Monthly Archives

April 2009

Extreme bootstrapping

By | Uncategorized | 8 Comments

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Anthony Feint has a great post today on how to launch a web startup with the minimum possible budget.  He was writing in response to a ReadWriteWeb post on the same topic which suggests the minimum you can get by with is $47,500 – an amount Anthony says is laughably high.  Kevin Rose apparently launched Digg for around $2000:

He paid a freelancer $12 an hour to mockup the site, $99 a month for server space and $1.2k for the domain name.   And on the 5th December 2004 he launched the site and had his very own startup.  Simply amazing!

The full post is well worth a read, even if you have $50k+ to launch his thoughts will help.

To bring out a couple of highlights:

[When Outsourcing] Know what YOU are doing – don’t just know which features you would like to build. Know the technical details on how to build it.  I know php (what my app is developed in) and can speak technically with the developers. This is essential.

One of the most common ways I have seen web startups get into trouble is not having a sufficient grip on the technical details of what their outsource partner is doing for them.  The result: down the road performance problems and difficulty iterating/adding new functionality.

[On Design] I don’t think Kevin had a design when he started Digg and he obviousy didn’t need one. in the end  If you have a solid product the design can come later.

….

I spent a lot of time researching UI (user interface design) and put this knowledge to work.  I suggest you do the same as it could make or break your startup.

Product comes first (i.e. what does your service do for people, what is its utility?) but great UI is also very important.  To get to any kind of scale people have got to enjoy using your site.

All this is important because for many web concepts it is hard to know at the outset what the interest level will be.  The cheaper you can test the better.

Local search – more on the death of print

By | Search | 9 Comments

I’m at an AMR organised local search conference where lots of local advertisers have been talking about how they spend their marketing budgets and where they are getting the best bang for their buck.

Perhaps unsurprisingly the main story is the transition away from print and onto the web.  In this case the dying print format is the Yellow Pages style directory.  Across the board advertisers seem to be reducing their spend, preferring instead to spend money on the web, largely on Google Adwords.

For example at Rentokil web enquiries passed Yellow Pages enquiries by volume in 2007 and the former continues to grow as the latter declines – and at some point it will stop becoming viable for Yellow Pages to publish their annual directory.  Apparently the Danish Yellow Pages equivalent is already considering switching to bi-annual publication.

One other interesting titbit of information is that for Rentokil the quality of Yellow Pages enquiries is higher (15% more of them are genuine sales opportunities), but the cost of web enquiries is 60-90% lower, depending on geography.

One category that hasn’t been mentioned much is online directories.  It seems that local advertisers are more focused on Google Adwords.  There were some stats which suggested that Yellow Pages online isn’t delivering much volume.

Newswires staffing up as newspapers closing down

By | Uncategorized | 3 Comments

According to the FT this morning Bloomberg and Dow Jones are both adding staff to their Newswire operations – in Bloomberg’s case including 100 journalists.  On the other hand newspapers are, as we know, shedding people and shutting down.

This makes sense to me as we still need journalists, but increasingly newspapers aren’t able to employ them.  Newswire groups on the other hand can sell stories more easily via the web.  The FT suggests that the newswires are hoping to build internet based direct to consumer businesses which I think might be tough for them, but selling content on an item by item basis to web publishers could well work.

One of the side effects of the transition to web delivery of content is that the historic practice of packaging stories/songs/TV programmes into easy to deliver bundles (papers/albums/TV channels) is coming to an end.  The logic for the bundling was all about distribution in a physical and scarce broadcast spectrum world.  As the cost of distribution heads lower the economic reasons for bundling get weaker.  The shift from papers to newswires can be understood in this context.

That said, I’m not a big fan of newswires.  Informed largely by Nick Davies Flat Earth News I am a little worried that journalists they hire will be forced to prioritise the quantity of produce over quality (i this a good source?).  Ultimately I guess that it is down to the newswires’ customers, the web sites, to insist on quality.  Hopefully keep an eye on the matter and be prepared to pay more for better articles (or refuse the poor ones).

Finally – there is also hope for new models of crowd-sourced journalism.  It would be nice to see a successful startup come from this space.

Facebook continues to open up

By | Facebook, Twitter | 4 Comments

Facebook just announced their Open Stream API.  Users will now be able to see and interact their Facebook stream in third party applications – just like Twitter.

For me this will significantly increase the utility of Facebook, or at least it will as soon as I can get in Tweetdeck!

I look forward to the day when I can mingle my Twitter and Facebook and even email streams.  It will need some intelligent filtering though!

The real-time media distortion effect – Swine flu pandemic

By | Social networks, Twitter | 5 Comments

There is a lot of excitement at the moment about the transformative power of real-time social media, not least on this blog, but the path from here to success for Twitter et al is not straight forward.  As well as the big issue of business model I have previously written about the challenges for Twitter in keeping the service useful as it scales

When I read Evgeny Morozov’s excellent post this morning entitled Swine flu: Twitter’s power to misinform I started thinking that services which seek to mine the realtime data flow face a challenge in understanding the distorting effects ‘group-think’ that hadn’t occured to me before.

Evgeny put it like this:

anyone trying to make sense of how Twitter’s “global brain” has reacted to the prospect of the swine flu pandemic is likely to get disappointed. The “swine flu” meme has so far  that misinformed and panicking people armed with a platform to broadcast their fears are likely to produce only more fear, misinformation and panic

and

too many Twitter conversations about swine flu seem to be motivated by desires to fit in, do what one’s friends do (i.e. tweet about it) or simply gain more popularity.

Or in other words with the swine flu pandemic a positive feedback loop has been created within Twitter which has taken the tweets out of synch with reality.  I would also posit that the same sort of positive feedback loops can be created with other topics that become hot, as everyone wants to be seen to be in the know.  The ease of Tweeting combined with the lack of context inherent in the 140 character message make it easier than ever before for the rumour mill to get going.

This is the real-time media distortion effect that I mention in the title to this post.

Anyone trying to get the most out of mining the emerging real time data stream needs to somehow take account of this distortion in their algorithms.  There is some value in simply knowing what people are talking about at any given moment, but there is much more value in analysing the contents of their utterings to figure out what is going to happen next in the real world.  In this case that would mean figuring out whether it is the pandemic that is spreading or just hysteria.

Momentum with Apple and Android in mobile

By | Mobile | 4 Comments

New data released from Admob has Android now accounting for 6% of the mobile ad requests on their network, with the iPhone still dominant at 50%.  Blackberry is the other big player with 22%.

In related data, sales of the Android G1 phone are now estimated at around 1m in the US, and the app store hit it’s 1 billionth download just nine months after launch.
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Microsoft watch: not a good time to be Steve Ballmer

By | Facebook, Google, IBM, Microsoft, Yahoo! | 7 Comments

Microsoft reported Q3 results yesterday and they weren’t pretty – the first ever drop in overall revenues compared with the year ago quarter and online revenues down 14% were the main lowlights, although good news was thin on the ground.  I will leave the detailed commentary to others more qualified, but it looks to me like this beast is in terminal decline and won’t escape without some very radical change, which probably means new leadership.

First take a look at what their share price has done over the last five years:

This isn’t the picture of a company that is moving forwards.  It isn’t much different to other old school tech giants like IBM and Oracle, or even the NASDAQ over the same period, but it is a story of a company that is moving sideways.

To their credit Gates and Ballmer have long recognised that they need to re-orient the Microsoft around the web, and have tried to use the huge cash thrown off by their core software franchises to do that.  However, there isn’t a single web sector that they dominate, at least one that I can think of, and it looks to me like Windows and Office are at the start of what could turn out to be a pretty steep decline.

As successive generations of Windows underwhelm open source alternatives make steady progress, particularly in the high growth netbook area (the Microsoft offering for netbooks is still XP!), and at the same time Open Office and Google Docs are effective low end competitors for Word and Excel – so no good news on the horizon here.

And as I said at the beginning their online business is performing terribly as well.  They are nowhere in search, their social media story doesn’t go much beyond an over-priced investment in Facebook and the chat that I hear suggests that aQuantive the display ad business they acquired last year for $6bn isn’t prospering under their ownership.  At 14%, the decline in Microsoft’s online business over the last twelve months is worse than Yahoo!’s 13%.

It is hard to see what they might do to engineer a turnaround – so cue some more over-priced M&A and investments.

With AOL, Yahoo! and MSN all looking weak we are left with Google as the only strong player in this market, which doesn’t strike me as healthy for the world economy, but is likely to mean there are more opportunities for new companies.

Social media must prove profitability

By | Facebook, MySpace, Social networks, Twitter | 3 Comments

As you may have seen Chris DeWolfe is stepping down as CEO of MySpace, following the exit earlier this year of COO Amit Kapur and two other senior execs.

Om Malik sees this as the beginning of the end for MySpace as a broad based social network as the site has lost its buzz to Facebook and is posting flat revenues.  He also cites the fact that NewsCorp tried last year to sell MySpace to Yahoo as a sign that Murdoch has lost faith in the site’s ability to make good money, particularly when the Google search deal runs out in Q4 FY10.

He does however believe that there is a profitable future available for MySpace Music, although they still have a few things they need to get right.

By this analysis MySpace is a passing fad which is giving way to Facebook.  And now of course, Facebook is losing it’s buzz to Twitter.  All this without any meaningful profits being generated.

One of the criticisms frequently levelled at social media is that it is all just passing fad, lacking both durability and business model.  And therefore not worth very much.

I’ve been saying for a while now that the next big social media exit will likely go to a business that is generating significant profits.  Twitter may well prove me wrong, but with this sort of analysis in circulation I think the chances of me being right are increasing.

Buy.at wins BVCA and Real Deals ‘VC Deal of the Year’ award

By | Announcement | No Comments

At the BVCA/Real Deals awards dinner last night we were pleased and honoured to receive the award for Venture Capital Deal of the Year for our investment in buy.at, which was acquired by AOL for $125m last year. 

Thanks go out to the organisers and judges but espescially to the team that got us there.  Buy.at CEO Kevin Cornils and founder Steve Brown joined us for the dinner last night and they are the ones who made it happen.  As I said last night, we were just lucky to be at the table watching what I think is best described as a story of stunning execution.

The full list of winners is here.

Problems

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I am having problems with a renegade backup script and TheEquityKicker may be offline for short periods over the course of today (hopefully not longer….)

Apologies for the disruption and please bear with me.