Attention NYC-area startups.

Have: 1 entrepreneur who’s launched web products in e-commerce, ad tech and social networking; loves

• giving web startups feedback,
• Steven Blank’s customer development / lean startup approach (wikipedia, big deck, small deck, blog, book, course)
• helping you plan the growth strategy for the seven-year “overnight success” you’re working on.

Need: More startups to help.

The Catch? There isn’t one. Well, not one that’s fungible with your corner grocer. Yours truly is rather, ahem, under-employed at the moment. Over the past two years I’ve been fortunate enough to meet many of “the really smart people doing the really cool stuff” here in NYC, and with time on my hands I’d like nothing more than to meet the rest of you. (non-NYC people, don’t be shy. Have browser, will email… or drop.io or acrobat.com…).

The details: Contact me and we can set up a time to chat. Or just send me a quick overview and a link to your site, blog or business plan, such as it is. I’ll spend a few hours with it, and you, and give you my thoughts on your product, customers (real or potential), where to look for more of them, and how to reach them. No rocket science, but solid, proven strategies for growing scalable businesses. As above, this is all totally free for you.

So, if you’re working on a web startup, and you’d like some gratis feedback on your product or go-to-market strategy… what are you waiting for? Get in touch, thanks!

Jonah Keegan
jonahpkeegan at Google’s webmail
Jonah’s Twitter
Jonah’s Skype

Moriza

Lunches with folks who have lots of social authority are frequently auctioned for charity. Does a long-tail lunch market exist?

I want a long-tail auction site for lunches that donates all proceeds after expenses to charity.

An individual willing to have a lunch (presumably someone with some amount of social authority) posts date, time and city to the site.

Anyone interested in a lunch with that person bids, and the auction closes at some point prior to the lunch with sufficient time for logistical arrangements. Winning bidder gets a lunch with someone they want to meet, the “social celebrity” raises some cash for a cause of their choice.

This was inspired by the desire to have lunch with someone in NYC that I don’t yet know, First Round Capital’s resurrected office hours, John Boyd’s MeetingWave and a conversation yesterday where I was told about “interview auctions” at top-flight business schools, where demand exceeds supply for certain employers, and the open slots are filled by auction.

Tech entrepreneurs who dream of launching “the next Google” should consider customer retention, a largely untapped goldmine for search stakeholders (platform, consumers, and merchants).

Search Acquisition

Paid search has fundamentally changed the economics of customer acquisition, driving new business creation in multiple industries and reaping the enormous rewards that have historically accrued to similar transformative technologies (Intel, Microsoft, etc).

But that’s yesterdays news, entrepreneurs who dream of global scale and revolutionary economic impact want to know what’s next. What technology will unlock value for businesses (and consumers) on a similar scale, and launch the next startup into the large-cap corporate firmament? For a possible answer, let’s first look at one of the reasons paid search is so successful, it’s vibrant long tail of both consumer and merchant activity.

The long tail of search is where the entrepreneurs live, identifying and creating new markets. And key to these exploratory businesses, aka startups, is customer acquisition cost.

Acquisition is critical for any entrepreneur with a “startup” rather than a business. A startup’s costs exceed its revenue, and for the vast majority of companies, seed capital delimits the time available until profitability or failure (again, for the vast majority of companies, re-capitalizing is not an option).

Search-based acquisition affords the entrepreneur transparency and a moderate level of control over this cost, making it an enormously attractive acquisition channel.

After Acquisition Comes…

One way to get ahead of the curve in business is to identify a large group of economic actors, with a life-cycle that has known, or at least highly probable, needs, and provide a solution. Economist Burton Malkiel made a tidy fortune investing ahead of baby boomers’ needs, and profiting as boomers flooded into those markets (diapers, cars, drugs, etc).

Applying this model to the search ecosystem, we find thousands of online businesses that have identified an opportunity, and thanks to the efficiencies of search acquisition, have launched and grown to profitability.

So what’s next for search businesses? Search solved acquisition, but what are they doing to retain those customers?

Customer Retention

I believe the average search business hasn’t paid much attention to the issue of customer retention. Acquisition costs have been so low, in what are still early days for this marketing technology, that the massive pool of potential customers maintains a steady-state environment of stable profitability, and perhaps even growth. We can count on reversion to the mean in any economic system however, so these days are numbered, and many of these businesses are going to have to look elsewhere to stay in the black and/or continue growing.

The tactics of customer retention are well-established, but much as pre-internet global customer acquisition was the exclusive domain of large companies, the absence of scalable, long-tail-oriented retention platforms has kept this powerful growth tool out of reach for most small businesses.

A platform that allows an ecosystem of customer-retention applications to flourish has transformative potential, a business and technology revolution that creates the elusive “next Google.”

Examples and Opportunities

Salesforce.com (and of course, the Google Apps suite… including website optimizer) is one such player, but their top-down, vendor-services orientation cannot tap into organic customer behavior in quite the way search does, providing a true ecosystem for perpetual economic innovation.

Who has the behavioral data that will drive innovation in retention technology on par with search? Social networks.

Consider the Facebook Connect program. The consensus is that Facebook will build an ad network on top of this data asset. As the only big social network to take significant risks in the past two years, my bet is we’re in store for a lot more.

Imagine Facebook providing their applications ecosystem with access to this data, significant innovation in customer retention results, creating scalable retention solutions for multiple industries, all of them sharing the low cost of entry and (relative) ease of operation that permitted the explosive growth of paid search.

Open social initiatives have the potential to connect innovators and consumers directly, but cut out the “all the world’s a stack” kerfluff-ing (advocated most fiercely, no surprise, by folks with the biggest stake in its success) and the historical antecedents say we need a trusted walled garden to get us there first. Would the internet be where it is today without AOL? Facebook will chart this path for the industry, and elevate the art of “my lifedata online” to the point where users can accept this data swimming out of the Facebook pool to join the wider web experience.

As online economics mature, merchants will need additional innovations to generate continued sales and margin growth. A long tail-friendly retention technology platform that offers utility to both consumers and merchants is going to be a search-scale win, creating enough new value in the lives of its users that the provider’s share will catapult them into the realm of the most profitable companies.

Coda: The futurist’s are discussing this elsewhere, with a closer look at Connect and more product insight. For the early stages of one of the most important tech-entrepreneur stories for 2009, Nicholas Carlson and Ben Parr both have very good recent reads up at Alley Insider and Mashable, respectively.

CIA.com appears to be a legit dial-up ISP. They offer subscribers a “free” name@cia.com email address. Which someone is using (or spoofing) for this scammy scam scam attack:

Hello xxx@gmail.com ,

Your IP address has been logged on more than 20 illegal Websites.

This does not necessary means that You browsed all of this illegal content.

Theres possibility someone else has access to your PC, physically or someone else gained remote access to your PC machine.

As a matter of that, we kindly ask You to answer all our questions regarding this case in reasonable amount of time.

List of all our questions is available for download at http://www.some.scammy.scam.scam.trojan.link.with.a.ba.TLD/

If you do not answer these questions until 10.07.2008 we will start investigation and make final decision on our own. In that case, You’ll get the charge in writing soon after.

Please note that browsing illegal content online is serious violation of laws in many countries.

We expect your co-operation and prompt response.

Sincerely,

Paul Allison
Central Intelligence Agency -CIA-
935 Pennsylvania Avenue, NW , Room 3220
Washington , DC 20535
Phone: (202) 324-30000
Case ID: 528-84223

This kind of attack has been making the rounds since at least 2005, but hopefully this will add some Google-juice to debunking the CIA variant.

PS – This is a total and complete FRAUD. If you receive it, forward it to spam@uce.gov and your email provider as spam and delete it from your inbox.

Where the Hell is Matt? (2008) from Matthew Harding on Vimeo.

Startupping. I miss my blog. I really do.

I’ll be back someday, I promise. In the near term, you will probably find me blogging much more frequently over here.

This was created by my brother and his friends. I love the mockumentary format, there are so many ways it just works.

I’m helping to organize an (un)conference in New York City focused on entrepreneur-ing in the financial services space. Anyone who might be interested for whatever reason is invited to participate. We’re just getting started, and to join in or watch for updates you should head over to our BarCamp page BarCampMoneyNYC.

More details as they develop…

danah makes a lot of good points and asks great questions in her post. She touches on the notion of a diverse advertiser ecology, but then sort of subsumes it in an observation about the anti-consumerist attitudes of “the classes” versus pro-consumerism among “the masses.” The point about who’s clicking across the internet globally is well-founded, but I’m guessing it’s informed at least in part by her repeated exposure to exactly what’s being clicked on in her area of study, social networking sites. The world of online display advertising can be divided into two camps, the ads from companies that everyone knows and loves from their offline existence, established brands, and everything else. Everything else overwhelmingly predominates on social networking sites, and I’m willing to bet is more aggressively click-oriented than any other type of online advertising. So I thought I’d share my thoughts on some of the reasons why that is the case.

The essential reason for the “two worlds” of advertising is a disconnect on the part of buyers (advertisers) between what a pageview is and what it is worth. Advertisers (and plenty of publishers) have yet to fully reconcile what is on a page, and the user behavior that elicits, with the inherent value of whomever happens to be viewing that page to them as a customer.

At the end of the day, ad inventory is as unique as the individual person viewing the page, but delivery technologies and business practices have not yet gotten sophisticated enough to bring the ideas of buying audience (putting your message in front of the right people) versus buying response (maximum click rate, conversion rate, etc) into balance. Both can be the correct end goal, depending on your situation, and for reasons danah makes clear, but if you believe in loyalty economics, in which the repeat customer is on average better than a new one, then most advertisers should care very much about who is getting the message (things that are always themselves “new” like movies, music, etc excepted).

And from the perspective of loyalty economics, this imbalance can hurt the advertisers. Every business with growth and longevity in mind ultimately needs the right customer, not just the most initially responsive customer. But for simplicity’s sake, and brand skittishness towards user-generated content (which with present technology carries with it the unfortunate inevitability that at some point, your brand will appear somewhere on the internet next to pornographic material), the media-buyer ecology (which spends the vast majority of Fortune 1000 online advertising dollars) has stuck more-or-less exclusively with editorial content (curated and cleansed for ad safety) despite its ever-dwindling share of the attention economy.

As an aside, the typical agency ad buyer is an obstacle as well, because they are not incentivized to learn the intricacies of what does and does not work long-term for their clients. They are allocating assets across a spectrum of media (broadcast, print and online) and relying on portfolio theory to ensure that at least one of their investments “hit” (eg. the TV campaign sucked, but the bus ads were a hit). And as far as online goes, the “dumb metrics” of click-through rates and imps on valuable demographics is a lot easier to use as an explanation (or mollification) for a client than convincing them that the narrow, huge cost-per-eyeball campaign is better because it goes deeper with the audience that the client actually cares about.

So… circling back to my point, this reality creates two tiers of ad inventory, premium and remnant. Premium is where the Fortune 1000 plays, and remnant is everything else, including pages on premium publisher sites that don’t “convert” ads as well for whatever reason, and social networking sites. While the people looking at premium and remnant are the same people (albeit not in the same socio-economic ratios), the pricing disparity between the two is dramatic, overvaluing premium but dramatically under-valuing remnant.

This is relevant to questions of the tenor and intent of online ads in the remnant space, because the massive mis-pricing of this inventory which is occuring allows businesses which would not be economically viable in its absence to flourish.

The under-pricing of remnant advertising currently permits businesses of a certain type to acquire customers so rapidly and cheaply that they can achieve scale and profitability on the back of a staggeringly high churn rate. Prime examples are ringtone and dating sites. These sorts of operations are not without precedent among larger companies and in the public markets, they are commonly known as “roll-ups,” and have been observed in all sorts of consumer retail sectors, from dry-cleaning to fast food to movie theatres. Acquisitions and expansion hide a fundamental inability of the business to generate repeat business at a level sufficient to maintain growth projections. Ultimately the other shoe drops (customers don’t come back enough), reversion to the mean being the one truth of market economies, projections are missed significantly, and stocks crater.

In the “old” economy, which we draw most of our lessons from, this would happen upon reaching geographic constraints… the high-density, high disposable income locales within the continental United States become saturated with the roll-up’s retail outlets, and the growth engine switches over to reliance on repeat business, cue disaster.

But in the “new” economy, all-growth-all-the-time-churn-rates-be-damned operations have two things going for them, the first is that they are unconstrained by geography, in fact, they probably perform better in more rural, sparsely populate areas, where the lower rungs of the socio-economic ladder are more strongly represented. So the moment of truth is prolonged, because their ability to expand is improved by their television-like distribution (direct to consumers inside the home, their safest enclave, and where their defenses are at their lowest point, and also having the readiest access to alcohol — which we’re culturally programmed to believe reduces our inhibitions, what it actually does is depress us, and make us more receptive to activities which will stimulate our reward pathways, such as the pleasure one feels at acquiring something shiny and new) at rock-bottom internet prices.

The second is that these companies are private, small and shadowy, they are just starting to get the faintest glimmers of attention from the mainstream media, a fact I can guarantee you they are profoundly unenthusiastic about, and ultimately have no stakeholders with long-term horizons, no pension funds on the board, this is snatch-and-grab until the well runs dry.

All of that said, the “model” for businesses has changed regardless of their motives. Advertising used to drive the bulk of its recipients to a physical space, a storefront, or at the very least to a voice on the phone with an agent or what-have-you. The end result was the opportunity on the part of the business to create some sort of p2p relationship with the consumer. The limits of geography and the powers of p2p persuasion both worked together to bolster the number of customers a company could consider loyal. On the internet, it is easier to compete with a given service, easier for consumers to discover and learn about the competition, and much much easier to switch your account or buying habits from one impersonal website (no matter how well-designed) to another.

But on the flipside, you have a global market reaching 1.2 billion consumers (19% of world pop) and still growing at over 10% per annum. No one has ever had access to consumers on this scale before, and as long as the tide continues to rise, there is perhaps little macro incentive to focus on the details and worry too much about customer loyalty (yes, this is glib, not many businesses can truly leverage the global reach of the internet, but it works on a nation-state scale, would the subprime crisis be what it is today without the online mortgage lead-generation “industry”?).

So what do I think will happen? Publishers are working furiously to prove to advertisers that the value of a pageview should be weighted to more heavily reflect the value of the person looking at it, and not what part of the site it happens to fall under. Calling Dave Morgan the “EVP of Global Ad Strategy for AOL” is perfectly accurate, what is far more relevant to the discussion is the fact that he founded TACODA, one of the most successful online behavioral targeting ad technologies on the market. He has proven you can cherry pick your audience online and still run ad campaigns that work. As the value (driven by performance) of online inventory becomes more accurately correlated to its audience, you will find increasing confidence among deep-pocketed advertisers to swim in these waters, the market will become more competitive, and businesses that depend on ultra-ultra-cheap customer acquisitions will be largely priced out of “mainstream” remnant and social-networking inventory.