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On Monday, the research company Outsell, announced findings that more will be spent on online advertising than print for the first time in 2010.  The report, entitled Marketing and Ad Spending Study 2010: Total US and B2B Advertising, surveyed 1,000 marketers in the United States in December of last year.

Outsell projects that total spending on advertising this year will reach $368 billion, with almost $120 billion spent online and $112 spend on print.2010 Advertising Breakdown Chart

If we’ve reached the tipping point and fully crested the transition into the realm of digital advertising, it begs to question if the rate at which print declines from here will be prematurely expedited.

Check out the full announcement here:  Marketers’ Digital Spending to Overtake Print for First Time Ever, According to Outsell, Inc.

Well it’s time to dust off the old blog and learn a quick lesson about the Power of Inconsistency.

Inconsistency is the something that we all deal with.  Whether hitting the gym hard for 3 weeks before getting “busy at work” (Guilty), not finishing the last 2 chapters of a book for 6 months because we were “busy” (Guilty), or going MIA for 12 months on a blog due to “time limitations” (Guilty).  Regardless of the excuse, we have all been guilty of being inconsistent in our lives at some point.

The problem with inconsistency is that it kills our momentum in the pursuit of goals.  It pains me to think of all the things I could have done, or where I could be now, if only I had been more consistent in my pursuits.  ‘Where would I be now’ is the BIG QUESTION that reveals the real impact of this reality.

The Big Question

Just ask yourself:  “Where would I be now if I had only kept _______________…?”

Whether the answer is practicing the guitar, learning a language, or working towards a B.A., it becomes blatantly obvious the impact that inconsistency has had on our lives.

Beware the Subtle Stealer of Dreams

Personally, these questions began cycling through my head about a week back when I had read an article by Darren Hardy on How to Win – Every Time! The How-To in his post all boils down to CONSISTENCY.  If you are interested in how inconsistency is the “subtle stealer of dreams” as Darren calls them, I highly recommend checking out his article on the topic.

Moving forward then the question we should all start asking ourselves is; “What am I going to miss out on if I cannot maintain consistency in the pursuit of my goal?”

LESSON LEARNED: Beware the powerful temptress inconsistency; she is the subtle stealer of dreams.

I was recently sent this video [Fireside Chat – Revenue Bootcamp Aug. 7th, 2009], posted by Building43, which features a Q&A session between:

-        Guy Kawasaki – Garage Technology Ventures

-        Mike Moritz – Sequoia Capital

-        Paul Graham – Y Combinator

It is a very worthwhile video to watch if you are an entrepreneur involved in an eVenture.  Guy hosts the forum and discusses early stage technology investing with Mike and Paul.  At my personal stage in this business I found the segment on revenue the most insightful and helpful.  I’ll leave the explanations up the experts.

Included below, is an outline of the questions asked and the time in the video at which they occur in case you don’t have 60+ minutes to watch the whole thing.

Q&A Outline:

  1. Paul Graham introduces Y Combinator. (1:00)
  2. Mike Moritz introduces Sequoia Capital. (2:10)
  3. What do investors look for in a startup? (4:45)
  4. How does Sequoia & YC perceive entrepreneur’s projected revenues? (8:05)
  5. How does an entrepreneur present a competitive landscape? (15:00)
  6. Why does it seem that all startups founders are in their twenties? (18:20)
  7. What should entrepreneurs expect investors to do for them? (22:12)
  8. Is there a point when a startup should give up? (28:25)
  9. What makes a good board meeting? (32:55)

10.  Audience Questions:

    • What is going to be the next big wave of innovation? (37:30)
    • How do you value a company and how much do you expect? (43:20)
    • Comments on Socially Responsible investing and Patient Capital. (45:18)
    • How do you feel about husband and wife teams? (49:18)
    • Thoughts on entering the Chinese market for investing? (51:20)
    • Guy – Do you have higher expectations for entrepreneurs to have a prototype? (56:15)
    • Prognosis for the current economy? (58:20)
    • What advice would you give an older CEO/Founder? (61:30)

      11.  Closing with Guy (63:50)

      Shortly after the announcement that Mint.com was to be sold to Intuit in a $170m Cash Deal, CEO and Founder Aaron Patzer shared his step-by-step strategy for Mint’s growth at the Vator.tv Juice Pitcher event.  Aaron breaks down his 3-½ year journey with Mint into three phases of development, and each stage’s goal, expected expenses and runway until next round.

      Here’s the 22-minute video, and my notes below for those of you who don’t have the time…

      Awesome, insightful and very helpful to see behind-the-scene basics of a successful startup to exit in the Valley…

      PHASE I: Garage Stage (<$100k)

      -        Goal = Build a Prototype

      -        Pre-Revenue Valuation: How a company is valued prior to revenue.

      • “Rule of thumb around the Valley is to…”
        • Add + $500k / Engineer
        • Subtract – $250k / Business Guy
      • …Reason being, web startups need Engineers to build while there is little to do for the Business Guy at this stage.

      -        Mints Expenses: Calculating Phase One expenses, Burn Rate, and Runway before next round of funding (based on $100k).

      • Founders at $30k Salary for living expenses. (Aaron’s Salary = $30k)
      • Engineer First Hires at $30-50k, + 1-3% of company.  (Mint’s 1st Hires at $36k + 1 ½ to 2% Equity)
      • Legal Fees deferred payment for 0.5 to .075% of company.
      • Example: 2 Founders + 1 Engineer = $150k / Yr Burn
        • Resulting Runway = Must raise Seed Money in 9 months.

      PHASE II: Seed Money

      -        Goal = Release Alpha Launch and get it in front of users.

      • Alpha should be usable but not polished.

      -        Headcount should be around 5-6 ppl.

      • 3-4 Engineers
      • 1 Product/Front-End
      • 1 Biz Generalist

      -        Mint had raised around $750k at this point.

      -        Mint’s Expenses:  Calculating Phase Two expenses, Burn Rate, and Runway before next round of funding (based on $750k).

      • Salaries = at $50-90k
      • Overhead = + 20%
      • Legal = $25k General + $2k/mth
      • Total = $600k / Yr Burn
        • Resulting Runway = Must raise Series A within 12 months.
      • Note on Legal Fees: “One thing VC’s won’t tell you is how much the legal fees will be and that you’ll be paying theirs and yours…”
        • Paid around $60k in Legal Fees on $750k, leaving them with $690k.

      -        Revenue Projections:

      • “…they’re going to be total bullshit.” And everyone knows it.
      • What Matters Most is…
        • A Huge Market Opportunity
        • Per use/client revenue
      • How much will you make per user, per year?
      • Calculating Opportunity:
        • #User Base x Rev/User/Yr = Opportunity

      PHASE III: Funded

      -        Goal = Launch a real product and grow a profitable business.

      -        Be Aware of Hidden Expenses

      • Patents, Trademarks, Consultants, Legal, etc.

      -        Mint’s Expenses:

      • Salaries + Overhead = $200k / Yr / Person
      • Legal = $10-50k / Mth
      • Total = $6m / Yr Burn
        • Resulting Runway = Must be profitable within 2 years.

      SUCCESSFUL EXIT MORE THAN $$$

      -        Boost in Self-Confidence

      -        Gratification of creating something from nothing.

      For anyone coming across my blog here for the first time, or for those that have stopped back to check in, you may have noticed that my latest post was at the end of March.  No I haven’t been purposefully neglecting my work here.  All of my writing energy over the past few months has been dedicated to writing a business plan for a venture I am working on, RentUpdate.com.

      I felt it necessary at the least, to post this note in explanation of my disappearance.  I’ll be back with fresh content soon and will leave you with this quote from Thomas Edison:

      “Opportunity is missed by most people because it comes dressed in overalls and looks like work.”

      I was passed this interview of Marc Andreessen by Charlie Rose and it is a must see for any entrepreneur, investor or businessperson involved in technology or the future of the Internet.  Marc Andreessen has an impressive resume as an entrepreneur, investor, and software engineer that founded Netscape, co-authored Mosiac, co-founded Ning and also sits on both ebay and facebook’s board of directors.  In this interview, Marc has offers thoughtful insight on the past, present and future of technology, the web and the major players involved.

      The video is almost an hour, but well worth the time invested.  Also I’ve noticed that there are a lot of folks on YouTube have seen clips but are looking for the full version (56 Minutes) which can be found here on either Google Video or Charlie Rose’s website.  Enjoy…

      Price TagsWhen starting a business online, one of the toughest questions entrepreneurs face is, “what should I charge?”  It is so difficult today because no matter where you turn someone is offering a similar product or service for less or free.  So how do we compete with free and still be profitable?

      “Back in the day,” entrepreneurs only had to worry about what the guy down the street was charging.  It was a bigger world then and you’d physically have to walk down the street to compare prices, and therefore the race to the bottom not as fierce.  But with the Internet, we have access to the competition at our fingertips, and more and more of the competition are just giving stuff away.  So again, how do we decide on prices and compete with free?

      FREE IS NOT THE ENEMY

      First, we have to stop seeing free as the enemy.  In many cases it is unfortunate, but however you look at it, free stuff is inevitable in the online marketplace.  If it is inevitable then, you have a choice to either adapt and change with the times or struggle to keep your doors open.  Mind you that I’m not saying ‘everything’ should free, but entrepreneurs need to be aware of it, recognize it as a tool, and incorporate it into their strategy.

      DON’T BE FOOLED: FREE HAS A PRICE
      Free Costs Time

      Free Costs Time

      In reality, Free is not free.  Free comes with its own price.  The price of free however, is measured by the span of our attention, in time.  I’m not spending dollars and cents every time I log into my Mint account or read an article from Hubspot, but I am spending my precious time.  It’s ironic, but in reality our TIME is much more valuable than money.  Time is a finite resource.  Time is what you spend every moment you’re logged into that free service.

      The new question then, isn’t how do I compete with free, but how do I use Free and monetize the ‘time’ of our audience?

      HOW TO USE FREE

      Seth Godin, master marketer, writes high-quality articles everyday on his blog.  Doesn’t charge anyone to read it, even though he probably could.  But he still manages to sell thousands of copies of his book, ‘Small is the New Big‘ at $26 apiece, which…is merely a collection of some of these same Free articles.  Mint.com provides an incredibly valuable personal finance tool for millions of people, but doesn’t charge a cent to its users.  It does however make money on advertising and connecting its users to credit card offers and such. Hubspot.com is an awesome Internet marketing business that offers tons of free tools, info and articles to their audience.  This draws in prospects, and they then convert these prospects into clients.

      SEEK BALANCE

      Again, I am not saying that you shouldn’t charge people for your service and give everything away for free.  But unfortunately the online consumer expects a lot from businesses these days.  If you keep everything behind lock and key, it will hurt your business.

      What you need is a balance of both.  Offer some free advice, blog about your topic, connect with your community, and show your target audience that you know what you’re talking about and can provide value to them.  This builds trust and loyalty.  As with the examples above, by balancing the scales of what you charge for with what you give away, you can create a natural draw on your audience and monetize their time.

      LESSON LEARNED: Free does not come without cost and is therefore not FREE.  Free costs time to produce, and also to consume.

      Update: This article by Chris Anderson, entitled “Free! Why $0.00 Is the Future of Business” is an awesome resource for those that may be interested in ‘Freeconomics’…enjoy.

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