April 2008 Archives

Some interesting interviews and commentaries:

Interview with Google's Eric Schmidt by CNBC

Interview with Google's Larry Page by Fortune Magazine

Future of the Web - commentaries by ten visionaries via BBC (a couple of them with more details here)

 

Here's full coverage of the 2008 Y Combinator Startup School:

http://www.justin.tv/hackertv/97554/Startup_School

 

The vide gets jittery sometimes and there are skips, but it's usable.  A better version (but it's not complete at this point - will take time to finish) can be found on Omnisio which syncs videos with the slideshow of the presentation, so it's much nicer.  Also the questions from the audience are captured and captioned on the video:

http://omnisio.com/startupschool08

I can tell you from experience that most of what you see in this article is good advice, so it's a good quick read.  I would also add two things:  Most of VCs look at the team very closely - even when you present and how you interact with each other - and also they want a go to market strategy.  See my other post on the subject.

I have followed Jingle's Free411 service (1-800-FREE-411) since they are a voice service like Frucall's initial voice based comparison shopping.  They have done an amzing job, specially given the competition from Google (1-800-GOOG-411).  At this point they have about 6-7% of the US directory assistance market, and they are processing about 20M calls per month.

The company had raised two series of financing before and the valuation was around $150M in 2006.  They just announced a series C round of about $13M with existing investors.

The amount is low compared to the valuation and their series B, so I'm not sure what exactly is going on.  The company has just reached profitability, and their market share and call volume is great.  I would expect a larger amount for aggressive growth and capturing more market share.  I hope this is not a down round for them for unknown reasons.  Most probably their estimates about their expenditure have been off, and they are running out of money sooner than they think so they are doing an internal round.

For most of web start ups the technology component is the easiest part.  Usually founders, specially first-time founders, are too distracted by proving that they can build a technology that works.  Don't get me wrong, that's very important.  However, since we are talking about engineering work getting there is much more manageable.  Specially if you're coming from a similar background and have built similar products before, the risk of building the product is usually low.  Scaling it is more tricky, but let's leave that for another post.  Again if you have been in an environment that needed scalability you know the tricks.  What I'm saying is that in the big scheme of things, the engineering part is usually easy (unless you're doing something that needs inventing new algorithms or things along those lines).

The biggest challenge a web start up has is acquiring users.  Without users technology does not matter.  It is easy to "assume" that you can get 300,000 users in the first year because flickr could do it or delicious could do it, but it's easier said than done.  Depending on the nature of your service (how viral it is), clarity of your messaging (how easy you can communicate to the user why they should use your service), your business model (do you charge your users or you provide a free service supported by ads, etc), and the demographics of your users (who's the target of your application) things can be very different and very undeterministic as to how you get users and how your user base grows.

That's why as an entreprenuar you need a "go to market strategy".  And that strategy cannot be "I'll hire a VP of marketing to figure that out".  If you are starting a business you should be more than an engineer.  You should have a sense of why people should like your service and how you get the word out, and who's the right audience.

You need to think and document how you want to get the first, say, 1000 users, and how you want to grow it to 2000 users, 5000 users, and 10,000 users.  If I were an investor and you were pitching to me, I would be very interested to know how you get up to the 50,000 user mark.  If you get there then hopefully a VP of marketing can help you grow it more.  Otherwise your technology might be nice, but it does not build a business.

Since this part is not engineering work and is not exact science it's very hard.  That's why it's a big challenge, so give it time and think about it.  Imagine you have your product ready and, say, 100 users who are your friends who were kind enough to listen to you and try your service.  What's next?  That's the big question.