The Post Money Value

The trap of what people will pay for

2009-07-13T21:30:09-04:00

People generally do not like public restrooms. According to my best friend, women more so then men. We stand –n- spray, women, well you get the point.

Now imagine a company called Fresh as a Daisy. They have a chain of clean restrooms in your town, GPS located, etc. Plus they have franchise/satellite locations in popular places like Borders (hint: I got this blog post idea in the Borders Bookstore located in Oxnard California. Somebody with a mop? Anybody? Yowsa…).

You pay 10 bucks a month for access to these private bathrooms with live attendants, etc, so the places are eat of the floor spotless. Sorry for the visual.

Everybody says they hate the pig pen type bathrooms, everybody says they want clean restrooms, etc.

Nobody would pay for this.

They expect it as part of retail experience. In fact, when you gotta go and you head into the nearby Starbucks, you don’t care about the triple vanilla, de-cafe, venti, mocha, latte, you care about toilet paper and getting on with the rest of your day.

My point of this post is as you are building your start up, watch for the pay trap.

The idea can be killer, people will high five you, etc. But will they pay? Does the problem you are solving have money anywhere in it?

[Random Idea file: Somebody should build a simple bathroom rating app for the mobile device. Central server, linked into Google maps, etc. People rate the bathrooms and, over time, you have all this integrated into a nice db so when you gotta go, that mobile device on your hip/in your purse tells you where the closest clean one is. Maybe no money, but nice public service.]

Expectations Your Secret Weapon

2009-07-13T14:44:37-04:00

Two recent stories; one point to make.

Another Mac issue. My trusty MacBook had an odd smell coming out of it. That electronics burning, uh oh, kind of smell. It was in passing but the Ethernet port stopped working. The Apple genius says, ruh oh, fried board. They have to order one and then it will take 3 or 4 days based on workload to get it back to me. I keep the machine until I get a call the next day. Part is in, come on by. I drop by on Saturday morning and check my sick puppy in. They say, yeah, based on backlog, 3 or 4 days. That evening at 6:30p, I get a call from the Apple store. All fixed, come get it.

Sweet!

I was inviting somebody to connect on LinkedIn and I got this warning notice that said be careful lots of people are ignoring you or some such. Very weird since ever single LinkedIn invite I’ve sent has been accepted (I track em) or bounced because of people’s email addresses. I sent a note to customer service asking for the explanation of the error message and I got back the standard email acknowledging my note and indicating they’d get back to me shortly. About 24 hours later, I get back a nice note from “Stacey” removing this warning and giving me a full explanation of what/how/why, etc.

Nice.

My point to you and your startup is from the second you start to interact with the fickle public (like me) you are on the expectation setting treadmill and you need to be in seriously good shape to stay on it. There are services I use and products I buy which have choices driven totally by the expectations met/exceeded.

To all the software startups who have sent me ‘instant responses’ on questions or bugs, it’s a great investment to get a loyal customer.

Set expectations and blow them away. Your competition will be forced to follow and if it isn’t in their DNA, you get the advantage.

A Great VC Way of Thinking*

2009-07-09T23:13:24-04:00

This is a great quote:

“A VC is not in the business to NOT lose money.”

Think about it. It sounds wrong until you think about what this really means. It’s an awesome mindset. Next time you are with your favorite VC, ask her what she thinks of this way of thinking. It will tell you a lot.

Quote from: Bryan Kerdman, Edgestone Capital Partners.

(* I changed ‘loose’ to back to the original ‘lose’ which was Bryan’s original point. I was trying to be a bit deeper about loosening up, taking more risk, etc. Clearly, blew that one!)

The Flair Gun Analogy

2009-07-09T11:19:51-04:00

In working with my fair share of startups, I’ve landed on this fairly interesting analogy that some folks seem to like so I’m sharing this with the broader world.

Start Ups are a lot like flare guns. Aimed right they get the light seriously high enough to get everybody’s attention. This attention causes lots of customers to show up but also lots of ‘competitors’ to go ‘gee, we should do X’ and then they get on it. So, the good news is that everybody loves you, the bad news becomes everybody wakes up and wants your piece of your pie. Google has lived a long time fending off Microsoft, now here comes Bing which finally got on the beach and appears to be digging in for the fight. Twitter got up there and so far nobody has knocked them off (yet).

I point this out because it impacts a few things as you grow.

Getting a hit on Techcrunch, presenting at Demo, having the bloggers go wild, seeing a TweetFeast on your behalf; all of these things could arguably be labeled as “firing the flare” with varying degrees of height, light, notice, etc. It can be a head fake of success. Since you will be yesterdays news in about a split second, what happens after? When do you press on the gas? Spend marketing money?

If you assume somebody says, we can do that or you wake up the competition saying, throw a zillion dollars at it, etc, what’s your plan?

My council to you is spend the cycles planning out the successful firing of that flare. What’s happens if people do like it? This SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis will be a great tool for you and your team. It also lays out to your board and investors that you are thinking about the landscape, planning, and money spending within a well thought out context.

A SWOT diagram is a one page document which can help everybody focus.

Thanks for all the Fish

2009-07-07T08:52:41-04:00

Last week was the conclusion of my VC adventure. For 8 years I’ve been doing the voodoo that VCs do and it’s been great. I’ve realized, tho, Venture Capital is for the most part a spectator sport. You are a coach in some cases, yes, but in general, you write the check, do some nurturing but watch (hope for!) the growth.

I am not a good spectator. I am a terrible back seat driver (ask anyone!) and I really miss those days of making products and pressing the buttons.

Naturally, there will be the rumors and propaganda regarding the VC industry in Canada, etc, etc. So, a few tidbits for you.

No, JLA Ventures isn’t the next casualty in Canada. Far from it, the upcoming announcements in the fall will certainly put that nonsense to rest. I’ve written many times about the “brain flip” and in this case the bell tolls for me. Going forward, JLA will continue to be the leading VC in Canada. They are the best, go there first, nuff said!
No, I don’t think the VC community is dead in Canada. I’ve already talked about that one. I believed it then and I believe it now.
Yes, I believe now is a great time to be doing a startup. Nuff said on that one.
No, I’m not a casualty of anything or a symptom of anything. It’s really as clean and simple as it is. The VC thing and moi is not a long term good mix.

So, that’s a wrap for me. I am really grateful to John Albright for giving me the opportunity at JLA Ventures. The proof of being a risk taker is taking some wonk and letting him play with the big boys.

JLA has great portfolio of companies with amazing management teams all of whom are in great shape by any metrics you’d like to use. It’s been an honor to have been part of their story.

I have a number of posts queued up that I hope will be helpful as you continue your quest for startup glory, stay tuned to this station.

Go code something! (I am)

A Very Clear Lesson for Your Start-Up

2009-06-22T23:37:53-04:00

People love convenience, right? You can always count on people who will pay for the benefit of stepping up, past, and through others, eh?

Not necessarily.

Verified Identity Pass Inc., the company behind the CLEAR card has shut down. This was the trusted traveler card that essentially was a line cut card for airport security. The company couldn't reach a deal with one of her creditors and, buh bye.

The basic premise of the company was that business people would pay for this bad boy to cut down on the time in line. Combine this with a NEXUS Card and you were rocking when it came to going over borders and through security at special airports. It all made sense and I, along with a couple hundred thousand of my friends ponied up the cash.

Unfortunately, the basic bet ran smack into the realities.

1. Signing up was a bit of a hassle. Fingerprints, eye scans, etc.
2. It wasn't available at every airport so you had a a narrow field of paying customers that were road warriors between to clear cities.
3. The road less traveled, aka, the economic hairball didn't help a bit.

Personally, I admire the people who tried it, the money folks who backed it, and the customers to signed up and (for the most part) loved it.

Lesson to you: People, habits, and friction to get that transaction completed. Pesky but deadly details.

RIP: CLEAR

Geeks Linked to Business = Success

2009-06-21T23:35:25-04:00

Here are two examples from my past that I will connect in a minute, stay with me. A very long time ago, I had an opportunity to work for Sabre (the airline reservations system). During the interview process, I had a chance to speak with 5 different systems developers. I asked each one: “What do you do?” In each case, these folks were able to link exactly what they do to a business result. For example, one guy told me that he was responsible for the queuing algorithms for the reservations line. He knew that by shaving off .0001% of a second in the route to free sequence, he could improve throughput which directly translated in X dollars of revenue on an annual basis.

It was amazing. Contrast that to some big lumbering insurance company I worked for in the late 80’s. The what do you do question would be answered with “I code” or “I’m an analyst” or “I’m a tape (!) librarian.” Any answer except the specifics of what they do as it relates to the business.

Fast forward to today. The problem/difference exists today. As part of due diligence on companies, I ask everybody in the company “What do you do” and am always surprised how the company’s success trajectory can usually be linked to to the granularity of the answer(s).

I Love Rewards, a JLA portfolio company, is a particularly good example of this thinking in action. The technical team at ILR gets this in spades. There is the “simple” process of looking up your points, picking a reward, etc, which makes up a fairly good chunk of the ILR offering. When you ask one of the coders “what do you do”, you get back answers around the speed of the dB look ups. They will tell you they’ve tweaked/improved some queries by X% so that the user gets a result faster which in turn gives them a great experience which is then passed on to fellow employees. They translate that directly into sign ups which translates into new customers, seats, points, etc, all of which means good things to the company.

Joe Taiabjee, my technical uber-brain at b5 Media, knows to the sub atomic particle level how fast pages load, where, what, and why because he can track ad serving, page abandonment rates, etc, and tie it directly to revenue. He is not “just the tech guy” by a long shot.

Our main tech man Frank, over at Xobni, along with Adam (one of the co-founders) obsess over every pixel paint, refresh, etc. When I interviewed Adam and we go past the co-founder state, he dived into the WDYD answer with an almost line by line source code linkage to how it impacted the product and where the paid things would be impacted. It was impressive.

And so it goes. If you are a CEO/Founder, ask yourself if you’ve got your entire team thinking like this. Can a random stranger come in and ask that WDYD question with results that are technical but business focused.

If your tech team is a “those people” or they think of “them” as the “others” in the company, you’ve got a problem.

I’m beginning to think this is a seriously important key to success.

The Stop Watch Test

2009-06-21T23:02:13-04:00

Over the past few weeks, I’ve been heads down working on a bunch of things for a few portfolio companies as well as having a ton of 30 minute no harm, no foul meetings. One of the interesting things about those meetings is the vast majority of them are pretty much centered around either “Let me tell you about my idea/business” or a discussion about the VC/Angel world.

On the idea/business front, I’ve been giving people the 60 second stop watch test. I simply say, okay, step one, let’s see if you can, in 60 seconds, tell me what you do and why. Currently, I’m running about a 35% success rate which is, in a weird way, a good thing because we can then spend 39 minutes working on a bit of fine tuning. Makes for a true no harm, no foul session.

Try it. Get a clock/watch with a second hand and see if you can do this. 60 seconds is a long time, much longer than you realize. Check out the various radio and tv ‘quick updates’ and watch how much can be packed into 60 seconds.

Get this down to a science, it is a great step one. With a tight opening, lots of practice, you’d be amazed how many people will appreciate the clarity, direct information, and engage you in a productive conversation.

60 seconds.

P.S. I’ve typically told people, what’s the problem, how do you solve it, where’s the money, as being the three things that are core to any ‘pitch’ or idea looking for funding. What you are doing and why in sixty seconds is the same things.

Big Upgrade At Microsoft

2009-06-17T14:57:28-04:00

Microsoft is formally giving up on American talent for executives.

I know this to be true because Uber-Canadian Mark Relph is leaving Microsoft Canada and heading over to Redmond to be in charge of the Windows Ecosystem Team. You can read about his promotion here but before you head off let me just tell you that the quality of management in MSFT HQ just went up by a factor of 100. Mike Nash, Mark’s new boss (and also one of the smart/good guys in Redmond), just guaranteed his own promotion to super senior vice chancellor or whatever the next level is for Dr. Nash.

Congrats to my buddy Mark. I’ll miss you. Can I have your laptop? It has a Canadian plug and they’ll give you a new one in Redmond.

P.S. I think I saw David Crow wheeling your chair out the back door.

OVCF Sends Out the Love to ILR

2009-06-17T13:45:37-04:00

Razor and the gang at I Love Rewards continue to blow the doors off on all fronts and metrics. The fine folks at the Ontario Venture Capital Fund (OVCF) jumped onto the ILR bandwagon with its first direct co-investment of $1.8 million dollars. This brings the total capital raised to $8.7 million.

ILR is an amazing rewards and recognition company. Check em out of you are looking to motivate your team.

Congrats Team!