Crash Dev

Spam-bashing on Twitter - A True Story

2009-11-04T20:19:00.000-08:00

Earlier this week, AppStoreHQ released Hottest Apps on Twitter, a ranking of iPhone apps based on the volume and quality of tweets about each app (if you're curious, you can read more about the ranking methodology here). The project was a fun one for several reasons, but the biggest eye-opener was the sheer volume of "app spam" - tweets auto-generated by iPhone apps - when stacked up against actual user-generated tweets. We haven't run a formal analysis, but a back-of-the-envelope estimate is that spam tweets are running 10-to-1 against actual user-generated ones.

Since the goal of AppStoreHQ's service is to accurately reflect the aggregate sentiment of Twitter users about iPhone apps, the spam issue is more than an annoyance - it has the potential to grossly skew the results in favor of the worst "app spam" offenders. You can see this effect in action right now if you visit the results: the current leader is Chorus, an app for sharing iPhone app purchases with friends. By design, Chorus auto-generates a tweet for every new install, and for each new iPhone app that a user downloads to their phone. This may be a smart short-term marketing win for the app, but my bet is that users (and their friends) will tire pretty quickly of the tactic.

The good news is that these bots aren't very well-designed - the spammy tweets fail the Turing test almost immediately by revealing their pattern after two or three iterations. This makes it relatively easy (if an annoying waste of engineering cycles) to exclude spam tweets from our process. But it's a troubling indication of where Twitter is headed as a platform. They've made it so easy to script tweet generation that it's almost inevitable that the ratio of machine- to human-generated tweets will tilt rapidly in the machine direction. And even though the machines will get better at concealing themselves, the signal-to-noise ratio on Twitter (not so hot already) is certain to get a lot worse.

AppStoreHQ Gets Personal

2009-10-15T07:49:00.000-07:00

Sometimes it's the obvious stuff that's the hardest to see.

The AppStoreHQ team has been hammering away on all kinds of hard technical problems on the topic of helping iPhone owners find iPhone apps. But a friend looked at the site the other day and said something that stopped me dead in my tracks. Instead of using adjectives like "useful" or "helpful", he described the experience as "overwhelming" and "intimidating".

{Imagine the sound sound of screeching brakes}

Oh shit! We 've been so focused on our fancy algorithms and smart strategies for discovering and ranking iPhone apps that we lost sight of our customers. There are real people out there who are using our site to find iPhone apps, and they need it to solve their problem - ideally in a fun and easy way - not boil the ocean of iPhone app discovery just to prove we can.

The good news is that the first wave of user-specific features were already on the roadmap - Ian had built out the basic table structure for member profiles, wishlists, etc. in the early days - but we kept bumping them down in favor of other projects. But as soon as we grokked the idea that we were leaving our users out in the cold, we pretty much dropped everything to start down the path of making AppStoreHQ useful to specific people with specific needs, not just iPhone owners as a class.

We still have a l-o-o-o-o-n-g way to go, but today we're pleased to announce our first baby steps in the right direction, including:

Member Profiles - One great way to discover new apps is to see what your friends are using. Use your member profile to save and share your favorites, and browse others' profiles to see what you're missing. (Want a closer look? Here's Ian's profile, showing his Loved apps).

Wishlist - Something new catch your eye? Click the "Wish" button to save it to your personal wishlist. When we have enough data to make it interesting, we'll start showing you related apps based on your selections. (Want to see? Here's Brett's wishlist).

Loved Apps - Has an iPhone app changed your life for the better? Click the "Love" button to add it to your profile and share it with the world. As with Wishlist, we'll ultimately use your Loved list to suggest other apps you might want to check out.
Saved Searches + App Search "Mad Libs" - Are you always on the lookout for new golf games, Twitter clients or music apps? Create custom searches with App Search "Mad Libs", and save your favorites for one-click access. (Here are some of Chris's faves).

Login with Twitter - Want to share your favorites with friends? Connect your AppStoreHQ and Twitter accounts and tweet your Loved & Wishlist apps and Saved Searches out for the world to see (or don't - it's up to you).

We're just getting warmed up, so expect to hear from us again very soon. And if you have ideas or feedback about what else you'd like to see from AppStoreHQ, *please* drop us a line.

Chop Wood, Carry Water

2009-10-14T16:55:00.000-07:00

My recent conversations with several of our portfolio companies have reminded me of a Zen maxim that goes something like this...

Before Enlightenment: chop wood, carry water. After Enlightenment: chop wood, carry water.

At Founders Co-op we focus on ideas that come out of the gate fast - they typically ship product, engage customers and start generating revenue within the first 3 months of operations, and several have hit breakeven at (or shortly after) their 1-year anniversary.

But we also like ideas that have longer-term strategic potential within their markets. Not suprisingly, establishing a market-influencing position takes more than a year or two. And unlike the "easy" wins of the first year, taking a leading position tends to be harder work - more nuanced, more dependent on partners and with less linear progress toward the goal.

Several of our companies are now in or entering this second phase, and the founding teams are having to recalibrate their expectations about how quickly they can achieve the goals they've set for themselves. These are great, often profitable businesses, so this isn't a heavy task - once they get their heads around it the teams are motivated and energized by the challenge. But no matter how quickly they achieved the early milestones of market acceptance and financial stability, there's more hard work to be done - chopping wood, carrying water - to carry their businesses to the next level.

BigDoor Media, Lessons Learned and Second Acts

2009-10-14T09:50:00.000-07:00

Keith Smith just announced the public launch of his new company, BigDoor Media. The thesis behind BigDoor was formulated and refined by Keith and co-founder Jeff Malek in their Icarus-like journey at their previous company Zango (a.k.a. 180Solutions). As Keith acknowledges in his launch blog post, Zango was built around a powerful insight about online monetization via superior targeting, but forgot to take good care of the actual source of that money - the consumer - and wound up losing everything they'd worked so hard to build.

Andy and I have known Keith for a long time - we boostrapped our previous company, Judy's Book, in part by consulting to what was then known as 180Solutions, and Andy remained involved as a board member until almost the very end. And while we may have differed with Keith about the path he ultimately took with the business, our admiration for him as an entrepreneur only grew as we watched him work to build - and fight to save - the business he had created. Keith is hands-down one of the firecest and most mature entrepreneurs we've ever seen, so we were naturally interested to see what he'd choose as his second act.

Like Zango before it, BigDoor Media is an online monetization platform. But as Keith notes in his launch blog post, all the lessons from his prior company have been baked into this new venture, including the following:

Be good to consumers. Monetization of users and content by its very nature is not going to be directly welcomed by consumers, but it absolutely has to be consumer friendly. The most classic example of this is with network television. Nobody likes to have their TV show interrupted by ads, but doing so was a model that worked for years for the industry. But there is a balance. 22 minutes of show and 8 minutes of ads can be stomached by users. 8 minutes of show and 22 minutes of ads would have resulted in TV sets all over America being turned off and audiences would have dried up. The world has now shifted and this model is showing its age, but the underlying consumer behaviors still remain.

Don’t be adware. It doesn’t matter that our move into adware was based on logic that was sound and motives that were pure. Adware became known as a public scourge and trying to fight a broadly based perception is like spitting in the wind. We don’t ever want to write broadly distributed client-side software again.

Founders Co-op is the lead investor in Keith and Jeff's new company, and we're very excited about where they're headed. We expect the investment to raise some eyebrows based on what people believe about Keith's past company, but we know more about that story than most folks do. We made the investment based on a bedrock conviction that Keith is going to apply *all* the lessons he learned at Zango to build another big business - including the need to take care of the consumer along the way.

AppStoreHQ gets another shout-out in The New York Times | Gadgetwise

2009-09-30T09:38:00.000-07:00

A few months ago the AppStoreHQ team noticed a spike in visits from The New York Times. We checked our referrer logs and discovered a very flattering description of our iPhone app search offering in this article.

This morning we saw a similar bump and wondered if the same piece had been rediscovered. Instead, we discovered a new (and even more flattering) mention in a Gadgetwise piece on a new app discovery feature from Apple titled "Is That a Recommendation, Or an Ad?" After describing Apple's offering - a collection of recommended apps for different needs - the author (Roy Furchgott) goes on...

"Okay, I’ll grant that it’s really difficult to pick between the many great apps out there (and the many more cruddy ones). But that’s just the point. We need a better system. Take a look at something like AppStore HQ, which lets you sort through apps using multiple criteria, like category price and popularity to narrow your choices to a manageable number. Something like that from Apple would be useful."

AppStoreHQ may be a "new" media company, but when a "traditional" company with the stature of the New York Times singles us out for attention, it still makes us feel like the most feared and respected teacher in school just gave us a gold star. Thanks, Roy - we're honored to be on your radar and working hard to make sure we deliver for your readers.

This is cool: real-time results from Cooler Planet's solar calculator

2009-09-29T16:45:00.000-07:00

The clever guys at Cooler Planet keep coming up with new ways to shine a light on the U.S. market for residential and commercial solar panel installations.

Here's their latest: a real-time display (anonymized, of course) of the savings estimates provided to consumers and businesses using their solar system cost estimator. You can see an example in the image above - every few seconds a new result is displayed, showing where the customer is located and how much they could save a month by going solar. Nice work, gang!

Announcing our newest Founders Co-op investment: Nearlyweds!

2009-09-29T12:17:00.000-07:00

Today we're proud to announce a new member of the Founders Co-op family: Nearlyweds!

In business since 2007, Nearlyweds! provides personal wedding websites for design-conscious couples. In a market littered with generic free offerings, Nearlyweds! has built a great premium business by focusing on the user experience, partnering with top invitation designers in the industry to offer beautiful design coupled with intuitive and functional social software.

The company's focus on quality has attracted key industry partners as well - in addition to operating their own destination site, Nearlyweds! also powers the wedding website offerings of leading wedding stationery designers Wedding Paper Divas and the world's favorite non-traditional offering the Offbeat Bride, and works closely with a passionate community of supporters in the independent wedding design and wedding blog community.

We first met Nearlyweds! co-founder Porter Bayne in early 2008, but at the time he and co-founder John Scrofano were running the site as a side-project while pursuing other businesses. As we got to know Porter and John better, we learned more about the business and collectively began to see significant untapped potential in the "social wedding software" space, powered in part by:

Shifting demographics - as young adults raised on social software enter the wedding market, many of them are looking for online wedding tools that enable the kinds of collaborative planning and sharing they're accustomed to.
Fragmented / localized business - wedding vendors are still predominately local, and despite the best efforts of leading online brands like The Knot and Brides.com, the default process for inviting wedding guests and communicating with them in the months leading up to the wedding is still largely managed offline, via a highly fragmented collection of service providers.
Secret sauce - In thinking about where they'd come from and where the market was headed, John and Porter had some really interesting new ideas about the role Nearlyweds! could play, but they needed a little more firepower than the current business could support.

The ink is still drying on this investment, and Porter, John and Chief Architect Eric Malone are now heads-down turning some of those ideas into software and new customer relationships, but you can expect to hear more about what they're up to in the months to come.

If you're (a) planning a wedding; (b) have stories to share about the social software you wish you'd had when you got married, or (c) play a professional role in the wedding business and want to learn more about what Nearlyweds! is up to, please drop me a line and I'll introduce you.

iPhone App Discovery + "Mad Libs" for iPhone App Search

2009-09-21T11:04:00.000-07:00

I've always been kind of a word geek. One of my favorite games when I was a kid was "Mad Libs", a notebook of short stories with blank spaces provided for strategically placed nouns, adjectives and verbs. Depending on the words you or your friends chose, the resulting story could be hilarious, obscene, or just plain bizarre.

As many iPhone analysts have pointed out, finding iPhone apps within the iTunes App Store has become nearly impossible. If it doesn't make the "New and Noteworthy" or Top 100 list, an iPhone app quickly gets lost in the huge and rapidly-growing sea of competing applications.

The team at AppStoreHQ was thinking about this problem the other day and came up with a fun idea: what if we created a "Mad Libs" for iPhone Apps? Because everyone's looking for something different, but they all ask the same questions:

Is it a game or a utility, a travel app or a music app?
How much does it cost?
Has it been well-reviewed by other iPhone owners
Is it new, or has it been around for a while?

Our "App Search Ad Libs" feature (image above) is now live on AppStoreHQ. As you'd expect, the service lets you construct a simple sentence from the four questions above to create your own custom list of iPhone apps. (We also added a keyword field for those who want to narrow their results even further).

So now, if you want to see something like:

...we've got you covered.

If people like this enough, we'll go ahead and add things like saved searches and RSS feeds, but (true to form) we wanted to get it out there and see what kind of feedback we received before spending more time on it.

Cool idea: Y Combinator "Request for Startups" (RFS) + one of our own

2009-08-25T11:06:00.000-07:00

Andy and I spend a good amount of time talking about startup ideas we'd like to see at Founders Co-op. Sometimes we get so excited about an idea we start it ourselves, but that's not something we can do every day.

So I was inspired the other day to hear that Y Combinator had initiated a "Request for Startups" program, where they outline a problem they'd like to see solved as an explicit invitation for prospective applicants to tackle. They've published two of these already:

Our themes tend to be a little less highfalutin' but in the spirit of the game I thought I'd publish a topic we're excited about with the same intent. If you're a Seattle-based hacker and want to take a run at this, we'd love to chat...

Software Workflows for Personal Services

This is a general pattern, but our investment decision would be based on the specific vertical targeted with this pattern.

Professional service providers (e.g., doctors, physical therapists, career/life coaches, smoking cessation / weight loss counselors, etc.) monetize a finite resource: their time. Since the quality of their services is hard to evaluate in advance, some of these professions also have a difficult time standing out from the crowd of competing providers. And many of these professions assign tasks to their customers to be completed between sessions, as a way of both making and measuring progress.

We see *many* opportunities for an agile software development team with intimate knowledge of the workflows and needs of a particular service vertical to create software tools that:
Increase the perceived value of the service delivered
Support competitive differentiation and customer retention for the provider
Improve the odds that customer goals are achieved
Increase customer satisfaction and follow-on referrals
The general pattern for these software tools includes the following modules (some of which are more applicable than others to individual verticals):
Pre-service self-assessment - a questionnaire or test that establishes a baseline for the provider and customer against which later progress will be measured.
Session notes + prescription - a web-accessible record of each service experience, including session notes (discussion of goals and progress to date) and a prescription for tasks to be completed in preparation for the next session).
Prescription support - a web- and mobile-accessible task list that customers would use both to review assigned tasks, and to check them off (yielding an electronic record of actions taken between service sessions).
Push messaging - To increase between-session prescription compliance and generate incremental progress data points, generate outbound messages to the customer requesting prescribed action or real-time self-assessment.
Customer + service provider dashboard - web-accessible record of all interactions, prescriptions and completed tasks, with at-a-glance visualization(s) of progress over time.

Economically, the goal of a service following this pattern is to shift a portion of the perceived value of the service experience away from the face-to-face interaction and toward the software-mediated experience. The expectation is that the service provider would either (a) charge a higher service rate than competing providers, justified by the incremental layer of service, or (b) offer the software service as an incremental charge on top of their standard time-for-service agreement.

Want to take a swing at this? Drop us a line...

Book Reviews: Small Giants + Nudge

2009-08-17T15:59:00.001-07:00

I've spent more time on planes than usual lately, which means I've actually had time to read something more than my inbox, feed reader and streaming-sources-of-distraction. Two recent reads worth mentioning for this audience are:

Small Giants: Companies That Choose to Be Great Instead of Big (Bo Burlingham)

This book did nice job of articulating a number of the lessons I've taken away from my experiences working for everything from ginormous public companies (AT&T) to successful family-run ones (Patagonia) to my current role as parallel founder/funder of multiple early-stage web software startups. A few themes worth mentioning include:

"All successful businesses face enormous pressures to grow, and they come from everywhere - customers, employees, investors, suppliers - you name it. [T]hose forces will make the choice for you if you let them, in which case you will lose the opportunity to chart your own course"
This applies especially to start-ups seeking capital and establishing their DNA around cost control and revenue-seeking. Taking too much capital too early is often toxic to the enterprise in a way that many first-time founders have a hard time seeing.
"[T]he entrepreneur is like an artist, only business is his means of expression... It's amazing. Somebody goes into a garage, has nothing but an idea, and out of the garage comes a company, a living company."
This captures why I love my job as well as anything I've ever read. Building companies is the most exciting and complex creative outlet I've ever found, and I've deliberately geared my work life to stay as close as possible to the earliest and most creative phases of new venture formation because it's just plain fun.

Nudge: Improving Decisions About Health, Wealth and Happiness (Richard Thaler and Cass Sunstein)

This one was less fun, but still a worthwhile read - especially for anyone with an interest in public policy and how it shapes individual behavior. There's lots of familiar material in here to anyone who's read the core texts in organizational behavior or behavioral psychology, but the packaging and message add an interesting layer of ideas. Two ideas that stuck with me were:

"Libertarian Paternalism" - this terrible-sounding name is what the authors call their brand of social enginering, and (for me) it's a convincingly better way to frame up public policy choices. The focus is on providing options (vs. mandates), and framing the option selection in such a way as to maximize the social benefit while minimizing the cost to both the individual and the state. Lots of good examples here around personal savings, health, etc.
"Choice Architect" - this is what the authors call any individual or organization that controls what options are made available and how they're presented to the chooser. We are all choice architects in different areas of our life, and seeing our work through that lens (whether as a parent or an operator of a commercial website) is a helpful frame of reference.

I'm always looking for book ideas for my next flight, so if you have a new one you think I'd enjoy, please leave your suggestion in the comments.

Where's the real money in iPhone apps? Remember Web 1.0?...

2009-08-13T13:41:00.000-07:00

Back in April I wrote up some parallels I was seeing between the current iPhone app explosion and the first big wave of mass adoption of the Web. One of the patterns I predicted at the time was a building rush of incumbent companies coming into the space:

"Brands Rush In. In the late '90s it suddenly dawned on a broad swath of incumbent brands (retailers, manufacturers, etc.) that their customers were looking for them online. To anyone in the Web application development business (as I was at the time), customers were everywhere and billing rates were whatever the market could bear. I haven't yet seen the flood of brands hit the iPhone, but early adopters are there and I'll be very surprised if the same cycle doesn't play out here."

Just a few months later, I'm seeing data to suggest that this trend is now in full swing. Every iPhone developer I talk to tells me they're getting more pings about contract development work (whether they're available for hire or not). A recent AdMob research piece fanned the flames by suggesting that 70% of iPhone owners had downloaded an app from a recognized brand, and another 60% would "definitely" or "strongly consider" downloading one from a well-known brand they liked. And Ian and I have been noticing an uptick in developer-related searches on AppStoreHQ.

To test this theory further, we just shipped a new, searchable developer directory at AppStoreHQ. Published developers can claim their profile and indicate whether they're for hire (so far almost 200 developers have raised their hand). And for folks who find that amount of choice overwhelming, we now offer a developer matching service - tell us what kind of app you need built and we'll match you with up to three qualified developers ready to bid on the project.

Is this trend for real? I'm about to find out, and will share stats as I have them. Stay tuned...

TechStars Demo Day rocks the house

2009-08-07T09:13:00.000-07:00

I'm sitting in the Denver airport heading home (if the air travel gods allow it) from TechStars Boulder Demo Day 2009. I've been a fan of the organization since it started, not least because Brad Feld (a Judy's Book investor and board member) is a prime mover behind the project. But this was my first live Demo Day and I was blown away by the presenting companies, their founders, and the incredible mentor network that Brad and co-founder David Cohen have engaged as key participants in the experience.

Beyond the scripted presentations, the event offered a great opportunity to connect with both current and past TechStars companies, and in each of these conversations I asked the founders to describe what was the most powerful element of the program: the peer group, the coaching received during the twelve weeks, or the extended mentor network. To a man (and they *were* all men), every founder I spoke with described the mentor network as the greatest single source of value, and most expressed surprise at how accessible and supportive this group was.

Beyond David and Brad (no slouches themselves when it comes to mentorship), the TechStars mentor group includes an incredible list of household names in the software and early-stage investing world: Stewart Alsop, Jeff Clavier, Dick Costolo, Dave McClure, Rich Miner, Matt Mullenweg, Jared Polis, Fred Wilson, and on and on. And according to the TechStars
entrepreneurs I spoke with, these aren't just names on a website; they show up, dig in, give feedback and are quick to pick up the phone to make a connection within *their* extended network on behalf of the companies in the program.

As you'd expect from a solid day and a half of drinks, dinners, formal pitches and informal chats, my TechStars visit stuffed my brain with new ideas and relationships. But if I had to pick just two, my biggest takeaways from the experience are:

TechStars is a great and *scalable* model for early-stage venture formation. Y Combinator is a powerful brand and franchise (and in many ways the model on which TechStars is based), but it's hard to imagine it without Paul Graham at the helm. By contrast, the TechStars brand and experience is largely defined by the credibility and proven effectiveness of its mentor network. This probably makes it harder to understand and evaluate from the outside, but offers a far greater capacity to scale across geographies, industries and types of opportunities.
Founders Co-op can and should do more to leverage the power of its network, beginning with the involvement of our Limited Partners (or at least those that have the time and appetite for it). Andy and I have always thought of this as one of our great sources of strength, but based on my experience at TechStars it's clear that we aren't doing nearly enough to engage our own community on behalf of the companies we fund.

Thanks again to David and Brad for inviting me down and hosting such a great event. I already loved my job, but I'm coming away from TechStars even more fired up to make the Founders Co-op offering as differentiated and effective a member of the Seattle startup community as TechStars is in Boulder.

You know it's a bubble when...

2009-07-30T16:03:00.000-07:00

One of the most accurate business cliches I know of is this one: "success is 1% inspiration and 99% perspiration."

Most good entrepreneurs come up with new business ideas constantly, but also know from experience that those ideas have no value if they aren't backed up with commitment, sustained effort and constant adaptation to market feedback.

If this is true in traditional business ventures, it's an order of magnitude more applicable in the domain of iPhone applications. As a recent GigaOm post pointed out, *very* few apps have a meaningful number of customers, and many of those are free. So even if you have a great idea, build a fantastic product and get it approved for distribution in the App Store, you're still pretty unlikely to generate meaningful revenue.

These facts are in pretty wide circulation, so I've been surprised to see an increasing number of search queries to this blog (query visibility courtesy of Lijit) like these:

"selling an idea for an iphone app" (Bremerton, WA)
"how to sell an iphone app idea" (Little Rock, AR)
"how can I sell my iphone app idea" (Location Unknown)

Folks, I hate to break it to you, but even if you're a skilled dev, interaction expert and graphic designer who can code it up all by yourself, your iphone app idea is still might not pay this month's rent. And if you don't have any of the skills above and think you can sell an idea for an iPhone app, you've been reading *way* too many breathless headlines in USA Today and Newsweek.

Making money on the iPhone is like any other serious entrepreneurial effort: the guys who make it look easy are extremely talented *and* have been busting their ass in their area of expertise since well before the iPhone was a gleam in Steve Jobs' eye. The mobile web is a hugely exciting and potentially rewarding market for software entrepreneurs, but I'm getting a strong feeling that iPhone bubble economics are now fully in effect.

The Google Giveth...

2009-07-23T16:30:00.000-07:00

...and The Google taketh away.

All of our companies at Founders Co-op rely on organic search traffic to drive revenue and margin (some more so than others), and we're very careful to stay well on the "white hat" side of SEO best practices to ensure that our hard-fought gains on that front are lasting.

But inevitably we get caught up in Google's filtering mechanisms from time to time (often because a white label distribution strategy has triggered a duplicate content flag on their end) and have to go through the "site reconsideration" process to clear things up. The process feels fair and we've never failed to be reinstated, but the experience is always a stark reminder of the power Google holds over our business success.

This happened again this morning with one of our companies - a site that had been receiving thousands of Google organics a day was suddenly capped at 500 visits, and then received a metered trickle of traffic each hour after the cap was hit. We quickly reviewed all our recent actions to make sure we hadn't screwed anything up, fired off a reconsideration petition, and are now waiting for the wheels of justice to turn. I fully expect that we'll be back to normal in a few days, but I'm freshly in awe of Google's dominance in web content distribution.

W00t! AppStoreHQ named best services startup at MobileBeat 2009

2009-07-16T23:07:00.000-07:00

A few weeks ago VentureBeat emailed to tell me that AppStoreHQ had been selected as one of seven finalists for the Best Services Startup competition at their upcoming MobileBeat show. More than 100 companies had applied for the competition, so I was stoked to get picked but had no real expectation of winning. We just started AppStoreHQ this spring, and we were stacked up against much more established (and better funded) entrants. But I figured it would be good exposure for us, so I bought a plane ticket and threw together a deck (embedded below).

The format for the competition was a two-minute pitch, followed by questions from a five-member expert panel. At the end of the seven pitches, the panelists would confer and vote on a winner. The panel included Bob Borchers (Opus Capital), Anand Iyer (Microsoft), Stephan Noll (T-Mobile Ventures), Nagraj Kashyap (Qualcomm Ventures), and Greg Tarr (Cross Pacific Capital). I hadn't fully grokked how short two minutes of talk time was until the flight down, when I first had a chance to practice. I felt like I had hardly opened my mouth when I got the time signal and had to wrap up.

My personal pick for the winning pitch was Urban Airship, a platform provider for push and in-app transaction services enabled by the v3.0 iPhone SDK. They had timed their release perfectly with the launch of 3.0, releasing in association with a few leading iPhone app publishers. So I was amazed when Matt Marshall announced AppStoreHQ as the judges' pick.

Unfortunately, there was no cash prize for winning, but the show was a great experience and the win was a nice surprise. Partly as a result of the win, AppStoreHQ has a small but influential group of new admirers, and I have renewed faith in the power of just showing up.

AppStoreHQ makes the New York Times

2009-07-14T20:24:00.000-07:00

I love the New York Times - it's one of the only publications I still read in paper form (every day, no less), so it's always a good day when one of my projects gets a mention in the Gray Lady.

Today was that day for AppStoreHQ. Roy Furchgott gave us a nice shout-out in his Gadgetwise piece on App Store shortcomings titled "Apple's 1.5 Billion Wake Up Call":

"Of course, there is another option. Give consumers better tools to sort through the stores themselves. One stab at that is found at the Web site App Store HQ. In addition to being more organized and informative than the iTunes App Store... it also has a sortable search. So instead of just choosing from 1693 apps categorized under music, you can then choose only those rated four stars and up (158 apps) then narrow it to those that cost 99 cents (38 apps). Still not perfect, but a step in the right direction."

Thanks for the shout-out, Roy - you made my day.

Introducing SeeYourImpact - a micro-giving platform for global 501c(3)s

2009-06-29T15:59:00.000-07:00

A few months back a friend here in Seattle asked if I'd like to help out with a new non-profit idea he'd been cooking up. My friend - Digvijay Chauhan - had worked in the U.S. for years, first at Microsoft and later as co-founder and CTO of AskMe. But he was born and raised in India, and was all-too familiar both with that country's crushing poverty, and the inefficiency and corruption that often prevented help from reaching those most in need.

Dig's idea was simple: to create a platform that allows first-world donors to make small contributions directly to those in need, and to receive direct feedback in the form of images and stories about the impact their gift had made on the recipient's life. Because of his personal connection to India the idea would be piloted there, but if successful the platform could be made available to any qualified 501c(3) that could support the model of small gifts + personal impact stories. In keeping with its focus the organization was named SeeYourImpact (http://seeyourimpact.org)

Thanks to Dig's vision and persistence, the project quickly moved from idea to reality, hugely assisted by the commitment and support of Scott Oki (another Microsoft alum and committed philanthropist). A basic software platform was wired up (using WordPress for content management and PayPal for transaction processing), and we were just planning the first phases of donor outreach when the Seattle Times got wind of the effort and put together a story that ran today profiling SeeYourImpact and another local effort with similar roots called Jolkona.

We had hoped to tie up a few more loose ends before spreading the word, but the site is live and the Times story is out there, so SeeYourImpact is officially open for business. It's a little different from most of the startups I work with, but we have the same basic needs: customers and feedback. So if you have a few dollars to spare please come by and consider making a gift. Not only will it help us test the platform, you might just change someone's life...

Frugal Mechanic continues to rock it

2009-06-24T16:03:00.000-07:00

Just a quick update for those of you following our investment in Frugal Mechanic: Eric and Tim don't make much noise but they're quietly dominating the world of auto parts price comparison. That may not sound like a big market, but DIY auto parts is actually a $19B market in the U.S. alone, and none of the big price comparison guys has shown the stomach for the extremely messy data work required to get it right.

They have a great destination site at http://FrugalMechanic.com, but the real story is in their white label auto parts search tabs for major auto-related media properties. They just inked a new deal with High Gear Media to run micro-targeted parts search across 38 of their online properties. And this is just the latest in a string of deals covering some of the best-known brands in the business.

I'm proud of the team at Frugal and fully expect them to run the table in this vertical, and maybe knock over a few other verticals with similar characteristics once they've taken care of auto. Keep up the great work guys...

'VC is Broken', Royalty Based Finance and 'Class R' Stock

2009-06-18T11:08:00.000-07:00

Since last fall's economic downturn, dozens of pundits of various stripes have announced the death of venture capital as an asset class. And it's true (as Paul Kedrosky and the Kauffman Foundation have convincingly argued) that the class is grossly overcapitalized and will have to shrink radically to produce the kinds of returns investors rightfully demand for the type of risk being taken.

But if you look beyond the billion-dollar funds and their challenges, the early-stage investment environment isn't just surviving, it's thriving. Checks are being written, great new companies are getting funded, and entrepreneurs are getting the cash and support they need to grow.

Perhaps most exciting, with the persistent drought in public offerings and an equally sharp slowdown in corporate M&A activity, new investment methods are emerging that better align the interests of entrepreneurs and early-stage investors around the core metrics of success for any real business: revenue and operating margins.

A few weeks back a friend shared a recent HBS paper by Clayton Christensen (among others), applying his "disruptive innovation" framework to the venture capital business. Most of the paper covered the familiar ground of overcapitalization in a context of declining costs of technological innovation. But the part that caught our attention was the description of Royalty Based Financing (RBF), with the specific example of a firm called Royalty Capital Management, created in 1992 by an investor named Arthur Fox. In its simplest form, RBF is secured lending, but rather than requiring a fixed coupon and repayment period, the lender obtains a claim on a fixed percentage of gross revenues until an agreed-upon multiple of invested capital (typically 3 - 5x) is returned. RBF investors trade steeper default, timing and rate of return risk for richer potential returns than those offered by traditional business lending.

Just today, GigaOm ran a thought piece by Brian McConnell titled "Class R (Revenue) Stock: A New Class of Investment" that essentially reprises the strategy practiced by Royalty Capital, but with a hybrid debt-equity model geared to earlier-stage bets than traditional RBF lenders would typically take on:

"Let’s say for rough numbers that a group of angels invest $500,000 for a 10 percent stake in an early-stage company and 5 percent of gross revenues with a 5X cap (total payout: $2.5 million). The company does OK and turns into a nice small business with revenues of $2-$3 million dollars a year. Happy with that, the owners decide not to sell or try to grow much bigger. The investors in this situation will be receiving $100,000-$150,000 per year (off $2-$3 million/year in revenue), which is not a bad annual return, and will get up to $2.5 million over the life of the agreement. In other words, everyone wins — the entrepreneur is rewarded for creating a viable business, and the investors do well without having to force a sale."

The innovation here lies in bringing the RBF approach to riskier, earlier-stage investing, where investors retain an equity position as an option on a future liquidity event, while receiving a portion of the expected return in the form of cash flows. And the fact is, most well-run businesses look more like the firm in this example - growing, profitable, but not a shoot-the-moon success - than like the Google and Amazon.com rocket rides that the traditional venture industry is geared around.

We haven't yet done a deal like this at Founders Co-op, but we're trying it on for size, and - at least for some of our investments - this model may wind up being a better fit than the traditional venture approach. Most of all, we love the idea of breaking the mold in our industry - early-stage investing - in the same way we hope our companies shake up the status quo in theirs.

'Fire + Motion' at AppStoreHQ

2009-06-01T14:40:00.000-07:00

Last week Ian reminded me about Joel Spolsky's famous blog post on "Fire and Motion" - here's a key excerpt:

"When I was an Israeli paratrooper a general stopped by to give us a little speech about strategy. In infantry battles, he told us, there is only one strategy: Fire and Motion. You move towards the enemy while firing your weapon."
This pretty much sums up our strategy at AppStoreHQ. With such a small team and such a big and fast-moving opportunity, our best approach is to pick a target from one of three critical areas - Content, Distribution and Monetization - release a burst of fire in that direction, and then sprint upfield to the next piece of ground and fire again.

To date, most of our bursts of fire have been aimed at Content (app + developer info, related blog posts, enhanced search, etc.) and distribution (widgets for iPhone owners, app developers and iPhone bloggers). We figured Monetization was too far away to get a clean shot, and that our Content and Distribution battles would put us in range eventually...

...but developers kept pinging us saying: "Great site. Can I advertise my app on it?" And we got tired of saying 'no'. In the spirit of Fire + Motion, we didn't want to blow a lot of ammunition on what seemed like a distant target. So we loaded up the smallest burst of fire that we thought would (a) satisfy the developer appetite for app promotion, while (b) delivering the most relevant and least-intrusive experience to iPhone owners searching for new apps.

Ian spent about a day and a half on this, a lot of which was brain-damagey stuff having to do with PayPal and SSL. But with that small investment we now have a basic app advertising program available on AppStoreHQ. The price is cheap and the rules are simple:

The only "Ad" format available is premium placement for an app listing - the kind of thing our users are already looking for.
Ads appear only when visitors are browsing or searching for apps by category
Only one ad will appear on the page at any time (in randomized rotation with no more than two others per category)
Only published iPhone app developers can play
You can only promote apps currently for sale in the App Store (i.e., no “teaser” ads)

If developers like this and the inventory sells through, we'll have a nice (little) revenue line and a new source of relationship capital and feedback with our developer customers. If no slots sell we'll have invested a day and a half in some market intelligence. And if the result lies somewhere in between, we'll take what we learn, move up the field and squeeze off a few more rounds in a different direction.

Is someone at HBS reading this blog?

2009-05-30T14:04:00.000-07:00

A few years back I proposed (and only partly in jest) a "Hippocratic oath for business." This morning I read in the New York Times that a group of students at Harvard Business School had publicly made a similar pledge. I don't really expect this to sweep the business world by storm, but I applaud these students and the spirit in which they offered this pledge. The world needs more of this...

Android update: 2009 will be a big year after all

2009-05-27T17:01:00.000-07:00

A while back I made a prediction that 2009 would be a breakout year for Google's Android project. With the mid-year mark approaching and no new devices shipped that bet was looking a little shaky, but today's announcements from the Google I/O conference put a little more weight behind my bullish view (phew).

There's been a ton of blog coverage, but this piece from the New York Times does a nice job of explaining both the handset picture and Google's rules / incentives for making their core services (mail, docs, etc.) the on-deck defaults. The bottom line:

18 new Android phones in market by year-end
5 or 6 of those will offer the full "Google experience"
12 to 14 will include some level of Google app integration

The next hurdle is to see how many of these phones ship - not just in the U.S., but particularly in some of the more exciting global markets (e.g., China, India).

iPhone app search and browse: there's a new one-eyed man in town...

2009-05-21T16:01:00.000-07:00

"In the land of the blind, the one-eyed man is king." - Anonymous

We just shipped a major upgrade to our search and browse functions at AppStoreHQ. It sounds crazy to say it, but as far as we can tell we now offer hands-down the most useful iPhone app discovery experience on the Web (not to mention the phone itself).

Want to know how many apps there are in the 'fart' category? Turns out a whopping 165 (!) apps match that keyword. What do they cost? Most (118) are priced between $0.01 and $0.99. How good are they (whatever that means)? Well, only four have a rating of 4 stars or more.

If you're curious about the iPhone app phenomenon and are looking for a way to slice and dice the data, AppStoreHQ is now the place to start. And if you know of a site that does it better, please leave a comment setting us straight.

P.S. - If you run an iPhone-centric blog or site and want to offer this same search experience on your domain, just give us a shout - we'd like to help.

Presentation (with updated data) on iPhone App Marketing

2009-05-14T16:58:00.000-07:00

The guys at Madrona invited me to present the results of our iPhone developer survey on app marketing at a lunch today (thanks again, guys). Lots of great commentary & feedback in the session, and I promised to put the whole thing online...

If you're reading this in a feed reader and can't see the deck above, here's a direct link to the source presentation on Google Docs.

Startups, agility and the power of the franchise player

2009-05-12T21:37:00.000-07:00

Ian and I have been having a ton of fun with AppStoreHQ - our mobile web app + developer discovery engine. We haven't been at it all that long, and at the moment it's just the two of us. But the other day we were reviewing our roadmap and backlog (which we track on two tabs of a Google spreadsheet) and Ian remarked:

"I think I've shipped more code in the past month than I did in three years at Amazon."

There are good reasons why big enterprises with lots to lose have to proceed cautiously with their development process. And moving fast and running lean can definitely cause trouble down the road, as hasty architecture decisions today cascade into time-consuming and risky fixes after complexity and load have scaled. But the sheer amount of software that one skilled dev can ship (especially with the help of a framework like Ruby on Rails) is truly astounding.

Last week we heard a great story from Urbanspoon on Tuesday and Ian turned it into a product by Thursday. Then the guys at Cooler Planet shared a tip on Friday and Ian shipped a riff on the idea today (if you don't want to follow the link, just check the widget below). And these opportunistic projects are on top of the usual load of core data, search and presentation work.

What's exciting to me about this model isn't raw speed-to-feature (no one ever won a competitive fight on features alone). It's the power of one agile developer who's comfortable working at any layer of the stack to turn ideas into working code almost as fast as you can come up with them. Because getting fresh code in the hands of customers is the most powerful way I know of to test ideas and figure out what works.

Given the scale of investments we make at Founders Co-op, we can't afford a lot of expensive specialists on our founding teams. We like to say we're looking for "franchise players" - guys (and girls) who have the skills, resourcefulness and confidence to make the product and business happen without asking anyone for permission. We have more projects like AppStoreHQ up our sleeves, so if you like to ship code early and often and have an interest in the startup life, give us a shout.

Find iPhone apps at AppStoreHQ