Monthly Archives: February 2010

Losing Your Virginity: Signing up first customers

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Friend’s startup asked “how can we speed publisher adoption of our free product” (they’re about to beta some code that will help websites provide editorial value and make money from connecting visitors with relevant social media – contact me if you want to talk with them). Outside of the obvious “build a great product,” here are some tips on getting those first large publishers to implement. It all comes down to reducing barriers, creating a sense of urgency and maybe indulging in some of the seven deadly sins (greed? vanity? envy?).

A. Find a champion at the target company
– without a clear sponsor, you’ll get delayed
– look for someone who has the ability to sign/implement themselves or the authority to assign someone else

B. Build an advisory board comprised of potential champions from target companies
– identify important potential champions within your target companies and ask them to join an advisory board
– best if they have a real interest in what you’re doing
– commitment theory suggests that these folks will now want to help you

C. Do ANYTHING to get a reference customer
– No one wants to be first but if there’s perceived marketplace momentum you go from “maybe” to “must have”
– if you have to be very aggressive (rev share, implementation customization, etc) to acquire the reference customer, structure the deal in a way that won’t lock you into these crappy terms w/ (a) other customer [they talk] and (b) the reference customer in perpetuity
– you can do this by preserving your standard terms but adding subsequent clauses which exchange some value (eg in return they agree to participate in a case study or whitepaper w/ you) or are specifically timebound
– you can also structure as a payment to help them accelerate implementation – ie $25k payable on first impressions to defray implementation costs (for which they might need to hire a contractor or defer some other revenue generating projects)
– or even do the install yourself if they’ll let you into their code

D. Build affiliate hooks into the first version of product
– If your first partners are able to derive additional value from their implementation, it may create a sense of urgency over later when the market has been penetrated
– For example, including a ‘want this on your site’ link that will pay a bounty to the originator of the lead might be a good short-term catalyst even if longterm you won’t rely upon this sort of acquisition

E. Use a launch event to create a deadline
– “We’re launching X date and would like to include you in announcement if you’re live w/ product”
– Similar to the attractiveness of the advisory board, this can be directed at your champion as a way to get them some press – indulge their desire to see their name in print and portrayed as a connected in-the-know innovator

F. Make your data match their KPIs
– Present your opportunity matched to the driving the key metrics of their business – every exec has some set of results he needs to drive that quarter – if you can prove you’re the best way to impact those results, you get attention, otherwise you’re speculative

Any other ideas? Post them here or tweet to me http://twitter.com/hunterwalk

Apple insists TV is a ‘hobby’ but listening to their ‘gut’

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Apple COO Tim Cook this week said “Apple will continue to invest in its Apple TV set-top box “hobby,” despite its relatively low popularity.” Why? “We’re continuing to invest in it because our gut tells us there’s something there.” Yes, the “SOMETHING” is a $100b advertising market and an equal amount of money spent on content.
He continued to state they had no interest in making TVs. Double-speak. They’re not going to make TV, they’re going to make large computer monitors w/ an OS and chipset.
This is no different than if Apple insisted they’re not interested in netbooks and then launch the ipad. They’re never interested in an existing category. They’re interested in creating a new product which displaces an existing category.

WSJ on Howard Stern

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Howard Stern has been in the news more often these days as rumors of an American Idol gig coincide w/ the ending of his $500 million, five year deal on satellite radio. The WSJ on Friday asked “what’s next for Howard?“

Having grown up listening to Stern on NYC radio i hope it’s a return to mainstream media – either radio or American Idol (which i don’t watch). Pre-Sirius Stern was great for three reasons, which the satellite deal all killed for me:

1. He used to be the underdog: Before he was the half billion dollar man, Howard was always on the outskirts of celebrity – loved by the blue collar publicly and the white collar secretly. Then he got divorced, started dating the models and attending restaurant openings. While this transformation was distinct from his move to satellite, the huge employment contract he received became the prefix on any discussion of his work. Any deal he gets is likely to be lucrative but perhaps a return to “market wages” and mainstream radio will put the focus back on Howard and away from his bank account.

2. He was limited by ‘the man’: No matter how large his audience, Stern was constantly at war w/ the FCC for his style of humor. This ongoing battle and his attempts to deal with restrictions and corporate oversight produced some of his best humor. The freedom of satellite let him move from innuendo and self-censorship to an anything-goes style of comedy which overshadowed his intellect and subversiveness.

3. Celebs had to put up with him: Stern commanded a massive audience on radio and this forced celebrities to swing by the studio on publicity junkets. In return for a plug here and there, they let Stern eviscerate them, asking the type of questions that Entertainment Tonight never would. And it wasn’t just dick jokes. Stern would treat them like people – asking about their relationships, foibles and failures. Often with gripping results.

C’mon Stern, come back to us.

Hey, dirty, baby i got your money: why start-ups need to make like ODB and turn users into customers

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You and some buddies finally launched a killer product. It’s starting to scale in beta, TechCrunch has been poking around and you’re getting inbound VC interest. Whoo hoo! Sooner or later (probably sooner) you’ll think about launching the business model. When’s the right time to make some money? If you’re going to be charging someone directly (users, advertisers, enterprises), the answer is likely NOW (or as soon as you’ve reached minimum viable product). This advice is independent of your funding situation – it has nothing to do w/ profitability.  Rather it’s about turning users into customers which validates your product and stress tests your technology and culture. 
1) Validating your product
The dreaded penny gap – can you actually get people to pay anything? Market research, existence of competitors, love notes from your beta users – they don’t mean poop. Ask someone to whip out a credit card and you’ll get real data. 
At Second Life there were plenty of discussions about leaving beta. Our users were building a world – it would never be “finished” but we settled on charging once the authoring tools were sufficient. In early summer 2003 we pre-announced the end of beta and once the day came to start processing credit cards there was an internal pool betting on what percentage would convert. If i recall correctly, the estimates ranged from 150% to 5% as the optimistic thought we’d not only get everyone to pay but some would bring friends along. And the more pessimistic (me) wondered whether this early adopter crowd would pony up for an experience which was still forming (remember, this was 2003 pre-freemium, pre-virtual goods and in the midst of an economic malaise).
Well after 24hrs unfortunately i had won the pool (thankfully that wasn’t the end of the story and in the years since Second Life has grown many times over). Our founder Philip Rosedale looked dejected for a moment but then remarked “well, i guess it’s a good sign that our product/business guy got the number right” (since i was also the holder of our traffic models maybe this meant my future more rosy forecasts were likely to be accurate).
So if we had tried to link our launch to “having something of value to sell” and only a fraction of users agreed with us, did we exit beta too early? Absolutely not! In recounting the experience w/ Cory Ondrejka (Cory’s Blog), Second Life’s former CTO, he remembered “we got there about as fast as we could and then did a good job completely changing the way we billed when we were wrong. Could have been easy to wait another 6 months w/o launching, fortunate we didn’t as we’d have then run through our burn w/o knowing we had the wrong business model.” [in fall of 2003 Second Life made a fundamental shift to focus on virtual property rights and letting users “own” their land/objects, charging them essentially for server space]
Now this early product validation might be more common these days but Cory notes that “video games (which SL owed a significant part of its cultural dna to) have traditionally been secret as hell.”
2) Stress Test Your Tech and Culture
So let’s assume the best and people actually want to pay for your product. Awesome. Now you just need to see if two other essential components scale: your technology and your culture. Prior to charging you might think that “users” can deal with the occasional outage or be dismissed as “people who are getting something for free so they shouldn’t complain.” And while this is clearly NOT a healthy attitude even at this stage, nothing changes it all faster than flipping the bit to “customer.” You can’t treat “customers” that way because they get mad, they only give you once chance, they have a boss waiting to see the results from the latest campaign and an ISE when trying to get the data off dashboard.yoursite.com isn’t going to win you love. 
It might be a valid argument to suggest that companies which don’t treat their users as customers from Day One are already screwed but nothing stress tests your entire org and systems like pushing some money through the system. In fact you’re likely to find lots of weak points that previously went unexposed – be prepared to help your team prioritize these and be upfront with any customers about known issues. Lack of reliability is the killer in customer relationships above and beyond not being feature complete or five 9’s stable. 
So it’s simple. Start charging people as soon as you’ve got that Minimum Viable Product. Now you just need to go build one 🙂

Welcome Aardvark to Google!

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Very excited about Google’s Aardvark acquisition. We bring on board a very smart team and Max’s excellent hair styles.

Questions i ask on Vark have a pretty high success rate. I find the questions they ask me to answer are often not very well targeted so i hope that’s an area for improvement.

Here are some of the recent questions that Vark solved for me where traditional search struggled:

  • how would i go about hiring a dungeon master in the San Francisco Bay Area for an old school Dungeons & Dragons play session?
  • what’s the best android app for tracking flight status (via flight# or departure/arrival airports)?
  • looking for the name of the essay which discusses why things like cat picture blogs are important because they train people to use technology which can then be leveraged later for more important uses such as political protest. I thought it might have been clay shirky but can’t find it. Thanks!
  • what rap song has the line that goes something like “crazy grants and a couple of jacksons?” can’t find it anywhere! [referring to $20s and $50s]
  • Anyone have positive or negative feedback on the iD Computer Camps at Stanford [ http://bit.ly/5s2orB] ? My 12 year old nephew wants to go.
  • what’s a soft, public running track in San Francisco i can use to ease my way back into distance running after several years of chilling because of bad knees?
  • what hex color is the Zagat cover?

Veoh going but not forgotten

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I’m sure there are plenty of quotations about how a person’s true self is exposed not by success but by struggle. Dmitry Shapiro, Veoh’s founder & CEO, posted today re: closing their business and heading towards bankruptcy, a difficult realization for any leader. Dmitry’s note represented him the way i’ve come to know him – as a passionate, truthful and introspective guy. We first met on a panel several years back and although our sites were to some extent competitive, there was never animosity. We were building the same vision to help media of all sizes come online. Veoh stood up for their rights in lawsuits and won a summary judgment against Universal Music Group.

Best of luck to Dmitry and the rest of the Veoh team.

The Geo Wars: How Foursquare survives…..

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With Yelp, Facebook and perhaps Twitter moving into Foursquare’s territory, and the start-up already facing competition from Gowalla, MyTown and others, pundits are starting to wonder, “will foursquare survive 2010?“

My opinion: yes – and they’ll be big – if they can execute the following two tricks:

1) Make sure 4SQ is an experience, not just a utility
If checking-in is predominantly just a way to publish your current location to FB or Twitter, then 4SQ will ultimately lose to those services. But if 4SQ can build an experience on top of checking-in, they will create a differentiated use case. Examples of what this experience could be incl:
a) GAME: extending the mechanics of badges, mayorships, leaderboards, etc
b) RECOMMENDATIONS: using my personal geo data to not just track where i’ve been but provide me suggestions of where to go
c) COMMERCE: Discounts, sweepstakes, etc for checking-in at locations

2) Hit escape velocity fast!
We always overestimate the ability for bigger companies to staple on yet another use case to their product. Consumers often want simple tools that satisfy a need. Now at over 1m check-ins/week, 4SQ needs to throw everything they can at growing quickly and getting adoption in order to cross over to the mainstream – to become the snowball. This means eliminating frictions to sign-up even if it means collecting less info on users in the nearterm or relying more on FB Connect; accelerating a partnership or two for distribution even if it means paying to seed distribution; or being ruthless about delaying advanced user features in order to make sure the basics work across multiple platforms.

As an early 4SQ user I want the innovator to win – they can leverage my loyalty to help them out – put me to work – Dens, whatcha want me to do? Invite five friends this month? Update five listings? Mobilize us!

Once escape velocity is achieved you gain two advantages:
a) network effects of new users
b) competitors are playing catch-up, building the product you were as opposed to the product you’re becoming

If they get reduced to being a utility (“publish location”) or end up focused on too narrow a group of users, they’ll get passed by general purpose geo services or social networks on one side and out innovated by gowalla, mytown, etc on the other.

Alright, gotta run and check-in somewhere….

The next AppleTV will probably be a TV

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Does anyone else think that v2 or v3 of AppleTV is not going to be just a box but instead a TV (or technically a tv-sized internet connected monitor running a native OS)? If Apple is truly going to close the circuit they need a large screen in the living room. An AppleTV-style buddy box or mac mini plugged into a HD TV isn’t going to cut it.  Tablet is a great intimate media device that continues to make media portable, but even w/ a stand, it’s not going to replace five hours a day of lean back. iPhone/tablet/touch become remotes.