On Entrepreneurialism

imgresA nice description of the entrepreneurial temperament from Tony Tjan, CEO of Cue Ball:

“Entrepreneurs hold an idealism and risk profile that makes them fundamentally different. They don’t think about security—in fact they are often uncomfortable with it … “

Web 3.0: Show Me the Money

piDespite a sincere enthusiasm for all things Internet, Site can’t help but to have noticed a lot of over-valuation going on.

Site applauds recent news from Silicon Valley that increasingly scrutinizing eyes are being put to Internet-based investments. Most notably, VCs now seem more interested in investing in companies projecting non-ad-based revenue models, citing that Accel’s early investment in Facebook might not be repeated today given the social platform’s challenges with monetization.

Making money online is attractive because it’s extremely efficient and cost-effective if done right—not because it magically happens with when traffic or even market share get large. Potty-mouth notwithstanding, Jeremy Schoemaker makes a nice case for caution when counting your Internet chickens before they are hatched in his 7 Deadly Sins of People Trying to Make Money Online.

Making money online is smart. Making smart money online is even smarter. Cheers to the portfolio managers who see past simple site popularity and look for clean, predictable and short paths to profitability when deciding how to spend investment dollars.

Even Breakthrough Brands Compete

Boy, if we only had a nickel for every time we asked a startup CEO about his competition and heard: “Really, no one. No one does what we do. We’re a breakthrough category – you know, like Google.”

Okay, we’ll grant you your big vision. Where would we all be without big vision? In the dark ages. In caves. In the name of evolution, someone among us has to think big.

But while you are busy ensuring that your offering truly is breakthrough, your new savvy sales VP will say the first order of business is to find an enemy. If you don’t define your competitive set while you craft your positioning, it’ll get defined for you when your sales team hits the streets. Better to be in front of it.

No matter how game changing your breakthough brand may be, we all still must compete in the marketplace, yes? Even if no one does what you do, with whom must you compete in order to penetrate the over-crowded awareness of your targeted customer? Who else will already be in the consideration set when you ask to be included?

If you aren’t comparing yourself thoroughly to everything remotely close to your offering, your customers are. You should know more than they do, not less. Your savvy sales VP knows that.

The slots for awareness, consideration and decisive action in the minds of the consumer are finite. As are the dollars in our pockets. We are careful about how we spend them. Your visionary value prop may very well follow in the footsteps of the automobile and the telephone, but if you want to ramp up sales quickly, skip the headache of reacting to the marketplace when it asks, “Why you instead of them?” Because it will.

The marketplace will accept you more readily if it is offered a convenient way to fit you in to an existing perceptual set. Be proactive. Anticipate the expectations of your marketplace. Know what your customers need to know about you and make it easy for them to know.

The Valuation Math Scares Me, Too


Social sites are the darling of the VC world at the moment, but a lot of people in the business are wondering about the scary valuation math. Again. Techcrunch’s coverage of Yelp’s latest and fourth – yes fourth – round of financing lured a tone of skepticism from nearly all who commented on the post. After two years and $31mm invested, the still unprofitable Yelp! is valued at $200mm. Come again? A figure twenty times the undisclosed-but-rumored-to-be sub $10mm annual revenue mark.

One of the best things that came out of the bust to my mind was that the industry learned to stop confusing eyeballs with valuation. Or has it?

Remember the documentary startup.com? Internet entrepreneur is introduced by his press agent to a Rockerfeller at an event. The intro line includes, “and he’s raised over $60mm in seed capital for his venture.” To which the Rockerfeller responds, “Yeah, but does he know how to make money?”

A great idea is a great idea. The ability to develop a large audience is an impressive thing. Running a profitable business is an altogether different beast. I was hoping the near-death experience many of us went through back when would have shaken some sense into people in charge of the valuation math. We’ll see …