Monday, September 24, 2012

VC irony

This just blurted out of head....

VCs encourage startup founders to take risks and not be afraid of failures.  Failures will be the badge of honor and many invaluable lessons learned for future endeavors.

VCs fund the company and puts up a big company logo with enchanting praise for how proud and fortunate that they are for working with such great entrepreneurs.

The problem begins here....

  • If things work out well, the entrepreneur is stamped as "Past Investment Exits" on the VC's website.  Awesome outcome regardless of size of the exit.
  • If things don't work out and the venture crashes and burns, the company is permanently banished from the VC website like the investment has never happened.  
Fair or unfair?  

Friday, September 7, 2012

Be warned of so-called "startup advisors"

I was approached by a self-claimed "startup advisor" (SA) and had this conversation.

Me: I'm working on an iPhone app

SA: You'll have problems marketing iPhone apps, and it's going to be impossible to be successful.

Me: Thanks for the feedback.  I know it's hard, but I've done this for a few years with about 10M registered users under my belt.

SA: I know how hard it is.  Just listen to me.

Me: Okay. Thanks for the feedback.  By the way, I'm curious to hear what you built, so I can learn from your experience.

SA: What did you use to code the server side? (yep, he didn't answer my question)

Me: I used PHP and memcached hosted on Amazon.  I'm planning on migrating over to Node.js and MongoDB

SA: Listen.  I asked what language you used for the server side.

Me: PHP and will use Node.... so javascript

SA: That's not my question. What PROGRAMING LANGUAGE you use on the server side?

Me: Ummmmm... PHP and javascript

SA: Never mind. How about database you used.

Me: Ummmm..... (at this point, I already gave up and wanted to see if he has any clue) MongoDB

SA: Forget it. What do you use to build an iPhone app?

Me: Xcode

SA: That doesn't make sense. You don't get it. Here's why your project is not going to work out.  I used Titanium (which I had no clue what it was, but I do now :) ) and XXX (something else I had and still have no clue what it is), and it didn't work out.  So, you need to think about the whole architecture and start from scratch.

Thought of the day: Thanks for the feedback, but if you claim to be an advisor and started asking questions about technology, please know what you're asking.  If technology is not your thing, that's okay.  Just admit it.  Let's talk business if that's not your thing.

Tuesday, January 18, 2011

Mobile app marketing is not just about downloads

I was just following an email thread in my Inbox for a friend of mine looking for some thoughts on marketing a mobile app. As I quietly followed a healthy dose of active discussions, I couldn't stop jumping in to make some corrections. For those of you new to the world of mobile app marketing, watch out for these rumors, pitfalls, mistakes, red flags, or whatever you wanna call it that all app marketers should try to avoid.

Speaking from the point of view of paid app marketer.......

It's all about getting the high ranks - Wrong!
Yes, if you're ranking high in the App Store chart, you get the visibility that you only dreamt of, and magic often happens. As Mighty Eagle of Rovio explains, "Being #1 starts doing some magic". If you read between the lines, its starts the magic but doesn't cause the magic to start. Apps rank high because of the well-planned marketing effort, but it starts with the product. Mobile app users are chatty, and word-of-mouth catapults the traction. However, ranking happens as a result and not because.

A small paid advertising campaign to test out the customer funnel, optimize that channel, and maximize the sales.....blah, blah..... - Not quite.
If you're like most of the paid app developers (meaning excluding the in-app purchase or offdeck subscription apps), you don't get many chances to optimize that channel. It's a fight for impulse buy. It's about quality product. It's about capturing that "moment" to convert. In a more traditional SaaS business, you get a number of chances to convert these users to long-term paying customers. For many of the paid apps, there's one (maybe 2-3) chances to convert. This places tremendous pressure on marketers to ensure that the conversion happens early on in the purchase process.

Free apps are obviously different, because it's really about the engagement that makes or breaks a free app. There's no cost to the "buyer". You don't get paid a dime for selling a free app. For socially-driven apps, as long as network effect kicks in at some point in time, you're in good shape. BUT, it's the user engagement.. gotta keep 'em coming back.

As for the in-app marketing... it's a separate topic.

Thursday, January 13, 2011

Startup vs. "Big" Company - Pecking Order of Execution

I wrote a post about startup vs. big company a while ago. There, I talked more about politics in startups. Today's post is about something else that may resonate more with the big company types.

For those of you who've never lived the life of startups, here's the thought process to get ideas going.

Ideas to Execution (startup style)
  1. Boss: "We don't have $$, but come up with something awesome."
  2. Peon: "Yes, sir. We'll juice our brains as much as possible to get something going as soon as possible. It's a matter of life or death situation for me."

Ideas to Execution (big company style)
  1. Boss: "Come up with the best idea ever."
  2. Peon: "Yes, sir. We'll talk about it with the teams. What's our budget?"
  3. Boss: "Come up with the idea first. We'll see if we can fund that idea."
  4. Peon: "Yes, sir. What's our budget?"
  5. .........

You get the idea. Neither is a good or bad thing. The pecking order of executing an idea is just different. Budget is already out of the equation (mostly in early-stage company marketing stuff), so the $$ discussion never happens. Ideas make everything happen in startups.

It just takes different personalities to operate under these two different conditions. Trust me. Not having the $$ to make an impact sucks, but it's such a beautiful act of startup life. On the other hand, having a set $$ creates artificial boundaries to think big.

Where do you fit into this picture, dear readers?

Wednesday, January 12, 2011

Ramen Profitable VCs

Dow Jones reported today that venture capital fund raising at 7-year low. Some people smell VC shakeout and doom, and I call that B.S.

Yes, being in venture capital sucks compared to the good ol' 2004-2007 when the fund size was outrageously oversized. Before 2008, it really was a good life. 10 partners get together, go out to raise a billion dollars, and earn 2-3% management fee. (If you do a simple calculation, this comes out to be a lot of $$) When they hit 1-2 homeruns, they go out again.

It's no secret that the recession beginning in 2008 changed the dynamics of entrepreneurial community. VCs can't raise bigger funds, downsized partnership, and hate the fact that startups require less capital to make pretty awesome outcome. Wait, what? Some people don't like the fact that it's cheaper to run startups? Well, they're not making as big of living as before by making the same # of investments and get underwhelming management fee now.

Look. LPs lost a ton of money during the recession left and right from both public and private equity investment. They hated private equity but weren't able to unload this long-term assets. When PE/VC managers come back in 2008-2009, they said, "Look, things will be better. I want to keep this relationship. Instead of cutting you out for this fund, let me scale back". Money managers nodded, though not so excited about this.

VCs raised smaller funds and can no longer make big investments. Heck, startups are becoming cheaper to run, so why should investors make big investments? Coupled with the rise of super-angels and micro-VCs, the venture investor community go small. After all, startups don't require that much capital anyways. This is a healthy situation. Life is good again.

Many evidences point to the fact that VC shakeout hasn't really happened. Instead of shutting down, they scaled back. They became smaller. Yes, venture fund raising is at rock bottom in terms of capital raised, but there are as many investors and ever more startups making the startup economy engine going. Maybe we'll see ramen profitable VCs?