Category Archives: Startups

Discussion of startups.

Pinterest Removes Itself From Acquisition Pinboards

Pinterest Oregon Ducks boardAs reported a couple of hours ago on AllThingsD, social collection site Pinterest is raising a $100M financing round at a $1.5B valuation with Japanese company Rakuten leading the round.

First of all, good for Pinterest. Even though that kind of investment milestone is so rare it’s almost like winning the lottery, it’s inspiring and amazing to see startups achieve this type of success.

I’m sure we’re about to see a flood of articles and posts about if this is another sign of a tech bubble, if Pinterest is really worth that valuation, how they haven’t established a revenue model, how they infringe on copyright, and other various attempts to knock them down. It should be noted that these days, that’s probably a big sign of success to receive that kind of criticism.

The biggest implication of this though is that an investment at a $1.5B valuation means that Pinterest is virtually taking themselves out of being an acquisition target. For investors to get any sort of positive return on that money, they’re looking at a multibillion dollar deal. The only companies that have the cash and business fit to be interested at that price are Google and Amazon, and until Pinterest is generating a ton of revenue it is tough to justify for those companies.

There are a few more things I find interesting about Pinterest along with this news.

Not an overnight success

Pinterest has been portrayed by many as being an overnight success. In reality, it’s been a four year journey, although it’s quite true that it accelerated exponentially in the last year.
 

Pinterest is not a mobile-first company

A great deal of the “hot startups” lately are mobile-first companies like Instagram, and a lot of the startup advice is that mobile is the future. While mobile is obviously important to Pinterest and their future, the company originally pivoted from being an iPhone app to being a desktop-driven experience where it took off. How many times has that happened successfully?
 

Huge valuation without much technical difficulty

Don’t get me wrong, obviously there are technical challenges involved in scaling to the size of Pinterest, but their initial product was not a challenging technical problem. Like Instagram, they took something that was already being done by many other services but designed it better and made it a great experience. That IS challenging, but not for hardcore technical reasons.
 

Another Valuable Company Built on the back of Facebook

Facebook’s platform and access to the social graph has been a huge boon for many businesses. However, thus far Zynga is really the only company anyone can point to that really grew to a billion dollar company thanks to the Facebook platform. Pinterest may be the second company that can fit into that class now. While it’s not an app that lives inside Facebook, and you can sign up with Twitter or email, it’s clear that Facebook was a major piece of Pinterest getting viral exponential growth.
 

Where’s the revenue?

As I pointed out above, we’ll probably see many upcoming articles about Pinterest’s lack of revenue so far. But to be fair, they have barely tried. The product obviously has a very natural fit with ecommerce, so it will be interesting to see how they can profit from being the source of discovery for so many purchases.

Overall, raising an investment round like this does not mean Pinterest is assured long-term success. They need to keep innovating and pushing forward, but this investment should give them plenty of runway to go for it on their own and become an important independent company.

You can follow me on Pinterest as well.

Batch Is a Very Nice Photo Sharing App

Batch ScreenshotI’ve tried out just about every iPhone photo sharing app, and many of them are quite good. I’ve mostly been attached to Instagram due to the ease of use, design, and the biggest user base means I have more people to follow and to share photos with.

One of the biggest problems with photo sharing apps so far is that they all tend to only allow you to share one photo at a time. While this keeps the quality of photos shared high, it creates some problems.

It’s a painful process if you want to share multiple photos from an event, as part of a theme, or just to get photos off your phone and put them in a place they can be shared without the painful process of downloading them to a computer and then uploading them somewhere.

Tonight Mike Arrington broke the news that the team at self-photo taking startup DailyBooth recently launched a photo sharing app called Batch for the iPhone.

I downloaded Batch and immediately loved it for the following reasons:

  • The design is beautiful. I love the handwritten instructions that overlay the screen in certain areas, and it walks you through how to use the application really well.
  • Uploading photos in a batch is great. The first time I got to touch multiple photos and have them uploaded at once I saw the value in the speed and simplicity of sharing the photos in a batch.
  • Automatic friend connection via Facebook makes it nice to not have to worry about building up my social graph. As friends join Batch, we’ll just get connected. Simple. This has some downsides in that you can’t customize who you follow or don’t follow yet, but I prefer it over having to start from scratch and manually choose everything and hope my friends find me.
  • You can see the future potential if batches from one event or location are grouped automatically and viewable together. It could nicely fulfill the promise of Color that never came to be.

If you have an iPhone and share photos, give Batch a try in the app store.

Best Startup PostMortem Yet – GameLayers

GameLayers Spending

Every entrepreneur and investor takes something different away from shutting down a company. I’m glad to see more people are choosing transparency and dialoge to share unfiltered experiences and extract lessons to be learned. The startup ecosystem is better off as a result. – Bryce Roberts

I posted recently about how much there is to be learned from the stories of startups failing. As investor Bryce Roberts from OATV points out, this postmortem from former OATV investment GameLayers is very detailed with a wealth of knowledge.

There’s personal stories, videos, pitch decks, charts, and pictures that really take you through the ups and downs of the GameLayers startup experience. It’s definitely a worthwhile read.

Great Funding Details Post From DuckDuckGo

While it’s not a startup failure post, I found this detailed post from Gabriel Weinberg of DuckDuckGo to be much more interesting and helpful than reading a generic blog post about their funding news on all the tech blogs.

Kudos to Gabriel for being open and sharing his fundraising experience.

Someone Create A Startup Failure Blog Please…

At the recent TechStars Demo Day, Gary Vaynerchuk spoke about his concern with the current trend of celebrating the startups who raise money.

It’s easy to understand why the media, investors, and us all as individuals in the startup/tech world tend to focus on the stories of fundraising and hot startups. It’s positive, exciting, and it fuels the dreams of so many involved.

Gary’s point seems to be that we should celebrate the startup that knows how to make money instead of raise money. It’s a good point, but I think when startups make money at scale that’s celebrated quite a bit by everyone.

The problem I see is that these stories paint a picture that everything is great out there in startup-land, it’s easy to raise money, and that if you follow some simple steps you can also raise money and get on Techcrunch.

Besides the inaccurate picture that’s painted, there’s frankly not much to be learned from hearing about a hot startup with a strong team, that’s executed their product well, and raised money from A+ investors. While it’s a feel good story, there’s not much in that story that’s easy to learn from or duplicate.

Where there is something to be learned is from the startups that aren’t making it. The startups who are not finding product/market fit, the ones who can’t raise money, who are having team problems, or are failing for some other reason.

I’ve learned far more from the few startup postmortems that founders have posted than I’ve learned from the thousands of “Startup X raises investment” stories that have been published this year.

These stories are somewhat hard to find, as founders are often less excited to publicly talk about their failures. However, it’s also because there is no publication that’s really giving these companies and founders a voice.

The solution is a blog that specifically covers startups that have failed, are currently struggling, or that were on their way down before pivoting to find success. This isn’t meant to be a site that gossips or mocks these startups like F—edcompany.com did back in 2000, but one that seeks to pull out the lessons to be learned and positive experiences that can be drawn from them.

I’m tempted to start such a blog, but I’m busy working on my own company and don’t need the additional distraction. Who’s up for building a publication that could be very valuable for the good of the tech world?

Great Startup Postmortem: MyFavorites

MyFavorites LogoThe tech media is filled with articles gushing over startups that have attracted millions of users, raised millions of dollars, been acquired, or are on their way to surefire success.

However, the reality is still that the majority of startups fail. These failures are usually not written about unless it’s a high profile flameout from a company that was well known. It’s too bad, because it seems like there’s a lot more to learn from why a startup failed than just hearing about the latest success story.

It’s also not that common for the founders of failed startups to be public and forthcoming about what went wrong.

The latest postmortem of a failed startup comes from Steve Poland and his startup MyFavorites.

Steve goes over the big vision for MyFavorites while also being very forthcoming by sharing spreadsheets, mockups, and other artifacts from his startup journey.

As an entrepreneur, it’s the kind of blog post you never want to write, but I’d like to thank Steve for sharing it with the world.

Tech Entrepreneur Blog Directory/Rankings (2011)

Kevin Rosephoto © 2009 Eric Susch | more info (via: Wylio)As part of my mission to build a successful technology company (GuideMe), I have turned to learning from others who are also doing it or have done it before.

To help others along this path, while also being inspired by Larry Chang’s VC Blog Directory, I compiled all the entrepreneur blogs I’ve been following and used Compete traffic data to sort them by average unique visitors in 2011. While imperfect, it’s a quick way to determine that other people also find them to be great resources.

Rankings
You can also subscribe to all the blogs listed here in the Google Reader Tech Entrepreneur RSS Bundle or follow a Twitter list of all of them called Blogging Entrepreneurs.

(Name, Twitter, Company, Blog, Avg Monthly Uniques)

  1. Seth Godin (@thisissethsblog), Squidoo/AuthorSeth Godin’s Blog (143,103)
  2. Jeremy Schoemaker (@shoemoney), AuctionAds – Shoemoney (74,136)
  3. John Chow (@johnchow), The TechZone/TTZ MediaJohnChow.com (53,174)
  4. Dharmesh Shah (@dharmesh), HubspotOnStartups (48,918)
  5. Joel Spolsky (@spolsky), StackOverflowJoel On Software (43,762)
  6. Neil Patel (@neilpatel), KissMetrics/CrazyEggQuicksprout (41,488)
  7. Guy Kawasaki (@guykawasaki), AlltopHow To Change The World (29,057)
  8. Erica Douglass (@ericabiz), Whoosh TrafficErica.biz (24,342)
  9. Matt Mullenweg (@photomatt), WordPressMatt (22,737)
  10. Gary Vaynerchuk (@garyvee), WineLibraryGaryVaynerchuk.com (19,249)
  11. John Battelle (@johnbattelle), Federated MediaBattelle Media (16,944)
  12. Kevin Rose (@kevinrose), Digg/MilkKevinRose.com (16,144)
  13. Jason Cohen (@asmartbear), WPEngine/Smart BearA Smart Bear (15,217)
  14. Chris Dixon (@cdixon), Hunch/SiteAdvisorCDixon (13,282)
  15. Ben Yoskovitz (@byosko), StandoutJobsInstigator Blog (11,154)
  16. Patrick McKenzie (@patio11), Bingo Card CreatorKalzumeus (10,742)
  17. Markus Frind (@plentyoffish), PlentyOfFishPlenty of Fish Blog (10,344)
  18. Gabriel Weinberg (@yegg), DuckDuckGoGabriel Weinberg’s Blog (9,179)
  19. Eric Ries (@ericries), IMVUStartup Lessons Learned (8,081)
  20. Jason Calacanis (@jason), Mahalo/WebLogs – Jason Calacanis (7,279)
  21. Tim Berry (@timberry), Palo Alto SoftwarePlanning Startups Stories (6,573)
  22. Marc Cenedella (@cenedella), TheLaddersCenedella.com (5,506)
  23. Rob Walling (@robwalling), DotNetInvoiceSoftware By Rob (5,137)
  24. Vinicius Vacanti (@vacanti), YipitViniciusVacanti.com (4,781)
  25. Noah Kagan (@noahkagan), AppSumoOKDork.com (4,606)
  26. Ash Maurya (@ashmaurya), UserCycleAsh Maurya.com (4,363)
  27. Jason Baptiste (@jasonlbaptiste), OnSwipeJasonLBaptiste.com (3,834)
  28. Ben Pieratt (@pieratt), SvpplyVarsity Bookmarking (3,568)
  29. Sean Ellis (@seanellis), CatchFreeStartup-Marketing.com (2,952)
  30. Joshua Porter (@bokardo), PerformableBokardo.com (2,879)
  31. David Cancel (@dcancel), PerformableDavidCancel.com (2,800)
  32. Alexis Ohanian (@kn0thing), Reddit/HipmunkSoaring on a Pig with Bread Wings (2,715)
  33. Wayne Chang (@wayne), i2HubWayne Chang (2,621)
  34. Mike Nolet (@mikeonads), AppNexusMike on Ads (2,621)
  35. Erin Blaskie (@erinblaskie), BSETC ErinBlaskie.com (2,399)
  36. Tara Hunt (@missrogue), BuyosphereHorse Pig Cow (2,287)
  37. Jonathan Mendez (@jonathanmendez), YieldBotOptimize and Prophesize (2,275)
  38. Pat McCarthy (@patmccarthy), GuideMeConversionRater (2,195)
  39. Rand Fishkin (@randfishkin), SEOMozRandFishkin.com (2,094)
  40. Jordan Cooper (@jordancooper), HyperpublicJordan Cooper’s Blog (2,080)
  41. Mike Rundle (@flyosity), 9RulesFlyosity (1,399)
  42. Philip Kaplan (Pud) (@pud), Blippy/AdbritePud’s Blog (1,038)
  43. Steve Poland (@popo), MyFavorites- StevePoland.com (1,038)
  44. Matt Mireles (@mattmireles), SpeakerText - The Metamorphosis (1,021)
  45. Joel Gascoigne (@joelgascoigne), BufferJoel.is (978)
  46. Steve Sammartino (@sammartino), Rentoid.comStartupBlog (924)
  47. Dan Martell (@danmartell), FlowtownDan Martell (923)
  48. Jessica Mah (@jessicamah), IndineroJessicaMah.com (922)
  49. Lisa Bruckner (@wasabinights), Hendricks ParkWasabiNights.com (674)
  50. Giff Constable (@giffconstable), ApriziGiffConstable.com (614)
  51. Hiten Shah (@hnshah), KissMetrics/CrazyEggHiten Shah’s Tumblr (585)
  52. Tristan Kromer (@trikro), MonkeyMake.itGrassHopperHerder.com (351)
  53. Nat Turner (@natsturner), Invite MediaNatsTurner.com (216)

Rules for Inclusion
In order to put the rankings on an even playing field I created some rules for inclusion in this list:

  1. Current or recent founder of a technology startup.
  2. Not purely a personal blog.
  3. Nobody included who is primarily an angel or VC investor.
  4. Must be written by a single author with only occasional guest posts.
  5. There had to be at least one post so far in 2011.
  6. Must have data registering at Compete for most months.
  7. No company blogs are included, even if the founder is the primary writer.
  8. I did include authors who also founded tech startups (Godin/Kawasaki/Vaynerchuk). (Although there is a clear advantage for them in blog popularity)

I know I’m probably missing hundreds of entrepreneurs who blog who may fit this criteria, so please let me know in the comments below and I will add them.

Who’s Left Off

  • Tim Ferriss (@tferriss) – Extremely successful author, but he hasn’t actually founded a “tech startup”. Although he did start and sell a supplement company and is a tech angel investor now. He’d be #1 on this list if included.
  • Mark Suster (@msuster) – Two time tech entrepreneur who’s blog is a great resource, but he’s a full-fledged VC investor at this point. There are other VCs who were former entrepreneurs who have good blogs as well.

Why is Compete the data source?
Compete definitely has it’s faults with traffic accuracy, but it is the only service that allowed me to see traffic data by month during 2011. Some of the other services didn’t have enough data to quantify the blogs. Exact numbers are less important than the trend.

Additional Thoughts:

  1. Being a book author helps tremendously for growing a blog audience. Bloggers like Guy Kawasaki, Seth Godin, and Gary Vaynerchuk have a lot of popularity that was driven by being published authors. Of course, the reason they are writing books is because they are also intelligent people and great writers in the first place.
  2. The majority of blogs were on a downward slide of traffic, especially in the month of April. It’s unclear whether this is just something specific to Compete’s data, or if there is some macro trend that caused it. My bet is that it’s specific to Compete’s data, but almost every blog experienced it so it’s still fair to compare them.
  3. Consistency in posting appears to have a positive effect on traffic. (Duh).
  4. The types of posts on the blogs also seem to have a positive effect. The most popular tend to have more evergreen educational posts that are likely to get shared quite a bit. The entrepreneurs who also post polarizing opinions get more traffic.
  5. The number of years they’ve been blogging is another clear and obvious positive indicator. Although some of the newer bloggers have rose to a lot of traffic quickly due to great content.
  6. A successful exit or running a well known company adds quite a bit to their blog popularity.
  7. Additionally, last year I created a private email discussion list for technology founders called FounderList. It’s a great intimate way for tech founders to network and learn from each other. Go sign up if you are a technology startup founder.

Don’t Be A Statistic: Internet Entrepreneurs Peak at 25?

Don't be a statistic!Mike Arrington at Techcrunch wrote a recent post based on a conversation with a venture capitalist in which that investor said:

“Consumer Internet entrepreneurs are like pro basketball players, they peak at 25, by 30 they’re usually done.”

Quite a provocative statement! While I don’t have access to lots of conclusive data about this, I’ve started companies in my early 20s and have just started one at 34 (GuideMe). I can definitely see how age, life situation, and experience has changed me when comparing and thought it would be worthwhile to discuss.

First, I think it should be noted that the original article seems to be focused at the peak age of success for consumer internet companies. My guess based on comprehensive data would be that this is probably a “more true” statement than it woud be about other types of startups such as B2B/enterprise or non-internet.

Second, everyone should be aware that even if it were true, it doesn’t mean that every 20-25 year old will have success and everyone older will fail. That’s obviously not the case.

That being said, speaking from experience and observation I think that there are some general advantages and disadvantages around the age differences.

Let’s start with the advantages of being in your early 20s:

Energy Level
While we can all point to that person in their 40s in great shape with a ton of energy, it’s safe to say that most people in their early 20s have a higher energy level then they do in their 30s, 40s, or 50s. Generally you can work longer and later at night.

Family Situation
Most people in their early 20s are not married and don’t have a child or multiple children. Having a spouse and family can do a lot for support, work/life balance, and make people happier. However, it can also cut into time spent working, add additional stress, limit travel, etc.

Facts of LifeThe Facts of Life
Whether you have a family or not, generally as we get older we start to accrue a more bills, larger bills, and we get more financially conservative. We get a mortgage, car(s), a family to support, parents or other family to potentially help support, save more for retirement, etc. When you’re 22 it’s much easier to share an apartment, eat ramen, and have no other burdens so that you can roll the dice and risk it all. It doesn’t mean it’s not possible to do that at 35, but it’s usually harder.

The “It Won’t Work” Factor
This could be also construed as being more creative or imaginative, but I think part of the benefit a 22 year old has is that they haven’t gotten jaded yet by hearing about all the reasons something can’t work. Said another way, they haven’t yet gotten used to the way things currently work so it’s easier for them to challenge the status quo.

Could someone in their 30s have created Facebook? Probably not, as that person would have been always stuck on the notion that “people want privacy and don’t want to share all this information”.

They have an easier time taking on large incumbent companies because they simply aren’t as used to them being in control of that industry.

So is all hope lost for those like me in their 30s? No. Besides the fact that there are tons of examples of people who have done it, there are some advantages to being a bit older and wiser as well:

Working Smarter Instead of Longer
While I may have been working until 2 am at the office of one of the first startups I was involved in, I was most definitely wasting time shooting the breeze with coworkers, playing games, and wasting time in other ways. My experience over the years taught me how to get more done in a shorter period of time by learning how to prioritize, focus, and eliminate distractions.

Fool Me Once…
Learning from past mistakes and getting valuable experience in lots of different aspects of business can help quite a bit. When I was 22 I knew far less about how to manage people, how to do marketing, how to do accounting, how to let people go, etc. This experience saves time and money.

It Can Be Who You Know
One of the benefits of being around longer is that you’ve made more personal connections. You’ve met more people, had more jobs, been to more conferences, worked in different areas, met more investors, etc. In this day and age this advantage has been reduced a little bit as the web has made it much easier to network and connect with people. There are also incubators like Ycombinator and Techstars, services like AngelList, and other tools that have made it easier to get in front of investors. I do know more people today than I did 10 years ago though.

Being Conservative Isn’t Always Bad
While there can be advantages to being extremely risky, knowing how and when to be conservative can keep a company from cratering and flaming out badly. I’d bet there are less crash and burn situations for entrepreneurs in their 30s and 40s then there are for companies started by people under 25. However, VCs are looking for the huge wins, so they care less about soft landings for companies.

Conclusion
I think this is probably a bigger issue for investors who are trying to find an edge and make decisions about what who and what they invest in. I don’t think that those who are contemplating starting a company think too deeply about an age label and actually just look directly at their own situation. Are they in a situation where they can work extremely hard? Are they in a situation to take financial risks? Is there idea disruptive and they aren’t afraid to take big chances? The answers to these questions matter more than if you’re 23 or 33 years old.

One last point is that I think this situation can and will change. 5-10 years ago the entrepreneurs in their 30s and 40s had already worked in the “non-internet” business world for a decent amount of time before the web took over. They had to adapt to the web instead of having it in their DNA of their whole working life. Now the people hitting their mid-30s such as myself are part of that “pure web DNA” generation.

Since the end of high school I’ve been on the web for all my real work. That’s probably only the case for a people a year or two older than me. Which means I think it’s quite possible that we’ll see more cases like Andrew Mason at Groupon, Dennis Crowley at Foursquare, Mark Pincus at Zynga, Ev/Biz/Jack at Twitter, and others who did numerous other smaller internet related companies before they created the huge consumer companies they are building now. I think they’d all say their past successes/failures have helped them in their current companies. (Yes, I know Crowley did Dodgeball and Ev did Blogger but they also weren’t 22 and right out of college for those companies).

Personally, I’m planning on not being a statistic.

Rough Launch, But Color-full Future

Color App ScreeniPhone mobile application Color recently had one of the most talked about startup product launches in a long time.

A lot of that was due the fact that they raised $41M prelaunch, have a well-known team, and the mobile photo-sharing space is really hot.

The other reason it was so talked about was because, for a $41M application, the product itself was really ineffective as a first-time user experience. Tech blogger Robert Scoble famously ranted about it, and many others tweeted or blogged about how confused they were by the user interface and the lack of social interaction.

Blowing the first-time user experience is never good, and I also felt like my first usage of Color was not fun or interesting.

However, due to the hype I fortunately knew enough to know that Color was designed for group experiences, so I didn’t write it off immediately and decided to try and use it with others.

I started using Color at a restaurant with GuideMe lead developer Joe Garstka, and later we added a couple of other users at my house.

The pictures and videos we were taking were automatically popping up in our applications and creating group albums based on time and location without us having to create and specify anything. Less work from the user is always good.

There is amazing potential behind implicit social networks and the automatic grouping of people based on location for an application. Also, creating a history of photos and videos at a specific location holds a lot of potential, and made it more likely that I would take a picture to leave it for future people to see when they were near that spot.

I think the key thing though that may make Color work, is that I found myself telling other people to try it with me. For the application to work, I needed others to participate. This is one of the key growth engines for successful network applications, and Color has that going for it.

On the flip side, it means early adopters without early adopter friends probably won’t use Color. People who are living in areas that are sparsely populated will also have a hard time getting that much value out of the application.

That might be okay though if Color can do various things to improve that first-time use while also letting the network effects happen.

There’s also a big opportunity here for Color, or other companies, to do the same type of creation of implicit location-based networks for other applications like gaming, chat, and more.

Color has a bright future, and enough cash in the bank to get over their initial rough launch.

Effort Required To Build Big vs. Small Companies

Dangerphoto © 2009 chego101 | more info (via: Wylio)

There’s a saying I’ve seen mentioned a few times over the past couple of years that was brought up again in a recent @venturehacks tweet.

“It’s just as hard to build a large company as it is a small company, so you might as well build a big company. It’s roughly the same effort.”
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