Web X.0

Startup Nation

2009-11-18T13:47:32-05:00

I recently had the pleasure of hearing Dan Senor, author of Startup Nation, at the most recent TechAviv meetup. I just bought 10 copies of the book, and will be giving them away to 10 Outbrain customers. More details on that below.

Yaron Samid did a great job describing what Startup Nation is about:

"...the book asks and answers the question; How is it that a nation only 60 years old, 7 million people strong (smaller than New Jersey), literally surrounded by enemies, in a constant state of war since its founding and with no natural resources, has:

Highest concentration of startups in the world
Most VC investments per capita in the world
More NASDAQ listed companies than any country besides the US, more than all of Europe, India, China and Japan combined
Economy barely hit by global economic crisis

In short, how do we kick ass with such little feet? The book and its answers are particularly timely for a world struggling out of a global economic crisis. Most agree that there’s only one way out; Innovation, and Israel is its hotbed..."

(Yaron's full post - here).

If you're interested in the book, and want to help get more people to read it by pushing it to the Amazon Best Seller list, go ahead and buy your copy here.

Or, if you want a better deal, I will be giving away 10 copies of the book to the first 10 people who submit a link to Outbrain's sponsored link service - Outloud. With Outloud you can amplify an article or blog post of your choice on our network of thousands of sites and newspapers (including USA Today, Slate, Fox, Tribune, Golf.com, SportingNews, etc, etc). The cost is only $10/month for each story you choose to submit, and there is no long term commitment. You can promote any story you want to on the web - it could be about your company, a blog post you wrote, or a great article about a cause you'd like to support. Hey - you can even help get the word about Startup Nation out to more people by sponsoring this article on Newsweek!

(More details on Outloud here).

All you need to do is go to Outloud, submit your story, and let me know (either by Twitter, or on a comment here, or shoot me an email to galai[at]outbrain[dot]com). The first 10 people to do this will get a copy of the book (which, btw, sells at book stores for $27, not including the shipping... so you'd get over $40 in value for a $10 investment, and help promote a great book in the process).

In the mean time, here's a short interview with Dan Senor, author of the book:

Outloud

2009-11-10T10:15:00-05:00

Today we (=Outbrain) are announcing the launch of our sponsored link program called Outloud. Outbrain now powers the recommended/related article links ("People who liked this article also liked these:") on thousands of blogs and newspapers including USA Today, Slate, Fox, Tribune, Golf.com and SportingNews.

Using Outloud, companies and bloggers can now submit links to stories into our index. We then show links to those stories on the most relevant pages in our network. The cost is a flat $10-per-month for each story you choose to submit via Outloud. There is no long-term commitments or anything like that, so this is practically risk-free.

Here are a few examples of what Outloud is perfect for:

Amplifying earned media - Having bloggers write an authentic, positive review of your company or product is one of the most powerful endorsements you could ever hope for. But once that blog post is written - how many people actually read it? How do you get more, interested people to read those reviews? With Outloud you can submit links to authentic reviews of your company or product, and we'll show them to people who are actively reading related content.
Amplifying PR - Similarly, PR folks are focused on getting press and blog coverage for their clients. But once your client gets the PR, how can you maximize its effect. For $10/month on Outloud you can amplify great press coverage and get many more people to hear about it.
Getting new readers - If you're a blogger looking to get new readers exposed to your content, Outloud is a great and affordable way to do it. Choose the 5-10 stories on your blog which you think are best, and submit them to Outloud for $10/month each. We will then show your links on the most relevant pages in out network of thousands of blogs and newspapers.

The idea around Outloud is simple - we want to be able to show the best sponsored links possible on each page using our service. And to do that, we don't want you thinking twice of whether you should or shouldn't be submitting stories to Outloud - we've reduced the price barrier to the lowest reasonably possible.

The links you submit can be on your own blog, or on any other website in the world. If Walt Mossberg covered your company on WSJ, you are more than welcome to submit that link to Outloud as well. In fact, we think that the best links to submit would be authentic stories writen about you by other people.

But what we do insist on is that all links in Outloud be pointing to interesting, real content. We will be gladly rejecting any links to spam, scams, non-disclosed self-promotions, fake content, splogs, etc. Outbrain has always been about providing readers with the most interesting and relevant links, and we plan to continue doing so whether the links are free or sponsored.

Here's an example of how Outloud links might look on a site using our service:

So go ahead and submit your stories to Outloud, and get them read!

(Thanks Eze and Jay for the coverage!)

Speaking at two events

2009-07-10T16:37:26-04:00

I'll be speaking at two events in the next couple of weeks:

The Israeli Business Forum of New York (IBF) is an apolitical, nonprofit organization facilitating quality business discussions among Israeli professionals in New York. I'll be speaking there on Tuesday, July 28th at 6:30pm. Details and registration here.

On Wednesday, July 22nd, I'll be speaking on a panel at an event benefiting Rabin Medical Center in Israel. Registration is here.

With me on the panel will be Joel Naroff – Chief Economist of TD Bank and Dr. Lindsay Rosenwald – Founder of Paramount BioCapital. Cost is $75, and it all goes to benefit the new emergency and trauma center at Rabin Medical Center.

Evaluating the real risk of swine flu

2009-05-01T12:33:16-04:00

I am sick and tired of all this swine flu craziness. Does anyone remember the last pandemics which were going to wipe out humanity? - avian flu, SARS, ebola, anthrax, etc... Where did they all go?! And hey - weren't we all supposed to have been mad cows by now?!?

I want to suggest a new formula for evaluating the real risk of pandemics like the swine flu:

# of infected people / $$'s made by the media

Anyone out there have the numbers re swine flu? Regular flu? Bee stings? Fire ant attacks?

Based on my proposed formula, I bet swine flu is probably one of the safest and mildest diseases in the world.

Now world - get back to work...

"Journalism"

2009-04-26T01:26:03-04:00

Globes published today an obnoxious article (Hebrew) about Better Place - Shai Agassi's electric car venture. From the first word through the last, it was clearly setup as a hit-job by a clueless nobody "journalist" who has obviously never tried to accomplish anything meaningful in her life.

Disclosures: I'm not an expert on the subject matter. I'm not very familiar with the company. I've never met or spoken with Shai Agassi, and have no other connections I'm aware of with his company.

The "article" attacks Better Place for failing to deliver on a variety of milestones that the "journalist" had apparently expected them to. For example, they did not yet start manufacturing cars or employing 50,000 people in Israel after less than two years since the company was founded. The writer of course has started multiple successful companies, and has extensive experience in building factories within months....

This seems to have been going on for a while now - On the one hand Better Place has gotten some incredible press, and on the other hand "journalists" ripping apart Shai and the company, as if they owed them or the public anything (they don't...). It's sad to see this kind of hit-job journalism which is designed to do nothing more than sell a few more copies of the newspapers. The cost of hit-jobs by mediocre writers is much cheaper than actual journalistic work by journalists. And unfortunately, tabloid crap like this sells newspapers...

So as an FYI to Ms. Shlomit Lan - startups in general, and specifically one as ambitious as Better Place, take years or decades to build. During those years, as long as it's a law-abiding, private company, it owes *nothing* to the public as it relates to timelines, milestones, business models, pricing, etc, etc. Building a great company is never as simple or quick as it seems, and if they figure out half of the challenges they currently face in say 5 years, that will be an incredible achievement. Passing this kind of judgment on the company so early in the game proves you're either clueless, or jealous, or you've intentionally setup a hit-job.

A couple of years ago I attended a conference where Yossi Vardi was part of a panel judging startups. After passing criticism to a couple of the entrepreneurs, Yossi stopped the conference, took the microphone, and said he has something critically important to remind all the judges, journalists and investors dealing with entrepreneurs. He quoted Theodore Roosevelt's 1910 speech (also covered by TechCrunch here):

"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

Shai Aggasi is the man in the arena. He might fail miserably, but he will do so while daring to make great things happen.

I know too little to determine whether Better Place is good for the environment or bad (I suspect it's a pretty good alternative to buying oil to fund the bad guys and burn it to destroy the world...). I simply dread the day that "journalists" kill innovation and innovators by abusing their power to run hit jobs like this on the men in the arena. Therefore I had to respond.

Finally - to anyone who is genuinely interested in this project, I highly recommend this hugely inspiring talk that Shai Agassi recently gave at TED:

Free ad space

2009-02-13T15:28:12-05:00

For an experiment I'm doing, I'd like to offer a month's worth of *free* ad space on several blogs for one of the following products:

If you run marketing (or manage the ad budgets) for any of these product/companies, drop me a note: yaron[at]galai[dot]com

The first company/agency to respond will get the free ad space, no strings attached.

The Lighthouse

2009-02-02T12:50:32-05:00

A key to a successful startup journey is to always know where you're headed. The company has to always have a single lighthouse that it is pursuing. More importantly - everyone on your team has to know exactly what that lighthouse is. This might sound easy, but in reality most startups fail miserably on choosing a lighthouse, communicating it clearly to the team, and sticking to it obsessively.

A healthy lighthouse can usually be reduced to a chart. Curiously, the most trivial chart - the revenue chart - is hardly ever a good lighthouse to choose... I'll explain why below. The lighthouse, if properly communicated to every single person in the company, should determine pretty much everything that gets done by by each team member. In a company with a clearly communicated lighthouse, everyone - junior or senior, engineer or biz dev, in NY HQ or in the Israel R&D - should prioritize tasks nearly identically. If your company is struggling often with priorities, your problem is extremely simple to diagnose - you are most likely missing a clear lighthouse.

For a web company, the trivial lighthouses are - page views, unique users, etc. Choosing trivial metrics as the company's lighthouse is acceptable, but the problem is that it will likely be the same lighthouse used by many other companies. That means that that the faster/bigger boat, not necessarily the smarter one, will likely win. If you are the biggest baddest boat around (aka "Google") - you should be fine. If you're among the 99.9% other startups, you might want to dig deeper and find your unique lighthouse.

A good lighthouse is also clearly actionable. A lighthouse that implies action will help everyone focus on the biggest opportunities. For example - when all search engines were focused on ranking sites based on keyword counts, Google's lighthouse was to perfect the ranking of results based on the site's authority. Later when Google was a late entrant to the PPC search advertising market, their lighthouse was maximizing the yield of each ad shown while their main competition was focused on maximizing the bids.

Which brings me to another attribute of a good lighthouse. And this one isn't always achievable, but it's beautiful when it is -

A great lighthouse is fairly invisible outside the company. In Google's example, it isn't immediately clear to an outsider how search results are ranked, and is therefore very difficult to play the same game. A good lighthouse let's you compete in a crowded market while playing a game that's completely different from your competition.

Revenue is therefore almost never a good lighthouse. It is not actionable and it does inherently not let you play a different game in the same ball field. But unless you're doing not-for-profit work, revenues is probably a primary goal for you and your shareholders. The right way to reconcile this gap is to ensure that your chosen lighthouse has a reasonable eventual linkage to revenues. For example, if your lighthouse is to maximize unique users, that can later (if successful!) be translated to advertising revenues.

The lighthouse cascade

Most importantly for startups - a lighthouse is *not* permanent. It should change as the company grows and develops its product. The important thing is to know when to transition lighthouses, how to do it, and most critically - how to communicate to everyone what the current lighthouse is.

Each lighthouse should have a logical connection to the next one. For example, your 1st lighthouse might be to focus on building a big user base, while your 2nd lighthouse might be to maximize the page-views (so the actionable parts are to grow both the user base, as well as page-views-per-user). Each metric should eventually be a supporter of those future metrics.

The lighthouse metrics should not only cascade logically from one to the next, but also eventually have a strong connection to revenues. Choosing a good lighthouse and planning how your metrics will eventually cascade into revenues does not ensure your company's success, but it is nearly impossible to succeed if you (and your whole team) don't know what your lighthouse is at all times.

{image CC - mischiru. thanks!}

Best reality TV show format

2009-01-09T11:45:43-05:00

So here is proof that something good can emerge from a war situation. Israeli TV has pretty much become 100% reality shows this year, importing all the American/European junk TV formats (Survivor, Big Brother, etc). Ugh...

It took a war in Gaza for Israel's Channel 2 to come up with an original, and incredibly good, reality show format. The kids in southern Israel have not been going to school for over two weeks now, and are at homes and shelters with not much to do. The idea for the TV show (named "Learning Together") is super-simple - Put cameras inside a classroom and bring the most interesting people in the country to give a lesson on a subject of their choice. There are several "classes" each morning, passed by people like: Presidents of Israel, book authors, etc. For example - as a kid (and even an adult) - could you hope for anything more interesting than getting a class in citizenship by Nobel Prize winner, President Shimon Peres?... Wow.

I'm not sure what the ratings are for this show, but I love how for a near zero production cost a new format emerged which is intelligent, educational and original.

Moneyball - highly recommended

2009-01-08T01:14:48-05:00

Last week I participated in a roundtable organized by Carmel Ventures, with probably 20-30 entrepreneurs in the room. I recommended they all read Moneyball by Michael Lewis - a book I read a couple of years ago. I think most of the people in the room didn't have a chance to take note of the recommendation, so I'm repeating it here.

Moneyball is a must-read for any entrepreneur. It has nothing to do with entrepreneurship (it's about baseball), and it's not a very good book (in the literal sense, I mean).

But if you read it with an entrepreneur state of mind, there are great lessons to be learned... 2 have been particularly useful for me:

Look at the same game differently - Most startups compete with many other companies for the same market share. In the online world in particular you are likely to be competing with hugely successful companies like Google, Yahoo, Amazon, etc. You can't win by playing their game. But you can absolutely win by playing a different game in the same space. An example that comes to mind is Yelp - while all other yellow pages and review sites are focused on getting readers and selling to advertisers, Yelp seems to be playing a completely different game. It looks like they are focused obsessively on their reviewers - giving them tools, recognition, community etc. Yelp is looking at the exact same market as all other yellow page companies are, but playing a totally different game.
Understand what metrics really matter for your business - the metrics that *seem* to matter for your business might not be the ones that really determine your eventual success. Moneyball shows how the Oakland A's found that most of the metrics that baseball teams have been using for decades (batting average, # of steals, etc) had little or nothing to do with how successful the teams were. Another example is a post I wrote recently about how PV's and ad revenues might not be the best success metrics for publishers.

Bottom line - highly recommended. Get it here at Amazon or here at Audible.

Pricing Display / Demand Creation Ads

2008-12-16T18:10:01-05:00

Following Fred Wilson's post about display advertising, and my post about demand-creation vs. demand-fulfillment advertising, I had another thought I'll share here regarding the pricing of "display" advertising (or in my terminology - Demand Creation Advertising)Fred Wilson says:

"...However, this study does not determine what the right price for display advertising is. Search is measurable by virtue of the cost per click and display is not. And if click thru isn't the right measure, then display has an issue..."

And I agree with Fred 100% on that... While auction-based CPC (cost-per-click) is a great way to price the value of demand-fulfillment-ads^[1], it is certainly *not* the right way to price advertising which is introducing a brand and creating demand. That's because the users are *not* in immediate shopping mode, and the effect of the advertising on them is not necessarily embodied in an immediate click.

So following my thread, I had an idea which is slightly theoretical at this point, but could serve as a way to price Demand Creation Ads in the future:
Search ad inventory is inherently limited. That is why CPC bids on search terms are bidded up over time. In other words, the bids advertisers place reflect the balance between the value they get from each click, and the amount of clicks available on their keywords.

If this is true, then a mechanism that creates a lot more search queries and clicks should increase supply, thus reducing the cost of each keyword. One such mechanism are Demand Creation Ads (or, if you prefer - display ads). These ads don't necessarily create any immediate clicks, but they should create more searches for the brand down the road.

Assuming all this could be aggregated and tracked efficiently (a big IF), you could then price display ads based on one metric - the increase they create in future searches.
Then the next step in pricing would be to identify a common denominator between the pricing of search ads and the pricing of display ads. So for example, as an advertiser I would know that I could pay $1 per search click, or I could pay 50c for display ads that created enough future searches to reduce my search CPC to 40c per-click.

Again - I'm not sure how doable all this is, but if it were - I think this would bring on the golden age of display/demand-creation ads on the web, making them suddenly as efficient as search ads are perceived today.

UPDATE: John Battelle just posted some interesting data from eMarketer on the effect of demand-creation-ads on the # of search queries ----------------------------->

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[1] It can be argued that CPA is a more perfect pricing model than CPC is, because it ties directly to the only real conversion metric that matters - the purchasing of a product. That is technically true, but I think that CPA has a few inherit deficiencies which make it a pretty bad solution for pricing ad inventory:

It moves all the risk from the advertiser to the publisher. CPC perfectly balances the risks on both sides.
CPC is a wonderful common denominator that allows all advertisers to participate in a single, easy-to-understand, marketplace. There is no comparable denominator in CPA.
CPA requires a LOT of data points in order to establish the value of each ad and its probability of generating revenue. That makes it completely ineffective for a centralized and efficient marketplace.