Earlier this week there was a post about an entrepreneur losing 4 million dollars in sales due to his reliance upon Google as their primary sales+distribution channel. The same problem faces Demand Media with their IPO, Zynga with diversifying beyond Facebook, and many other startups that are primarily platform plays dependent upon the mercy of the platform overlords. As an entrepreneur I find it very important to have a large diversified distribution channel for customer acquisition. The goal of this article is to outline the plethora of distribution channels that exist for startups.

Public Relations

Public Relations is a strong distribution channel due to its low cost and repeatable nature. PR certainly has a human capital cost, but can be fairly easy to execute with the right story. It can also be highly segmented ie- verticals, industries, and audiences. It can also help bring forth social proof. As seen on CNN, TechCrunch, and the New York Times will always be a seller.

Organic Search Traffic

Organic search traffic is the gift that keeps on giving. It can go away due to an algorithm tweak by Google or a simple drop in rankings. For the most part, the traffic generated by organic search traffic will stay generally the same. It may increase due to a demand for the product you’re offering, seasonality,etc. Optimizing for organic search is also a smart move as it can benefit future content that is created. Once you’re “trusted” by Google, it can help with new content you produce. Organic search traffic has a “cost” in terms of time, proper optimization, human capital,etc. but the cash outlay is much much smaller than paid search traffic.

Content Marketing

I believe content marketing is the future of customer acquisition and a cost effective, scaleable, and brandable way to acquire customers. One method of content marketing might include educational and analytical blog posts on topics related to your market. Another method might include putting together infographics and white papers that also educate your prospective customers with education. Content marketing can be further enhanced with Organic Search Traffic and Social Media Marketing. Make sure you are capturing as many email addresses as possible when educating your audience for lead prospecting. Here’s why I feel content marketing is important

The content should be: educational, actionable, and full of utility. A reader should learn something and be prompted to do something they could not before.

This video from Jason Fried re: education as a customer acquisition strategy is gold.

Affiliate Programs

Affiliate programs can be major drivers of distribution for certain products. Information products tend to do the best here, but they can be effective for all types of commerce. There are hundreds of affiliate networks to sign-up with as well as running your own. The key to many of these networks for larger scale companies is not the software itself, but the affiliates and affiliate managers. In order to attract top tier affiliates also be prepared to be flexible on your terms. Smaller affiliates will be okay with net30 payouts, but top tier affiliates may want direct wire transfers with weekly payments.

Lead Gen Programs

I can’t find the exact link, but I distinctly remember Tony Wright, Founder of RescueTime saying, “The internet was made for lead gen”. The lifeblood of any company is generating new leads and new potential customers. Once you’ve experienced it, you will be a fiend for it. Lead Gen programs allow you to pay for each qualified lead brought your way. A lead can usually be in the form of email addresses and names. If the numbers are calculated right, it can be gold

Events and Conferences

Events and Conferences are great ways to not only generate some auxiliary revenue, but they are a great way to gather + educate your prospective customers. Simple meetups with refreshments that gather your customers is one way to go about things. Another more grandiose way of going about things is throwing your own conference. Alain from Fair Software did this with Founder’s Conference . Other examples include FastCompany article

3rd Party Social Platforms

I find 3rd party social platforms to be different than a basic Twitter or Facebook implementation. 3rd party social platform usage examples include games from Zynga or Geni.com integrating as an app inside Facebook.com. Another example would be HubSpot with TwitterGrader. Integrating social platforms inside your destination is one thing, but making stand alone apps inside of sites such as Facebook is a whole other form of distribution.

Social Media Marketing

Social media marketing examples include personal RFPs and using Twitter for permission based promotions. A personal RFP might look something like “I need good WordPress hosting”. From this message a representative from WpEngine might reach out. Companies such as DELL have done millions of dollars in sales via Twitter with deals. Other companies including local businesses and tech startups use social media marketing as another permission based marketing channel.

Mobile Platform Distribution

Pandora increased it’s usage exponentially after the app store appeared. It almost doubled their growth overnight Don’t just think iPhone either, though that is probably the best place to start. The best companies such as Dropbox or Evernote have mobile applications across all different platforms. Android, blackberry, WinPhone7, iPad, and mobile web are all important. Every user counts and app stores are a chance to reach new users.

APIs

APIs are the new business development for the 21st century. Integrating with other companies used to require a lot of time, negotiations, and often money. Now? It just requires an API key and some imagination. Not all APIs allow for commercial access and some have a limit, but that’s a problem that can be dealt with. Dropbox just introduced their API and I’ve seen it popping up in almost every work related iPad app. I’m not sure what effect this has had on sales, but I’m almost certain it will be a big one. If I wasn’t already a Dropbox user, I would certainly check their service out.

Paid Online Advertising

Online advertising can come in three flavors: CPM, CPC, and CPA. CPM is your traditional pay per 1,000 impressions on a website. I’m not a huge fan of this and usually think it’s quite a spray+pray approach. It can be very useful when applied to the right niches and audience. CPC ads let you pay per click. This is primarily how Google makes money. You search with an intent, they show sponsored ads, and you end up clicking on one of those ads. The problem with CPC ads on Google and other sites comes in the form of click fraud. Lastly, CPA ads are billed on a Cost Per Acquisition basis. You pay the advertiser everytime a customer acquisition mechanism takes place. That usually includes a purchase, but it could also be a registration of some sort. My advice on online advertising if you are going to do it is this:

* Heavily track the funnel coming from online advertising so you know what does and doesn’t convert.
* Try to put custom landing pages in place.
* Go as niche as possible when buying ads. Find your audience. Buysellads, influads, thedeck, and federated media are great places to find very niche ads.
* Make sure the economics make sense. You can reduce anything down to cost per acquisition. ie- Buying 100,000 impressions at $2 CPM. If the lifetime value of your customer is $10, you will break even at 1 purchase per 5,000 impressions and be profitable at anything under.

Direct Sales

A direct sales channel can be very important in B2B plays where the cost of having a direct salesperson exceeds the lifetime value of the aggregate customers they can exceed. To many in the startup world, it might seem absurd to have a direct sales team, but in enterprise and b2b sales, it’s a viable channel when done right.

Business Development + Cross Sales Joint Ventures

Business development deals with similar companies that have the same customer base yet are not competitors are insanely lucrative for both sides, especially you. Find a business development partner that has the same customer base as yourself, but larger in size. By working with you they provide their customers new value and make more money as a super affiliate of sorts. Your benefit? Credibility and increased profits.

Referral Programs

Referral Programs are slightly different than affiliate programs. Referral programs are less about traditional affiliate channels and more about using your existing customers to spread word about your product. The reward can be cash, but it often comes in the form of in-app rewards. For example- Dropbox gives you 250MB for every user that signs up from your referrals. They also employ a two sided referral that rewarded the user that signed up with more storage. Gilt also has a referral program, but the reward is in cash when the user you refer makes their first purchase. Think about it like this: User X invites User Y. User Y now makes $75 purchase. User X now receives $25 free, but makes a $75 purchase themselves due to the referral reward. ($75+$75-$25)== Net win of $125 due to the reward loop even while giving away $25. This doesn’t take into account the lifetime value of User Y either.

Traditional Media

People still subscribe to cable, read newspapers, and listen to radio. If you’re trying to reach normals, not just early adopters, and establish some credibility, then traditional media is still a huge channel. Honest truth it’s bigger when it comes to PR and even ad dollars. Hard to believe, but it’s true. The problem comes down to the large up front spend that traditional media entails and the lack of true analytics that exist. If possible, I would do unique URL tracking and call tracking by building a simple app with Twilio.

New products and add-ons to existing customers

Once you have a large enough customer base, the goal should be about increasing the Lifetime Value of that customer by offering new products that make sense. Look at 37 Signals, their first products such as Basecamp and Backpack did really well. They used their existing customer base to expand their profit pools with new relevant products such as Highrise and Campfire. Don’t be afraid to look to your own customers as a source of distribution.

One distribution channel will most likely outweigh another – that’s fine. What isn’t fine is being able to answer yes to the question of: “If I lost distribution channel x, would my startup fail?” One last thing to make sure you evaluate as an entrepreneur is the customer acquisition costs and their quarterly increase/decrease. A growing, but cost ineffective distribution channel can be equally fatal. The equivalent of startup gold is a distribution channel that grows with a Customer Acquisition Cost (CAC) that is a very low number or zero (think viral). I will investigate these metrics more in depth in my next post “Metrics Every Startup Should Know”.

How many of these distribution channels can you check off as a startup?

If I forgot anything leave it in the comments below.

This is the second part of a two part series of posts. The first post was entitled What To Look For In A Business Co-Founder. It seems that potential technical cofounders are approached by business cofounders a lot more than business cofounders are approached by technical cofounders. I thought about why that was after writing the post. In essence, I think it comes down to the fact that it’s a lot easier to identify the tangible skills of a technical cofounder from a high level perspective. Do they code? Yes. Okay, they could be a technical cofounder. At the end of the day “being able to code” is a small piece of the technical cofounder puzzle. Here are the qualities that make sense to look for in a technical co-founder.

A past record of building things

Potential technical cofounders should have a past record of building things. They may be very large projects with hundreds of people or they may just be very simple applications that never went anywhere. Learning how to code often happens best through practice exercises. The same can be said for building an entire company or large product as a technical cofounder. The more your potential technical cofounder has built things, the more pattern recognition they will have.

A past record of building things just for the fun of it

You have to love what you do, and the same should hold true for your technical cofounder. One good way to spot this is if their past record of building things includes products that were just built for the fun of it. It might be a dinky little app or some technology demo that does something completely new. Since startups are marathons, this is a key characteristic of technical cofounders as they will be more likely endure this marathon due to their love of the game.

An Understanding of The Intersection of Business and Technology Decisions

Some technical decisions are deeply rooted in business decisions. Need to switch the DB from MySQL to CouchDB? Need to add in more viral loops above other features to increase customer acquisition? Your potential technical cofounder should understand that their technical decisions will often have a strong impact on the overall health of the startup. My belief is that startups are cyborgs- half business decisions and half technical decisions. Your startup will die if you remove one part.

A strong expertise in a specific language

It seems most technical cofounders will dabble in different languages, especially if they have been around the block for quite some time. Your technical cofounder will set the foundation for the next few years on the language that is being used and the people that will be hired to work with that language. If they are experts in one specific language they are most likely well connected within the community and have access to more talent. They will also be able to deal with the most intricate solutions possible and optimize the hell out of the specific language being used. Facebook is now using many many different languages, but there is a very strong domain expertise in PHP. That strong domain expertise allowed them to build Hip Hop, which has significantly increased the speed of Facebook as a whole. The team behind this at Facebook may not have been co-founders, but finding individuals like the team behind Hip Hop would be ideal examples of those with domain expertise in a specific language.

Also, don’t try to force a language on them because you heard from someone that it was the “in thing” or “old shit”. Maybe they want to use PHP and maybe they want to use RoR, or maybe they want to use Python. You should trust in their decision and what they are comfortable with.

// The team there actually had to be experts in both PHP and C to make this happen, but for arguments sake I’m focusing on the PHP part here.

An expertise in solving problems relevant to the domain of your startup

Are you solving something in the payment space? Then fraud detection experience is key. Building another CRM? Then having past experience at a B2B/Enterprise startup makes a lot more sense than MySpace or Facebook. Non domain expertise does not make a person a bad technical cofounder, but it certainly makes them a better one. For example, Engine Yard was well served by having cofounders that had strong domain expertise in Ruby on Rails. Maybe a strong hacker without a strong domain expertise in RoR could have learned on the fly, but I would rather have had my cofounder possess the needed domain expertise.

An ability to meet deadlines

There are two points to this attribute. The first is the ability for your cofounder to be able to not flake out and keep to their actual deadline. This comes from having previously built things and understanding how longs it actually takes to finish something. It also comes from straight up work ethic and dedication. The second point is your cofounder’s ability to have a strict cutoff for features to implement and what to “refactor”. A good technical cofounder will be able to say no to many things and put a hard stop on adding features in order to meet a deadline. Even if a technical cofounder has the ability to finish on time, they may not be estimating what’s realistic due to their inability to say no + leave things be. Taking twice as long was not due to their lack of work ethic, but the fact that they added too many things causing it to take twice as long. Many of these ideas may have even been the business cofounder’s ideas. A great technical cofounder will have the ability to tell their business cofounder no for the sake of meeting a deadline.

An ability to keep things organized

Even with one person the technical architecture, staging/development environments, code itself, and specifications can get so unorganized that many mistakes happen. An almost OCD technical cofounder with a strong attention to organization will be great early on, but crucial later on when the technical team grows. A good technical cofounder should have the following things well organized from day one:

* Development, staging, and production servers.
* Subversion/Git setup
* Strict commenting and documentation that allows new hires to get started without too much confusion.
* A clear and organized product roadmap.

An ability to prioritize

You just launched and you are being slammed with paying customers. Great problem to have, right? Yes, as long as you dont f**k it up. With those paying customers are going to come problems, support requests, and feature requests. Now it’s up to your technical cofounder to balance everything. Which fixes are most crucial? Which fixes are most crucial and also easiest to get done?

An ability to balance taking the lead and also listening to feedback

A good technical cofounder will have the ability to interact with customers and listen to them, but also know how to take the lead. Most customers don’t know what they want, but at the core of their complaints lies the true essence of a problem. A good technical cofounder will listen, find that true essence, and then come up with something truly unique that solves this problem. The feedback may not even be direct feedback from customers themselves, but from metrics.

An ability to know their weaknesses

Some developers are great designers+front end coders, and vice versa. A good technical cofounder may have to bear the burden of doing everything technically from the beginning, but they will strive to have better technical hires take over their weaknesses. This advice can just as easily apply to business co-founders, but I feel it’s easier to distinguish technical weaknesses.

A formal CS degree is a nice to have

I have a CIS degree, which is sort of like a watered down CS degree. I was required to learn many of the fundamentals of programming, database design, etc. Any real technical skills have come from being involved in building things and working with other smart technical cofounders. I will say it is certainly nice to have the academic and formal foundation in basic programming concepts. A fair amount of great technical cofounders won’t have this, but it’s certainly a nice to have.

This is by no means a definitive list or even a fully correct list. In many ways finding the right technical co-founder is a chicken and egg problem. Can a business co-founder even understand how to properly identify these points? Yes, but they need to be fairly technical themselves. The best advice for finding a technical co-founder might be: “Be Semi-Technical Yourself”

This is the first part of a two part series. The second part will obviously be: what to look for in technical cofounders. This post is something that I’ve been meaning to write for a while, but after reading two nonsense articles on Hacker News this evening I was immediately prompted to write this. A startup is a lot of work and no one skillset can handle it all. When you’re bootstrapped, with little funding, and working against the clock, each individual needs to be laser focused on what they are best at. A well trained technical cofounders should be handling the engineering side of things and a well trained business cofounder should be handling the business side of things. So if you’re a technical cofounder and you need a business cofounder or have been approached by a potential business cofounder, here are the things that I would look at.

A good level of technical understanding

Too many business co-founder types have no technical understanding at all. If you’re in the software business you should understand the technical end of things, just as if you’re in the biotech business, you should have a good understanding of science. They should have an idea of how products are built, not be afraid of code speak, specifications, and architectural decisions. Startups are like cyborgs, where the technology is so interwoven with the business side of things, that separating the two out would just kill it. Make sure your business cofounder has a strong grasp on technology. They will not be able to make the proper business decisions without this.

A strong ability to communicate in copywriting and presentation

While you are writing the code behind the app and working on a lot of the design, they will most likely be preparing the sales copy, the site copy, the ad copy, and presentations that will be given at conferences/to investors. Your business cofounder should be able to strategically set the message that will be displayed. Look at Steve Jobs. He’s actually the business co-founder of Apple. Find someone who can communicate clearly with an audience and bring a strong level of passion and enthusiasm into the room.

A clear grasp of how to execute PR campaigns

Public Relations is a funny dance in the startup world. It’s essentially a sales process that requires a certain skill of persuasion. They are selling the journalist on the fact that your startup is worth writing about and unique enough that it will bring them more pageviews/interest than the other 100 companies pitching them that day. This takes practice and in some cases an innate talent for storytelling. While you are putting the final touches on the actual engineering, your business cofounder should be putting together a PR plan along with the pitch materials for the journalists themselves. +1 if your business cofounder has done this before and has relationships with journalists.

A strong understanding of operational headaches such as legal, HR, etc.

Paperwork and mundane operational stuff is such a pain in the ass. Payroll? Incorporation? Founders agreements? Fundraising details? All of these things take time and are a distraction to technical cofounders. Yes, they should be aware of what’s going on and have input, but spending a ton of time on these items is not optimal.

An ability to walk the walk with investors

Fundraising is such a hellacious pain that eats a startup’s time like none other. All cofounders should be present at pitch meetings, but the negotiations behind the scenes, constant emailing back+forth, setting terms, paperwork,etc. eats time. A good business cofounder will have dealt with investors in the past and know how to go through the fundraising process from pitch to term sheet.

A clear ability to translate user feedback and support requests into product decisions

You just launched. You now have hundreds of customers and thousands of users. Things are breaking and people are sending in requests left + right. Some are important and some are just silly. A good business cofounder knows how to deal with support and how to prioritize what problems are truly worthy of immediate attention or just things to add to the roadmap. Your business cofounder must also once again put his communication skills to good use by dealing with most support inquiries. This is also another area where your business cofounder’s tech background should come into play. By understanding the way the software works, they can start to prioritize requests. That “easy” fix might actually require a huge underlying architectural change. Your business cofounder will know this and move it down the list due to its larger than meets the eye impact.

A great filter of potential opportunities

People are going to want to partner with you, give you ideas on product direction, and who knows what else. Hell, your investors, the people that gave you lots of money will start to throw ideas at you. You can’t do them all and if you try to do them all, no matter how much you have raised, you will just drown in a pool of unfocused sorrow. You and your business cofounder have set a distinct vision, and your business cofounder must have a vicious appetite for saying no to most things that come through the door in order to preserve that vision.

A great talent scout

One person was not enough and two people will most likely not be enough. Guess what? You’re going to have to hire people and that takes a lot of time. The initial recruiting and scouting takes a ton of time. Both cofounders should be very involved in the interviewing and hiring process, but it’s the initial scouting of talent that matters. You won’t have enough money for a recruiter, so you will have to do it yourself, which is better anyway. The DNA of your first 50 employees is too crucial to leave up to someone outside the company. Your business cofounder should be a great scout of talent to build out the rest of the marketing, biz dev, and technical team (another area where being technical as a business cofounder is crucial).

A clear vision on how to develop customer acquisition methods

I’ve said it before and I will say it again: if you build it they will not come. A lack of customer acquisition methods and points of distribution is the single largest killer of startups out there. Getting a product to market is certainly difficult, but acquiring customers is even more difficult. Your business cofounder should have a clear vision for how to acquire customers. SEO and viral stuff shouldn’t be their only answer. Many customer acquisition methods include business development deals and channel partners. Your business cofounder should know how to develop those relationships.

An understanding of metrics, pricing, and A/B testing

Knowing the important metrics of your business are so key from even the early days. I’m not talking revenue numbers. I’m talking customer acquisition costs, acceptable churn, lifetime value of the customer, etc. Pricing is also an important decision making process that your business co-founder should understand. Your business cofounder should also be comfortable performing a/b testing on all of the beautiful copy he has put together.

A level of domain expertise in the business of your specific sector

Developing an enterprise SaaS company is way different than an ad supported niche consumer product. Your business cofounder should be well versed in the actual sector you’re going in to. It’s like saying an athlete should just play baseball if they play basketball. Sure Michael Jordan is a gifted athlete, but we can both agree his talents are best served in basketball. The same should be true of your business co-founder. If they are a former SalesForce employee, they would most likely be a great business co-founder for a SaaS startup. Former Facebook employee? A consumer driven application would be a good fit.

An ability to think fast

Just like you can iterate quickly on the actual product through code, your business cofounder should be able to make decisions fast. Startups have a distinct by being able to move fast. Your business cofounder should be confident and have the ability to make decisions fast. This is as true for fun decisions such as “Which investor do we go with?” as it is for not fun decisions “Do we let this person go?”

It’s possible that a hacker could do all these things, and vice versa where the business cofounder could do all the things a technical cofounder could. The problem is you can’t buy time with stock options. Focus on what you’re best at (design+engineering) and let the business cofounder focus on what he’s good at (customer acquisition, communication, and operations).  Part two on what to look for in a technical co-founder will be coming sometime soon. (Either right before or after my next article, which I’ve already started writing).

I spent a few hours at Dogpatch Labs in NYC earlier this week to catch up with an old friend and also discuss the email space with a few members of the email mafia. I only brought my iPad and my friend, Joseph, wanted to see Flipboard in action. Of course it got the usual “oohs and ahhs!”. I ended the demo with a comment of: “Yeah, not sure on the revenue model, but it’s fine they raised 10 million dollars from Kleiner”. My friend was taken back and could not believe that an iPad app that just launched raised $10 million dollars. My answer: The co-founder sold TellMe to MSFT for $800 million and the other co-founder was an original engineer on the iPhone team. At that point pattern recognition kicked in, and hence the inspiration for this article was born. There are often fundraising announcements that bewilder entrepreneurs or even plant the seed that “Oh, they raised a ton of money just like that, holy shit, I can too!” Sadly, this is often not the case as there are a good list of reasons why they raised money. These reasons are beyond the usual Brilliant team in a huge market with a killer product. These reasons also apply primarily to the angel round to initial Series A round. If made public, the valuations may also be fairly high.

They Have A Strong Track Record

Entrepreneurs with a strong track record have what I like to call “the eternal checkbook”. They not only have money in their own bank account, but they now have the ability to raise funding for any startup they would like to found in the future. Look at the founders of Skype. They were also the founders of Joost, which bombed terribly after raising money from some of the best investors in the world. Guess what? They just raised a ton of money for RDIO, which only launched to the public a week ago. Look at this comment about Josh Schachter raising money in this TC article . “Even if the company fails, someone will buy it just to get Schachter. There’s no way we lose our money.” If you’re an entrepreneur and a good offer comes around to sell your company that’s more than an “acqui-hire”, I would suggest taking a further look not only at that dollar amount, but the implications that acquisition will have for the rest of your entrepreneurial career. Be honest with yourself, it will not be your last, we’re addicted to this game.

They Are In A Very Hot Market

Social gaming? Group buying? Cloud computing? Those are some of the hottest markets of the past 12-18 months. Throw in a little bit of location based mobile “something” for good measure and you get the idea. When a market is determined to be hot, each fund will want to make some type of bet in it. The top tier funds will get in on the best startups. The lower tier funds usually have a herd mentality and will want to make a bet on someone, so the odds of just being in the hot market make it a lot easier to get funding. VC investing is a funny business as most companies fail, but are eventually accounted for with the large homerun exits.  Getting into a hot market such as Group Buying makes it seem more likely that a homerun exit could occur.

They Have A Strong Reputation Amongst The Tech Community

If you have a reputation amongst the tech community it’s going to be easier to get past the point of social proof, get introductions, and have an audience to launch your product to. Kevin Rose is a prime example of this. He launched Digg on a shoe string budget, but was able to leverage his G4 celebrity status to give Digg a boost in traffic. It also gave him the ability to get hooked up with the right group of early investors. A large portion of the investor meetings I’ve taken in my life were solely due to writing on this blog or work I’ve done in the tech community as a whole. Get out there and write, hold meetups, and make a name for yourself. Moot, who has not made much money with 4Chan was able to deploy this method when raising money for Canvas Networks.

They Are Thought Leaders With Strong Domain Expertise

What do Clara Shih and Laura Fitton both have in common (besides being awesome women entrepreneurs)? They are thought leaders in their space. Laura was already a leading Twitter consultant as well as the author of Twitter for dummies. Clara wrote The Facebook Era along with developing Faceforce while at Salesforce. I also believe Dennis Crowley is the right horse to back in the LBS wars as an entrepreneur. He has been doing this for over 6 years along with intense research during his graduate studies. He understands location based services at a product and scientific level that very few others can match. This domain expertise can also come from working at a related company in the field. Ryan Merket used to work at Facebook and has now launched an app store for Facebook pages. I would certainly back Ryan due to his domain expertise in the field. Having domain expertise is also a great way to build attention around the company as it’s a transitive property. If the founder is a thought leader on a topic, then their company in the space must also be something fairly smart.

They Are Ex-Googlers/Facebookers/PayPal Mafiosos/Other Company

Quora raised 11 million dollars from Benchmark, Friendfeed raised a large amount, and PayPal is known for feeding its offspring of former employees with funding. One way to set yourself up for funding at a later date is to be an earlyish or standout employee from a startup that became one of the major leaguers. Your founders will most likely be rich at some point and the backers of those companies will be eager to talk to you. The other option is to do a good job at a normal company and then raise money from the well to do employees there who angel invest or have gone on to the nice life as VCs.

They Have Intense Growth

Formspring went from being a form builder SaaS tool like Wufoo, to having 8 million unique visitors in a matter of a few months. Facebook did the same by starting out as a simple dorm room project that spread at Harvard and continued onwards to other campuses. YouTube continued to raise money after its first round just based on the sheer growth it was having. If you have a consumer product with intense growth, there is a good chance raising money will not be a problem for you. It’s even become a cliche amongst entrepreneurs that so many of us try to predict hockey stick like growth. Having it already? Now that’s something. Traction and intense growth is like crack for investors.

They Were Vetted By a Pre-Seed Fund

YCombinator and all the other Pre-Seed funds show their value not only in the mentorship, but in their ability to help attract capital for companies afterwards. I was talking with a VC after the W10 class Demo Day, and he told me that close to half the companies had already closed their next round of financing. That blew my mind: before even launching to the public, most of these companies had closed their next large round of financing. There needs to be a good screening of dealflow and YC seems to have that nailed down well. They’ve done this enough with well over 100+ companies, some successful exits, and have trained the entrepreneurs for months through mentorship. Along with what’s shown as a product, that’s a fairly good basis for getting funding for the next round.

They Have Strong Customer Validation

If you can walk into an investor meeting with strong customer validation it’s an easy way to refute the most important question they will ask: “but will people pay for it?” It shows that you not only have a product that people want, but a product that people are willing to pay for. When things go to the due diligence stage this will let them easily talk to actual customers and see why your specific solution is the right horse for them to back.

They Nailed The Customer Acquisition Model aka Printing Money

Everyone thinks they should just raise money because all the cool kids are doing it. The cool kids are doing it for the reasons outlined above. Odds are you’re not one of the cool kids and you can’t just raise money like that. A real basis for raising capital comes from accelerating growth and adding fuel to the customer acquisition model. If your company has a profitable customer acquisition model down that’s proven along with a handle on churn then raising money becomes the equivalent of printing money. Put a dollar in, get some multiple of it back, and lock the market up. Rinse, repeat, profit, and exit.

They Have A Truly Unique Product Solution

Some products go above the call of duty. They are technical masterpieces with a secret sauce that makes them an obvious choice to back. I would say this point is often addressed in highly technical businesses. I look at companies like Cloudera as one example. Think of companies where you have said “holy crap, how do they do that?” and now you will understand why they were able to bag funding.

They Are Founders So Smart You Cannot Ignore Them

My friend Brian Wong was able to raise 200k from True Ventures a few weeks ago. Sam Altman did the same at a young age with Loopt. Throw in others like Mark Zuckerberg and Steve Jobs. You get the picture. It’s hard to see this through press articles or even conference interviews, but some founders are so good you cannot ignore them. They are that bright and the type of individual that a VC/Angel will want to back. It might be part charisma and part technical chops.

Many founders meet multiple attributes on this list, so it’s often a combination of these attributes that become the reason why “they” got funded. I also hope this list serves as some type of water on the face effect for new entrepreneurs. Too often the tech press makes it seem like a piece of cake to get funding. It’s not. Most of the attributes listed above take time to develop, but any entrepreneur can develop them overtime (and should).

If you’re an entrepreneur looking to change the world it all seems to start with a simple little idea. It may seem as if the idea sprung up instantly, but it’s most likely a compilation of building blocks. Over the course of history new building blocks become available, which allow us to build companies that weren’t possible before. The crucial part to changing the world as an entrepreneur is to use these new building blocks to build what had previously not been possible. When looking at an idea it’s useful to ask yourself: “Would it have been possible to build this company 12-18 months ago?”

Over the past 18 months I’ve noticed an immense new set of building blocks emerge that will define the companies that shape our world over the next decade. In discussion with fellow entrepreneurs I’ve started to call these building blocks “The Future Stack”. Some may be obvious and some may be immature. The key is not to look at them alone, but look at them as pieces that can be put together to create something truly fascinating.

Location Aware

Not only will phones be location aware, but devices such as tablets and even laptops will be location aware. The introduction of HTML5 allows modern browsers to use location as contextual information. Most phones and 3G tablets will have built in GPS capabilities, which allow for pinpoint accuracy. Companies such as SimpleGEO or MixerLabs allow applications to now have access to rich location aware data at a reasonable price. Any application you build can now be aware of its location and most importantly the context around it: people, places, events,etc.

Synced Data

The Kindle app from Amazon and Dropbox are early parts of this vision. If I read a book on my actual Kindle, pick it up on my iPhone, and finish it on my desktop PC, it will have synced my location+bookmarks effortlessly. Dropbox also allows the same to occur with file storage. The “different data on different devices” syndrome is now a thing of the past as the ability to have synced data exists. When building an application, you should think across all screens (laptops, tablets, ereaders, phones, tvs,etc.), but most importantly you can now build the same data across all devices.

Social Context

Having Facebook Connect or seeing which Twitter users you follow on an app used to be something to tout as an innovation. Now this is becoming the standard. With 500 million users and growing, Facebook has built a very important part of the future stack. They allow applications to be built with an automatic social graph. If you think back to even three years ago, each new application would have to recreate your social graph. That was a huge barrier to entry and point of friction. Facebook isn’t the only player here. Messages from Twitter and professional information from LinkedIn provide additional insights into who a person is. If you combine the three together, you start to get the social context of who a person is. From day one, an application can have access to the full social context of who a person is and who resides within their social graph.

Two billion dollar+ companies, Zynga and GroupOn, may not have been possible without Facebook.  The same model as GroupOn had been tried with Mercata, but ultimately failed back in the Web 1.0 days.  GroupOn could still meet the same fate, but it doesn’t seem likely.  Their ability to get to where they are today can be heavily attributed to Facebook.

Touch Over Click

The world is moving towards touch interactions, even on the desktop with devices such as the Magic Mouse. This requires redefining the interfaces we build (ie- no dropdowns/hovering), but it’s certainly for the better. This is also a much more intimate form of interaction for a user as there is no boundaries between their physical action and what happens on screen. If I swipe a piece of content, it automatically transitions to the next article or if I touch a link on a page it automatically changes. It used to be the user’s physical presence => the mouse => the gui. Now there is a direct relationship between the user

Say Cheese!

Not only do phones have rear facing cameras, but they are now starting to have front facing cameras. Over the past three years webcams have become the standard on laptops allowing for cheap video conferencing and self expression via apps such as Daily Booth. My hunch is also that Microsoft Kinect type interactions will come to all devices in the next five years as well. Check out some of these demos to see what is possible today in that respect.

http://www.extendedreality.com/webcam_game_motion_bubbles.html
http://www.urdalen.com/lab/motiondetector/
http://nocreativity.com/blog/webcam-motion-detection-coolness

These are just simple demos. I’ve seen some more advanced ones as well. We may soon see Minority Report type interfaces much sooner than later.

Transactions <= .99

Microtransactions used to be a pain in the ass. The fees were high and it was often unprofitable for developers. Small transactions are now possible with the new PayPal X API, Mobile payments via Venmo, Amazon FPS, and many more. Virtual goods are one part of the micro-transaction trend, but content whether it is music, video, or text easily fit into this category. Users are now trained to pay .99 for something. Use that to your advantage.

Assume The Device Is Portable

Desktop computers will be around for a while, but my belief is to make a bet on what is emerging, not declining. If you are building an application, assume the device that they are on will change location and frequently. My phone changes location multiple times a day, with my iPad and laptop following. Portable also means able to last a long time due to low power consumption and better developed batteries.

Zero Delay Information Flow

The point in which a user would access information used to have a significant delay. Go back a century and it was measured in days due to the lack of widespread telephone usage. Go back a decade and it was measured in hours. Devices weren’t portable, email wasn’t always-on/always connected, and SMS did not have widespread adoption. Also throw in push notifications and real time updates from applications such as Twitter. The delay of information received by a user is almost impossible to measure and probably somewhere in the average range of seconds. Think of it like this: If 9/11 happened in 2010, how much different would it have been? The delay of information flow would have made it a completely different experience for the general public. I remember the day perfectly, as I lived 20 minutes outside NYC + my high school lost 8 alumni that day. It took forever to know what was going on as the channels of TV and Radio weren’t fast enough. The web wasn’t ubiquitous and the ability to publish as fast as today was not there.

Scaleable To Billions

1 million users used to be something to celebrate as if you were king of the world. It then became 10 million users. Now we’re at the point where many companies are making 100 million users the new 1 million users. Facebook is at 500 million ACTIVE users and I’m certain it will grow to cross 1 billion. Even if you’re a service with 50 million users, the amount of records and data per user will put you in the range of scaling “something” to billions. With computing resources such as AWS available as a utility and the NoSQL Movement it is entirely possible at a reasonable cost.

Always Connected

I remember the first day I had High Speed Internet in high school. It was a world of new possibilities. What took 20 minutes, now took a minute. Sadly, I was limited to my desktop computer. Then I remember my first smart phone type device. It was before the blackberry and called the AOL Communicator. I now had access to my email and ims anywhere. Sadly, I was limited to my ims and email. I remember May 16, 2010. That was the day I picked up my iPad 3G. I now had high speed access to anything, anywhere I went (ATT actually works well for me). With 4G popping up in various cities across the country, it’s fair to assume that the dream of ubiquitous high speed internet is not too far away. The phone in my pocket has infinitely faster Internet than my desktop computer from ten years ago. I know many people are still sadly stuck without broadband, but it’s coming and soon I hope. Regardless of that timeline, it is now possible for your app to follow your users wherever they go.

Zero Barrier Distribution

Getting initial traction used to be really hard and really costly. If you were a creative type you needed a record label and if you were an app developer, you need to cut deals with portals. All of that is gone now. Artists can do most things themselves and distribute with tools like tunecore and CDBaby. Writers can self publish to the Kindle or sell print copies via LuLu. App developers can place their mobile apps in the Android and/or iTunes app store.

Everyone can leverage the power of social. If something is good enough, it can be seen by hundreds of thousand of people for a cost of almost nothing due to the accelerant that is social sharing. In the past month, this site alone has been viewed by over 70,000 people. I haven’t spent a single dime on marketing and don’t plan to. Good content with the right distribution now makes it possible to be heard. You don’t need a record deal or a Series A round to be heard.

Anything As a Service

Recurring revenue through Subscriptions is a beautiful thing. Netflix has toppled Blockbuster with it, and it’s starting to change the software world as well. The thing is, it’s not limited to digital goods. https://www.bagborroworsteal.com/g/member PThe infrastructure for turning anything into a service is now possible due to the likes of companies such as Recurly, Chargify, and Zuora.

HD is the Standard, Not Exception

I remember when I first watched a DVD movie. It was ~1998 and I had just received a black Compaq Presario with a 17 inch CRT monitor + DVD drive. I was floored with excitement and bought the first DVD I could find, Scream 1 (Yes I know, horrible choice.). Now high definition video has become the standard. My phone can record 720p video and studio quality 1080p cameras are affordable for even the most amateur film maker. All major video sharing sites now support HD Video, with YouTube now supporting up to 1080p video. Two years ago I remember complaining that I couldn’t find a good provider to upload a 720p demo video to. All new monitors/TVs do 720p now, with most doing 1080p. Easy to create HD video, easy to deliver it, and easy to consume it.

Ala Carte

It used to be that you had to buy the entire album or the entire season on DVD. Now the great big bundle is being broken up and replaced with customers being able to choose what they want. Only want these features? Sure. Only want the three good songs? Sure. Only want the two episodes you missed? Sure!

Direct Access To Customers

It used to take a long time to get through the feedback loop with customers. Maybe you had their email addresses, otherwise you would have to conduct expensive research sessions. Now you can not only talk with existing customers, but with potential customers as well. Want to get feedback from 24-32 year old women that are single in NYC? Try targeting some facebook ads. Want to engage anyone talking about Django? @ message them. Want to talk to your existing customers? Skype them, send them Wufoo surveys, or even do an visual heatmap test for a fraction of the cost.

On the flipside, a shit storm can erupt very fast and you have to be even faster to respond to it. There’s certainly a downside, but if you’re built upon a culture of customer service, you can actually contain the outbreak way faster than you could before.

I have a certain sensation these points are just the ones scratching the surface. There are most likely a fair amount that I overlooked, and maybe even some that shouldn’t be on the list. Would you like to see me constantly update this piece/turn it into a short psuedo-book with more editing/examples/interviews with companies,etc.? If so, email me j@jasonlbaptiste.com

Use the building blocks above that make sense to you, stop building what was possible yesterday, and start building what wasn’t possible yesterday. It’s what moves society forward.

You’ve probably heard the cliched phrase “If you build it, they will come.” More importantly, I would like to counter that with an even more important cliched phrase “If a tree falls in a forest and no one is around to hear it, does it make a sound?” In the web and entrepreneurship community there’s this misconception that “launching” a product ensures long term success. It doesn’t. Launching is really just a small period of time where a lot of initial attention is drawn to the product. You should certainly be proud of getting yourself to the point of launching to the public, but the real battle is won before and most certainly continuing the marathon race for years after your initial launch.  Just because you’ve built an app does not mean they will simply come and keep on coming.  The following is a good overview of some of the things entrepreneurs should be doing before, during, and after their product launch.

Pre-Launch

Customer development - From the very first day that you decide the idea will become a reality you should immediately start doing initial customer development. This makes sense for building the right product, but it also gives you a strong list of customers to go to when the product launches. The early potential customers that you talk to will also be some of your warmest leads at first due to their input into the product, which means it may be a very good fit for them when it launches. Think about it this way: if you talk to 50 potential customers before you launch, that automatically gives you a close relationship of 50 people to talk to at launch who will also help spread the word.

Build in viral loops from line 1 - Most startups don’t have a large custom acquisition budget, if any at all. It usually amounts to PR, business development, and things with a dollar value that is close to zero. One of the greatest results of the social web is the ability for viral loops to transform customer acquisition to a dollar amount that approaches zero. Perfecting your viral coefficient and viral loops isn’t just adding in a few share or like buttons, it’s a pretty in-depth process that requires commitment from day one. It’s a significant multiplier to your other customer acquisition efforts such as PR. Think of it like this: X = initial users drawn in from your first press launch and other efforts and Y= your viral coefficient. By having the right viral hooks in place, you can heavily multiply your initial efforts. Note: this usually applies to consumer startups way more than SaaS.

Build a relevant audience- This might be through your company such as what Mint did with its Mint life blog + I want my mint badges. It might also be through the brand of one of the cofounders such as what Kevin Rose did with Digg by giving it a showoff on TechTV. Numerous other web personalities have done this such as Joel and Jeff from Stack Overflow. Even if you’re not thinking of doing a startup right now, start building an audience for yourself by writing and interacting. Odds are the domain expertise you build up over the years will translate into some startup in that sector, and the audience you’ve built will be highly relevant. If you are a current startup, you should be actively teaching+sharing some knowledge that is relevant to your market.

The slow reveal - Start showing off teasers of the product before you launch it. It might just be a piece of a screenshot, but it has to be something. If you’re building an audience up and talking to the world about your super wonderful startup, you need to keep the faith that the product isn’t just Vaporware. The slow reveal will help the world believe that you’re delivering on time and continue to get them excited. Bungie does this very well with their games by revealing levels, features, and more every few weeks.

Beta user testimonials- Aside from initial customer development, your product has hopefully had contact with a fair amount of beta testers. That number varies from startup to startup, but it should certainly be > 0. Hopefully, these beta testers will give you testimonials that you can use as social proof when launching.

Build an email list- You know my obsession with email from previous articles. Email is permission marketing in its greatest form. With all of the early customer development, blogging, product revealing, etc. that you do, always try your hardest to capture an email address. Don’t let it be an afterthought. Think of it this way:

-100 people talked to for customer development
-500 beta testers
-4 hot articles per month netting 100 email addresses each for 3 months before launch (1,200 total)
-Your design is inspiring, so the slow product reveals net 1,000 more email addresses
——————-
2,800 relevant users on day one without doing any press.

Actual Launch Period

Segment your press list - All pitches were not created equally. You can’t be lazy when it comes to pitching and what works for the tech press doesn’t work for the mainstream press. Your product probably has some additional niche aspect to it. It might be Apple press since it’s an iPhone app or it might be the education press since it’s an education application.  Spend time on your pitch emails, be personal, be concise, and send enough resources for the writer.  Videos are great.

Have a date nailed down in advance - You should have a date nailed down for when the app is a golden master and you should have a separate date that is a little bit further in the future for doing the actual press launch. Don’t just say: we’re done developing+testing, let’s pitch some press. Have a set day to work towards and give yourself enough breathing room to execute well. Also check your calendar for any other major upcoming events. New apple product launching? Major conference with 50 product launches? Wait a few more days.

Embargoes Will Be Broken - You have an embargo? Aren’t you special. Guess what? Bloggers have pageviews to earn and breaking the story gets them more of them. Once the embargo is broken by one, then it’s just an absolute free for all. Make sure you are rock solid and ready to flip things on before pitching journalists. The embargoes usually stay quiet enough in advance, but things are fair game 24 hours beforehand, especially a few hours beforehand. Embargo breaking highly depends on how important, special, and hyped the product is. If you did the things listed in the pre-launch section, bloggers will want to break your embargo.

Try to coordinate with an event- This could simply be a conference you’re speaking at or something bigger like a TC Disrupt, DEMO,etc. Hell it could simply be a tech meetup that 100 close people from the tech community will be at. Doing your launch on stage in front of as many people as possible creates way more attention than sitting by yourselves in a room. Just make sure the logistics of the team are taken care of beforehand. Whoever makes sure things stay stable through the influx of traffic, shouldn’t be worrying about delivering a talk.

Giveaways- People love free stuff and those with a hungry audience love to give stuff away even more. Identify key influencers and give them samples/invites/premium accounts/etc. for your product to give away. It’s a win win situation. You get users and they get to give their audience something valuable.

Post Launch

Release Often- Yay! You launched your product and things are going well. That Techcrunch bump and spike will start to die down though. Hopefully your attention to viral hooks have allowed the userbase to grow nicely since then though. Get prepared to go through the whole launch process all over again every quarter, but on a smaller scale. Keep releasing new improvements, features, and reasons for people to talk about you. Twitter is the extreme example here, but every little change they make is tracked by the press. If you listen heavily to your customers they will also heavily market your new releases ie- “OMG Widget Corp added that new feature we’ve been waiting forever for!” Apple does this almost to the point that it’s evil. They could have put Copy and Paste in version 1.0 or 2.0 of iOs. The hardware was capable of doing it and I’m sure the engineers knew exactly what the solution was. Why did they wait though? Simple. It gives them a major expected feature for their audience to anticipate and talk about when they launch it.

Analytics reveal new markets- Starting to notice your userbase consists of a lot of women between the ages of 24-32? Never expected that, eh? That’s okay and actually awesome. That means you should now start trying to gain some press and do some business development deals that attract more of that audience. It’s like a silver platter of growth. Your analytics show this market segment makes sense and now all you have to do is target them specifically.

Business Development- Biz dev can be the eternal sandtrap that never delivers anything. That’s best left for another post. What you should do is take the traction you’ve now hopefully gained to prove you’re legit and find those who have a similar audience yet not competitive. Keep the deals simple and easy to execute.  In short, find other companies that have users that you would like to also be users of your product.

Integrate Affiliate and Partner Programs-  Either build it yourself or use Cloudomatic(flow).  It’s not just a software problem, but also a time problem.  If you integrate an affiliate program along with a referral system, you need to constantly promote it and monitor it.  People will game it, try to cheat you, and more.  With that said, it can account for a serious amount of revenue.  Just ask GetClicky, which reveals the power of their affiliate program on Mixergy.

Platform Expansion- The iPhone has been the largest source of growth for Pandora, which was already a hot startup before then. Don’t worry about getting your app on all platforms before your first launch. Gradually start expanding how people can interact from your app on different platforms (iPhone, Android, iPad, Boxee, Blackberry, Desktop app, Facebook, Twitter,etc.)

API - If it makes sense, which I hope it does, making an API available for your app can do wonders for growing your userbase. People will start tying your application as a value add. If 100 apps each with 20,000 users integrate your app via API, you have now been exposed to 2 million new potential users. I’ve been seeing the dropbox API integrated into every iPad/iPhone productivity suite as of late. I have a hunch they are going to grow heavily with the introduction of their API.

SEO/SEM/Social Advertising is your friend- Advertising might not make any sense for your company. You might not be able to do it with the proper scale due to cashflow issues. With that said, your other argument might be “Oh, but my app is viral. Advertising is a waste” Zynga is viral, right? Guess what? They are one of Facebook’s largest advertisers. Groupon is viral right? They’re also another large advertiser on Facebook. Even if you’re not a content or consumer play, SEO is still your friend. Patrick explains this well in a recent presentation Bonus: Patrick left a great comment here on HN with more advice. Read it, he knows way more than I do on this specific topic.

When I started writing this post I had an intro, pre-launch, actual launch, post-launch, and closing h2 tags. I filled in the different points in between, and quickly realized the list for pre and post launch far outweighed those for the actual launch period, which seems to be about right. The real work isn’t that short launch period, but the work beforehand + continued work afterwards.  These are just some of my initial thoughts. I’m just over 2,000 words and only scratching the surface.  Someone could literally write a book on the topic.

ps- speaking of a launch, you should probably check back in here tomorrow afternoon for a small surprise.

“If you were the inventors of facebook, you would have invented Facebook”- Mark “Jesse Eisenberg” Zuckerberg

If you’re in the tech scene you have most likely seen the theatrical trailer for The Social Network, a movie with a semi-sensational edge on the founding of Facebook. The quote above really stuck out at me, and made me realize stealing an “idea” is a lot like stealing a snapshot. Even if someone steals your precious idea, they can’t steal the more important resources+skills that aren’t apparent in the context of that very small snapshot. Focus on the things unique to you that your competitors cannot steal:

They cannot steal your long term vision: Craigslist started in SF, Facebook at harvard, Google with only millions of pages, and Microsoft started as a basic interpreter. Everyone has a minimum viable market. The real question is: ” What is your long term vision?” Your long term vision and the path that gets you there cannot be stolen. When someone tries to steal your idea, they usually just steal the current market you’re going after. Could you have imagined ConnectU having a vision like that of the Facebook platform like Mark did? I doubt it.

They cannot steal your domain expertise: Truly great ideas are organic and usually come through your own experiences. Marc Benioff started salesforce after years of understanding the business software space by working at Oracle. Many other startups are born through founder’s frustrations with processes in areas they have domain expertise in. This deep understanding, especially in vertical and/or very specific engineering cases can only come through first hand experience.

They cannot steal your market failure driven pivots: The successful version of your product or eventually products will certainly look different than the idea someone stole, which was likely in the napkin phase at the time. After they steal your initial idea a fork in the road is formed by the pivots and failures that you go through. Someone who actually has the balls to “steal your idea” will be so blindly in love with it that they will most likely be closed to feedback which may alter it.

They cannot steal your talent (at this point): Do you think the Winkelvoss twins could have recruited the tech team that is in place at Facebook today? It takes a certain class of founder to attract top notch talent. Many think that they can just outsource the development work overseas or have someone write copy for $10 an hour to make things sell. That’s just foolish. If you surround yourself with insanely smart people you trust in the early days they cannot be stolen. If they can, then you picked the wrong people to be cofounders. Only when you’re beyond the idea stage does poaching from similar companies become a problem.

They cannot steal your analytical insights: The data you collect in your early days is so very important and for the most part so very unique to your exact concept. Track every click, every conversion, and every complaint from a user. Find out what is working and most importantly what isn’t working. People trying to steal your idea will think that pixels are there just because they look pretty in that place or that those exact words were there because they sounded smart. What they don’t know is that every pixel and every word in place has meaning through rigorous analytical insights.  Here’s a great post that scientifically explains a lot of the analytics and metrics you should be tracking.

They cannot steal your plans for generating revenue: You can break down most revenue models on the Internet down to their simplest form as either advertising based or charging for something. The real value comes from the details. Who are you charging? How much? What type of ads are you running? Why can you charge that rate? Why does it convert? The most someone can steal is your pricing page or your rate card. They can’t steal the endless testing, customer development, and insights behind those numbers. You should almost hope they play follow the leader here. When it comes time for your competitors to change these numbers, they won’t know what to do. You’ll be far far ahead before they realize what to do.

They cannot steal your passion for great service: Shoes. Fucking Shoes. No. Fucking great customer service. That’s what Zappos sells. If someone tried to steal the idea for Zappos over a decade ago they would have probably said: “Let’s set up an ecommerce shop for shoes. Those Zappos guys are making a killing. It’s a great idea!” What they would have missed is the passion for great customer service. Do you think someone trying to steal the idea for Wufoo would steal the concept to write thank you notes to customers? I doubt it.

They cannot steal your passion to make this idea a reality: People stealing ideas are often followers. They are a product of the passion and vision you have displayed to them. They may often get passionate about the idea for a few days, but that passion will surely fade almost instantly once they realize the difficulties that lie ahead. Since an idea is just a snapshot, they will often lose passion/energy once they find themselves lost as to what lies beyond that one snapshot.

They cannot steal your luck: Luck is a funny thing.  It’s a weird multiplier of success.  It just happens (or doesn’t happen) to startups.  It might be the difference between very little money or a whole lot of money.  When it hits, boy is it sweet.  You can’t steal luck.  It’s like a ghost that you can only faintly see in the photograph afterwards.  If someone tried to steal it, they would probably be grabbing at air.

Be open with your ideas (Chris Dixon gives good insight here).  I suggest sharing your ideas in a blog post to solicit feedback.  It worked well for me.  They will change by the time they become real businesses.   Don’t worry about someone stealing the idea, worry about the things they cannot steal.

/* First off, this is not a fanboy piece. Apple’s successes do not depend on others having to fail. The other companies mentioned below such as Microsoft, DELL, and Google are doing pretty well. I have no intentions of starting a flamewar or Android/PC/Google/etc. debate. */

Everyone seems to think Apple is superhuman with a magical business crystal ball. When they launch a new product (okay, iPod Hi-Fi not included), it’s usually a true hit amongst consumers. If you look at Apple’s strategy it’s actually pretty simple and straight forward. The real key is Apple’s ability to stick to this simple strategy with unwavering dedication. Here’s what I feel is the key to succeed like Apple with your own startup:

You don’t need to be the first: Apple lets others Fail first. The Diamond RIO and many others existed before the iPod, PC manufacturers have been doing tablets for years, and RIMM was worth tens of billions of dollars when the iPhone was just a rumor on Gizmodo. First mover advantage is great, but it can often be a detriment. It’s sort of like buying a new model of a car the first year its available. Its nice to have it first, but you will probably have to deal with all the unforeseen problems. Let someone else be the guinea pig.

Often the first to get it right: When Apple does release a new product or even feature they are usually the first to get it right in terms of usability. They let other companies fail first and listen in on why they failed with crystal clear clarity. Look at the original iPod. They knew other MP3 players existed, but they found the benefits that people really wanted (small form factor like a Diamond RIO with the storage space similar to that of a Nomad).  John Gruber explores this concept in-depth in what happens to be one of his best articles imho.

Speak in soundbites: “Thousands of Songs. In your pocket.” “A magical and revolutionary product at an unbelievable price”  ”This changes everything. Again” Remember these phrases? Some are old and some are only months old, but they certainly stay with you over time. Apple makes sure that the message is delivered in a soundbite that a reporter or someone telling their mom can deliver in 5 seconds or less with extreme clarity. There’s always more to tell, but it’s a hell of an opener. It sets the tone for why the product matters.

Benefits are primary, features are secondary: Let’s go back to the Thousands of Songs in your pocket example.  That’s a benefit.  I now have all of my music in my pocket.  If Apple had used 5GB of space, that would be a feature.  Apple puts benefits before features and technical specs.  They emphasize the benefit of a technology.  Battery life in terms of work hours, storage in terms of music hours/total photos, etc.  Talk to your customers in terms of benefits.  Things like security, the ability to hold more stuff, work longer, and work faster are things they understand.  GHZ, MPs, GBs, and 48X are just confusing.

Keep the number products you offer low: Tim Cook said that every product Apple makes can fit on the small table at their annual shareholders meeting. Think about that: 200 billion dollar+ market cap company, which produces physical products can fit all of them on a small table. Could you imagine Asustek or HP fitting all of their products on one table? Doubtful.  They have a million different products with a million different configurations.  It’s overwhelming for the consumer.  Another way to look at apple’s simplicity in its product offerings can be seen with the introduction of the Original iMac. Steve used a 2×2 grid. Their computers are divided into laptops and desktops, each with a pro or consumer version. iMac, Mac Pro, Macbook, and Macbook Pro. That’s it. (They have since added the Mac Mini and Macbook Air. I don’t know where they exactly fit and that may be the reason why Apple sells less of these products than others). Before Steve returned to Apple, their computers used weird model numbers like Asian manufacturers. Things were a mess.

Be as proud of what you say no to than what you say yes to: Everyone wanted a Newton2 or a Netbook, but Apple wouldn’t give it to them. It just didn’t fit into their vision or where they were going.  As an entrepreneur, your customers, investors, friends, and even random strangers will want you to do things that may sound exciting and even lucrative.  That doesn’t mean you should do them. It’s hard and it’s tempting, but learn to say no way more than you say yes.  It will keep you focused and within the confines of your vision.  Here’s one of the many examples Steve exercises this belief too.

Have a consistent and polished style/user interface: Applications on the Mac or the iPhone are just a pleasure to use. Mac devs might be more UI/Designer centric than Windows devs, but I don’t have any data to back it up. Instead I’d like to attribute it to Apple’s strict human interface guidelines. You know how an iPhone app should act or how a Mac app will work. Many of the icons are similar, the interaction gestures work consistently, and the overall look of the app makes you say: “This is an application made for an Apple device.”

Don’t Design By Committee: Another interesting tidbit from the most recent D Conference was Steve Jobs’ comment that Apple was the largest startup on the planet and that there were no committee. Apple puts the company first and foremost, not individual people.  No one person, even Steve himself, is above Apple.

Don’t compete on price: Apple has never been one to compete on price. The recent low pricing of the iPad seemed to shock people, but starting at $499 for the lowest spec’d version makes it a very high priced netbook (My belief is that the iPad does what Netbook were set out to do: portable, web centric, and always on internet). When you talk Apple with others there’s a good chance you’ll hear: “BUT THEY ONLY HAVE < 10% OF THE MARKET.” That thinking is short sighted. Apple has 90%+ of the premium computer market (machines costing >$999). They make BMWs, not Fords.

Have a Clearly Defined Leader: Everyone knows Steve Jobs is the leader of Apple in the same way everyone knows Mark Zuckerberg is the leader of Facebook and Tony Hsieh is the leader of Zappos  It’s a face and a personality that people can associate with your brand.  It keeps things personal.  People want to know that someone is calling the shots and can be identified with inside of the organization.  Do you know who the CEO of AT&T or Comcast is?  I didn’t for quite a while, and I think that reflects back on to their culture.

Always recognize Your Team: Take a look at any major product announcement.  At the end of the announcement, Steve always thanks the team leaders and usually asks those who worked on the product to stand up.  Believe it or not, but you know many of Apple’s supporting cast of leaders quite well:  Phil Schiller, Jonathan Ive, Tim Cook, etc.

Deliver exceptional service: Everyone always asks me why I pay so much more for a Mac.  The main reason beyond the quality of the software and hardware?  The service.  I’ve had products break that were out of warranty or things just go wrong.  Every single time Apple has replaced them or done well by me.  They certainly didn’t have to.

Educate Your Users: Apple also spends a ton of time making sure users are educated.  Whether it’s why you should switch from a PC or how to use iPhoto, they make sure that you have a way to get educated.  It might be through the 1to1 service for only $99 or showing up for a free class in the Apple Store.  I can’t think of a single OEM that does that for their user in a clear and concise way.  Maybe it’s the lack of a dedicated retail presence from guys like DELL or HP, but there would be other ways to accomplish this.  They could easily replace some of the crapware with a free trial to Lynda.com with a dedicated HP section.

Real artists ship: Apple is a culture of shipping products out the door. The routine is pretty clear now: January is iPad/completely new product reveals (formerly Macworld time), later Winter is iOS preview, June/WWDC is new iPhone reveal with a launch a few weeks later, and Fall is iPod/iTunes update time. They usually don’t waver and they don’t stray from this schedule.

Only make a product you would give your friends+family: For a while everyone kept asking: “When is Apple making a Netbook?” The constant response would be: We don’t know how to make a computer for the price of a netbook we would be proud of. It’s just not in our DNA. It’s not something we would give to our friends and family. That’s a great rule of thumb for building a product: Is this something you would be proud enough to give to your friends+family as a Christmas gift?

Evolutionary “Porsche like” improvements: Look at this photo. It shows all four versions of the iPhone. Even the iPhone4, which is considered a huge leap forward, is still an evolutionary improvement. Take a look at the original Macbook Pro from many years ago. It still resembles the current unibody model. This reminds me of the Porsche strategy. You know a Porsche when you see it, and its design is still very similar to Porsches from over 50 years ago. The design is timeless due to evolutionary improvements.

Throw events: Marc Benioff likes to use this strategy with Salesforce in order to create buzz and it obviously works well for Apple.  The world has grown accustomed to watching Apple events and can expect products to be delivered there.  Apple funnels everyone’s emotions into one high impact event that is well thought out and coordinated.  Facebook has started to do this with F8 along with SalesForce’s annual dreamforce conference.  Throwing events lets you connect with developers and your customers, along with coordinating launches to the public.

Build mystery: Apple has been cultivating the press and building a culture of mystery with PR since its early days with Regis McKenna.  A leak is akin to a black swan event that could have never been expected and usually attributed to shit just happening (or leaving a phone at a bar while drunk).  Rumors fly rapidly for months before and Apple goes to great lengths to keep its products secret.  Build mystery and let your customers+the press anticipate what you’re about to deliver.  Business should be part showmanship.

Every pixel is guilty until proven innocent: Less is certainly more and every last design cue and pixel should have meaning.  Unless it adds something and fits in, it should not be there.  Start removing things from your product and ask yourself and your users:  ”Without this, does the product lose value?”  You will be surprised at how much just doesn’t matter.

A stream of my online social activity.

In late 2009, I wrote an article about the fascinating and very lucrative business behind email newsletters.  In the world of Twitter, Foursquare, and Tumblr, it’s not the sexiest of businesses.  In the past 9 months, a ton has happened in the space.  New entrants have emerged and past entrants are doing even better.  Let’s take a look:

Help A Reporter Out (HARO)-  A few weeks ago HARO sold to Vocus for a reported 8 figure sum (I’ve heard 20 million).  That’s right, a boostrapped email newsletter went from starting out as a facebook group, to email newsletter, to $1 million+ in revenue, and then a huge acquisition.

Thrillist-  This is my favorite out of the group due to their new strategy: mixing commerce with content.  Thrillist purchased JackThreads a couple of months ago in order to further monetize their audience and provide value.  More importantly, Thrillist is officially on record to be doing $10 million+ in sales this year along with 2 million+ subscribers.

Since then a few new and interesting players have come into the field, including many that have been funded by Bob Pittman:

GeekChicDaily-  GeekChicDaily was founded by the original founder of Wizard magazine and other publishing vets.  It caters to a crowd I’m familiar with: Geeks.  I have a list of verticals that I felt needed to be tackled, and this was one of them.  They’re doing well with a claimed 425,000+ opt-in readers, along with a nice round of funding from Bob Pittman and others that totals 1.5 million dollars.

DailyWorth-  I found out about Daily Worth from its founder, Amanda Steinberg, when I asked Quora for other verticals for email newsletters.  It is a daily email newsletter for women focused on the topic of personal finance (talk about lucrative market).  Forbes even called it one of the top 100 sites for women on the net. She already has 40k+ subs (and growing), along with an angel round of 250k.

Letter.ly-  Letter.ly is a new service from the founder of Drop.io, Sam Lessin.  The point is simple:  create a premium subscription newsletter.  Letter.ly is somewhat different from the daily content based newsletters without a price attached, but it still has the same belief:  email is a lucrative and focused channel to distribute content on.  Sam explains a lot of this on his last “blog post“.  Darren Herman makes an interesting argument against Sam’s move, but also brings up another interesting point:  Since I pay for the content, I find it to be more valuable.

Daily Deal Sites-  This would have to be the huge elephant in the room.  This space is absolutely killing it.  Groupon has gone from 0-1 billion dollars+ in valuation in under 3 years.  Other sites such as ScoopSt are also dominating it.  Though I believe the use of Facebook is a primary driver of customer acquisition, the main driver of customer retention and repeat purchasing would have to be: daily emails.