An Amazing Finish

May 31, 2009

On Memorial Day, I got to witness one of the most amazing come-from-behind victories I have ever seen in sports. The Syracuse men’s lacrosse team defeated Cornell in overtime to claim the NCAA title.

The amazing part of the victory was that Syracuse was down by 3 goals with only three and a half minutes left in the game. They scored 3 unanswered goals to tie the game, with the last one coming with only 4 seconds left on the clock, and then went on to win in sudden death.

I have been coaching youth sports for a few years, and working with entrepreneurs for quite a bit longer. This season as a youth basketball coach, I was trying to get my kids to believe that they could come back and win despite facing trying circumstances. Syracuse lacrosse is my new example to explain to kids about not giving up.

There is such an amazing value to perseverance, but it is often difficult to show good concrete examples, especially championship winning examples.

Most entrepreneurs facing similarly trying circumstances in getting their companies going, getting products launched, generating revenue, and getting profitable. When I was a VC, I used to refer to this as walking across hot coals. You simply had to believe that you could make it, and persevere. Importantly, I am not saying you don’t need to change, adapt to the circumstances. Good entrepreneurs will persevere, but not blindly following the path that wasn’t working.

But ultimately, you have to keep believing that you can score the tying goal, even with :04 left on the clock, in order to actually score it and win the championship in overtime. Like Scott Cook the founder of Intuit, making payroll on his credit cards more than once.

Syracuse persevered and won it all.


The role of VCs?

May 23, 2009

I spent a great week in the Bay Area talking with companies and VCs as I look for my next opportunity.

I had the pleasure of meeting some senior people at YouTube and it started me thinking about companies that grow rapidly, get wonderful customer adoption, but still don’t know how to make money, at least not enough money.

It is clearly now Google’s issue that YouTube doesn’t make enough money to justify a $1.6 billion price tag. What role should the VCs play in company formation and business model determination? Or should they just be happy (in this case thrilled) with financial returns?

Is the VC only responsible to his limited partners for generating returns, or should they be focused on building enduring companies? Or at least an enduring business model (even if the company gets acquired)? If VCs are only looking for returns, period, then they deserve most of the criticism heaped on them for pushing crappy companies to go public during the 1999-2001 Internet bubble. If so, they are much more like hedge funds (who make no bones about seeking absolute returns) than they want to believe.

One of the friends I met with works in a late-stage venture fund and he was talking about Twitter. I think Twitter is a great idea, but it’s clearly not a great company yet, even though they have tens of millions of users. This investor passed on a chance to invest in Twitter because it didn’t meet his firm’s guidelines (not enough revenue). In this case, zero revenue. While we’re both convinced Twitter will figure out a business model, will it be sustainable? Will it justify the lofty price that some major Internet company will pay for it? Or will it be another YouTube, left to the acquiring company to figure out how to make enough money? What role should the VCs play in that? Or is it enough that they, and the founders, made money?


The Air Being Let out of the Balloon

May 21, 2009

There has been so much written lately about the newspaper business and its impending death, however, I feel the need to add to the dialog and hopefully can do so without repetition. The decline has been so long in coming it’s like watching one of my kid’s helium-filled balloons. It loses helium over time until it’s flat. How did the newspaper execs let it get to this? Didn’t they see any of this coming?

So much of the difficulty has been self inflicted. Newspaper advertising sales teams have been “in-bound” focused order takers for so long that they are struggling to change to a world where they need to compete vigorously for shrinking ad dollars. Newspaper union leaders have negotiated 37 hour work weeks and lifetime guarantees for certain workers. Newspaper management fought interactive participatory, journalism. They fought the link economy, continuing to believe they were in the content economy (paraphrasing Jeff Jarvis). They fought blogs.

I thought that newspaper leaders might be starting to get it, but then I saw the following from Dean Singleton, CEO of Media news Group:

Him: We need to “tell our existing print readers that what they are buying has real value.”

My reaction: The consumer will tell you what has value and where and how they want to consume it.

Him: “To be clear, the brand value proposition to the consumer is that the newspaper is a product, whether in print or online, which must be paid for.”

My reaction: The consumer will decide what they will pay for and how they will pay for it. See Napster, iTunes, and the recorded music industry.

Him: “We have the advantage of being the trusted source of for news and information in our communities and have a large base of traffic to feed into Local.com. Local.com will leverage existing newspaper content and existing traffic, and we will add new content (such as Entertainment/Lifestyle) to target a younger audience.”

My reaction: You may not be the trusted source you think you are. Consumers have shown time and again that they trust each other for reviews of restaurants, travel, products, and events. Also, newspapers tried local “sites” a decade ago. It was called CitySearch.

In my city, we have the example of the Boston Globe, owned by The Times Company. Boston is a sports-crazed town, so much so that it is estimated that 25% of the traffic to Boston.com comes from out-of-market sports fans coming to read the Globe. Yet the Globe can’t, or won’t capitalize on this, embrace the web, the commentary, the blogs. I always wonder why Bill Simmons, aka The Sports Guy, ended up on ESPN rather than Boston.com. Probably because he’s a blogger, and therefore not a journalist.

One of the solutions being tossed around to solve newspaper woes is micro-payments. Micro-payments will lead to walled gardens of content and dialog, and they not going to solve the real problems. First, the revenue streams available from users paying for content are not sufficient to support the business. Subscription revenue for most newspapers is, and has been historically, around 20-25% of revenue. So if it wasn’t near enough in print, why would it be enough online to support the business in its current form. Second, micro-payments decrease the online readership, making it that much harder to make an online advertising model work. Sounds like a downward spiral to me.

So we watch the newspapers wither, and now ask for either (micro) payments or government relief. Don’t get me wrong, I think hard-hitting journalism is critical to a functioning democracy. I just have a hard time supporting this business model and these executives. Maybe I will change my mind when I see a news organization (nee newspaper) truly support the web and the innovation.

I’ll know the news organizations have turned the corner when we see one of them partner with Craigslist for classifieds, or even try to bring something radical to help to their recruiting (help wanted) customer like matching services from QuietAgent or JobFox. Or when we see one partner with Zillow or Redfin for real estate classifieds. Or when we see one partner with Yelp for restaurant reviews and listings.

Until then, we continue to watch the leak and listen to newspaper execs tell us what has value.


A true unified inbox

May 13, 2009

Rocketvox_270x138Yesterday was the culmination for me. I was trying to manage 2 email accounts, inbound and outbound texts, blog comments, Facebook, LinkedIn, Twitter, and voicemail–it was crazy. I value all of them, but there are simply too many ways to communicate. I have tried a couple of the aggregation sites, like socialthing or xobni, but they only help some.

They don’t manage texts or voicemail, and they don’t control my communication in the way I want, by groups of friends, family, work, parents, etc.

That is why I am so excited about RocketVox (www.rocketvox.com). This is the product we all need. RocketVox gets all your digital communication in one place: multiple email accounts, all social networks, SMS, voice mail, address book, voice-mail-to-text, blog comments, Twitter, all of it.  (Caveat- I know the founders and have helped them with a few introductions). The product is in private beta, but soon will be in public beta. Look for it. The team launched it a few weeks ago at a trade show and it won numerous “best of show” awards.

Check them out:

SlashGear

http://www.slashgear.com/slash-gears-top-5-products-at-show-stoppers-rocketvox-0139615/#comment-58737

CNET

http://reviews.cnet.com/8301-12261_7-10211572-51.html?tag=contentBody;spotlight


The Classified Ad

May 12, 2009

The “help wanted” ad, or job posting, is a strange and unique animal in the world of advertising and marketing.

Most forms of advertising try to attract as many people to the product or service as possible in the hopes of selling lots of units. In the case where the units are limited, the price will rise as demand rises. More traffic is good, it either means selling more units, higher prices, or both.

Recruitment advertising doesn’t work this way.  The recruitment classified ad, or help wanted ad hasn’t really changed in 50 years (other than moving online, now it’s called a “job posting.”)  A job posting attracts lots of people, but there is only one job. So it creates a huge amount of work for the person who needs to review all of the applicants. Because there is no filter on who can apply, many unqualified applicants “throw their resume in” in the hopes of being considered for the job or for a different job.  The pervasiveness of the Internet has made the problem worse, not better. Job seekers dash off resumes for jobs with very little effort.

The statistics are staggering. Most employers will tell you over 90% of the applicants for online job postings are unqualified. One Fortune 100 company told me they received over 1 million applicants last year for 17000 openings.

It is quite obvious that the traditional job boards are not helping companies—they are still promoting a basic “help wanted” ad unit.

Niche job boards do make things a bit easier. In theory, by posting a job on a niche board (with a smaller, targeted audience), the applicants should be more qualified. And they are, to some degree, but there is still nothing stopping unqualified people from applying.

The solution really requires a different set of thinking from old line recruitment people, and from traditional advertising methods.