on their own independent from the rules governing the rest of the retailer.</span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-75559356762685606972012-03-03T08:57:00.001-08:002012-04-16T23:05:04.991-07:00Too Fit to Pivot? The Dangers of Optimistically Pivoting after Scaling<span style="font-family: Arial, Helvetica, sans-serif;">by Serge Vartanov <br /> <br />In 2009, researchers at the University of Pittsburgh found that optimists live longer and happier lives than those who are skeptical or cynical. Unchecked optimism can indeed be a great source of joy, but for many tech entrepreneurs, it is also a great source of danger. The impact of a founder with unbridled optimism can be painful for a lean start-up: if the founder continues to believe in the product even after the core hypothesis around product/market fit has been proven wrong, then considerable angel and VC money can be wasted chasing an opportunity that doesn’t exist. Fortunately, for a new start-up, this destruction of value occurs on a relatively small scale and can be a good learning experience for everyone working on the team. This good doesn’t necessarily outweigh the bad, especially when a more developed company is attempting to conduct a pivot with an optimistic executive at the wheel. <br /><br /> Over the course of this semester, our class has studied a number of start-ups that conducted pivots early on as they sought to find their product/market fit. For small companies like Triangulate, having the opportunity to pivot from a failed hypothesis (social-dating) to a new idea (slightly different social-dating) can bring tremendous hope that the venture still has room to succeed. In a way, this undercuts the strength of the pivot – with so much riding on the new idea, it’s easy to get caught up in the hope and destroy value by expecting a better outcome than the early data indicates. Fortunately, once the post-mortem occurs, the experience and learning that comes from a lean entrepreneur pivoting into a brick wall can make the entrepreneur much stronger. <br /><br /> Pivoting into a wall may not be ideal for a small lean start-up searching for product-market fit, but the value destroyed is much greater for a more established player that already had product-market fit. Consider the classic example of Michael Jordan pivoting from basketball, where he was a perfect fit, into baseball. At the time, Jordan was optimistic that he would be able to hit a ball as well as he could shoot one – but his 2-year foray into America’s national sport caused tremendous injury to his brand and will forever serve as a scar on his otherwise impeccable sports record. <br /><br /> Perhaps a more relevant example for tech entrepreneurs would be the tale of Mochi Media, which brought on a new CEO who initiated a pivot from what was arguably a successful product that just didn’t have a big-enough payoff. George Garrick was so optimistic that the pivot into publishing would work that he led Mochi into launching a live version of a new game-portal, HelloGiant, before it could test all the hypotheses underlying the new product-market fit. Because there was already strong buy-in for the already existing current fit that Mochi offered, Mochi’s pivot received little buy-in from the firm or its clients, and ultimately failed. <br /> <br />Did Mochi learn from its optimistic misstep into the publisher world? Surely it did, just as Jordan learned much from playing baseball, but because of the large size of the organization, this failure destroyed more than just some seed money – Mochi experienced a sharp drop in employee morale and its relationships with its publishers undoubtedly suffered. Of course, not all late-stage pivots are prone to such failure – over the last few years, IBM completed an impressive transition from manufacturing to services – but both Mochi Media and Michael Jordan’s pivot serve as stark examples of how pivoting from a great fit can cause tremendous destruction. </span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-54396738603287350472012-03-03T08:57:00.000-08:002012-04-16T23:05:04.871-07:00Lean Startup Methodologies in Book Publishing<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Terrence Gong</i><br /><br />The book publishing industry in recent years has been heavily disrupted by technology, particularly in the form of digital distribution through e-readers like the Amazon Kindle and Barnes and Noble Nook. While consumer discovery processes and purchasing behavior has transformed, book creation itself has not had nearly the same amount of change. But, lean startup methodologies could be the answer to how to enhance traditional book content development given new technological advances.<br /><br /> Through internet-connected e-reader devices, it is foreseeable for the serial novel to become a terrific category for optimization through lean startup methods. In this model, rather than authors writing a full novel before publishing, authors can write and release their novels in incremental chapters. Readers could purchase the novel on a chapter basis, and provide feedback and information to help inform the author what they like and dislike about the story. Therefore, each chapter (and especially early ones) could form <u>minimum viable products</u> that provide data to the author on whether they should continue, pivot, or perish book ideas, concepts, and characters. Reader feedback can also be both conscious (written reviews and feedback), or unconscious. For example, many metrics available to websites (book page views, book page bounce rate, time spent on page, etc) could be useful for authors to better design their story to optimize engagement (one can see a world where an author can discover that certain characters entice people to read more per sitting, and therefore might be ripe for a spin-off series).<br /><br /> The idea of a serial story is not new – these same elements are present in traditional tv series. Spanning 20+ episodes, tv writers usually are very careful in monitoring message boards and viewer feedback to see which characters are popular, and what story themes resonate. But, books can benefit even more from this feedback since the production costs of writing are significantly lower and only involve a singular author and editor (versus tv shows which involve whole casts and studios), so the minimum viable product is cheaper to produce, and the ability to pivot around the learned information is much easier. <br /><br /> Serial novels are also not new to the book industry – Michael Chabon wrote a serialized novel, “The Gentleman of the Road”, that was part of New York Times magazine in 2007, and famous authors, like Stephen King, have experimented with the concept of e-book serializations (exp: “<a href="http://www.stephenking.com/library/novel/plant:_zenith_rising_the.html">The Plant</a>”), but it has yet to really take hold in the market. But what is so different now than in the past is the ease from which to get feedback – e-reader devices are not only becoming more ubiquitous, but they also already include syncing mechanisms to download books. Thus, it would be very easy for this feedback functionality to be integrated, and it is much easier to collect data compared to serial novels published in magazines.<br /><br /> Finally, if these start-up methodologies are incorporated, book publishing can also have a potential enhanced revenue stream. If authors can convince readers to purchase chapters for $.99-1.99, longer form books might be able to have significantly larger revenues than current $9.99-12.99 e-books. Further, readers might like how they can be part of the writing process, and this form of interactive story-telling might encourage new users.<br /><br /> Overall, book authors have the opportunity to develop innovative new products through careful usage of lean startup practices in the book creation process.</span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-47868156427212050312012-03-03T08:56:00.003-08:002012-04-16T23:05:05.485-07:00Who is the customer?<span style="font-family: Arial, Helvetica, sans-serif;"><i>By Vijay Yanamadala</i><br /><br />One of the biggest lessons from Ben Foster’s presentation on his role as product manager at OPOWER is how to think about the customer. Indeed, both utilities and end consumers were on some level “customers” of </span><span style="font-family: Arial, Helvetica, sans-serif;">OPOWER</span><span style="font-family: Arial, Helvetica, sans-serif;">. Utilities actually paid for the service, but it was consumers who were ultimately modifying their behavior based on the activities of </span><span style="font-family: Arial, Helvetica, sans-serif;">OPOWER</span><span style="font-family: Arial, Helvetica, sans-serif;">. <br /><br />While it is easy to view the payer as the customer, it’s more difficult to appreciate the more nuanced approach that both are important, indeed essential to your ultimate success. Success is ultimately interdependent and focusing only on the payer’s needs may not lead to optimization for the payer because it ignores the interdependency of the relationship and the ultimate service provided by </span><span style="font-family: Arial, Helvetica, sans-serif;">OPOWER</span><span style="font-family: Arial, Helvetica, sans-serif;">. Ben talked about treating the consumer as the ultimate customer because it is the consumer whose behavior they were ultimately trying to modify. <br /><br />Then in actually thinking about treating the consumer as the customer, the consumer’s needs may indeed be different from what they describe. He specifically made a point about paying attention to a customer’s pain points and then thinking critically about how to address their pain points as a way to coming up with the best solution. This strategy avoids coming up with products that don’t ultimately address real pain points and thus have a limited potential for real adoption.<br /><br />In many ways, the </span><span style="font-family: Arial, Helvetica, sans-serif;">OPOWER </span><span style="font-family: Arial, Helvetica, sans-serif;">example applies to the complex landscape of healthcare. As with utilities, there are multiple parties, including healthcare providers (physicians, hospitals), payers (government, private insurance), and patients. Often, in a working business model, one of these entities will be the payer, but ignoring the complex interplay between these three entities will not lead to an optimum business model.<br /><br />Indeed, the models that have worked best have demonstrated positive value for each of the players involved: providers, payers, and patients. Even if one of these entities is the payer, without demonstrating such positive value for everyone involved, successful adoption is never achieved. There are numerous examples of this sort of failure in healthcare entrepreneurship.<br /><br />Medical History Office (medicalhistory.com) is a software company founded in 1982 that was designed to automate patient data gathering. Today, if you ask 1000, 999 of them will likely say that they have never heard of this company. They designed software that solely took a physician’s pain point into consideration: the frustrations of paperwork. However, in the process, they created a pain point for patients, burdening them with even more paperwork without any clear benefit received. Even if physicians were to be the ultimate payer, in ignoring the patient as an integral component of the model that would drive adoption, they failed to achieve even limited adoption.<br /><br />Similarly, Google Health tried to address the patient pain point of incomplete records without taking into account the tremendous burden that providers would have in interfacing with a new system, and they ultimately failed because of it. Tech Crunch takes an even more scathing view of this topic: <a href="http://techcrunch.com/2011/06/26/why-google-really-failed-money/">http://techcrunch.com/2011/06/26/why-google-really-failed-money/</a> - perhaps Google’s failure to take into account the very reimbursement scheme that connects the system together was their biggest failure. In not recognizing that they may be destroying monetary value for providers through such a system, they were creating tremendous disincentive for one of the key interdependent parties. By viewing the patient as their sole customer, the failed to appreciate how destroying value for another interdependent party would lead to failed adoption.<br /><br />Thus, in trying to drive better business models for healthcare start-ups, perhaps using the holistic approach towards the customer that </span><span style="font-family: Arial, Helvetica, sans-serif;">OPOWER</span><span style="font-family: Arial, Helvetica, sans-serif;"> uses may lead to heightened success. Understanding how each of the parties may benefit, or at the very least not suffer, will be essential to achieving success where the coordinated efforts of three interdependent parties ultimately drive adoption of all new innovations.</span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-34247183478195210722012-03-03T08:56:00.002-08:002012-04-16T23:05:05.253-07:00There is Nothing Wrong with Copying<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Jonathan Lo</i><br /><br />Fred Wilson stated that he would not invest in copycat models. This surprising comment came despite the many success stories of copycats such as Google copying Yahoo, MercadoLibre copying eBay etc. Not to take anything away from what Wilson has achieved thus far as a great investor, but I think this is an easy statement to make after you’ve succeeded in the Venture Capital business. Wilson mentioned that his no copycat investing is a matter of pride, but very few VCs can afford to make this a matter of pride. Union Square Ventures is arguably one of the top tier VC firms, therefore they have the luxury of being approached by a larger number of start-ups; as entrepreneurs are more inclined to work with them in light of their past success, giving Union Square Ventures a much wider selection of companies to choose from.<br /><br />While Union Square Ventures has portfolio companies that expand internationally, a large majority of these investments start in the US market. Given that the US market is home to a large number of technology based pioneers, I would have to agree with Wilson that the copycat model is not necessarily as effective within the US, especially if the start-up has already gained significant traction. On the other hand, I feel that this is a very effective model to follow in areas that are behind the technology curve. In fact, there are some VCs that explicitly look for copycats to invest in. An example of one of these VCs is Monashees Capital in Brazil. Monashees recently invested in companies like baby.com.br (copying diapers.com) and Peixe Urbano (copying Groupon) because these were areas that had not been captured in Brazil. As these business models have succeeded in the US, there is no reason not to believe that these same concepts would not succeed in Brazil.<br /><br />Another great example of a copycat investor is Rocket Internet. Rocket is known for bringing successful business models to new regions; providing the capital and operational support needed for the start-up to succeed. One of their portfolio companies, Glossybox, a copy of Birchbox, has already expanded into 8 countries; Glossybox is arguably even larger than the pioneer start-up. While Rocket only started in 2007 and has yet to prove their investment model, they have definitely made a strong case thus far.<br /><br />Finally, based on a study by the American Marketing Association, in 1993, only about 11% of the pioneers were market leaders. Pioneers were able to maintain their market leader position for 5 to 10 years with long-term market leaders entering an average of 13 years after the pioneer. While technology and the internet have changed the dynamics of starting companies, do the findings of the 1993 study still apply? Is the copycat model the way to go? </span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-73500807709892228822012-03-03T08:56:00.001-08:002012-04-16T23:05:05.146-07:00Drowning in Liquid Assets: 5 Risks Faced by Over-Funded Startups<span style="font-family: Arial, Helvetica, sans-serif;"><b>“Too much money in a startup is not only unnecessary, it’s actually toxic.” Mike Maples, Super Angel</b></span><br /><div><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div><div><i style="font-family: Arial, Helvetica, sans-serif;">by Jonathan Krieger</i></div><div><i style="font-family: Arial, Helvetica, sans-serif;"><br /></i></div><div><i style="font-family: Arial, Helvetica, sans-serif;"><br /></i></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt9G2BSI2Aazk4_SXIs8uwtdywuJ-ImAXXF36kQMguMkZT_oBjJa_3GxMI-hUQiXmvb8fUzGYrSdcauuYsGjonKNLI3AY_Ll2jWfS_3Au4-9WlnEopRJIl6cYcKspRkIkT9RTaoN5qZ1s/s1600/Scroodge+McDuck+Swimming+In+Money.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="244" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjt9G2BSI2Aazk4_SXIs8uwtdywuJ-ImAXXF36kQMguMkZT_oBjJa_3GxMI-hUQiXmvb8fUzGYrSdcauuYsGjonKNLI3AY_Ll2jWfS_3Au4-9WlnEopRJIl6cYcKspRkIkT9RTaoN5qZ1s/s320/Scroodge+McDuck+Swimming+In+Money.jpg" width="320" /></a></div><div><span style="font-family: Arial, Helvetica, sans-serif;"><i><br /></i></span><span style="font-family: Arial, Helvetica, sans-serif;">The VC market is frothy. With Venture Capital </span><a href="http://www.nvca.org/index.php?option=com_content&view=article&id=344&Itemid=103" style="font-family: Arial, Helvetica, sans-serif;">investments up 22%</a><span style="font-family: Arial, Helvetica, sans-serif;"> in 2011 and average </span><a href="http://www.invigorlaw.com/venture-capital-survey-overall-investment-and-deal-size-up-in-2011/" style="font-family: Arial, Helvetica, sans-serif;">deal size on the rise</a><span style="font-family: Arial, Helvetica, sans-serif;">, there is a lot of money floating around the startup world. In this “founders market” investors are eager to deploy capital, and when VC bank accounts start to resemble Scrooge McDuck’s vault, startup valuations and funding rounds rise. </span></div><div><span style="font-family: Arial, Helvetica, sans-serif;"><br />While this presents great opportunities for entrepreneurs to fund their dreams, they should do so with caution. Frothy markets lead to overvaluations and, according to Mike Maples, “Too much money in a startup is not only unnecessary, it’s actually toxic.”*<br /><br />It’s important for entrepreneurs to understand these toxins and be ready with anecdotes. This post focuses on 5 watchouts for over-funded entrepreneurs.<br /><br /><b>1) Pressure to meet overvaluation</b><br /><br />High valuations come with pressure to pursue high-value business models. While this may sound trite (and maybe it is), it still deserves attention. In it’s early days a startup needs the flexibility to experiment and test different hypotheses and models. When you raise money at a high valuation, you may limit your ability to run certain types of tests. With high expectations, there’s pressure to only pursue the biggest opportunities. You may end up swinging for home runs and whiffing, when would have been better suited to hit a single or double.<br /><br /><b>2) Spend to long on bad ideas</b><br /><br />Raising more cash than you need can make people lazy. You no longer have to guard every penny like it’s your last, which allows you to “pursue loosing strategies for too long to the detriment of winning strategy.”* (Mike Maples) When something isn’t working you may keep throwing cash at it to see if you can make it work. This not only wastes money, but also valuable human resources that should be directed to new ideas. <br /><br /><b>3) Scale before achieving product-market fit</b><br /><br />According to Marc Andreessen, “Product/market fit means being in a good market with a product that can satisfy that market.”** This is no easy task and requires time and testing. Once you find product/market fit, you can build out your organization and scale it – but not before. <br /><br />When companies raise too much money too fast they may feel pressure to quickly show results, and scale before achieving product/market fit. This leads to unnecessary spending - hiring people and acquiring assets that may not match your business. Don’t let over-funding distract you from this key piece of entrepreneurship. As Jeff Bussgang says you need to “nail it before you scale it!”*** <br /><br /><b>4) Cushion to stay in your comfort zone</b><br /><br />Cash provides comfort. It’s a soft fluffy cushion that allows entrepreneurs to stick to business activities that are comfortable, and put off activities that are critical. Tech teams like to build and may need the pressure of a dwindling bank account to get out and sell.**** <br /><br /><b>5) Hire expensive talent you don’t need</b><br /><br />Another danger of cash-flushed coffers is the urge to hire talent you aren’t ready for. A big bank account lets you hire “big-company execs who look great on paper but may not do particularly well in a startup setting.”**** Just because you can hire someone doesn’t mean you should. It’s better to let investors’ money rest than put it to work on the wrong things. <br /><br />These are just a few of the risks that come with over-funding. What other watchouts can you think of and what can entrepreneurs do to avoid them? Comments welcome. <br /><br /><br /><span style="font-size: x-small;">* Mike Maples Jr. <a href="http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1925">Entrepreneurial Thought Leaders Lecture</a>, Stanford University, January 2008.<br />** Marc Andreessen “<a href="http://pmarca-archive.posterous.com/the-pmarca-guide-to-startups-part-4-the-only">The Pmarca Guide to Startups, part 4: The only thing that matters</a>,” Oct 2009. <br />*** Juff Bussgang “<a href="http://www.slideshare.net/bussgang/product-market-fit-fgvn-2010">Presentation on Product-Market-Fit</a>,” slide 6, March 2011.<br />**** Jim Andelman “<a href="http://www.quora.com/What-mistakes-do-over-funded-under-funded-startups-usually-make/answer/Jim-Andelman">What mistakes do over-funded and under-funded startups usually make?</a>” Sept 2011.</span></span></div>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-77029115862057432202012-03-03T08:56:00.000-08:002012-04-16T23:05:05.025-07:00The Cathedral vs. the Bazaar, and the Lean Startup Methodology<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Helen Weng</i><br /><br />In computer science, there is a famous essay written by Eric Raymond on two software development models. The Cathedral model is customized, constrained, with source code tightly controlled. Microsoft comes to mind. The Bazaar model is essentially open source software and Raymond argues that when source code is open for public scrutiny and experimentation, more bugs are discovered and fixed in contrast to the Cathedral model. More information about his essay can be found <a href="http://en.wikipedia.org/wiki/The_Cathedral_and_the_Bazaar">here</a>.</span><br /><div><span style="font-family: Arial, Helvetica, sans-serif;"><br />I’ve been thinking about the Cathedral and Bazaar in relation to startup business models. The model of a tightly controlled, end to end solution applies to startups of product and process innovation. Apple, Warby Parker, and Bonobos are Cathedrals. Bazaars on the other hand, are open marketplaces like Etsy and Aardvark, or business process innovations to existing products like Rent the Runway. These companies do not control the entire ecosystem, but rather facilitate that ecosystem in a better or different way. When looking at Cathedrals vs. Bazaar business models, is the lean startup methodology more applicable to one vs. the other? <br /><br />When building a Cathedral, the true customer experience relies on all the pieces that go into building the business to work perfectly together. Warby Parker manufactures, distributes, and sells fashionable and less expensive eyewear over the Internet. The founders spent 1.5 years working on their business plan and researching the market before launching a completed website with heavy PR. They hit their first year sales target in 3 weeks and acquired a 20,000 person waitlist. However, they did not test small hypotheses prior to launch because their core value proposition depended on a seamless integration of all parts of the product development and selling process. Perhaps the lean startup methodology is less relevant for Cathedrals. Sometimes, truly testing key hypotheses without the completed business is impossible. <br /><br />Bazaars rely on third parties or customers to fulfill certain parts of their business mission. Rent the Runway wanted to rent designer dresses over the Internet but relied on established designers to supply dresses which they knew would be in high demand. Thus, because they did not fully control their product, they could test small hypotheses around the process, such as whether women would rent dresses, rent without trying on dresses, and return rates. Aardvark relied on users to ask and answer questions, so could conduct “smoke screen” tests to experiment with features or validate new ideas. Similar to open source software, a Bazaar is more easily testable because small pieces of the model do not ultimately depend upon a closed, end to end ecosystem. <br /><br />To launch a Cathedral right seems to call for a fat startup mentality, otherwise a founder risks failing to fully test out a core hypothesis. Cathedrals are inherently more capital intensive and risky. Perhaps that is why, similar to a growing proliferation of open source development in software, more Bazaar business models are being launched today.</span></div>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-49653205790729605072012-03-03T08:55:00.000-08:002012-04-16T23:05:05.583-07:00Why Girls Say No To Entrepreneurship<span style="font-family: Arial, Helvetica, sans-serif;"><i>By Amy Chan</i><br /><br />Steve Jobs, Bill Gates, Mark Zuckerberg, Andrew Mason, Jack Dorsey, Mark Pincus. What’s missing on this list of superstars? Female representation. <br /><br />The percentage of women entrepreneurs overall is shockingly low: Y-Combinator, the “harvard of incubators,” reports just <a href="http://www.foundersatwork.com/1/post/2011/1/what-stops-female-founders.html">4%</a> women in its program. Paul Graham points out that only <a href="http://www.paulgraham.com/ideas.html">1.7%</a> of VC-backed startups are founded by women. Looking at our own course materials, only 1 out of 12 cases featured a female protagonist (Rent the Runway).<br /><br />In an era when women are occupying an increasing percentage of high-profile occupations, why is Silicon Valley – one of the most liberal locations, in one of the most progressive states, in the most advanced country in the world – so behind?</span><br /><br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0muTygWMJYpTpk3XCyGflK8fCZk3Q99hgR8n5uLTOwnXuweGh9NlSDnKOzUo6Sbb8yxHUnhN1vYY2-bRn3atItAJTmST22AzZeLbcLATOwey1fjRhs34lN5xz3pr3P5o8rc9J6UyVoDQ/s1600/ChanAmy_graph.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" height="163" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0muTygWMJYpTpk3XCyGflK8fCZk3Q99hgR8n5uLTOwnXuweGh9NlSDnKOzUo6Sbb8yxHUnhN1vYY2-bRn3atItAJTmST22AzZeLbcLATOwey1fjRhs34lN5xz3pr3P5o8rc9J6UyVoDQ/s400/ChanAmy_graph.jpg" width="400" /></a></td></tr><tr><td class="tr-caption" style="text-align: left;">Sources:<br /><a href="http://www.pay-equity.org/PDFs/ProfWomen.pdf">http://www.pay-equity.org/PDFs/ProfWomen.pdf</a><br /><a href="http://www.cawp.rutgers.edu/fast_facts/levels_of_office/Congress-CurrentFacts.php">http://www.cawp.rutgers.edu/fast_facts/levels_of_office/Congress-CurrentFacts.php</a></td></tr></tbody></table><br /><div><span style="font-family: Arial, Helvetica, sans-serif;">When thinking about this question, there are a few humdrum answers I simply don’t buy:<br /><br /><i>“Silicon Valley discriminates, it’s a boy’s club” </i><br /><br />I see no barriers to a woman asking her more successful male counterparts out for coffee for advice, or barriers to her taking on a male mentor. We don’t live in a time when this type of behavior is deemed inappropriate. Furthermore, unlike in mainstream corporate settings, there are no exclusive male golf clubs (“where business gets done”) in the tech industry – just garages. Due to its casual-nature, tech, at a minimum, can’t be anymore of a boys club than every other industry. <br /><br /><i>“A woman’s biological clock” </i><br /><br />Some seem to suggest that entrepreneurs are getting the startup bug right around the time when women want to start a family. However, Jobs, Gates and Zuckerberg all started during their college years. It’s quite rare to find college-educated women eager for kids during her early 20s.<br /><br /><i>Girls are inherently more risk-adverse than guys</i></span><br /><br /><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYALf9cfCdnnHp4WDAvB7UWvsT7zmi7yM4Axui7scIGycHicceQ1Sekr0qZP29huc3mcYT9jREFELU-bwA-Vx0dMfGM-0PZWBlv77DTaagLFMXI_YJlAURVIszJhClONyElIG66oSg41g/s1600/ChanAmy_cats.png" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYALf9cfCdnnHp4WDAvB7UWvsT7zmi7yM4Axui7scIGycHicceQ1Sekr0qZP29huc3mcYT9jREFELU-bwA-Vx0dMfGM-0PZWBlv77DTaagLFMXI_YJlAURVIszJhClONyElIG66oSg41g/s1600/ChanAmy_cats.png" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;"><a href="http://business.financialpost.com/2011/08/31/women-not-risk-averse-study-finds/">Women not risk averse, study finds</a>, Financial Post, Aug 2011. </td></tr></tbody></table><div style="text-align: center;"></div><br /><span style="font-family: Arial, Helvetica, sans-serif;"><b>Entrepreneurship as a Sport</b><br /><br />If there is one thing that this course has instilled in me, it is that entrepreneurship is like a sport. You have to train for it. For example, if you want your child to become a professional Major League Baseball player, you enroll him in Little League, take him to batting practice, and so on. Similarly, if you want your child to be a career entrepreneur, you must teach her certain skills at an early age. From Drew Houston to David Vivero, case after case, we find that two proficiencies are mission critical for launching successful tech ventures:<br /> </span><br /><ul><li><span style="font-family: Arial, Helvetica, sans-serif;"><b>Coding</b>. VCs often look for founders with strong technical backgrounds, not only because of the obvious (core product needs to get built), but also because those who have coded for a long time (think Drew) develop efficient ways of solving technology issues that are essential to lean methodologies. Historically, girls have shied away from computer engineering. The reasons for this are many, including social pressure and the lack of women role models in the profession. Whatever it is, not knowing how to code – and think like a hacker – is a setback. </span></li><li><span style="font-family: Arial, Helvetica, sans-serif;"><b>Selling Yourself</b>. Entrepreneurship is all about selling yourself, whether it’s raising money from VCs, attracting the right employees or getting customers to trust your startup. But we know from data that women earn <a href="http://en.wikipedia.org/wiki/Equal_pay_for_women">17%</a> less comp than their male counterparts. This gender gap showcases how women aren’t as good at selling themselves as men are, even when her capabilities are identical to his. </span></li></ul><span style="font-family: Arial, Helvetica, sans-serif;"><br />Thus, girls are simply not trained to be career entrepreneurs. Without the skills and <i>practice</i> necessary to succeed in this type of environment, women continually say NO to the startup life.<br /><br /><b>Hope</b><br /><br />Looking at the few current female-founded startups (i.e. Gilt Group, Birchbox, Rent the Runway), I am quite anxious to see if they materialize into significant exits. They are all undeniably successful early startups, but these companies have yet to scale/enter late-stage.<br /><br />Indeed, unless our society changes, tech ventures on the whole will remain overwhelmingly male-dominated. I am optimistic though – Mattel created its first Computer Engineer Barbie in 2010. If our eight-year-old-female-Zuckerberg-equivalent starts learning to code now, we can expect a disruptive female entrepreneur to appear circa 2022. Alternatively, Professor Eisenmann suggests reading Caps for Sale to newborns.</span><br /><br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWT8eY52x4IQkM_x-fK6Ju4AR9PI5UXUMsTLDqsxMJHiGE6sgJxaVY282Or_s78rX8M3A0Q8Uzp2Ww0BwH3Dkf-yq7TsaqJMAvpNtOtn7nVnwGbFV_TqZxYO8pnbzL1FY32b7zRYl2mW4/s1600/ChanAmy_Barby.png"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhWT8eY52x4IQkM_x-fK6Ju4AR9PI5UXUMsTLDqsxMJHiGE6sgJxaVY282Or_s78rX8M3A0Q8Uzp2Ww0BwH3Dkf-yq7TsaqJMAvpNtOtn7nVnwGbFV_TqZxYO8pnbzL1FY32b7zRYl2mW4/s1600/ChanAmy_Barby.png" /></a> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuaFIhsnZmo78zMGMmH3sOWuGc7BJ_4uqUNJPN0luPQtMKLUZKpDbvOaU4WuLVaNsqjhiHhCXBUfkh8pJ6TvJ2nslmIu33H1bghMKez2ynIFSeq2nhSGttwJ8Qm5wN6cUEEo2B0a9_bv8/s1600/ChanAmy_forSale.png"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhuaFIhsnZmo78zMGMmH3sOWuGc7BJ_4uqUNJPN0luPQtMKLUZKpDbvOaU4WuLVaNsqjhiHhCXBUfkh8pJ6TvJ2nslmIu33H1bghMKez2ynIFSeq2nhSGttwJ8Qm5wN6cUEEo2B0a9_bv8/s1600/ChanAmy_forSale.png" /></a> <br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /></div>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-8109087805929218592012-03-03T08:54:00.000-08:002012-04-16T23:05:05.687-07:00Going Viral - It just works!<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Robert Uhlemann</i><br /><br /> Dropbox just works. Within 20 minutes of becoming a Dropbox user I had Dropbox installed on my Mac, PC, iPhone, & iPad. My files were seamlessly synced and I was so impressed I instantly emailed my thumb drive addicted father to get on Dropbox. Heck of a conversion funnel and viral cycle time, which left me ecstatic and impressed with Dropbox from download number two. <br /> <br />Or not! Cake, on the other hand, required the user to scrap historical data from their financialinstitution, use Cake for financial advice, and then enter that informationback into their brokerage. If Cake had focused on being an integrated financial tool, such as Mint.com, it could have avoided conversion funnel complexity and long registration cycle times. <br /> <br /><b>Who’s Your Customer? </b><br /> <br />RentJuice entered a complex real estate market with multiple potential customers by carving out a niche focusing on providing value to the permanent middleman, the broker. By providing brokers with valuable, standardized tools RentJuice attracted thehigh volume, permanent real estate player and thus will be able to expand upstream and downstream to the renter and landlord capturing a wide swath of the real estate market.<br /><br /> Like RentJuice, Aardvark entered a difficult market, this time, dominated Google. Aarkvard had the difficult task of appealing to search customers that already used ‘Google’ as a verb and the necessary extended friend network that would answer the uniquesearch. If customers aren’t craving an alternative, can you succeed? If active participation is required, can you encourage people to play? <br /><br /> RentJuice segmented their value proposition down to brokers and provided them with value, while Aardvark provided a unique, but complexsystem, to a market that was content with existing search features. <br /><br /> <b>Is this a social behavior? Really? You’re sure? </b><br /><br /> “I have this great idea! Men go out to bars to pick up women with wingmen. This will definitely work online!” One small hypothesis test issue; wingmen in bars are socially acceptable, while online dating is still taboo. Triangulate tried to cross the online dating chasm with Wings, but failed to test the core social behavior behind their business model. While Wings is an intriguing concept, a few selective hypothesis tests may have saved the millions of dollars. <br /><br /> “I feel hot!” The Rent the Runway team knew they had something on their hands. The team managed to capture the social phenomenon of female dress shopping in their business model. By specifically targeting college females, RTR was able to reduce the cost, while increasing the quality of crucial life experience, and use Facebook Feeds as free marketing. <br /><br /> Fluke or not, RTR captured a positive reinforcing social behavior in their business model, while Triangulate failed to cross the chasm with their behavior changing platform. <br /><br /> <b>What to do, What to do…?</b></span><br /><ul><li><span style="font-family: Arial, Helvetica, sans-serif;">K.I.S.S. and keep conversion funnel and cycle time as short as possible!</span></li><li><span style="font-family: Arial, Helvetica, sans-serif;">If entering a complex market, stake out a customer and provide them value! They will be grateful and that will translate into word of mouth advertising.</span></li><li><span style="font-family: Arial, Helvetica, sans-serif;">Leverage existing social behaviors. Women talk about dress purchases publically, not online dating and investing. Coincidence? I think not. </span></li></ul><span style="font-family: Arial, Helvetica, sans-serif;"><br />Thanks,</span><br /><span style="font-family: Arial, Helvetica, sans-serif;"><br />Rob<br /></span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-12302321987814252922012-03-03T08:53:00.001-08:002012-04-16T23:05:05.826-07:00Copycat in Software Industry<i>By Qingxi Wang</i><br /><br />Copycat model can be good or bad. Some companies adopting ideas from others can succeed and benefit their users, while some can destroy the ecosystem of the software industry. There have been famous successful examples such as Google copying Yahoo and Baidu copying Google. Meanwhile, there are cases like Tencent copying ideas and business models from small companies. Here let’s discuss two issues: first, what can make a copycat model to be successful; second, what’s copycats’ potential impact on the software industry ecosystem.<br /><br />First let’s take a look at the two most successful “copycat” software companies – they are Google and Microsoft. Google did not just copy Yahoo’s idea. It followed the simple idea to search the content on the web, but it has completely different infrastructures and ranking methods behind, and it was not very successful until the AdSense technology and business model was invented. In other words, Google has made many innovations which are much more valuable than the original ideas and succeeded because of these innovations. The case o Microsoft is similar. Twenty five years ago, Apple sued Microsoft for patent infringement. Microsoft could not have succeed without improving user experience and introducing innovations to ease the development of 3rd party software. The lesson we learn from Google and Microsoft is that many software companies generate value and therefore gain value themselves because of innovations and operations, rather than the original idea. <br /><br />There is also another group of copycats like Baidu. They copy not only the idea, but also the business model and sometimes the techniques. Baidu’s success could be attributed to three factors: 1. Baidu focused on China market at first and did excellent localization work. 2. Baidu copied the correct model – there were several other companies had their own simple search engine at that time, but unfortunately, they copied Yahoo, which guaranteed them a failure. 3. Baidu knows its users better – not only the localization of language, but it also tried to make the ranking result to be helpful to the majority of China users. There is a similar localized search engine case in South Korea. Besides, Tencent is another good example from China’s software industry. They copied OICQ which you can hardly find a single user today, while Tencent has hundreds of millions users in China. In summary, even if a company does not own much technological innovation power, it can copycat and localize foreign products when there are language barriers and culture barriers. <br /><br />Second, the abuse of copycat models could lead to monopoly and less innovation in software industry ecosystem. It is not bad when small companies copycat the ideas from bigger companies and try to extend the business in a specific area. However, when big companies start to copy small companies, it tends to end up in monopoly. Tencent, the instant messenger company mentioned above, owns lots of business in varies sectors, such as game, twitter-like website, download and download tools, search engine and so on. Back in 2003, Tencent only has its messenger and peripheral products, but it had a large group of user, estimated to be more than 100 million. At the same time, there was an entertainment company called LianZhong which had online card games in China. Tencent observed the success of LianZhong and created an online gaming system which has the same feel and looked exactly same as LianZhong’s product, register-free for Tencent users. The market share of LianZhong fell from 85% in 2000 to less than 1% in 2010, while Tencent is almost the only service provider in this domain. Tencent repeated this strategy several times – it copies others’ successful model and makes it easy to reach by their users – and just like pirate software, this behavior has undermined the innovation in the industry. Nowadays in China, there is a tendency to copy all the innovations in the US and see if they work in China. This undermines the innovation power.<br /><br />To sum up, innovation is the most valuable assets in software industry. The copy of an idea is often not the problem. But if one is copying the whole business model and strategy, there is a risk of stopping innovation.Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-62365586266660668252012-03-03T08:53:00.000-08:002012-04-16T23:05:05.727-07:00C”lean” tech?<span style="font-family: Arial, Helvetica, sans-serif;"><i>by Louis Beryl</i><br /><br />I recently co-founded a high-performance lithium battery startup with a PhD student and technology based out of his research at MIT. Our technology appears revolutionary promising much greater energy density, better cycle life, wider temperature range, and improved safety. Our story on paper sounds impressive and it resonates with people. Who wouldn’t want an electric vehicle that drives 500 miles or a laptop battery that last 24 hours? <br /><br /> Yet during the six months that I have been working on this business most of my peers and mentors, the ones I most respect, have told me not to keep moving forward. “Cleantech businesses are too capital intensive,” I’ve heard over and over.And the history of battery start-ups is no exception. The most notable “success” story, A123, has lost over 90% of its value since IPO and has burned through over $500 million withnegative gross margins. <br /> <br />What examples like this and the lean startup method has taught me is not that I should run screaming away from cleantech businesses, but instead that hypothesis verification is even more important because of the capital intensity. The cost of making a mistake is so much higher that we better feel highly confident that we have the right answer before burning through millionsof investor capital and our reputation as entrepreneurs. <br /> <br />Thus, I have been spending a lot time thinking about the specific parts of the traditional battery business model and about the ways that I can validate our hypotheses for successbefore moving forward. First, a crucial element for any new product is the customer value proposition, which drives consumer adoption and your customer’s willingness-to-pay. <br /><br />Put simply, are customers even looking for the improved features that our product offers and if so how much would they pay for this improvement? Secondly, how much will your product cost to deliver, and how cheaply can we verify that our cost targets are realistic? <br /> <br />When first looking at our technological advantages we thought our battery would be perfect for electric vehicles, our battery could improve range, remove unnecessary space for packaging and cooling, and was safe in crashes and fires. Plus this was a large and growing market so we thought EVs were perfect. But before moving forward we asked, “What are the buying criteria for electric vehicle companies.” So I called Tesla and GM Ventures, and what they told me was that their main buying criteria wasn’t safety and they didn’t care too much about not needing the cooling system because they used this for air conditioning anyway. What they really cared about was cost; how much battery could they afford to put into the car. As a startup we didn’t win on cost, at least not now, so for our beachhead market electric vehicles were out. <br /> <br />After looking further at our technology development path in comparison to our competitors existing offerings, our team decided that one of our key initial advantages was the wide temperature range and safety characteristics our battery could provide, and we found a market where temperature performance was mission critical, down-hole batteries for oil drillers. Our batteries didn’t even need to be rechargeable because the batteries they are currently using aren’t. This dramatically reduced our expected time to market and we were able to verify this value proposition with several potential customers. But next we had to figure out if we could produce these batteries at our projected cost. <br /> <br />We’re not all the way there yet, but by using lean startup thinking we have started to shed light on this difficult problem. We asked, “what would we need to do to outsource our manufacturing to save us the huge capital intensity of traditional battery manufacturers?” <br /><br />We have verified that both the cathode and the electrolyte can be made exactly the same way as they are in traditional batteries at no additional cost. Now we’re working to verify that we can do the same with our anode as well. Certainly, outsourcing to contract manufacturing also comes with its disadvantages, what we gain in lower capital needs we might lose in our top line to our manufacturing partner. But models like this have succeeded in other industries; look at Dropboxoutsourcing to Amazon AWS/S3 to lower their upfront capital intensity allowing them to scale rapidly. If we are able pull off a profitable model we might be able to achieve what few startups have in the cleantech space by bringing a major technology breakthrough to market with a minimal amount of investor capital. On the other hand, I want to proceed with caution that as we move forward we don’t get so locked into a process or relationship with a long-term partner that pivoting on our business model becomes impossible.</span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.comtag:blogger.com,1999:blog-2159671849703462785.post-90982846712364680492012-03-03T08:52:00.002-08:002012-04-16T23:05:06.138-07:00When Startups Should Achieve Product-Market-Monetization Fit (PMMF)<span style="font-family: Arial, Helvetica, sans-serif;"><i>by George Audi</i><br /><br />Throughout our LTV course, we have analyzed US-based startups try to achieve product-market fit, decide when and how to scale, and develop a sustainable profit formula. Our debate of the latter issue frequently turned into an extended ping-pong match between classmates who favor building now and monetizing later, and others who prefer delaying scaling until a profitable business model is established. The takeaway—as is almost always the case—was “it depends”: platform-based consumer tech companies are generally allowed to ignore profitability in favor of rapid growth; however e-commerce sites such as Rent the Runway need to hone in on their unit economics and turnover rates before doing so. <br /><br />Entrepreneurs in mature internet markets have the luxury to delay the profitability discussion, knowing they will eventually have a handful of revenue models to choose from—ad-supported, subscription-based, transaction fees, etc.—as they deem appropriate for their venture. If they’re really proficient, they will even adopt a monetization strategy which improves the product/service’s value proposition to their users, as recommended by Fred Wilson. But let’s step out of Silicon Valley’s borders and its well-established monetization sources and examine the situation in developing economies. There, I would argue that entrepreneurs have to tackle the profit formula early on because monetization will dictate where they can and cannot go, and the types of startups they can sustainably launch. What may come as a secondary decision for founders in developed markets becomes a go/no-go decision for those where the ecosystem is less sophisticated. To clarify my point, I lay out some examples below.<br /></span><br /><ul><span style="font-family: Arial, Helvetica, sans-serif;"><li>In the top 5 advertising markets<sup>1</sup>(US, UK, Germany, Japan, France)—those characterized by a mature internet usage and advertising ecosystem—online advertising spend is 6x that of offline ($25B versus $4B). This is enough to fuel the topline of multiple startups aiming for an ad-supported monetization scheme. Facebook, MochiMedia and foursquare can rest assured to grow today and worry about revenues later as long as they amass a large enough user base which can be targeted by advertisers. On the other hand, entrepreneurs in the Middle East and parts of Eastern Europe would be competing over a $300M (combined) online advertising market, which does not leave much room for ad-supported tech startups. It is no wonder why we haven’t seen many of such businesses flourish in these regions. </li><br /><li>If your business will rely on e-commerce or subscription revenues, you might want to assess the electronic payment market in the particular geography. What is a $150B+ market in North America is short of $7B in the Middle East and Africa. Credit card penetration in the US exceeds 2.5 cards per capita.<sup>2</sup> It is 0.04 in Saudi Arabia. While startups in mature markets aim to convert website visitors into leads by asking them for their credit card details, those in developing markets may witness abnormally low conversion rates – not necessarily because the service has not achieved product-market fit, but because the logistics for its monetization are inappropriate for that market. With such low credit card penetration figures, a market which had seemed large at the outset becomes severely constricted, and your growth potential becomes correlated to that of credit card adoption, rather than your business’ intrinsic attractiveness.</li></span></ul><span style="font-family: Arial, Helvetica, sans-serif;"><br />It is to be noted that both situations described above are not stagnant. Developing economies will eventually reach internet sophistication equitable to that of mature markets, allowing founders to leverage different monetization streams. If you look at the startups launched by Rocket Internet today, most are in the e-commerce space (the first ones launched in the Middle East were Lazada and Namshi, clones of Amazon and Zappos, respectively). In a chat with Oliver Samwer, I asked him for the rationale behind this, and he validated my hypothesis that the geographies in which they operate are easiest to monetize through transaction fees. The Samwer brothers pick models which can achieve Product-Market-MONETIZATION Fit. Unless you are creative enough to come up with alternative revenue models or are funded by investors with really deep pockets (and sloth-like patience<sup>3</sup>), you might want to do the same.<br /><br /><span style="font-size: x-small;"><sup>1</sup> Google Market Metrics<br /><sup>2</sup> Credit Card Market: Economic Benefits and Industry Trends, <a href="http://corporate.visa.com/_media/ita-credit-card-report.pdf">http://corporate.visa.com/_media/ita-credit-card-report.pdf</a><br /><sup>3</sup> Sloths are considered to be the most patient animals. Their average movement speed is 15-30 cm/minute, it takes them about a month to digest their food, and they sleep 15-18 hours/day.<br /><br /> George Audi<br />Twitter: @audi_george</span></span>Justinehttp://www.blogger.com/profile/01230103344444491213noreply@blogger.com