Perls of Wisdom

FSBO in NYC?

2010-10-14T12:27:00.000-07:00

I recently posted my thoughts on how to FSBO in NYC using our RealDirect Owner Managed service. Check it out here...

Starting a business in a recession

2009-10-27T06:25:00.000-07:00

Having recently started a business in one of the worst economies in several generations, I am often reminded that many great companies launched in tough times. Microsoft, Apple, etc. - you have probably heard the list as well. And now that I am knee deep in my latest start-up, I wholeheartedly agree there is no better time to start a company. Here's why:

1. Self vetting - If you can raise capital and get clients in a bad market, the idea/product/team must be pretty good.

2. Bad economies accelerate disruption - typically, if an old model business was declining during good times because the trend was towards a new way of operating that business (think newspapers, radio, etc.), the combination of the cyclical decline (from the bad economy) and the organic decline (from new competition) will hit those businesses particularly hard - and force many of them to fail. This creates more opportunity for the disruptors.

3. Real Estate - its much easier to get offices and or industrial space in a down economy. This is obvious, but it also gets you things like a better location (marketing), desks (lower cap ex), and a nice build out that works for the type of business you have - which means greater long term efficiency for your company. In addition to the lower rents, business owners are often more focused on getting a better deal in a down economy - so the impact is amplified.

4. Government - even though banks tend to pull back in down markets, often the government steps up. Yesterday I heard of 2 start-ups getting significant capital from the government for their projects. And this money doesn't have a 4x liquidation preference...

5. People - This is probably the most important factor. Good people are easier to find in a down economy. They often are less attached to their prior business because a) their stock options are not worth as much; b) their current job is less fun because business isn't as good as it once was; c) they are worried about getting fired; or d) they were fired. Great people want to be in an exciting, dynamic environment where what they do matters, and where the upside potential is huge. And when the alternative is misery or worse, it's much easier to attract strong talent.

6. Valuations - This one is somewhat counter intuitive, but after talking to a bunch of entrepreneurs over the past few months - as well as from my own experience - I believe that starting with a sane valuation is crucial to the success of your business. In boom years, valuations are high, and due to the cyclical nature of business, the odds are good that your next round (or the one after that) will be in a bad economy, and the economy will have a negative impact on your business. When that happens, it doesn't just mean more dilution. It can often wipe out a management team - or at least significantly decrease their equity. While not all teams are motivated by their equity and upside - and not all boards react negatively to a business that is impacted by a negative economy - many do. When this happens, board meetings get ugly and teams often fall apart. Sometimes companies get through this - and sometimes they don't. And when valuations are too high, it usually means more capital is raised than is needed - which often has the impact of creating a less capital efficient culture of spending. And that is a hard to change down the road. Having fair valuations at each round helps mitigate these problems - and down economies seem to favor fair "A" round valuations.

The future of "sales"

2009-06-24T08:15:00.000-07:00

There were a few news items recently about self serve platforms (Yahoo, Outside.in) for online advertising and publishing, and I thought I would share my pov on this subject. I have been building self serve ad platforms for the past several years, and here are some of my thoughts:

1. It's hard to change user behavior.

If an advertiser is accustomed to buying ads (or anything) in a certain way, there needs to be something compelling to get them to change their behavior. And convenience isn't enough. Google (and GoTo/Overture/Yahoo) was able to pull it off with their search product because the utlity was so great, the ad creation was so easy, and the effect on revenue was so obvious. I doubt there will ever be another self serve ad product that does this - so no other self serve ad product should ever expect this sort of adoption. For everyone else, it will be MUCH slower.

2. Customer service is key.

Just because you have a self serve user interface doesn't mean you can turn off the lights and grab a beer. Client support is crucial when rolling out a self serve platform. And client support means everything from a detailed FAQ and searchable db of help topics - to account managers that work directly with your clients and even do the work for them. For everyone other than Google (and I am just talking about Google's search product), there will be a long adoption curve, and expecting most of your clients (especially the ones who are used to having things done for them - which are usually the ones who spend the most) to utilize your self serve product without any assistance is a mistake.

3. Just because it's hard, doesnt mean it isn't worth doing.

Creating a self serve product accomplishes a lot. It requires a detailed workflow of how someone buys and uses your product, and also requires that you boil down the process in the most efficient way. Making the product easy to buy is important to self serve clients as well as to your account managers, customer support, etc. who provide full service. And it creates a transparency in the sales process that ultimately every customer of every industry will require.

So embrace the future of "sales" and build a "self serve" product. But recognize that it isn't going to be easy...

Positive signs for radio industry

2009-05-22T07:54:00.000-07:00

Buried in another depressing report on the decline in revenue for the radio industry is an upbeat statistic regarding online. While revenue is down 24%, online revenue is up 13%. And the numbers are getting more interesting. Online revenue has broken $100M, and I suspect that this growth will accelerate as the economy comes out of the recession in the next few quarters.

This is a good sign. It is essential for the radio industry to ensure that the dollars they are losing during this recession can come back when the economy improves. And if there is not a viable, measurable, interactive medium within the radio industry, advertisers that are demanding this will move to another medium. And it is clear by these numbers that advertisers are finding this in online radio.

Radio is actually in a unique place when it comes to "digital". The buyers of traditional media in television and print are typically not the buyers of the digital version of this media. For example, the traditional print buyers are not buying NYTimes.com banners. Nor are TV buyers buying YouTube. But internet radio buys still originate from the traditional side of the business, and that is good for radio, since they are not competing against other media for these dollars. Again by way of example, the NYTimes is competing against other newspaper websites, local websites as well as bloggers and portals like Yahoo. But that is not the case for radio who still for the most part compete against other radio properties for these digital dollars.

My point is that as long as radio can offer an effective digital medium for the audio ad - one that has real time accurate reporting, granular targeting and interactivity - it should be better suited for holding onto their share of advertising dollars, rather than bleeding it to other non-radio interactive media, than other traditional forms of media.

While I am not sure the growth in the RAB report is attributable to this phenomena at this stage in the game - long term I believe that the growth of digital radio will outpace other forms of old media/new media migration by sector. And it is important for radio groups to recognize this and focus on this growth opportunity, or they will miss the boat.

NY Times

2009-04-15T07:13:00.000-07:00

One of the biggest topics in media and technology these days is the demise of newspapers as a result of the web. Yesterday, the NYTimes had a story about how hyperlocal web sites deliver news without newspapers. And several newspapers have shut down operations due to their cost structure no longer being viable, or in the NYTimes situation, threatening to shut down their Boston paper amidst serious issues at NYT Corp. However, as I entered the subway this morning and was accosted by 2 people trying to hand me a free Metro and AM New York paper, it dawned on me that the NY Times' problem is probably just as much competition from the freebies as it is from the web. Turns out that two of the three Metro's US outposts are in NYC and Boston. Combine the free option with a down economy - and the proliferation of mobile devices that allow for a paperless news distribution - and you have the perfect storm for disruption.

But, for me at least - and I know this is not much of a case study - I find that while I am reading the NYTimes paper less than I used to (the elimination of Sports and Metro sections really killed it for me), I am reading it more online. Not just because it is more easily available to me on the web, but because my mobile devices are formatting it better, and because with so much news available now from a million sources, I want one source I can trust, and I want it through a lens that is consistent with how I see things.

This post isn't one that is offering a solution - other blogs can do that. I am merely pointing out that the impending demise of the local paper may be exaggerated due to the free dailies and current economy, and that the web may in fact make them more relevant than ever. Of course, there will need to be some changes in cost structure, etc. But, at least for me, the Times is as important a read as ever.

The Next Big Thing - Autos

2009-03-02T09:00:00.000-08:00

I was recently out to dinner with several of my entrepreneur friends, and we drifted into one of our favorite discussions - what is the "next big thing" and how to be a part of it. We all agreed that what differentiated this conversation from ones we may have had in the past is the speed in which the world has changed in the past 6 months. We boiled it down to several areas of opportunity, where an experienced entrepreneur could gain some traction without fear that the space was too crowded or entrenched as to stifle the opportunity. With that, I decided to do a "series post" of where I think the next big opportunities are for entrepreneurs. The first area is the automobile industry...

The auto industry is in disarray. While gas prices have dropped precipitously, I think everyone agrees that the days of cheap oil are numbered. It may take a while for us to break out of this recession, but when it happens, oil will be the first commodity to recover. What will that do to the US auto industry? Probably seal it's fate. While I suspect the government will keep the Big 3 on life support through the next year or so, when the economy bounces back a bit, it is my opinion that at least one of them will die - and most likely, all of them will change dramatically.

With destruction comes opportunity. And opportunity comes in many varieties. Even without a the loss of the Big 3, many car lines will be axed. And thousands of dealerships will close. And what will those very attractive pieces of real estate be used for? Who knows, but these attractive pieces of real estate will be ripe for redevelopment and will be picked up at fire sale prices. The person that comes up with a good use of these spaces will have a huge opportunity.

But I believe the bigger opportunity will come in producing the vehicles themselves - i.e. the opportunity to mass produce the next Model T, Beetle or Civic. Not the trophy car Tesla Motors is producing, but a cool, practical, economical vehicle built by an American company without any of the baggage of the current automotive industry. This will happen in the next 5 years - I guarantee it.

An auto industry with a lower fixed cost structure will be able to innovate again. While there have been great advances in safety - stability control, anti-lock brakes, airbags, etc., the pace of innovation is slow in this industry because it is so entrenched in the past. Cars have the same look and functionality that they have had for the past 50 years. Sure they are faster, safer and more comfortable than ever, but there has not been any radical innovation for some time. I think this is going to change. Imagine a head up display that has GPS overlaid on the road you're driving on with directions and alternate routes superimposed on the actual road. And rather than C pillars creating a blind spot, they become invisible with full 360 degree vision no matter where you look through an innovative external camera system.

And maybe the next great entrepreneur will determine that cars are outdated gas guzzlers altogether, and what we should be moving towards are personal transporters like the Segway - which was probably 10-15 years ahead of it's time. I think there is a real possibility that these vehicles break into the mainstream very shortly. While they will never replace the minivan for as a family mover, they could easily provide efficient transportation for hundreds of millions of people around the world.

As an auto enthusiast, I suspect that we will see a dearth of interesting cars for the next few years. High performance vehicles carry high price tags, and with most individuals discretionary wealth disappearing over the past 6 months, the market for these cars has dried up. Some pundits think we will look back at the last 5 years as the golden age for autos, and that we will not see the likes of these high performance vehicles for many years to come. While I agree that we are at the end of an era, I think the new era will prove to be just as exciting - if not as an auto enthusiast, then as an entrepreneur.

Radio Performance Royalties

2009-02-25T06:31:00.001-08:00

I have been getting a bunch of calls lately from reporters on my take on radio royalty issues, so figured I would put them out here for all to see. For those that are not familiar with the issue, there are 2 main debates raging right now. The first refers to the performance royalty for digital audio - i.e. streaming, playlists, internet radio, etc. Terrestrial radio does not pay a performance royalty because of a long standing "agreement" that radio offers promotion for the artists, so therefore should get a break on this royalty. However, with the record industry suffering from illegal file sharing, they decided several years ago not to extend this break to digital transmission of music. The thought being that it is this digital medium that got them into this problem, so it should be what gets them out of it. Ironically, these days, internet radio is probably a better vehicle for music discovery than traditional radio, yet it's viability is being put in jeopardy by this royalty. And streaming audio is not the problem for the record industry. It's peer to peer file sharing - which is very different than internet radio. Have you ever heard of anyone stealing music off of an internet radio station? There are a million other places you can do it more easily...

The second debate is related, but potentially has a much bigger impact. I am referring to the recent discussions about lifting the performance royalty exemption on terrestrial radio. There has been some debate as to why this is happening - especially when the radio business is apparently under so much financial pressure. Some people think it is to blunt the digital broadcaster argument that applying a performance royalty on digital is unfair because there isn't one on terrestrial radio. Other's believe that terrestrial radio was the target of the record industry all along - and that digital was just the first step in taking back this exemption.

Ultimately, it doesn't matter. Performance royalties make sense. I find it hard to believe that someone in good conscience can argue that the performer isn't entitled to a royalty for the airing of their performance. However, it of course, isn't that simple. Because this is regulated by congress, and because the record industry is a wounded dog backed into a corner, there are all kinds of political and economic games happening.

In most situations like these, I would support the market working this out. If the record industry doesn't want radio - terrestrial or digital - to play their songs without paying a big "tax", then the radio industry can negotiate directly with artists, cut deals on a label by label basis, or enact a pay to play scheme where they only pay music from artists that pay them to play their music. However, since these two industries are mature and have hundreds of thousands of jobs and billions of investor's capital in them (pensions, IRAs, mutual funds), there is a political interest in keeping them stable. If I had my way, I would broker a compromise that put a small ($.0003 per song) royalty on performance. Something that recognizes radio's impact on record and concert ticket sales, but also pays for the right to use the content. Unfortunately, (or fortunately, depending on your pov), I don't decide what happens here.

But here are my predictions on what I think does happen:

1. Internet radio suffers through a painful royalty rate. It may improve a bit from where it is now, but this will happen.

2. Internet radio will start to look a bit more like terrestrial radio. By this, I mean that Internet radio will have more ads and more royalty free content. The good news is the personalized and niche programmed radio everyone loves will still be available. The bad news is you will probably be hearing about 4-5 minutes of audio ads per hour of programming to pay the bills. This is still less than half the ads heard on terrestrial stations, but a far cry from the commercial free experience found on Pandora and imeem.

3. Internet radio will get serious about ad targeting. In order to generate the most $ from the ads they run, internet radio will tap into all the targeting tools of internet advertising and ultimately create an ad that is much more valuable than a terrestrial radio ad. If they have less than half the # of ads running, they will need to create 2x the value to make the same $. I think this is possible. (I know this is self serving because I run TargetSpot, but I REALLY believe it!)

4. Terrestrial radio will win the current royalty battle with the record labels. This will happen because of politics. Quite simply, big radio is more powerful than the big labels. Not only does the radio industry employ more people than the music industry, but radio execs are much more politically savvy. Their business has always been in partnership with government - the FCC, local zoning laws, political advertising, issue oriented talk, etc., so they know the players and are in a better position to influence the decision makers. And government, correctly in my opinion, won't let the record industry drag down the radio industry - especially in an economy that is teetering on the brink of collapse. The record industry has already imploded, but the radio industry, despite the much publicized decline in ad spend, over leveraging, etc. is actually a healthy, profitable business.

But, if I am a radio group, I would continue to fight this royalty tooth and nail while at the same time begin to prepare for the demise of the royalty exemption. Eventually the labels will win this war. If not through legislation, through streaming radio becoming a larger and larger part of radio's distribution.

If I Owned a Radio Station

2009-02-11T08:27:00.000-08:00

I just got back from Radio Ink's Convergence conference in San Jose and spent a good chunk of my flight reflecting on the Radio Industry, where it is going, and where it should go. For those that don't know, the Convergence conference is all about the convergence of Radio and the Web, with lots of panels on utilization of the web - i.e. streaming, loyalty programs, etc. - to make your radio station more profitable and more appealing to listeners.

The conference was great. I go to a lot of radio and web conferences throughout the year, and this one is by far the most informative and while most other radio events are painful for me (especially because I focus on the interactive side of the business), this one is less about preaching to the choir, and more about sharing ideas and inspiring a traditional business to act.

However, the perspective of these events are always from that of the traditional radio broadcaster. Sure, this makes sense since that is who attends these conferences, but I am not sure the traditional operator is going to be the driver of this convergence. I actually think it will meet in the middle. The web operators, with all the information they have about their listeners, will be in as good a position to dominate "radio" as the terrestrial operators, and maybe more. Here's what I would do if I ran a terrestrial music radio station:

1. Get rid of my programmers

I hate to even say this, because the programmers are probably the people at terrestrial radio stations that I admire the most and enjoy spending the most time with. However, after using algorithmically personalized web radio like Pandora and Slacker recently, and using community driven services like Last.fm and Hype Machine, it seems that we should be able to program stations more efficiently. I am not saying that there shouldn't be a human element in programming - Pandora has 20 musicologists analyzing songs - but I am advocating utilizing technology to program in a different way. I would use the online community of music listeners and music lovers to program my station.

2. Take it easy on the ads

Every serious music lover I know barely listens to terrestrial radio. And if you are under 30, forget terrestrial radio altogether. But these people love internet radio. A big part of this is the personalization - and a lot of this can't translate to terrestrial radio. However, another big reason is commercials. Plain and simple, commercial breaks on terrestrial radio are too long. An ad shouldn't be longer than 30 seconds and there shouldn't be more than 2 in a row. That's the way internet radio stations operate. Throw out the 5 minute stop break and keep the music going as long as possible, and when you need to make some money, keep it short.

3. Throw formats into the garbage

Every terrestrial radio station has a format. Even when they tried to mix things up they called it Jack, and there was a specific format associated with Jack. I think it may have even been patented. However, I believe a music station should avoid formats. Let the community decide what they want to listen to. This way the station can evolve to the tastes of it's listeners. Just like one person can fine tune a personalized Pandora station, the "wisdom of crowds" can ultimately create the best mass market terrestrial station. And rather than firing all the DJ's, switching the call letters and having a commercial free summer to launch the new format, the flavor of a station can simply evolve into what the audience wants it to be.

4. Be platform agnostic, but web centric

These words get thrown around quite a bit these days, but it is important to offer the best programming to your audience whether they are listening on an FM signal, the web, HD or on a cell phone. Of course there are limitations to all of these formats, but a good operator provides the best experience each format is capable of. But in each case the web will provide the interaction and information necessary to enable the station to serve their listeners.

Of course, as someone who never actually ran a radio station, it is easy for me to say what I would do. I don't have an existing revenue stream to worry about, and I am not leveraged beyond my cash flow. I mentioned I was going to write this to an 80 year old, former station owner over lunch today and he looked at me incredulously and said, "what do you know about running a radio station?" Well, not much, but it is clear that the current model needs some work, and mixing it up a bit could be just what the industry needs right now.

Start-Up M&A

2009-02-04T06:47:00.000-08:00

I was recently interviewed for a small business publication about mergers and acquisitions for start-ups, and whether the tough economy makes it a good time to make an acquisition.

While I think there are advantages to doing M&A in a weak economy, the lack of capital available probably offsets the advantage. And while it motivates some businesses to sell - it is often the businesses you didnt want to buy in the first place. Of course, there will occasionally be some opportunistic moves a business can make to scoop up a competitor that would not exist but for the pressure of a smaller pie to divide. I think this is what the reporter was hoping I would say when he asked me about our recent acquisition of Ronning Lipset Radio. In fact, this was not the case in this situation, and I would argue that the deal we did with RLR is probably the only kind of M&A activitity a start-up should engage in.

Here's why. The reality is that completing an acquisition is a ton of work and the amount of work involved often has little to do with the size of the transaction. Smaller companies often have founders that are emotionally attached to the business that is often absent with professional managers at larger companies. Also, diligence is harder to complete with smaller businesses who often do not report finances in as great detail as larger companies who use professional auditors and have financial controls and policies in effect. Public companies (in theory, at least) are transparent and have disclosed not just their financials, but all known risks of their business, as well as thier outlook for the future. And there are criminal penalties if these were intentionally misleading or not disclosed. Smaller businesses are not regulated, so the overly optimistic forecast probably has a greater shot of rearing its ugly head, so the diligence process must be even more rigorous in these transactions.

Furthermore, start-ups and small businesses rarely have dedicated corporate development teams, so the bulk of the work to close these deals either falls on the CEO/Founders and/or their legal and accounting firms. Both aren't ideal since the time and effort to close the deal means people are doing that instead of growing the core business. And legal expenses add up very quickly, adding to the price of the deal. And since the time and effort to close these small deals are often similar to larger deals (we joked that our last deal took longer to close than Wachovia/Wells Fargo), the expenses of these transactions relative to the cost of the overall deal can be very high.

So when does it make sense to do a deal like this? Rarely. But there are times when the deal makes so much sense, you need to do it. Here are my criteria:

1. Must bolt on: When I was 17 year old car enthusiast, I was always looking for things that would make my 280Z faster. But I didnt have the expertise to weld or do anything electronically. I needed something that would work out of the box and merely bolt onto the existing hardware. Start-ups rarely have time for a lengthy integration before synergies are realized. And while it may make sense for management to spend a good chunk of time closing the deal, the distraction of putting pieces together that do not easily fit is probably a time suck that smaller organizations can't afford.

2. Good Chemistry: When you have a large organizations coming together, everyone talks about the "culture" of the orgs, and how they will mesh. In smaller companies, it is not the culture of the company, but chemistry of the people on the team that will be working together that matters. The bottom line is that if you don't like the people on the new team, the business will not combine well. There needs to be trust and respect between the teams and the individuals that will be working together so they will be able to work through the inevitable hiccups that occur when putting two businesses together. A sales culture and a tech culture can come together nicely if there is good chemistry between the individuals. A law school professor I had years ago always said people don't sue people they like. They also don't quit their jobs when they work with people they like. Two good reasons to make sure there is good chemestry.

3. Buy>Build: Quite simply, the cost of the acquisition should be cheaper than building the business yourself. This, of course, is not an easy calculation. We can all figure out the cost of hiring a team and/or developing a technology and then add in the opportunity cost of not having this team/technology in the market during the development period. But you also need to factor in the talent of the team you are hiring and whether it is possible to replicate things like expertise, relationships and credibility, and how much this is worth. And finally, you need to factor in the execution risk of being able to replicate the business. If the business you are acquiring is the undisputed leader in their space and few others have been able to replicate their success despite attempts to do so, there is clearly a lot of value to assign to this.

4. Necessity: Is this a business your company needs to succeed. This can't be a "wouldn't it be cool if we bought x" moment that drives the decision. You need to decide that your business must either build or buy, and doing neither is not an option. If being in this business is not the first item in your strategic plan, don't bother.

5. The Reese's effect: With a peanut butter cup, we all know that the chocolate and peanut butter on their own are tasty, but together it is greater than the sum of its parts. This applies to M&A as well. Merely bolting on a business is often appealing to add revenue, but if it doesn't have significant synergies, you will not get any additional value from it. It makes sense to get the perspective of professional investors when considering these types of transactions. Ideally, the cost of the deal should be paid for by the synergies of the business. By this I mean you should be able to raise $ for the combined business at a valuation that is equal to the pre-merger valuation of the acquirer plus 2X the value of the acquired company. If you can achieve this, or something close to it, it's a good deal.

If you can hit on all 5 of these points, go for it. If not, you should reconsider whether it is worth the effort. And this applies in good and bad economies.

Great Minds Drink Alike

2009-01-29T13:16:00.000-08:00

Today, I was delighted to read in the New York Times that President Obama shares my affinity for Honest Tea beverages. While most people hadn't heard of these drinks, I have been ordering them by the case for a while due to their high level of anti-oxidants for some time (although I am still not sure why oxidants are bad). However, I suspect that my endorsement hasn't done as much for the brand compared to what the President's will do now that the story is out.

While waiting for the elevator, Andrew and I were talking about the explosion of popularity that the Honest Tea drink will probably enjoy now that it is a noted favorite of the President, and Andrew came up with the idea that just might pull our country out of the financial crisis.

The question is how much would Pepsi pay to be the exclusive drink of Barack Obama? If history is any indication, a lot.

And why stop there? Professional athletes typically cash in on as many endorsment deals as possible while they are in their prime. And so should the President. Barack Obama should enjoy at least as many opportunities as Tiger Woods, and probably more. And the opportunity is not limited to the US - he is an international phenomenon, and should be able to reap big endorsement deals around the world.

And why should we limit this to the President. Any member of the administration who has the personal brand worthy of an endorsement should be exploited. And all federal buildings should be open for naming rights. Think T-Mobile White House, etc. with a visual wrap like the commuter busses in NYC. Of course, a cabinet level "super agent" (Ari Gold?) should be confirmed to handle all of this. Or maybe this should be a non-partisan commission. Or just outsource the whole thing to an online ad network and let the sponsor bid on it directly.

Either way, it's out of the box thinking like this that will get us out of this financial crisis...

Reinventing Radio

2009-01-21T17:33:00.000-08:00

There were a bunch of posts today covering the Deloitte consulting report which had a chapter on Internet radio. The best quote was, "In 2009, Internet Radio may not just reinvigorate the medium of radio. It may reinvent it."

Obviously, we are big believers in Internet radio and like to think we have a hand in this re-invention (okay - so maybe it's just a courtside seat). But as big as I thought this was going to be 2 years ago when we were putting TargetSpot together, I didn't see it coming this way. It's the proliferation of online apps - for the iPhone, Blackberry, Android OS - that are about to kick this thing into the big leagues of media consumption.

Honestly, I thought the next big frontier for Internet radio was going to be in autos. I figured the next 2 years would show significant organic growth on the desktop, with an eventual implementation in cars when WiMax came to enough metro areas that it paid to develop an in dash Internet radio tuner. Yes, this will happen, but there is a bigger, faster movement underway with the cell phone.

I totally didn't see the cell phone as the game changer. When we started TargetSpot, there were rumors of an "iPhone" but nothing more than a few spy photos. The concept of the app store had never been contemplated. And the idea that early adopters and the "tech elite" would stop listening to their iPod in exchange for "radio" would have seemed ludicrous.

However, this is exactly what is happening and it's helping drive the growth of online radio - even beyond the device. Wired had a great post on how your cell phone is changing how you listen to music, and I do believe this is a game changer. And the good news is that it means more music accessible to more people. And while ads will be more prevalent than they may have been before these services became real businesses, I suspect that the overall user experience will not be diminished.

And when you compare what radio is now and what it can be in another 11 months, to what it was 2 years ago, the Deloitte report is probably spot on.

Startup PR

2009-01-13T19:40:00.000-08:00

Last week we announced 8 of our newest partners at TargetSpot. We make these announcements every few months, and it is a big part of the story we are telling about our company. I am a big believer in an aggressive PR strategy. Of course, simply making annoucements just for the sake of trying to get publicity will not work. If it is not news - and not relevant to the journalist's audience - it will not be covered. So you need to have a message that makes sense, a story that will resonate, and an audience that will care. The good news, is that if you are at a startup - and one that has received venture funding - there is a good chance that what you are doing is interesting enough to make news on a regular basis. And it's up to you as CEO to get the word out.

Is it worth it? I would argue that it is one of the most important uses of a CEO's time. Not just because it gets your name in the paper or on a blog, but because telling the story is how we get better at what we need to do as CEOs. We need to tell the story of our business and execute against it. When we can convince the press/bloggers that we are onto something, we usually are. And the passion, ideas and success we communicate to the press, are also necessary to communicate to your team, your board and most importantly, your clients.

We get great press at TargetSpot and people always ask me which PR firm we use. As an early stage business, working with a large PR firm is probably not a good use of cash. However, the early days are probably the best opportunities for PR. Recognizing this, I teamed up with a former colleague with some extra bandwidth who helps us out a with our PR on a consulting basis. This works out well - we are heavily involved in the PR process, but have a seasoned professional guide us and help us deliver the message. And the cost is significantly lower than what a PR firm would charge. And you work directly with an expert - instead of a jr. account manager at a PR firm.

Leveraging prior relationships a common theme for us. In addition to PR, we work or have worked with several former colleagues as consultants in Sales/Tech/Business Development. In these situations everyone wins. While these are not always long term relationships, they let you quickly bring in highly skilled and experienced individuals - who you probably couldn't afford to pay on a full time basis - and leverage their expertise and connections in a way that can jumpstart your own efforts.

At a start-up, there is no entrenched way to do business. And with limited resources you must try new ways to reach your goals more efficiently. Leveraging relationships to accomplish these goals in an innovative way will help you build your business and conserve your cash. I think we have done that with our PR strategy and I urge other start-ups to leverage their networks where possible.

Slacker

2009-01-08T19:59:00.000-08:00

I have been mildly obsessed with Slacker since I read about it in the now defunct Business 2.0 a few years ago. The idea of a radio that is fully customizable is highly intriguing to me - while I have a huge itunes music collection and several ipods, I am tired of the music I own, and highly enjoy discovering new music. The radio has always been the typical place you discover new artists, but traditional radio doesn't suit me anymore - my musical tastes are more refined and eclectic these days, and - let's be honest - I could do without the 5 minutes of commercial stop blocks. So when Slacker introduced their radio device that constantly downloaded new music from the web when in a "hot spot", I knew I would be an early adopter.

A good amount of time passed and the devices hadn't come to market yet, and I started getting into Pandora and some of the other online music services. However, when I finally received my Slacker radio, I was a believer. I had access to tons of new music on one device without having to download, create playlists and pay for it. It was just there. And because of the caching mechanism, you could listen to Slacker on subways and in other "non-connected" places.

But a few days ago, I had the real aha moment. The new Slacker app for the Blackberry was released and I downloaded it onto my Curve. While I was expecting some glitches, and wasn't sure if I was going to be able to use my phone, email, calendar and web apps while listening to music, I was wrong. The experience was great, and I am down to one device for all of my mobile needs. I am in heaven.

However, it begs the question, do you ever need a customized device specifically for music? Probably not. The iPod is very cool, but the Curve gives me the best of all worlds right now with the least amount of compromises (iPhone and Storm are non-starters because of the lack of keyboards). And what about all the resources that went into the development of those nifty Slacker G2 devices? In a perfect world, I would like a Curve that has a full screen on the back for web navigation, but until then, with my Slacker app, I am good to go.

Netbooks

2009-01-08T19:33:00.000-08:00

Yesterday, Elena was showing off her new Samsung netbook in the office. It has a 10 inch screen, 160 gigs of storage, web cam, 8 hour battery and sleek styling - and runs all of the standard Office type programs you would want to run. Not too long ago, I paid $2K for a ultra light laptop with similar specs. Sure the processing speed was faster, but for my purposes, a netbook is pretty useful. When I heard the price I was blown away - this cool netbook cost less than $500. And this one is at the high end of the netbook spectrum, with many in the $300-400 price range.
Immediately, I started thinking that if you pair this 2lb device with a mobile card, it is the ultimate road warrior. And then I started thinking about the discounts that we will probably see in the not so distant future. The $199 netbooks with a 1-2 year Verizon contract is probably not too far off.

Compare this to the $2,000 I spent last year on a similar product.

Holy crap! The speed in which we are seeing disruption is accelerating in the personal computing industry. A tough economy, and a product that offers killer utility at 30-50% less money than a traditional machine, will cause considerable pain to these businesses - probably as soon as next quarter. Intel is already getting hammered, and these devices with their less expensive chips will only make matters worse. But it's a good time to be a consumer...

Anything Worth Doing...

2009-01-07T18:16:00.000-08:00

There are a lot of CEOs and VC bloggers who give advice to start-ups. It must be something about starting a company or funding a company that makes you want to share your experience with the world. Fred Wilson (a board member of TargetSpot), Marc Andreessen and others do a great job of sharing their experiences, and I will not attempt to rehash any of their wisdom since there is a good chance if you read this, you have read them. But when on rare occasion I feel I can make a contribution, I will post it. So here I go...

Probably my favorite rule of thumb for early stage companies is one that was told to me when I was working in politics. I was in Norman Adler's office discussing a campaign I was working on and told him I didn't think I could get to all of the things that needed to be done. [If you like working at startups, you will love political campaigns. A political campaign is a startup with a mandatory exit within a defined period of time - and it is usually less than a year. There is a sense of urgency to get things done like in no other profession (ok, maybe medical/public safety, etc. but you get the drift). ] Norman then turns to me and says,

"anything worth doing is worth doing crappy"

And it stuck.

When I tell people this, the reaction is either a polite cringe or a loud argument. It's easy to misunderstand. The point is that imperfect action is better than inaction. And in a startup, with limited resources, perfection is nearly impossible. You are constantly making sacrifices and compromises so your business can grow rapidly. And doing things "too well" is in my opinion will limit your growth.

Of course I am not advocating poor performance. We should always operate our business at the highest level possible. But when there are risks of not getting crucial work done, it's better to get it done than to get it perfect. Whether it is committing to a product spec, a timely press release, or a sales proposal, getting it done is what matters. We can always improve our pitch, product and press down the road, but you dont get second chances at point in time opportunities.

And that is why this blog will never be perfect, but has a good chance of being.

Internet Radio: The Sleeper of the Ad Supported Web

2009-01-06T17:22:00.000-08:00

Yesterday, my Google Alert for my company, TargetSpot, produced a blogger's review of the business that had a great quote - Internet Radio "may be the sleeper of the ad supported web". With all the attention internet radio has been getting, it still qualifies for sleeper status. Many people don't realize that when they hear an ad on "internet radio", it is as much an "internet ad" as the banner on Yahoo's home page, or the text link on the side of a search result. These ads can be targeted geographically, demographically, behaviorally and contextually, day parted, frequency capped and reported on in real time. They integrate into DART and Atlas reporting, and are interactive via the visual ad that runs simultaneously in the media player when the audio is running.

However, with internet radio currently reaching over 50M listeners per month and coming soon in cars, this sleeping giant is starting to wake up...

Getting Started

2009-01-05T19:37:00.000-08:00

I have been meaning to start blogging for a while now and have used my lack of a camera phone as an excuse. While I was tempted to go for the Storm or an iPhone, I decided to remain old school and make a lateral move into a Curve. The old BB keyboard is tried and true and it just feels good. I think my device envy ended with the Palm Treo I bought and returned in 2005 - I would not stray too far from what i know again. I think the transformation into my dad is now complete...

Anyway, free of excuses and with the clean slate of a new year, I will make an attempt to keep current with the items of interest to me and hopefully a few of you with shared interests will find some of this useful...or at least mildly entertaining.