Oregonstartups.com Blog

A recent Guy Kawasaki How to Change the World post linked to a 6 minute video by Lewis Howes on 8 ways to use social media. A quick summary:

1. Be yourself
2. Get active on at least Facebook Twitter and LinkedIn
3. Provide awesome content
4. Be smart with your time
5. Be consistent
6. Promote others
7. Connect face to face
8. Thank others

Lewis’ video adds a lot more detail, so check it out. (I think I’m still working on 2 through 8…)

I watched the video of Roger McNamee’s presentation for the Aug. 21, 2009 Tech Alliance Tech Talk today.  Roger has many years of experience investing in tech businesses.  Here are some of his comments on web start-ups that target consumers:

(if you have) a web business, and you’ve got cash flow in a web business, …  do not take money from anybody unless you really need it.  The real problem in a web business particularly consumer ones is that you have to build the audience before it makes any sense to try to build the revenues

When somebody comes to me with an early stage thing and there’s a business model in it, I say to them “time out”.  If you’re consumer focused I don’t think you can do it that way.  The ad market is not good enough. It just won’t support you. So you’re better off doing what we’re doing in music, which is give it away for a while, build the audience.  Why did I tell you that (music) story?  Because that’s how you build consumer web businesses today.

Putting the comment into context, I don’t think Roger is saying that he doesn’t believe in business models for web companies – but he does believe that it takes consumer focused web companies 3 years or more to get enough of an audience to be in a position of implementing a revenue strategy.  And expecting much revenue from advertising is not very realistic.  That’s certainly good food for thought for any entrepreneur who plans to start a consumer web business.  If that sounds like you, it’s worth watching the entire video.  It’s pretty long (over an hour and a half) but there is some good content.

Roger also had some good advice for entrepreneurs who are raising money:

The guy with the money doesn’t care how good your opportunity is.  The guy with the money wants to see that you understand all the risks  and that you have them contained or eliminated.  So in the battle of fear and greed, if you’re an entrepreneur raising money, eliminate the fear.  Whatever is left over will push you over the line.

To say the investor doesn’t care about how good the opportunity is goes a bit far — but the point on understanding and addressing risk is spot on.

A Lightspeed Ventures blog post describes the profitability and valuation challenges in the gaming industry, and points to 3 problems in the gaming business:

1. High cost to launch a new game
2. Low number of new games launched each year
3. Low probability of each game being a “hit”

If you’re in, or looking at entering, a gaming market, you might want to check out the full post .

From a VatorNews post , three lessons from entrepreneur Mark Pincus:

1. Especially if you’re going after consumer Internet, pick the macro and test continually to get the metrics that work
2. When you fail, fail fast
3. The biggest lesson in social networking is that there is an unbelievable opportunity to let people network with their real friends and worlds, and that is much more powerful than letting them network with people they don’t know at all
4. Business model is key: “I treated both [Tribe and Zynga] as a project. But I got to the point that the business model worked [at Zynga] before I went all in. And on Tribe, I didn’t.”

In a Wall Street Journal article, Chris Anderson observes that when both investment dollars and acquisitions were easier to come by, it was perhaps viable to give away web based services for free — but today both investment money and acquisition are questionable options, and web companies may actually have to shift to business models that involve making money:

What about those companies trying to build a business on the Web? In the old days (that would be until September of last year) the model was pretty simple. 1. Have a great idea. 2. Raise money to bring it to market, ideally free to reach the largest possible market. 3. If it proves popular, raise more money to scale it up. 4. Repeat until you’re bought by a bigger company.

Now steps 2 through 4 are no longer available. So Web startups are having to do the unthinkable: come up with a business model that brings in real money while they’re still young.

…

Meanwhile YouTube is still struggling to match its popularity with revenues and Facebook is selling commodity ads for pennies after its effort to charge for intrusive advertising led to a user backlash. And news-sharing site Digg, for all its millions of users, still doesn’t make a dime. A year ago, that hardly mattered: The business model was “build to a lucrative exit, preferably in cash.” But now the exit doors are closed and cash flow is king.

We have a recent local example in SplashCast’s shift away from their free option. You’re likely to see more web companies finding ways to extract dollars. And that’s likely to be a painful transition.

From the OTBC blog: OTBC is now a BizSpark Network Partner. What that means is that OTBC member companies can obtain free Microsoft tools and technologies. The requirements for a startup to enroll are, it must be:

• Sponsored by a BizSpark Network Partner (such as OTBC)
• In the business of software development
• Privately held
• Have been in business for less than 3 years
• Have less then US $1 million in annual revenue
• The software obtained must be used for production and deployment of hosted “software as a service” solutions

For more information on BizSpark:

http://www.microsoft.com/bizspark/

In a post to The Brain Fitness Authority blog, Dr. Bill Klemm (author of “Thank You, Brain, For All You Remember. What You Forgot Was My Fault”) suggests that social media is not so great for memory, or for grades in school:

Our brain works hard to fool us into thinking it can do more than one thing at a time. It can’t. Recent MRI studies at Vanderbilt prove that the brain is not built for good multi-tasking. When trying to do two things at once, the brain temporarily shuts down one task while trying to do the other.

…

So what has this got to do with memory? Well,if you try to memorize the first task and the brain immediately switches to the second task, performance of the second task interferes with consolidation of the memory of the first task.

…

A study of 517 California high-school students found that grades were lower in those who socially interacted via MySpace, instant messaging (IM) accounts, or who used cell phones.

And I thought my increasingly fuzzy memory was just one of those “getting older” things…

A recent New York Times article describes the research being done by David Kirsch at the University of Maryland on companies that started during the dot-com bubble. Some findings:

• Looking at a data set of 1,018 companies, not a single entrepreneur received venture capital funding by submitting a business plan “over the transom.”
• About 5 percent of entrepreneurs who knew the venture capitalist or gained a personal introduction received funding
• 48 percent of dot-com companies founded since 1996 were still around in late 2004, more than four years after the Nasdaq’s peak in March 2000
• Many survivors pursued markets that didn’t offer hundreds of millions in quick profits, but still presented viable Internet-based business opportunities

From “A VC”, Do You Ever Do Any Real Work?, Fred Wilson notes that making regular blog entries does take time – but he sees a definite benefit for his VC firm. The above post gives one example relating to his new portfolio company Boxee.

As Fred notes:

… the time and energy I’ve put into this blog for the past five years has built a unique and very sophisticated audience. You are connectors and hubs of influence.

I know that one person out of the 100 I invited this morning will be incredibly impactful for boxee. It could be five people, it could be ten. Who knows?

But in the world of social media, word of mouth and word of link marketing, it is connectors and influencers like all of you that make the difference.

When I mention Twitter to someone over the age of 40, I often get one of the following reactions:

1. What’s that?
2. Why would I possibly want to do that?
3. I don’t get it…

More than 3 million people are using Twitter. If you’re wondering what it is (or if you know what it is but are wondering whether it might be relevant to your business) O’Reilly has published a free video about Twitter for Business. It’s a good introduction to Twitter basics, and provides a number of examples of how Twitter can be used in business.

After viewing the video, you may or may not start “tweeting”, but at least you’ll probably be able to say “I get it” (maybe…).