Startup Revenue: Moats & Models

I’m giving a speech tomorrow at the Founder Showcase in Santa Clara.  The topic is around building revenue for startups.  The slides are here:

These build on a prior talk I gave in 2009 on this topic, and I’m looking forward to it.

To give my cliff notes here of the speech, it’s basically:

Revenue is the lifeblood, getting to revenue is nice, very nice. 

Some advise not to think about revenue too early on in the life of a startup.  The thinking goes: focus entirely on building something great, get an audience, then the revenue pieces will start to work themselves out.  I disagree with this philosophy in part. 

I totally agree with the idea that 100% of your focus needs to be on building something people want and driving to iterate, iterate, iterate.  At the same time, I advocate thinking about revenue–at least a little bit–early in the lifecycle of starting a company. Don’t get derailed, but at the same time, don’t avoid the topic entirely.  My rationale is simple—you never know what small thing will someday be the determiner of success or failure, so thinking about something important like revenue is a good thing to at least wrap your head around. 

The talk then goes into two parts.  Part 1 is about building out a business to think about how you’ll establish moats and drive traction.  This is about defensibility in part; its also, however about driving distribution (at least in internet businesses).  I argue that any founder should likely try to draw out the model that I’m advocating here—may not be relevant to you, but I’d think you’d at least want to try. 

Then Part II is about models.  I’ll talk about my thoughts on types of revenue models, a sort of revenue model 101.  Nothing too revolutionary here, but hopefully a useful primer if you’ve not thought through a business model before.  I then finish off with a brief description of how to think about your market as a whole.  An industry or market model, i.e., the macro picture of the environment in which you operate is something that entrepreneurs will very likely need to be able to grasp and exercise their minds about. I’ll provide some quick thoughts on how I view that as working well and not well. 

Hope to see you there!

What I learned teaching myself SEO

I wrote last summer about my quest to teach myself SEO in 2 weeks.  At the time, the key task was simple: get the NYT wedding announcement proclaiming my wife, Aimee Jamison (nee Aimee Vincent), and me as married to show up on the first page of search results to anyone who typed “Aimee Jamison” into Google. 

At the time I started, this announcement showed up as #48 in the search results on Aimee Jamison, at the bottom of the 5th page.  As of today, going to Google and typing “Aimee Jamison,” returns Aimee’s LinkedIn Profile, Aimee’s Twitter Stream, and then the NYT Wedding Announcement.  So we moved her desired result up 45 spots!  Nice!

In my prior blog posting, I’d talked about taking 2 weeks to work on this.  In fact, it was much shorter.  Here were the key things I did:

• We filled out a Google Profile for Aimee Jamison, which linked to the NYT article.
• In Aimee’s LinkedIn Profile, we added a Personal Link, which in turn linked to the article.
• We got her a posterous page, which linked to the article, as a backgrounder on her. 
• Finally, when you sign in to Google, Google puts little Up and Down arrows that you can use to move around the search results.  It presumably saves results for you, so that when you type common searches, you get the custom results you want.  I assume that Google takes input from what things people move around here, though I’m not certain that this is true. 

In any case, what I learned here was pretty simple—if you want to get that certain link to show up higher in the page rank, there are a lot of routes that you can use to help yourself.  Now obviously, we’re not trying to compete with others on Aimee’s name, so this was an easier task.  Still, if you’ve never done SEO, I’d recommend this, as it was a pretty useful, straightforward exercise, and it definitely got results.

My Founder’s Institute Talk on Branding & Naming Your Startup

Last week, I had the pleasure of speaking as a Mentor at Adeo Ressi’s TheFunded’s Founder’s Institute with entrepreneurial superstars James Hong and Bryan Thatcher.  

First off, before I get into the topic, let me say that I think the TheFunded Founder’s Institute is innovating the approach to startups in an important way.  The approach is a mix of company building philosophies.  It’s one part bigger hammer–that is bring in lots of smart people as founders.  It’s also another part strong social networks, connect those founders to each other and to experienced, proven entrepreneurs.  Add top-tier, discounted, startup services (legal, accounting, etc.) and that gets at crux of the approach.  The new stock class—F-Class—which Ressi’s introduced is also super interesting.

There are a lot more unique details to how Ressi’s going about this, which I’ll not go into here.  But suffice to say, it is both empowering for entrepreneurs and it has a bunch of detailed thought behind it.  Ressi’s vision is big and broad.  It is exciting to be a part of, and I’m eager to help it succeed.   More concretely, I wish I had had access to such a thing when I was trying to start out as an entrepreneur.

Ok, so that’s the Founder’s Institute, now onto what I was talking about when James, Bryan and I spoke last week.  Our topic was Naming—as in, you’ve now figured out what customer problem you think you’re solving and what you want to do, now what do you call this thing?

This is a fantastically rich and interesting topic.  It’s also, IMHO, super super important.  When you’re a startup, your name is about the only marketing you really have at first.  Also, everyone—customers, potential employees, and potential investors—will ask you about your company’s name.  So whatever you name and brand your company had better be good.

My slides from the presentation are embedded here (hat tip to the folks at Igor International, who’s free naming guide was very influential):

(Shared with permission from TheFunded Founder’s Institute.)

It was a good discussion, and my sense is that this provides a useful prescription for startups thinking about what to name their company and how to approach their brands.  Some key points for reinforcement.

Having a process for naming helps.  What I think is particularly useful about this approach is that you can put numerical scores next to how you think about names.  This enables you and your team to have a concrete discussion about why someone likes versus dislikes a certain name.  This is important, as it enables your team to come to a more objective decision, as opposed to just who yells loudest.

Think BIG picture first, then worry about finding the .com or URL that’ll work. Following my talk, one common theme in speaking with people afterwards is that I think many people get hung up on the challenge of finding a good .COM URL that’s not already been picked up.  While certainly a challenge, I think that worrying about this tends to drive entrepreneurs to small thinking.  You’ll have to work through it, but that’s an end point, not the beginning.

As I’ve said in other posts—as an entrepreneur, my advice to other entrepreneurs is to think big in everything you do.  So when it comes to naming and branding your company, think big.  Go for a big name, figure out what that makes sense and helps position you strongly relative to your potential competitors.  Figure out a name that really delivers on the strategy that you’ve put in place.  Get that strategy right and solid.  Then you can go and figure out the more tactical issues of what the URL hunting strategy needs to be.

Commit to going through the process.  The other thing that I’d encourage people to do is really commit to going through the process that I’ve described in the PPT deck.  I’ve met with several companies over the past year who’ve listened to this process, ignored it, and then have ended up hiring a naming consultant to basically help them go through the same thing.

Acknowledgments to the folks at Igor International. Igor International have open sourced their naming guide, which is a great thing.  My deck basically walks through how I used that free information to secure Moonshoot, an awesome brand name, IMHO ;).  The tool Igor’s provided is for frugal founders like us a tool to go figure this out on our own.  Invest the time to commit to doing it.

DriverSavers & Its Awesome Customer Experience

Cover of The Incredibles [UMD for PSP]

This mail is a big shout out to the Incredible folks at DriverSavers, who saved over 20K of our photos from a HD and backup regimen that went horribly wrong.  I also think that there are some terrific lessons here that any company–large or small–can take in terms of delivering a great customer experience.

The background

My wife is a serious amateur photographer.  She takes a lot of pictures that are artistic, and as we have two young children, she also takes tons of pictures of our children.  Our approach to backing these up was to use an attached HD to her mac, with a backup HD that used Apple‘s Time Machine.

The problem we faced was that the HD failed slowly.  When my wife would look at photo thumbnails, they would appear to all be there.  When the HD finally failed, and we went to Time Machine, we weren’t able to find any archived copy that had the actual JPEGs of the 25K photos that it was supposed to be backing up.  Disaster time.

After a few trips to the Apple Store and elsewhere, we got pointed to DriveSavers.  DriveSavers is a data recovery service in Novato, California, that promises to deliver data from hard drives that have suffered massive failure.  They’ve apparently been involved in recovering data from drives damaged in 9/11, drives that have been in fires, underwater, etc.

From the beginning of this experience, DriveSavers approach impresses.

First call. Upon my first call to them, I was instantly connected with a real human being–no long number prompt trees.  Despite the fact that I was *desperate* to get a solution, my advisor at DriveSavers slowly and calmly asked me to walk through the situation in detail.  This works to his favor, as it lets me and my wife get out all the concern and anxiety around having lost all the photos our children.  He listened very patiently, would have let me go all afternoon, if that was going to be needed.  As he listened, he then started asking a few questions about what happened with the specific drive, how big it was, when it had failed, had we continued trying to use it after we had had it fail, etc.

After about 20 minutes, our Advisor suggested his path forward.  First off, as we only needed photos recovered, he thought we’d qualify for a price point that was roughly 40% less than their normal drive recovery.  This was a relief as this ain’t cheap.  Second, and frankly more important, he was confident that they could have excellent chances for successful retrieval.  This is what I wanted to hear.

I wanted to hang up immediately and get myself up there to hand off the disk, but he then asked that I work with him to answer some more questions, as he walked through what they woudl do with the disk and how it would work.  This turned out to be awesome–he made me understand that they do this all the time, that the disk failure I experienced was very common, etc.  Now I was in the car and ready to run stop lights to get to him to save our photos.

DriveSavers Office.

DriveSavers office in Novato has its entry wall covered with photos of celebrities who have had their drives saved by them.  The Late President Gerald Ford, Bruce Willis, Brad Bird (writer/director of Pixar’s The Incredibles), Johnny Depp, etc.  That wall dropped my blood pressure even further.

The people in their offices had the same message as our initial advisor–they’d have the disk back to us in about 5 business days, all the content they could recover put onto a brand new drive we provided.  They also gave us a phone number to call anytime–24/7–in case we wanted to check in.

Very impressive.

5 days later.

5 days later, they called me to let me know that our engineering supervisor, Bohi Nadler, had successfully signed off on a saved data set that we could pick up at our convenience. My wife drove up to pick up the photos.  We have the business cards of the specific engineer who did the work, a set of new tips on how to manage data backup and recovery at home to a stronger degree than ever before.  (We now use 2 HD backups and have all our photos on Smugmug as well.)

I love these guys, and had to share the experience a bit.

Lessons on customer service

This experience really showed me how few companies really get on it regardign customer service.  Here are some of the key tips and techniques that I think are important:

• Have someone answer the phone, and if not, then at least be super responsive.
• Let your customers vent, listen, and guide them through your solution.  This both disarmed me and gave me a sense of hope.
• Always offer a deal.  It was very smart of them to offer me 40% off for a Photos Only recovery.  I felt it was expensive, but at least not full price.  I was “saving” money.  Help your customers feel like they’re saving money, always.
• Get every human at your company to have a consistent message to your custoemrs.  Having the receptionist have the same information as the sales advisor and the engineer made a difference, I felt as though they knew who I was and were willing to help me.
• Humanize the service–they told me the name of the perrson who actually did the work.  Having a name behind the work made me feel even happier about hte experience.

I can hardly believe that a data recovery service can create such a positive feeling in their customers–part of it surely is the magic of finding what is lost that is valueable.  But I truly believe that their ability to think through the experience they want their customers to have is waht makes their business truly stnadout.  We can all learn from this, and I wanted to both share my tgratitude and my lessons.

HPs bet on touchscreens–forgot to tell us why a customer will care

I saw this article in the WSJ, talking about HP‘s bet on touchscreen technology to review PC sales.  They are apparently getting these things solds in to things like airports and luxury boxes, etc., and that’s great.   We will need this technology to be mainstream and everywhere, so I’m thrilled that HP’s doing this work.  We will all want this stuff someday– I want my bathroom mirror or my desk surface to someday be a touchscreen PC that can let me scroll through email, tracking key news or whatever.  Seems a reasonable and easy thing to foresee.

The thing that this article didn’t have and what I think is limiting this technology today is  this: a scenario that a user would care about.  This was a miss in the article, from a PR point, or whatever, it’s notable that there’s not a single mention of what a customer might actually care about using the technology for.  Lesson for any marketer here–make sure taht you are pitching very hard this statement whenever you’re gettin gan article written: “here’s why a customer will care…”

It’s an interesting contrast to look at the side project that TechCrunch has been putting together on their little touchscreen web appliance thingy.  They ooze passion about the user scenario they care about–I’m sitting on a sofa and I want to surf the web with a screen.  Easy to grok, clear why customers would want it.  I’d argue strongly that this is a more approporiate use of the opportunity for press than the HP WSJ article.