Writing for B5 Media – Come on over to Startup Spark

Hello all, just wanted to let you know that I have been offered an opportunity to write for a great blog on the B5 Media Network.

The blog is called Startup Spark and is similar to Venture Files but is a broader version on all types of entrepreneurship.

I invite you to check it out and subscribe. This blog will continue but in the coming months I will be focusing this blog more on innovation topics and will be unveiling a new design.

So keep reading Venture Files and add Startup Spark to your feed reader and your daily viewing.

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Leadership Lessons: When the CEO is synonymous with the brand

There are different types of CEO’s out there. Some are the operational types who crunch the numbers, those who are sales people at heart, those who are visionaries who guide a company in new directions and many more variations of these major archetypes.

Then there are what I call “luminaries”.

Luminaries are those leaders that are identified with their companies so much that their name is pretty much a synonym for their company. Some examples are:
– Bill Gates – Microsoft
– Richard Branson – Virgin Group
– Jack Welch – GE
– Steve Jobs and Apple

The last one there, Steve Jobs, is of particular focus in light of the emerging stock options scandal. When someone who is so closely identified with the brand and is responsible for its growth and innovation and recent rebirth can there be any type of succession planning.

Analysts from Bloomberg to Piper Jaffray think that the stock would immediately drop 25-33% if Mr. Jobs were to leave. That is about $20 billion in market value as of this writing (yikes!).

So as an entrepreneur, you work hard every day to evangelize your ideas, promote your company, lead your team and make your company a success. What you can learn from this?

1.) Evangelize but don’t act like God – You love your company, your people and your products. We get it. Stay humble because it takes one wrong move to knock you down the ladder. The more you think you are a God the more people will be convinced you are the devil.

2.) Share the spotlight and reward others publicly
– Remember that you are not the center of the universe and many smart people in the company helped you get there. If you reward them publicly people will be more familiar with other people especially if they are in the succession plan. Plus spreading the love makes you appear to be the benevolent leader.

3.) Implement a succession plan – This is not to tell people that you are leaving, but rather that you are mortal and will leave one day so there must be a smooth transition. This makes people confident that the company will not suffer abrupt changes when you exit and will get people in place when the change does come.

So for the entrepreneur’s out there. What are you doing to ensure you don’t run the same risk?

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An Entrepreneur's View: 5 Things Digg needs to do or it will die in 2008

I was guest blogging for my friend Aaron Brazell who writes Technosailor. We live near each other and run into each other at Starbucks living the Bedoin lifestyle.

We talk alot about the techology scene and I made the comment that Digg would be dead or made irrelevant by next year. So he challenged me to write about it on his blog.

The original post is here.

I did a repost below to read the article as an alternative:

The Future of Web Apps (FOWA) conference this week and Kevin’s presentation “The Future of Crowd Generated Media” got me thinking about how long Digg might last or stay relevant.

Granted, Jason Calcanis wrote a month ago about how Digg would “die a death of 1000 cuts”. He is right that they own the “Young Tech Male” or YTM demographic and it is hard to go beyond that group. I subscribe to Netscape and the quality of articles are dramatically different. Netscape has far fewer votes but the news is real and relevant (their interface just needs work).

The death of Digg will not be 1000 cuts but because of its failure to extend and protect its brand. So much time has been spent on covering them and how cool they are that they have ignored the fact that there is no reasonable way it can meet its revenue goals.

Jason does a good analysis of the deal and I agree on the valuation. To quote directly:

“The real challenge for Kevin and Co. at digg now is that they probably raised their $8.5m round at 60-80M post-money. That means that the latest round of investors are going to look for 10-20x that amount as an exit. That’s a 600M -1.6B exit. That means they have to get to $30-50M in revenue. That means that Kevin is right when he says they have no interest in selling the company–they’ve got 4-5 years of work to get to those revenue numbers… start building the sales for now because to hit those numbers you need a 20-person sales team.”

Kevin Rose says that they have not interest in selling and that is smart. Unfortunately, in 4-5 years Digg will be irrelevant so he has about 1-2 years to make it work for an exit. You are seeing the beginnings of chinks in the armor. Friends list or no friends list, spammers, censorship, gaming the system and a lot more. Digg did not invent “social voting”, Slashdot did and Digg only got popular because the YTM saw this as a better venue to troll and trash each other. Their community is powerful (900K as of this writing) and the “Digg effect” is far reaching for what geeky things they find interesting.

In fact, every new site that adopts “social voting”, Netscape included, has been profiled as “taking the Digg approach”.

So is Digg going to become a verb like Xerox or Tivo and lose its brand equity?

In order to save this company and keep it going here are the five things I would do in the next 12 months to maintain Digg’s leadership:

#1 – Don’t fight the Digg Clones – Own them – There are Digg clones popping up all over the place. Why not screen them and make them niche sites within the digg community. Similar to a blog network (like B5 Media). This will create a niche army of targeted sites. Digg has created a brand for the Young Tech Male so it is going to be near impossible to break away from that perception. It needs this to stay on top.

#2 – Do a deal with MySpace – These are your future users and huddled masses looking for ways to make MySpace more relevant. The Digg model for artists, MySpace blog entries and news could add a whole new dimension to the ugliest site in the world. The revenue share could be gigantic.

#3 – Create a relevance metric for contributors – We should know that there is more weight on a submission from a 50 year old PhD with expertise in that topic than a pseudo-intellectual 16 year old.

#4 – Hire topic editors – Now, we don’t want to run the risk of paying Digg members to submit. This is quite the opposite. We want new people who can help monitor and own a topic to add value, prevent bias and . Social voting is great but there must be oversight or the “Wisdom of Crowds” will turn into the “Wisdom of Mobs”.

#5 – License the Digg software to major news outlets and Fortune 500 companies – Let’s face it, traditional media can’t keep up. Some are just now finding blogs and a limited few are experimenting with the Social Voting/Digg approach. Why not have Digg show them how to do it and take ad money and license revenue from the deal? Dell’s new site should have been running a Digg system feeding back to the mothership. In this case, it just borrowed the concept, baked it up and served it to customers. Digg not included….

Otherwise, if things like this are not done in the next 12 months, Digg will be outdone by a site that is cooler and sucks the core “Diggers” to the new site.

If you were the entrepreneur in charge of Digg, what would you do?

I look forward to everyone’s feedback.

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FOWA Presentation on Venture Capital

I saw this presentation that Ben Holmes of Index Ventures gave at the FOWA Conference in London “Everything you need to know about Venture Capital“…
He put his slides on slideshare so take a look. (BTW, Slideshare rocks)

Here is an entrepreneur’s take on the slideshow:

Think of this as liner notes if an entrepreneur was giving this….

Slide 5 – “How the VC makes money” – This is great. It gives an entrepreneur an understanding on two levels. First, the VC has people they answer to, the Limited Partners, and must make money for them. Second, should an entrepreneur think that their investment should be part of the portfolio, know that they are more likely to be a part of the failure list and that they need to have a big play to help the VC make their numbers based on the failure rate.

Slide 6 – “Stages of Investment” – Many entrepreneur’s ask about what type of investment is right. This is usually when they are going out for the first time and looking at angel vs. series A.

Slide 7 – “What a good VC will add” – This is what so many claim yet so few deliver. This should be a list of requirements and a test against any VC firm. He actually included case studies so they put their money where their mouth is – literally.

Slide 10 – “Typical Deal Terms” – Every entrepreneur that is looking for VC should make no mistake that they are in this to make money. They may like you but they like how much money the company could make even better. This means putting certain terms in place to ensure their investment.

Slide 13 – “When NOT to raise VC” – If you take one slide away this is the one. Everyone looks at VC as the way to get to the finish line but most of the time a company is not a candidate. If you are any of these three or close to it, rethink your plan or find other ways to finance.

Slide 18 – “Sharing relevant information” – You can see from this slide that it is important to have documents but not the 100 page business plan in the beginning. In the end it will be about them checking on you, those interested in buying from you and the who and how of execution.

In the end this presentation has a bottom line – This is a partnership and there must be alignment on all sides in order to make it work. It is about relationships, communication and execution. If any one of those three are missing you will fail.

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As an entrepreneur, "NO" from a VC is a good thing

In the blogosphere, there is some buzz as to why VC’s don’t say no. There has been early writing on this topic, but Stu Phillips of Ridgelift Ventures and his entry, Getting to NO!, is getting a lot of buzz.

I would like to add the entrepreneur’s perspective on the conversation.

In my experience, the VC’s I have presented to and met with for the most part think of themselves as risk takers or the “rebels of the investment world”. My perspective is that while this might have held true in the early days when people where investing in Apple and those first Internet startups, now it is mostly follow the leader.

This is one of the reasons many a clone of YouTube or MySpace to appear on the web and generate the froth in yet another new wave of startups. VC money for the most part does not chase true innovation, many pursue later stage with a clear exit or if it is early stage, they chasing deals with what I call “parallel potential” that emulate the successful pioneer.

This is why many companies getting funding sound very much like variations on the original (i.e. “this is MySpace for Retired People” or “this is YouTube for music videos” or “Google for vertical markets”) there is a reason this happens. First, VC’s who didn’t get in on MySpace or YouTube believe they invest in one with similar features and have a good exit if its positioning makes it stand out. Enabling this co-dependent investment relationship are the entrepreneur’s who are not really innovating and just see a niche that they can capitalize on and hope the VC is interested.

I look at a VC as a combination of Movie Producer and Casting Director. You are the actor/actress and winning the part is the equivalent to getting the investment. This means that you as the actor need to audition for the right parts and your company must match their type of portfolio investment or you are just wasting your time.

The value of a VC, a good VC that is, is to do as many “no harm/no foul” meetings to explore a potential investment. Many entrepreneurs think this is a YES/NO meeting. It is not. Think of it like a first round audition to see if your company fits their portfolio. If there is interest, you move to the next round.

I have experienced this first hand and for many investors, the real opportunities are ones that disrupt what exists on the market today or innovates in an area that can be marketed to a number of industries ensuring a safety net to reduce its risk relying on one sector or business model. Ironically, many VC’s when they first see these deals are apprehensive to jump and say “Yes”, but they will never say “No”.

Most investors might have a no harm/no foul meeting with an entrepreneur, they are reticent to say no because they like what they are seeing but maybe the customers aren’t there yet or they want the market to reach the idea and prove its viability. This is why you get the typical responses:

  • “If you find a lead, give me a call”
  • “It is a great concept, if you get a few key beta customers, come back and let’s talk”
  • For more of these little “nuggets”, I direct you to Guy Kawasaki’s “Top 10 Lies of Venture Capitalists“.

If you are getting these kinds responses your frustration level is high and I know how you feel. You must look at this as – NO, NOT RIGHT AT THIS MOMENT. But why don’t they tell you “NO”? It is because they want to stay in the game in case you do reach those milestones or other VC’s begin to get interested and want you. Does this not remind you of high school and trying to be popular? Yeah, I thought so too.

For you entrepreneurs that read this blog, understand that for a VC, saying ‘No’ shuts them out of a future potential deal, but hearing NO can be good for both of you. Hearing “No” let’s you focus on those VC’s that either say “YES, let’s continue” or “Not right now, but when you do X, let’s move forward”.

So here is my plea to the VC’s that subscribe to the blog – BE HONEST. TELL US NO AND TELL US WHY NO. If we know why, we are happy to move on or update you later and come back to TURN THAT NO INTO A YES.

What is interesting is that this is not uncommon in other countries and is a standard way of doing business. Business etiquette in many countries do not use “NO” in their negotiations. China is a prime example of this where “Maybe” is as close as you are going to get and negotiations are always happening right up until the contract is signed.

What I recommend to you my fellow entrepreneurs is not to focus your business on making it a VC play. If you are building a good business, build a good business. True, some have amazing potential but a limited time window to execute so VC or angel investment is necessary to grow. If this is the case, the opportunity will present itself and the relationships you build will be there when you are ready.

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Social Networking 4.0 – Meta Social Networks

Social Networking has gone through three phases so far and I firmly believe that we are at the beginning of the fourth phase.

I refer to these first three phrases from Dave Hornik’s seminal blog entry “Social Networks 3.0” written in December 2005. I accept his interpretation of the first three phrases as follows:

Social Networks 1.0 – Group communications (i.e., AIM, ICQ, eGroup)
Social Networks 2.0 – Basic and Broad Social Networks (i.e. Friendster, LinkedIn)
Social Networks 3.0 – Experience based and more niche focused

Unfortunately, this has left us with a multitude of social networks that just make the noise much louder and they will surely fail because the are selling to the echo chamber and not doing something innovative.

So where does that lead us?

With Om Malik’s post “Are Social Networks Just a Feature?” it got me thinking as to how things are starting to froth to the point where they either need to converge, consolidate, commit suicide or connect. Marc Canter is one person that has it right and has put the tools in place to enable your personal social network or define a niche one with a white label solution. Now this could contribute to the noise, but on the other hand it could allow people to be in one place and aggregate their social network memberships and relationships.

With the recent press coverage of social networks finding new growth with APIs there is the beginning of a ground shift that over the next 18 months will lead to Social Networking 4.0.

So what is Social Networking 4.0?
Social Networking 4.0 is what I call Meta Social Networks. Om is right that tools that build this as a feature will exist but I don’t think many have the desire or sufficient motivation to build a MySpace. I believe that this will lead to increasing the value of intranet systems and back a few years ago when “portals” was the big buzzword, we used to call this concept “Enterprise Expertise Portals”.

The extension of these API’s will allow not only wicked cool Mashups (that is for a later post) it will allow some smart enterpreneur (HINT: FREE BUSINESS OPPORTUNITY HERE) to create an identity portal that allows you to manage your profiles on each network and all the details, yet respecting the dotted lines – FOR EXAMPLE: keeping your Goth Emo profile on MySpace separate from your professional business resume on LinkedIn is a necessary thing. Unless you wanted to let your business colleague know about your penchant for black and finding everything so depressing. Then again, they might already have a clue….

So eventually your “Identity Portal” could use various plugins and mashup API’s to take the social networking sites to another level.

This actually leads us full circle to Om Malik’s post of social networks becoming a feature. But in my opinion they would be called foundation and not just a feature.

Still, there are some challenges to overcome:

  • Multiple Identities – This could be overcome with an identity portal but standards like OpenID could help move this along.
  • Social Network API standard – It is good some are opening up. But there should be some standardization of basic profile data so it is easier to work with when connecting to profiles.

I look forward to hearing the communities thoughts on this and if it might work, what other challenges and what “Identity Portal” you might build.

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Is the "Cult of Apple" really a cult? – Part 2

In the first part of this post I was talking about an article called “The 8 Marks of a Cult” and took with a sense of humor how Apple might size up to this analysis originally written in 1961.

So let’s take the remaining 4 Marks and see how they shape up…

Mark #5 – The “Sacred Science
Definition: (Taken from “The 8 Marks of Cult“)
The cult’s ideology becomes the ultimate moral vision for the ordering of human existence. The ideology is too “sacred” to call into question, and a reverence is demanded for the leadership. The cult’s ideology makes an exaggerated claim for possessing airtight logic, making it appear as absolute truth with no contradictions. Such an attractive system offers security.

Observing Apple’s Actions
This is a tough one. Although using Apple is not the ultimate moral vision for the ordering of human existence, in the IT world everything Apple is sacred and people do demand reverence for the brand in a way that they can do no wrong despite many examples of the contrary (i.e. Lisa, Newton, Mac Clones). Yet the Apple ecosystem does present this air of security because everything works together very well when everything is an Apple product.

Close to the Mark? 6 on a scale of 1 to 10

Mark #6 – Loading the Language
Definition: (Taken from “The 8 Marks of Cult“)
We are all familiar with the use of the cliches “capitalist” and “imperialist,” as used by antiwar demonstrators in the 60’s. Such cliches are easily memorized and readily expressed. They are called the “language of non-thought,” since the discussion is terminated, not allowing further consideration.

Observing Apple’s Actions
Apple’s language for the most part is full of “i” and “Mac” but that is just branding. Where they really hit the mark is “transforming”, “innovation” and “breaking away”. I don’t see it much but it is there.

Close to the Mark? 4 on a scale of 1 to 10

Mark #7 – Doctrine Over Person
Definition: (Taken from “The 8 Marks of Cult“)
Human experience is subordinated to doctrine, no matter how profound or contradictory such experiences seem. The history of the cult is altered to fit their doctrinal logic. The person is only valuable insomuch as they conform to the role models of the cult. Commonsense perceptions are disregarded if they are hostile to the cult’s ideology.

Observing Apple’s Actions
This one is strong at Apple. From what I read if you work there, you don’t really matter insomuch as how you contribute to the doctrine of Apple and its ultimate goal to rule the universe through innovative products that transform industries. It is interesting when you look at the history of Apple . Most recently at Macworld, the name change from Apple Computer to Apple, Inc. might have many thinking it is to allow them to be the Sony of the 21st century. However, it might be to alter the doctrine that the company was a consumer electronics company all along when we know they were and are a computer company. If you disagree, Apple will get hostile with you and might even sue.

Close to the Mark? 7 on a scale of 1 to 10

Mark #8 – Dispensing of Existence
Definition: (Taken from “The 8 Marks of Cult“)
The cult decides who has the “right” to exist and who does not. They decide who will perish in the final battle of good over evil. The leaders decide which history books are accurate and which are biased. Families can be cut off and outsiders can be deceived, for they are not fit to exist!

Observing Apple’s Actions
As for the history books we only need look at the bios like iCon or movies (Pirates of Silicon Valley) where Steve Jobs didn’t have input and got pissed off about it.

As Apple introduces new products it expects to dominate in and almost without saying it has the power to decide who lives or dies.

It is a stretch and therefore a low mark.

Close to the Mark? 4 on a scale of 1 to 10

Well, adding up the numbers we get 51 out of 80 or 64%. There is no scale as to what it should be graded but I will say with that high of a number that we can scientifically (yeah, right) prove that the Cult of Apple is a real thing.

So I just want to know one thing. To donate all my possessions and give myself over to the cult, do I have to make the trip to Cupertino or will any Apple Store do just fine”

Is the "Cult of Apple" really a cult? – Part 1

As an avid Mac user and a new convert to all things Apple, I have experienced the RDF (Reality Distortion Field) first hand at MacWorld last year during the key note when Steve Jobs launched of the MacBook Pro (which I am using right now).

I have seen many books on the “Cult of Mac” or “Cult of Apple” but with the growth in market share and its appeal to the masses, I wonder how much is really true.

This weekend I came across an article called “The 8 Marks of a Cult” and it was written in 1961 when the beat movement was in full swing and the Communist threat put our paranoia on full alert.

So with full tongue and cheek humor, let’s take the 8 Marks and see how they shape up…

Mark #1 – Milieu Control
Definition: (Taken from “The 8 Marks of Cult“)
“Milieu” is a French word meaning “surroundings; environment.” Cults are able to control the environment around their recruits in a number of ways, but almost always using a form of isolation.

Observing Apple’s Actions
If you look at how they talk to the press and keep a tight lip on product releases their control of the press is legendary. Witness the Macworld Keynote where they absolutely control the environment and it is filled with MacHeads in isolation waiting for Steve Jobs.

Close to the Mark? 7 on a scale of 1 to 10

Mark #2 – Mystical Manipulation
Definition: (Taken from “The 8 Marks of Cult“)
In religious cults, God is ever-present in the workings of the organization. The organization is given a certain “mystique” that is quite alluring to the new recruit.

Observing Apple’s Actions
Everywhere there is Steve Jobs. Steve Jobs is everywhere. There is no more to really say here

Close to the Mark? 6 on a scale of 1 to 10

Mark #3 -Demand for Purity
Definition: (Taken from “The 8 Marks of Cult“)
The world is depicted as black and white, with little room for making personal decisions based on a trained conscience. One’s conduct is modeled after the ideology of the group, as taught in its literature. People and organizations are pictured as either good or evil, depending on their relationship to the cult.

Observing Apple’s Actions
All the products are usually in black and white with the “professional” silver throw in. Don’t forget the occasional colors to mix it up but it always comes back to black and white.

Another example – Apple good. Microsoft evil. I would say that is pretty black and white, wouldn’t you?

Close to the Mark? 10 on a scale of 1 to 10

Mark #4 – The Cult of Confession
Definition: (Taken from “The 8 Marks of Cult“)
There is often a tendency to derive pleasure from self-degradation through confession. This occurs when all must confess their sins before each other regularly, creating an intense kind of “oneness” within the group. It also allows leaders from within to exercise authority over the weaker ones, using their “sins” as a whip to lead them on.

Observing Apple’s Actions
Most people who switch love to start their story with confession. “I used to be a Windows user for 10 years until I found the Mac and made switch”. As if almost they have found oneness to admit their wrong and connect with the fellow MacHeads.

Close to the Mark? 7 on a scale of 1 to 10


NEXT TIME: Part 2 and the other 4 Marks analyzed.

iPhone Lawsuit – Kettle? Please meet the pot.

I find it ironic that during the Macworld Keynote yesterday where Steve Jobs boasted about the 200 patents for the iPhone and how they would enforce them that they get a lawsuit for the one thing they couldn’t protect.

So Kettle, please meet the pot. It will be a fun topic of discussion and give Apple free press for the next 6 months.

My guess? I am betting it becomes the ApplePhone. Cisco will keep the name and their product will continue to suck and not make money. Apple will change the name and everyone will go “that’s great”!

It all depends on branding strategy. It seemed like the “i” was for consumer electronics and the Mac was for computers. With the iTV now AppleTV, I just don’t know.

Could it be…..

NOW: AppleTV

NOW: iPhone

This will have to be worked out by June, no matter what.

5 Reasons I will NOT buy an iPhone

As I watched the keynote live and looked at the flash demos on the Apple site, it occurred to me….

This phone is not for me. Why? Because I am a business person and a techie.

SO WHO WILL BUY IT? : Consumers that have money to spend that will look at the price of buying a fancy phone for $200 and a Nano for $249 and seeing the rest as “coolness price premium”.


I came up with 5 reasons this phone is not for business people or the techie crowd, of which I am both.

  1. NO 3G – This one I just don’t understand. Business users and techies need it because they surf the web and use it for e-mail and attachments all day. Just having EDGE is going to keep ALOT of people away. Especially consumers that that want to buy iTunes songs over the air. People will want to use this phone with their computer as modem and EDGE will not cut it.
  2. NO Corporate e-mail access – Just IMAP and POP is NOT OK STEVE. People who use the kinds of devices use Blackberry Servers and Versamail to access exchange. If you guys would fix iCal so it would connect and sync with Exchange I might be willing to deal with it for the time being.
  3. NO 3rd Party apps – The whole point of having wi-fi is to install Skype and the need for office applications. Widgets are great dude, but we need apps that make us productive. Developers are your life blood and if you want any chance of killing competitors you need to have apps available like Palm and Windows Mobile does. For goodness sake this phone is crying to open PDF’s Period.
  4. NO GPS – I can already pull up Google maps on my Treo. I hate my Treo, but what would make this a killer device is GPS for location based services (LBS). This is first phone that would actually make that market take hold.
  5. NO Removable Battery – Most business users who have phones, especially smart phones carry an extra battery to swap out on the go. This thing is supposed to have 5 hours of talk time but if you are using this all day as a business person, it will die on you before you get home.

All of this will come, but not tomorrow. However…

Apple thinks 10 million people will buy this phone by the end of 2008.




  1. Apple fanboys and fangirls – 500,000 units
  2. Consumers thinking about buying an ipod and hate their phones: ~ 500,000
  3. People that need a really good reason to leave Sprint or Verizon: ~ 1,000,000 (probably alot more but can’t afford the iPhone AND the cancellation fees).
  4. Phone freaks that love to be first – 250,000

So puts us at the number of units for the U.S. at 2,250,000 X GLOBAL UNIT FACTOR of 2 and you get a total of….

4.5 million units sold by the end of 2008 by my best and VERY UNSCIENTIFIC ESTIMATE.

So where will the missing 3.5 million units come from? iPhone 2 launched at Macworld 2008 that will have all the stuff I complained about earlier in this post. This will get the mass market to adopt, the business users to switch and everyone the sidelines thinking about it to make the plunge.

Look how long the iPod took. Everyone thinks it was overnight but to really become a success took about 3 years (2004). I suspect that the iPhone will take that long as well.
Apple is the one company that is the prime example of a “fast follower”. They watch everyone else, release something, learn from their mistakes and innovate even more.

In all fairness, there are two great write ups of this contrarian view that I share but they beat me to press so I must give credit for their speed and sharp analysis. They are Ars Technica and Paul Kedrosky.

At least I know I am not alone in seeing through the “Reality Distortion Field” of Steve Jobs.