Category Archives: Business

Various updates

Its going to be an interesting week in the technology universe.

Wahooly is launching on Tuesday. More on them below. Then the Facebook IPO will apparently be happening on Wednesday, which could potentially start off another big round of startup frothiness.

The overall level of excitement in tech is as boisterous as I’ve seen it in a number of years. Whether it has “legs” remains to be seen, but there appears to be a definite shortage of qualified people to go around. Over the past few months, the number of resumes sent my way has slowly dropped, and instead I’ve been receiving calls from head hunters and startups (although typically they haven’t bothered actually checking what I actually DO). It will be interesting to see whether things actually pick up economically (or even just in the tech world) over the course of the year.

Wahooly is an interesting riff on startup incubators, crowd-funding and viral marketing. The amount of attention that they’ve achieved in the past couple of months is larger than anything I’ve personally encountered. The basic idea is that startups give them a small amount of equity, which they then “share” among their users, in exchange for which the users promote the startup. The amount of “equity” given to each user depends on how effective the users are in helping to market the company in question, according to some internal formula. To avoid market regulations, it looks like they’re giving some kind of virtual equity to the users, rather than actual shares, and the users will only profit directly if there is some kind of liquidity event. Remains to be seen whether it will work (and whether they can keep it on the right side of legality), but there’s already a large number of users who have registered, and approximately 50 to 60 startups to begin with. My approach is to view it as a combination of an interesting source to find out about new startups (i.e. pure entertainment value), a possible deal flow source, and maybe, just maybe a couple of bucks on the side, somewhere down the road. In the meantime, I’ve been chatting with other users on two groups (here and here) that have been started on Facebook, and its been fun.

I’ll be posting regular updates with regards to Wahooly (and particularly the startups that are launching via their system) over the next few months. Also, two startups I’ve been working with are gradually getting closer to Beta launch, and I will have more to say about them as that time approaches.

Who wants to be a Trillionaire?

International Pile of Money - Flickr Creative Commons - epSos.de

One standard piece of advice given to startups is to pick an industry that will permit scale, so that it is at least feasible that somebody in that industry at some point in time could build a large company doing it.

I saw a video on Yahoo Finance a while back where somebody claimed that Apple will be the first trillion dollar company (barring a brief stint by Cisco during DotCom).

Obviously it is hard to tell right now whether that’s true or not, but an industry that can support a trillion dollar company sounds like a good place to start, doesn’t it?

We know that this is possible in consumer electronics then, but what other industries would make this feasible? The goal here is to list industries that are big enough to support large companies (possibly even trillion dollar ones), and yet are still at least somewhat feasible for startups (potentially requiring substantial – but not unfeasible – capital). Continue reading

Why Failure May Not Always Be Good

Flickr Creative Commons - daveschappell

The startup community has lately been enamored with the concept of “fail often, fail fast”.

The underlying notion is that companies whose business models aren’t functioning properly should “pivot” as quickly as possible, in order to minimize the potential cost of failure. In doing so, they hopefully eventually establish a business model that is market tested (if things work right).

The issue is that “fail fast” is a business aphorism, and like all such statements, it doesn’t always apply, and even where it does, there are subtleties.

What I’ve been noticing lately with startups that I’ve been working with are some troubling problems that result from blind adherence to this concept: Continue reading

Group Buy “Is It Worth It” Calculator

Everyone has heard horror stories about companies selling a coupon on one of those group buy websites, and then having a huge stream of unprofitable business, resulting in a massive loss. On the flip side, many companies have had great success from coupon campaigns.

We’ve put together a calculator (opens in new window) to try and assist anyone considering a group coupon campaign. Feel free to play around with its parameters to get a feel for when a coupon would be profitable – or not.

There’s also a new tools page that links to this calculator, as well as the previous CPC/PPC one. We’re open to suggestions regarding other tools that may be useful to businesses.

CPC / PPC Calculator

My customers frequently ask me about the profitability of cost per click (otherwise known as pay per click) campaigns.

Over the years, I put together a spreadsheet that I send them when asked.

Not that I have any interest in running ad campaigns for my customers (or SEO work for that matter), but I have a vested interest in making sure that my customers are happy long term, and that often includes educating them with regards to topics like marketing their business online. Continue reading

Yahoo should merge with RIM

I’m been bouncing this idea off people at both companies for the past week, with mixed feedback. I think the idea could work though. I’m interested in hearing feedback.

The two companies are roughly the same size, so this would be a merger of equals.

It provides some temporary bandaid solutions for both companies executive teams and boards (I think there’s enough talent at the top between the two companies to address some of the gaps).

Yahoo! (correct me if I’m wrong) was part of the team that bought Nortel’s patents, so there’s already some kind of mobile intent. And RIM looks like it could use some bolstering.

The real rationale is fairly simple though – the combined company would have a number of options for strategic direction, and would be large enough to stand on its own if it so chose.

If it decided to sell out (hint: Microsoft), the combined patent portfolio (in addition to Y!’s advertising business) would ensure a far more equitable price.

What next for SpaceX?

SpaceX's Dragon Capsule - Flickr Creative Commons - Copyright Steve Jurvetson

I freely admit to pumping my fists in the air and yelling out loud when SpaceX has successful launches.

The first truly successful private space venture, what they’re doing is the start, the very beginning of the future of everything.

Now that they have a robust launch platform, and their Dragon capsule is already undergoing the testing regime to become human-rated by NASA, what will they do next?

Elon Musk, SpaceX’s CEO has announced on several occasions that their ambition is to put people on Mars. The following is a three stage plan – with profitability in mind – that just might get them there.

The underlying notion is to build a set of standardized components for each step along the way – much like the way the automobile industry works (vehicles filling various niches, companies to service them, refueling stations, leasing etc). This isn’t a new concept, and all of the players in this industry already understand this strategy well. Continue reading

Working for Equity

Once in a while (actually every few weeks, give or take) somebody asks me if I’ll do a project for equity instead of cash.

My immediate response is “what’s your exit plan?”.

Usually this is met with a blank stare, which is when I follow my question up with “what I mean is, how do I sell those shares, and when?”. At this point, in 90% of cases, the other party is already starting to look panicky. I then usually politely excuse myself and leave.

It isn’t that I’m opposed in general to holding equity in a project that I’m working on. Far from it. The lack of an exit plan, however, implies a number of things about the person doing the asking though:

  • No business plan (if they had one, they would probably have an exit plan)
  • No cash (this makes launching a business an uphill battle from the start – I know this from bitter personal experience)
  • No idea of valuation (and in turn probable lack of general business know-how)
  • Possible utter lack of respect for the developer (more on this bel0w)

By asking a developer to work – possibly for months, or years even – without cash, the person isn’t paying much attention to how the developer will pay their bills in the interim, and how the developer will ever get paid for the project (i.e. by selling their shares).

What they’re saying is that they want the developer to assume all of the project risk, in exchange – maybe – for some pieces of probably worthless paper. Even worse, if things go completely pear-shaped, the developer might even wind up on the hook for company debts or legal issues. Even with paper, the developer can also still wind up with their equity diluted or out and out taken away – contracts can be tricky things.

Aside from all of the above, they also clearly haven’t thought through what happens when the developer runs out of cash (i.e. they leave, or they become unmotivated).

The converse to this situation is one in which a business has a clearly defined plan, cash on hand to pay contracts or salaries, and wishes to align staff with the overall goal – this is the only time when I would ever want to be holding equity in somebody else’s company.

Google + Motorola

The news that Google is buying Motorola woke me up prior to my morning coffee. In retrospect it makes sense, but it was big news, and most unexpected.

Assuming that regulators let it go through, some interesting things are likely to play out:

  • I’m calling stalemate or ceasefire in the patent war. Motorola has a very large holding of patents – probably sufficient to make Apple and Microsoft rethink their strategy regarding Android.
  • I’m guessing that they won’t try too hard to fully merge the two companies. The cultures are quite different, and probably incompatible (although they’re both very engineer-driven, so maybe I’m wrong here).
  • This is not good news for RIM. I was discussing this this morning with somebody who has a lot of connections there, and he thinks that unless they get their new OS out soon (and it is very good), they’re dead in the water.
  • I’m also guessing that some other big software players are going to get serious hardware envy. This could trigger a real wave of M&A in the near future (which would be good news for the markets, for a change).

Interesting times…