It’s the end of the world, as we know it

With everyone providing their deadpool lists for Web 2.0 startups and imminent demise of startups it is more critical than ever that start-ups prepare to actually build businesses.You might think the end of the world is upon the startups.

The Sequoia Capital presentation to their portfolio about the effect of the downturn on startups, available capital, product development, shows a variety of potential impacts on startups and offers some strategies to mitigate the risks presented by the down turn. The goal is to relearn how to build successful early-stage high potential growth businesses. This includes learning how to:

  • Perform situation analysis
  • Adapt quickly
  • Make cuts
  • Become cash flow positive as soon as possible
  • Spend every dollar as if it were your last

This isn’t rocket science. I love the focus on the financial side of the equation. Good business is about delivering return on investment to it’s shareholders. This has often been ignored by many entrepreneurs in the pursuit of attention. It’s about figuring out how to go from napkin to asking for the money. It’s starts with understanding the challenges that exist in a market place and offering a solution. Mark Evan’s has a great post, Buckle Down but Keep Innovating, on startups need to focus on business fundamentals and keep on innovating. He even provides example startups that have found an emerging business space. Outside of a few attention focused startups, I love that the list includes startups that are focused on solving problems that many marketing departments and digital agencies are experience in tracking conversations (Federated Media has unveiled social media measurement tools).

Business models might seem like a very difficult proposition. Peter Frisella has 2 great posts on the TechCapital blog about selecting a business model (Part 1 & Part 2). Much of the challenge with business models in the Web 2.0 economy is that it is not clear how they generate revenue. 

  • Models that intrinsically generate revenue

    • For these models it is clear how you generate revenue. For example, it is obvious that a manufacturer can make money by creating and selling an asset and as such this is the suggested model for a manufacturer.
  • Models that do not intrinsically generate revenue
    • For these models, revenue generation is not as straightforward. Instead a variety of “monetization” techniques must be employed in order to generate revenue from the traffic or value they create.

It’s about getting back to basics. At StartupEmpire, Rick Segal will be joining us to help run StartupSchool where attendees will see an idea go from napkin all the way through to funding ready startup.  The goal is to have entrepreneurs in each session “who have real world, hard knocks experience that are signed up to share their stories, lessons and tools”.

Start building empires

Tim O’Reilly gets it.

Computer-book publishing magnate Tim O’Reilly is urging young geeks to stop making software that lets you throw sheep at your friends on Facebook or drink beer on your iPhone and to instead start making a difference in the world. He is daring them, in the words of James Collins and Jerry Porras, authors of the business classic "Built to Last: Successful Habits of Visionary Companies," to take on "big, hairy, audacious goals." – Jessica Guynn, LA Times Blogs

startupempire It is time for developers and entrepreneurs to stop building frivolous, irrelevant applications. It is time to build enduring business value. The initial conversations about StartupEmpire focused on x things:

  1. Inspirational Entrepreneurs – We have the privilege of attending conferences in the US and around the world. We are lucky enough to have seen entrepreneurs and founders that left us feeling inspired. Not everyone is able to attend conferences across the continent, we wanted to bring these world-class founders and entrepreneurs to Toronto.
  2. Focused on Canadian Details – Often the content is focused on a local environment and ecosystem, and doesn’t take into consideration the unique environment in Canada. We wanted a conference that focused on the legal, funding, and government opportunities that are available to startups in Canada.
  3. Hands-on with Real-World Takeaways – Every time we’ve worked on a startup, there have been practical tools and advice that we’ve each needed to help get to the next step of development. We’re hoping to provide everyone with practical takeaways including: sample term sheets, marketing plans, cashflow statements, shareholder agreements, product roadmaps, accounting ledgers, etc.

Things are getting ugly. But it is a great time to be building a company.

More time than money

Nat Torkington has a great post, Effect of Depression on Technology, on the Radar Blog. The last recession or downturn or whatever friendly euphemism you’d like to use, gave us 37signals, Flickr, del.icio.us and others. The tightening financial belts will leave many developers out of a job. But this is really about managing costs, building solutions that deliver value to real customers. Downturns are great at getting rid of the fluff. Valuations tend to freefall during these times, but sustainable companies tend to continue or thrive. The hope is that you’ve raised enough money to survive the credit crunch and customer liquidity issues.

Nat’s observations include the effects as developers and entrepreneurs that we’re likely to see, including:

  1. Good for innovation
  2. Great for free and open source
  3. Open source and cloud computing services will benefit from the tight financial situation
  4. Most consumer apps will be a harder sell
  5. People will have more time than money

It is interesting that Nat doesn’t discuss the impact that this will have on the advertising marketplace. Looking at the latest set of IAB numbers, Google’s “grip on search advertising is tightening”. But it doesn’t talk about the viability of targeted advertising and lead generation as a potential revenue model for startups. I think that Don Dodge discussed how internet advertising works and how a startup built on target advertising might make money. Unlike the last downturn, the online channel has become tightly integrated into businesses. Coupled with a strong tie to performance metrics, it’s likely that online advertising will “consolidate gains over other media during the economic decline”. Advertisers are looking to online and mobile experiences as a way to “boost brand and market share when money is tight”. Startups need to understand the economics and models of the targeted advertising business, this may include deep partnering with advertising networks like Federated Media.

Nat has nailed the role that cloud computing and software+services will play going forward. Why bother with captial expenditure on new servers, when Amazon, Google, Microsoft and others either have or are about to have their servers in cloud that you can rent. Need proof that organizations, both big and small, can benefit from using services in the cloud. Check out the NY Times conversion of their archive and the creation of TimesMachine.

By leveraging the power of AWS and Hadoop, we were able to utilize hundreds of machines concurrently and process all the data in less than 36 hours.

Thirty six hours. No new capital expenditure. Just operational expenditure. For the Times, it seems like a no-brainer to get more content and hopefully more impressions to build their brand. You can see the NY Times use digital channels: iPhone application; the TimesReader application, they are just ways to leverage the existing content to build richer, deeper brand experiences and impressions for readers.

Thinking about starting a company? Build a StartupEmpire, November 13-14, 2008 at the Diesel Playhouse in Toronto.

Galvanize the Empire

Jevon beat me to the punch. We have added a great group of speakers to the StartupEmpire program including:

don_dodge Don Dodge – Don is a Director of Business Development for Microsoft’s Emerging Business Team and was recently a panelist at the TechCrunch50 conference (check out his summary of TC50 launches: investor services & tools; social networks & collaboration; advertising & commerce; enterprise software). Don calls Microsoft “the biggest start-up in the world” and his job is to work with VC’s and start-ups to help them build great companies

hugh_macleod Hugh MacLeod – Hugh is an inspiration to many of us building companies and brands with limited resources. His work with English Cut and Stormhoek are some of the earliest and best examples of using social media to connect and engage people. To build community and evangelists as part of the marketing strategies laid out. And he draws cartoons.

david_cohen David Cohen – David is the founder and CEO of TechStars in Boulder, Colorado. TechStars is one of the most successful seed stage funds in the world. Don Dodge provided his summary of the TechStars 2008 Demo Day.

The Rest of the Schedule

startupempire We are working diligently to finalize a schedule for StartupEmpire. There have been a lot of great speaker submissions, and it has been making more work for me. We really want to provide something that you will find valuable. The feedback has been that we need to have sessions that deliver hands-on, actionable advice with takeaways. We are working to build a program that is more than just people talking. We’re hoping that after each session that entrepreneurs will have tangible bits, e.g., cashflow statements, business plan, sample pitch decks, draft legal agreements, etc. We’re working on finding ways that entrepreneurs can be involved in the program including demonstration opportunities; pitch feedback sessions; and more. If you think we’re missing something, drop me a note. I’m happy to see what we can do to find an appropriate speaker to fill any gaps.

You still have a chance to submit your proposal in the next few days, and we will still take a look for anything that we think we need to get on the program.

Sponsors

Thanks for all your support, we are working hard to create something you will find valuable. We have received a lot of support from our lead sponsors Microsoft and High Road Communications. Mark Relph puts up with me at Microsoft and has been incredibly supportive of the efforts to engage start-ups in Toronto. Martin Hofmann didn’t hesitate when I approached him for help. We’ve had some fantastic open conversations about social media and start-ups for the past 3 years.

Don’t forget to get your ticket before the early bird deadline, or ASAP before we sell out. The venue is small and we can’t really add more seats.

Founders & Funders – Ottawa

Allan Isfan of Favequest has taken up the challenge of connecting “the people that start companies, and the people that fund them” in Ottawa. This is the fourth regional venue. We’ve hosted events in Montreal and Toronto. The Communitech team is hosting a Founders & Funders in Waterloo on October 9, 2008. Ottawa is the next to pick up the torch.

Founders & Funders is a social event. It was conceived by the awesome Austin Hill and the preeminent Patrick Lauzon in Montreal. The goal was to provide a social setting to help bring the people that start companies and the people that fund them together. This is not a pitch event. It is an opportunity to find out who is doing and funding what in your region.

What is Founders & Funders?

Founders & Funders is a social event aimed bringing together the people that start the next big successful company with the people that fund these companies in their earliest stages. The event is social. It is not a pitch fest. It is not a DemoCamp. It is an opportunity to meet other entrepreneurs and funders in your local community. The goal is to help facilitate opportunities for people to meet, share and build relationships that will grow into the NEXT BIG THING.

Founders and Funders is dedicated:

  • to helping Canadian entrepreneurs to meet each other;
  • meet potential funders: angel, VC or other money sources;
  • to have fun;
  • and see how we can help each other create the NEXT BIG successful company.

How do I get involved?

The event is "by invitation only’ and is limited in terms of availability. Please send Allan Isfan allan.isfan@favequest.com a note and let him know why you should participate. You will be contacted no later than October 20 with a confirmation, payment details and location.

What: Founders & Funders – Ottawa
Cost: $100 The event is "by invitation only’ and is limited in terms of availability. Please send Allan Isfan allan.isfan@favequest.com a note and let him know why you should participate. You will be contacted no later than October 20 with a confirmation, payment details and location.
When: Wednesday, October 29, 2008 6:00 PM to 10:00 PM
Where:
Ottawa, ON   Canada

HomeZilla launches

homezilla HomeZilla launced today. HomeZilla is a research assistant for researching and buying a home. It is not a real estate site like Realtor.ca or ZooCasa which are focused on listing houses for sale (read more about Realtor.ca and ZooCasa on BlogTO). HomeZilla is similar but very different, it tries to help home buyers connect with the 95% non-commercial information about their potential neighbourhood including information about:

  • 99% of all public Canadian schools
  • Over 1000 fire stations across Canada
  • Demographics like average age, median income, etc
  • Rail transit in Vancouver, Edmonton, Calgary, Toronto, and Montreal
  • Over 800 liquor stores from across Canada

The services is aimed at helping potential home buyers answer questions such as:

  • Where is the closest school, subway, bakery, dog park, etc.?
  • What is the average price for homes in this area?
  • How much money do people in this neighbourhood make?

It will be interesting to see if Sandy and the team can develop a business model that does not primarily rely on impressions to drive revenue (read Don Dodge’s post on advertising business models). CPM models require a huge number of visitors to drive revenue. There’s a business in market segmentation and targeted advertising. Figuring out a series of business development partnerships with other complimentary local players (ZooCasa, BlogTO, OurFaves, PlanetEye, among others) is a good starting point to help drive some traffic and driving up targeted advertising revenue. Where I could see a very strong partnership is an integration with the ranking and local reputation system being built by GigPark.

StartupEmpire is the new black

Image by Balakov Leave it to two knuckleheads, who tend to just do things rather than planning. The result is often something other than what was expected, sometimes you get bitten on the ass for your actions. Jevon and I both jumped the gun, showing you why entrepreneurs need help with logistics, legals and trademarks. Apparently there was a trademark registered with the previous name of our conference. We loved the name. While we’ve been in informed that our use does not infringe on the existing trademark, we decided it was just easier to change the name of the conference.

We bounced around ideas including:The League of Extraordinary Startups; StartupUnion; Her Majesty’s Canadian Startup; among others. Ultimately we’ve settled on StartupEmpire!

It’s a little audacious. Entrepreneurs need to start thinking big.

We’re working on planning the very hands on workshops. The goal is to provide entrepreneurs an extremely practical content around starting a company, building a product and growing a business. Participants can expect to leave the conference with example term sheets, example shareholders agreements, practical advice to dealing with cease-and-desist letters, marketing plans, example pitches, sample budgets and cashflows. All learnings from entrepreneurs and experts about in workshop format. We’re also open to suggestions and ideas for sessions. We want to make this valuable to attendees. We need a stronger, louder voice to build awe inspiring companies. Drop me a note about what you find valuable in a conference like StartupEmpire.

Startups and Agencies

drop.io Web2Expo was last week. There were a large number of startups kicking around the conference including FreshBooks, Octopz, GetSatisfaction, Aviary, ThoughtFarmer, ZeroFootprint, BrainPark and others. One very interesting story is the business development relations that Brookly-based startup Drop.io has built with Organic. AdAge has writing a great article, How Start-ups and Ad Agencies Can Collaborate, looking at the shared opportunities for Drop.io and Organic to meet the needs of customers.

This kind of collaboration between technology start-ups and ad agencies is arguably rare, but considering many media and tech start-ups are counting on advertising to be the bread and butter, they’d do well to make them more common.

I spend a lot of time at Microsoft working with both start-ups and agencies (sometimes even together). The trade rags tend to focus on the size of media buys and revenue per agency. What we forget is that agencies work for clients and brands. They are looking for cost effective tools to build unique engaging brand experiences. While the budgets roll up to very big numbers, it is the individual projects and designs that matter. Looking for opportunities to define new experiences where the agency doesn’t have to build everything from scratch. It is particularly valuable when there is a new technology or skill that doesn’t exist i house at the agency. In the case of Drop.io this technology and expertise was the iPhone. There are other technologies and expertise that are extremely important like Radian6 or Kontagent’s monitoring and conversation tracking software.

Drop.io is focusing on how it works and the functionality, and what Organic brings to it is a customer perspective. … We often brings thing to brands we think they should be doing and here there’s an opportunity for us to bring this to them and show them how they benefit.

For certain startups, agencies may be a great indirect sales channel to reach potential customers. The goal needs to be understanding how agencies can use your product and service to design, augment their offerings for clients. It’s really easy to see how GetSatisfaction could be used by an agency to help deliver better customer engagements for their brands. These relationships are just a business development tool for startups. The goal is to look for relationships where two organizations (in this case startups and agencies) that can leverage each others products a, services and expertise to help grow their business. The question for every startup is: what partnerships with service providers would provide value to the service provider like an ad agency and allow you to grow your business?

StartupNation

nation Jevon announced our efforts to continue to facilitate the opportunities for entrepreneurs in Canada. The goal was to have a grand gesture. To create a point in time to bring people together to learn, to connect and to inspire each other to build the NEXT BIG THING.

What?

Canada’s conference for startups

Who?

Students, entrepreneurs, and funders

When?

November 13 & 14, 2008 in Toronto

What?

The event is a two day event. Day one is focused on practical workshops aimed at helping entrepreneurs get started, figure out the mechanics of starting a company, growing and taking it to the next level. The workshops will include:

  • Assessing your market opportunity
  • Why should I use your product?
  • Strategies for getting users
  • Presentation skills for developers
  • Legal pitfalls for startups
  • Shaking the money tree
  • Pricing Models
  • Product Design
  • First customers and other business development pitfalls

Day two is all about connecting Canada and our startups to the rest of the world. Jevon has the list of confirmed speakers:

This is going to be fun. Jevon has been working his ass off while I’ve been slacking with a move, a baby, and being in NYC for Web2Expo.

Founders & Funders Waterloo

I’ve been working with the fantastic of folks (Kevin Tuer, Iain Klugman, Gary Will and the team at Communitech) to get a Founders & Funders event to happen at Entrepreneur Week. The event is sponsored by Communitech, Microsoft and TechCapital.

foundersandfunders

What is Founders & Funders?

Founders & Funders is a social event aimed bringing together the people that start the next big successful company with the people that fund these companies in their earliest stages. The event is social. It is not a pitch fest. It is not a DemoCamp. It is an opportunity to meet other entrepreneurs and funders in your local community. The goal is to help facilitate opportunities for people to meet, share and build relationships that will grow into the NEXT BIG THING.

Founders and Funders is dedicated:

  • to helping Canadian entrepreneurs to meet each other;
  • meet potential funders: angel, VC or other money sources;
  • to have fun;
  • and see how we can help each other create the NEXT BIG successful company.

How do I get involved?

The event is “by invitation only’. The easiest way to get invited is to send Kevin Tuer – kevin@communitech.ca a note explaining why you should participate.

What: Founders & Funders Waterloo
When: Thursday, October 9, 2008 10:00 AM
Where:
Waterloo, ON   Canada