Last fall, I worked a little bit to advise a company called UserVoice, which was (and still is) a way for companies to get direct customer input and feedback about their products.
The founders of UserVoice are serious entrepreneurs; they all live
in one home, and work out of a co-working space in Santa Cruz, CA. When
I met the company, they already had thousands of users, though their
product was free. The founders in the process of monetizing it.
When Marcus Nelson, one of the co-founders, asked me about expansion
capital, I was really skeptical despite my love of the UserVoice
concept. I gave him my customary advice: "don't waste too much time
getting funding. Startup funding is hard to get." After all, the time
was November 2008.
Still, there were all those users...really liking the product. I made a preliminary phone call to Howard Lindzon, one of the bravest, most contrarian investors on the planet. And then I went back to tweeting Marcus every once in a while.
Then I get an email from Marcus, asking to meet last week. I refuse,
because I'm still in Phoenix. But Marcus is releasing big news on
Monday. He sends me some language: "...drawn to the UserVoice vision,
Baseline Ventures recently led a group of angel investors in an
$800,000 funding round. Baseline was joined in the round by Dave
McClure at FF Angel LLC (seed investing vehicle for Founders Fund),
Betaworks, David Shen Ventures, TAG, Vincent Worms, and Howard Lindzon.
As a group, the angels give UserVoice excellent business connections;
expertise in messaging, marketing, product design, and international
exposure.
And about a new member of the Board of Advisers to the company: "as
the former vice president of communities and conversations at Dell Inc., Bob Pearson bolsters the hands-on, enterprise credibility at UserVoice. At Dell, Pearson led IdeaStorm,
developing an industry-leading approach to the use of social media that
included 25 blogs, forums and wikis in seven languages worldwide with
200 million page views of annual interaction and coordinated the
company’s approach in Twitter, Facebook and other key sites."
Pearson likes the company even more than I did: “UserVoice is
democratizing the idea generation model, so customers can plug and play
at their convenience, gain feedback from customers, and do so without a
major investment of IT resources. It’s very complementary to the great
work of Salesforce.com for IdeaStorm and, in many cases, will extend the reach of existing idea communities worldwide.”
And now for the real good news: It's spring, and UserVoice has additional hundreds of paying
customers that run the gamut from technology to more traditional
organizations, including Intuit, NASA, Facebook, Xing, Nielson,
Genentech, Blackbaud, University of Wisconsin, Animoto, Seesmic, Stumbleupon and TweetDeck.
Marcus and his housemates are going to use the money to do a white
label product, so any company can communicate with its customers in the
product development cycle, and find out what's working and not working
before it's too late.
When I became involved in the American Biofuels Council three years ago, the push for biofuels was at its highest point in the technology hype cycle. Now, in Arizona, under the aegis of the Desert Biofuels Initiative, a non-profit social venture advancing sustainable regional biofuels, companies in the state are collaborating to produce and sell real products.
As everyone knows, after every hype cycle is the disappointment: in the case of biofuels, that disappointment came from soaring world food prices — due to the diversion of corn and soy from food stock to biofuel, and the concomitant grain shortages and rise in prices. Falling swiftly into disfavor, ethanol and soy-based biofuels declined in popularity, and the entire midwest suffered job losses.The same media that hailed biodiesel as as means to energy independence derided it as consuming more energy in its production than it saved, and causing the global poor to head for starvation.
But all biofuels are not made of food stocks. At the 2nd Annual Desert Biofuels Summit in Scottsdale, Arizona, I heard about biodiesel companies making fuel from many different non-grain sources. Many of them are already successful; others are starting in the unique collaborative, open source environment provided by DBI.
Here’s a summary of companies that presented today, although not all of them.
Waste Vegetable Oil (WVO) Companies
1.Arizona Biodiesel, makes B99 biodisel from waste restaurant grease. Its CEO,Dan Rees, believes the biofuels industry was founded to be local and use local waste materials. He believes biodiesel should use local resources to benefit the local economy and benefit the local environment.
2.Amereco Biofuels Corp. was developed to meet the standards for soy diesel. Its plant is geared for 15 million gallons a year. All its products are made from recycled ingredients.
Algae and Jetropha Companies:
3. Biofeedstocks Global LLC, a startup, is planning nursery operations to plant jetropha in Arizona, and is in R& D working with a closed loop algae system.
4. Algae Biosciences, part of the Northern Arizona Center for Emerging Technologies, produces algae in contaminant-free salt water aquifers near Holbrook, AZ, where there’s a pristine salt water aquifer from a long-dried up sea!. The company is producing a wide range of products, of which algae-based biodiesel is a byproduct.
5. XL Renewables, in Casa Grande, AZ. is a renewable energy innovation company focused on the large-scale production of algae biomass and the development of integrated biorefinery projects
6. Energy Derived is dedicated to the development of energy efficient algae production systems for the creation of algae-based biofuels.. Their goal is to have every farmer grow an acre of algae and produce his own fuel. Apparently, drying algae is a relatively energy-intense issue; the company has attacked that problem.
7. Diversified Energy Corporation is a privately held company specializing in the advancement of a series of promising alternative and renewable energy technologies, including a biofuels conversion process that can take any renewable oil and produce transportation fuels that are physically and chemically identical to petroleum, and an algal biomass cultivation system that is scalable and economical.
8. PetroSun - is an example of a company that originated as an oil and gas exploration company, but and went from there into using microbes for cleanup and enhanced oil recovery, and from there into bacteria and algae as sources of fuel. By no means a startup, they have a million acres of land leases in Arizona and New Mexico to cultivate algae for biofuels.
9. Desert Sweet Biofuels is another company that has changed its focus. It will use the facilities and work accomplished by Desert Sweet Shrimp to pioneer the husbandry and production techniques required for the economic production of algae Biofuels and biodiesel. Involved in aquaculture for 14 years, the company managed fields in Ecuador, and has switched to Arizona because of its warm dry climate, perfect for growing algae.
10. My personal favorite, although perhaps not the biggest investment opportunity: Verde Biotrailors, which produces pre-engineered mobile biofuel processors that can be located on a job site, handle smells and spills better than a processor located in a building, and can be cleaned up at a car wash. The units sell for $12,500 and bring biofuel processing to the people.
Some of these companies are not startups by young people; I’m also seeing a group of middle-aged scientists trying to commercialize technologies they’ve been working on for years out of true conviction. There was so much energy around the Workshop that I can’t believe there isn’t more support for these obviously important companies.
You
will want to read this book. It collated many thoughts I've had about
PR and why it has failed in the past and could succeed in the web-enabled future. Our how it might morph into something completely different, and much more effective.
Its co-author, Brian Solis, embodies what he writes about. He blogs about clients, throws parties for them, takes photos of them. He doesn't sit back and send press releases or annoy journalists with email. He becomes the disseminator himself.
A sentence
that jumped out at me was "The future of PR is already underway and
it's defining who we are and what we choose to represent." BOOO-YAH. What we choose to represent. Say it over and over. PR people have
choices about what to represent, and more and more they are identified with the communications of their clients, even on the agency side.
Looking at it that way changes everything. It makes the PR person
and the "journalist" interchangeable under the best of circumstances.
That will be a hard change for some people to swallow.
In the twenty years I owned a PR agency, the thing I hated the most
about it was the assumptions people made about me. As a film reviewer
(before I opened the agency), everyone thought I was blunt, truthful to
a fault, and perhaps even intelligent or insightful. Once I was in PR,
all that changed.
Even the journalists and companies that depend on PR to "put out"
information disrespect it. For some reason, it is assumed that if
someone is "in PR," they will distort the facts and force them own your
throat.
The worst PR people do that, but the best PR people were never like that. They were and are
evangelists for products and companies they know and love, using their
communications skills to evangelize.
Sometimes they are paid, sometimes not, but if they love a product, they talk about it.
Now PR people will be even more, Brian says. They will find the conversations on the web about products and services they choose to represent, and they will contribute (or not) to those conversations.They will be cultural
anthropologists, listeners, analysts of online behavior, and
collaborators. More than anything, they will be facilitators of
conversations that are already happening about a product and a brand.
That's what I always thought I was. And that's why I think the big
agency model is out the door.There's a limit to the scalability of listening, analyzing, and evangelizing.
When you have a big agency, you often
take clients you have to struggle to evangelize for within the ethics
and constraints of your own personal beliefs. That's how big agencies
end up with countries that support terrorists, or even dictators and war criminals as clients. In the new model of social media PR, those clients should
gravitate toward agencies that share their beliefs, not just agencies
with big connections. When that happens, the industry will have really
changed.
My friend Jeremiah, over at Forrester, really understands social media for brands. Here's a presentation he gave that I think sums it up. Go where the fish are, he says. Too many startups are trying to reinvent the wheel.
In the spirit of avoiding the things everyone else is already telling you from SXSW, I didn't go to hear Dave Morin announce Facebook Connect's availability for iPhone, or Larry Lessig's presentation on how to change Congress. Instead, I went to a panel about "What Startups Can Learn from the Obama and Dean Campaigns."
Most of the people on the panel were early users of social media tools, using them for a wide variety of Democratic candidates. The lone Republican said she was embarrassed by the way her party used social media in the last election.
Here's what they said that applies to you, or to your company:
Every campaign has to have an opponent. Having an opponent gives you and your stakeholders a reason to try to win and drives you closer to each other. Whether you are winning voters or customers, it's always about winning.
In order to win, you have to make your customers into your campaign staff. Those unpaid organizers won it for Obama. To do this, you ignore the online/offline divide, and create the illusion of intimacy with your customer by letting your customers meet each other physically. Think Obama house parties. This is called engagement.
To promote engagement, try to think like a movement: give as much control over to others as you can if they share your vision, and empower them to carry your message. This is almost NEVER done in the corporate world today.
If you are authentic and personal, you can create a mob of screaming evangelists, which is what you need to take your product across the chasm.
What tools should you use: Video still rules, as does PERSONAL email, rather than newsletters
Localize your online marketing, addressing it right to your prospect or customer, the way Obama did with all those emails.
All politics is local, and Obama built his brand locally and globally by targeting his online advertising geographically Every banner ad mentioned city and state to which it was targeted. This empowered local voters
These media strategists for political campaigns believe national brands should try to do local targeting; Coke does it on college campuses, but it's rarely seen otherwise.
The Obama campaign also added social networks throughout the campaign as they became important to voters. so don't be afraid to experiment. Especially in advertising, the market place moves, and you have to move with it. Be on the cutting edge and don't be afraid to move fast and fail hard:-)
Learn anything?
Other major lessons from SxSw:
AT&T's Austin network wasn't ready for the onslaught of so many iPhones. It's almost impossible to call out, or to use the 3G data services.
Twitter seems to be holding up all right, but I think Brightkite is exploding here, or else every single customer of Brightkite is at SxSW.
The Hilton Hotel blocks every wi-fi card, forcing you to buy its $10/day service. Hospitality FAIL.
I've written about this before, but here I go again.
Entrepreneurship will get us out of the recession. Why? Because jobs are a lagging indicator of the economy, and job losses will continue even after the economy improves. And, more important, because structural changes that have been occurring for over twenty years will be accelerated by this downturn.
For example: in most instances, people no longer have to "go to" work. Work can come to them. This changes the need to hire, and makes contracting by far the most interesting option for employers. As someone said recently, we're entering the "gig" economy, in which we will all go from project to project rather than from job to job, and the timelines will be telescoped. Even employees will need survival skills.
Many employees aren't ready for this. That's why I developed Blueprint For Survival, a workshop for laid off workers and reluctant entrepreneurs. These aren't people who are going to go after "it" full-tilt-boogie; they're people who will have to "consult" to make ends meet, and who don't even know how to send an invoice.
In an op-ed post in Sunday's New York Times, Tom Friedman rightly says we need to quit bailing out the losers and start dedicating resources to the innovators. However, he jumps the track when he says money should be given to venture capitalists to foster innovation. Venture capitalists have access to plenty of money. What they don't have is good, shovel-ready innovative deals.
I have run programs for entrepreneurs through the Kauffman Foundation for ten years. In my opinion, giving stimulus money to VCs won't help, because the lack of funding (especially outside Silicon Valley and NYC) occurs at the earliest stages -- the seed stage or the prototype stage. Most of the companies I see are not suitable for a VC investment even if it fell out of the sky on them. They're not ready.
That's why boutique incubators like YCombinator and Techstars have been so successful in their niches; they weed out the silly start ups and put some muscle behind good ones. However, they only concentrate of software (or at least I think they do) and there are many other kinds of companies: clean tech, medical devices, hardware, etc. that require a bit more money to go forward. Having just listened to Marc Andreesen talking about his new fund on Charlie Rose, I think he's right: the sweet spot for funding is $200k-$1.5m
If the government were to contribute to innovation, why shouldn't it just provide more funding for existing programs, which now must turn down many deserving applicants?
For true innovative technologies, SBIR grants are a real boon, and their scope could be enlarged and expanded. They could be given outside research universities, and made easier to obtain (there's a little industry of SBIR grant writers that needs to be disintermediated).
For later stage companies, SBA loans are also good, although they always run out of money in Q2, so they are unavailable to entrepreneurs a good part of the time. And SBA loans place heavy emphasis on -- you guessed it -- real estate, which most entrepreneurs don't need right now.
Get the money to the entrepreneur, in the form of grants or government-backed loans (ordinary banks don't lend to entrepreneurs during the first 3-5 years of their existence), and I will show you a way out of the recession.
The Arizona Department of Education has invited me to speak to them today about state standards for teaching high school kids about entrepreneurship. This forces me to think what young entrepreneurs (and their teachers) really need to know.
1) It takes a certain temperament -- a fearlessness --to be an entrepreneur. Young people, especially in high school often have this. They also have little to lose, so they would, in theory, make great entrepreneurs.
2) Thinking about problems and solutions should be stressed. Successful entrepreneurs need to look at problems in their worlds and find solutions. Sometimes these problems can create very big businesses even though they are very small problems.
3)Research skills are important: who is the competition? What are they doing? How big is the market? How much does it spend to solve this problem? Who is solving the problem now? Research is readily available on the internet, but kids have to be taught how to go beyond the obvious.
4)Financial literacy is critical. Entrepreneurs need to know how to budget, because a budget is a business plan in numbers (or a business plan is a verbal budget). They especially need to know cash flow statements, P&Ls, and even balance sheets. These will not be easy to teach; they have to be taught in context, not as isolated skills and facts.
5) Old forms of business are collapsing. Think virtual businesses without office space, even without retail space. Encourage e-commerce.
6)Hiring is out. Outsourcing is in. Everything but the key component of a company can and should be outsourced.
7)Evangelism is the new form of marketing. Do not bother teaching advertising or marketing in the old ways. Teach Facebook, Twitter, and other social networks as the best marketing tools.
8) There is free software for running businesses. For finances, there is Quickbooks Online, or Freshbooks. There is also Microsoft Live Small Business, and Google Apps.
9) Use your ingenuity to bootstrap. There is no money for startup businesses. But get to know a banker in advance in case you survive for three years and become bankable.
10) Mentoring is invaluable. Form an advisory board of people who have been there and want to help others. They are remarkably easy to find. Put people on that board who cover your own weaknesses, like accountants, lawyers, and salespeople.
11)Get legal documents and set your business up right from the start. Use YCombinator.com for complicated documents, and any online document service for thinks like forming an LLC. See an attorney for a free consultation, but make sure you see a business lawyer, not a divorce lawyer or a real estate lawyer.
I would urge the teachers to populate their classes with outside resources, as someone who has spent his/her life receiving a public pay check has no clue about the world of the entrepreneur, which is a world of total uncertainty and ingenuity, much like manipulating a speeding car around a racetrack. I'm not sure entrepreneurship can be taught using Bloom's taxonomy of educational objectives:-)
Every once in a while I find someone's blog that I think should be shared with startups. Pat Sullivan is a friend of mine, and a serial entrepreneur/founder. I always wonder why he gets involved with what he does, and here he talks about the DNA of a startup, using as an example his most recent project, Flypaper :
The DNA of a startup includes all sorts of things. What is the problem the product is trying to solve? How it is designed and coded? How is the product envisioned by the founders? How fanatical are the creators about the details of the product? What marketplace itwill compete in? How much money does the startup have? How will the company monetize? What about the founders’ talents, personalities and experience? How will it be sold and distributed? What is the influence of outside investors and advisors, if they exist? What is the price point? What is the economy doing at the time? Just like DNA, these factors and many others are extremely complex. What eventually emerges is a product of the interplay of the many elements that make up that startups’ DNA. The major challenge for the entrepreneur is to recognize just what this product is!! And the earlier the better! At ACT!, we struggled many times with this.
We had already created the Contact Management category in the first few years of the release of the first version of ACT! We gained a 90 percent market share at one point. But as time went on new competitors were introducing Sales Automation products and then CRM products. We were tempted to try to make ACT! fit into those categories as well. But I always found myself saying, “if it walks like a duck, swims like a duck, quacks like a duck, IT’S a DUCK.” We could not change the DNA of what ACT! truly was. It was and still is today, a contact manager. That was its DNA.
With Flypaper the same is very true. It has been four long years in the making. And during its history many influences affected its DNA. But at its core its DNA was really very clear. If only we could see it. As I said, that is the entrepreneurs’ biggest challenge.
At first we tried to make it fit into the cool consumer market where you give a version of the software away to millions and hope that enough people will buy the “pro” version. Well that did not work. And it did not work because it was simply not the products’ DNA. Then we tried to alter the marketing by giving a 30-day free trial to consumers, and that did not work. Again, not in the DNA.
So what is Flypapers DNA? About five months ago, it became crystal clear to me and the other execs here. The problem Flypaper was designed and built to solve has nothing to do with consumers wanting to do cool stuff with Flash for their Myspace or Facebook page. Flypaper was built to solve the problems of companies building mid to large scale Flash projects for eLearning and Marketing.
Don Pierson, the founder of Flypaper has 20 years experience of building large scale Flash projects for large and midsize companies. He saw the problem. Flash was very cool but could only be used by talented and expensive programmers. It could not be edited or maintained by the customer. It took enormous amounts of time and money to build these projects. It involved much collaboration and many approval cycles. Arguments would arise about who approved what and when. This created many billing and payment issues. While building a project in Flash was the best way to do it in terms of a quality result, it was truly a nightmare getting it done. He reasoned, “There has to be a better way!”
That was the beginning of the DNA that ultimately produced Flypaper. Trying to make it something else, as it was being birthed, was a big mistake. But mistakes are common in startups. The good news is that we recognized it soon enough to allow it to become what it today is. Flypaper – The Leading Flash Content Management Platform.
If you look at our brand new, built from the ground up website at www.flypaper.com you will finally see what Flypaper really is. It ain’t for consumers playing around with Adobe’s Flash. It is only for serious producers and consumers of Flash projects. It solves the problems that Don saw years ago. You can now really build Flash projects in a third to half the time. You can collaborate online with all the people involved in the project in really productive ways. You can actually solve virtually all the problems with approvals and billing that inevitably arise. And, on yeah, you can also save a ton of money. Many of the companies we are working with estimate Flypaper will allow them to save millions of dollars a year.
And with Flypaper you get a lot more than you got with the Flash projects you built the old way. Each project you build inherently is tracked in a Dashboard. You know what the viewer has looked at. How long they spent on what pages. If they emailed it to anyone else, you know it and you know what those people did with it. You can edit and maintain your own projects without being dependent on Flash programmers who don’t really like to do the mundane maintenance anyway. Marketing can produce Flash projects that salespeople can easily personalize specifically to the prospect they are trying to sell. And marketing gets to control what elements sales can personalize. Salespeople use the Dashboard to see exactly what a prospect is doing with the marketing materials they sent. The stories (projects) also provide a way for the prospect (or learners in an eLearning application) to communicate with the sales person either by email or even live chat (coming soon).
Flypaper unlocks the power of Flash for everyone in the corporation. It releases Flash from the domain of experts and niches, and unleashes its power for the whole company to sell more and train more effectively. Content creators both inside and outside the company can now work together in ways they could not do before. To our knowledge, there is nothing like Flypaper. I could not be more excited about the potential of Flypaper. I like its DNA!!
For me, this answers the question I always ask businesses: "how will you make money?" You take a persistant, sometimes niggling, problem and create a company that solves it.
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