A VC in Vacationland

Web-Enabled Marketing, Sales & Training

May 23, 2009
I often get asked which providers my companies use for their web-enabled selling, marketing, demos, training, etc. with customers or prospects. Here's the short list of the ones we have found to be the best:
- Small Session Desktop Sharing–want to do one click, screen sharing within up to 100 people? Inexpensively and easy to use? Consider Glance when you want to do a demo for the global IT team evaluating your software. Besides being quick to set up and prepare invitations, Glance has the best latency of many sites we have tried in the past, especially when participants are in many countries. Plus free phone conferencing with each account. Much faster and easier than competitors for smaller, uncomplicated conferences.
- Larger Session Meeting/Webinars–Cisco's Webex ,while expensive, is still the best way to host a first-class meeting, training session or webinar with all the bells and whistles–moderators, questions, wikis, discussions, PowerPoint sharing, demos, videos, video conferencing, among other options are all available. A poor cousin, Go To Meeting , does many of the the Webex basics, at a lower cost. It works just fine for a straightforward PowerPoint and voice session.
Please avoid using companies like free conference call.com . These "free" services drive me nuts as they have major talk over/latency problems during calls. When a prospective entrepreneur calls me to do a pitch using one of these services, I politely offer my own services, either Verizon or Ready Conference.

Do not skimp on purchasing quality communication services to call/interact with your customers or prospects. Often, you have only one chance to make a good impression. Spend a few bucks to do it right.

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Stress Reliever!

May 16, 2009

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We can all use relief from stress, especially in the current economic environment. Acupressure is a quick tension reliever, according to researchers at Hong Kong Polytechnic University, who found it can reduce stress by up to 39%.

For fast relief from tension, massage your hoku(the fleshy part between your thumb and index finger) with your opposite thumb and index finger for 20 to 30 seconds. This is the universal pressure point for easing upper body tension. It really works….

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Marketing & Sales Strategy: Jigsaw

May 9, 2009

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Jigsaw Data Corporation has a developed a unique company contact database offering, one that is continuously updated and enhanced by their current customer base.   Jigsaw grows their product offering by sharing and trading their existing records for client and potential client contact databases. In early 2004, Jigsaw started with less than 100,000 names and today has grown to over 11 million contacts. With over 700,000 members, an average of 20 names per company, Jigsaw projects global contacts (mostly US based) will exceed 20 million by 2010.

Jigsaw is a contract database; not a complete corporate database. The Jigsaw data is useful for sales lead development, direct marketing mailings, recruiting, credit/finance, among other applications. The Jigsaw advantage is driven by the members that join and trade business contacts. The Wikipedia model ensures a continuously expanding and accurate listing database. A number of my portfolio software company are using Jigsaw daily and find it a viable “reach” tool for identifying high-end and mid-market company decision makers. Jigsaw claims that their contact detail is close to 90% accurate; an exceptionally high rate for a notoriously unreliable industry space.

Jigsaw has one of the largest contact databases in the business, including:

·       Email coverage at 100% (most B2B files range between 20-40%)

·        Direct (50%) phone number listings; rest main corporate number

·        100% actual postal addresses, not only the main corporate address

·        Actual position titles with function code classification

Jigsaw also sells lists to corporations for direct marketing programs, will take an existing data base, cleanse it and return it to the client, and append the old database with new names, phone numbers, addresses, locations, and email addresses. They will also swap. For example, a customer who offers 100 viable contacts will receive in return at least 100 new Jigsaw-cleansed names. The customer can then cleanse the received names, re-submit and start the “swapping” process all over again; driving perpetual growth and accuracy. This is an invaluable tool, seldom found in any contact database. Jigsaw also offers a fee-based service to cleanse client’s database on a quarterly basis.

For a start-up hungry to grow their contact database and willing to contribute contacts in return for new ones, Jigsaw is an excellent tool to help a cash-strapped entrepreneur gain potential new customer contacts.

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Marketing & Sales Innovators (Update): Zoom Systems

May 2, 2009

Image by Laughing Squid via Flickr

According to VentureBeat, Zoom Systems, the San Francisco-based provider of luxury-good vending machines, just brought in $20 million in fifth-round funding to increase its market presence in the U.S. and Japan. You may have already spotted its machines (termed “automated retail stores”) in airports and shopping malls. By and large, they sell major electronics from companies like Apple and Sony, and other swanky tech goods like Rosetta Stone language-learning software.

We originally reviewed Zoom Systems two years ago. They have come a long way in a tough economic environment. The concept started as a vehicle for marketing Motorola products in 2006 — only 20 machines were supposed to be placed throughout the U.S. Today, more than 800 machines have been installed, bringing in about $40,000 per square foot of space they occupy per year in airports alone. While Zoom doesn’t actually make the machines itself (it outsources manufacturing to a partner), it says it takes care of installation, maintenance, security and supply monitoring.

With just 100 employees, the company claims the recent round will fund the rollout of 1,000 more machines in the U.S. and Japan by the end of the year. The money came from existing backers Sierra Ventures, Goldman Sachs Group, NeoCarta Ventures, Motorola Ventures and Starfish Ventures.

For now, it appears to be the only vending machine provider of its kind. Their minimal supply chain and sales cost per product will continue drive success for Zoom, even in a difficult economy.

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Give Me Liberty, Or Give Me Death

April 25, 2009

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March 23rd was the anniversary of Patrick Henry's famous 1775 speech before the Virginia Assembly where he proclaimed the famous phrase "Give Me Liberty ,Or Give Me Death". In the speech, he proclaimed that war had already begun with England and that the only choice was whether to fight. He fired up the assembled group, supposedly including Washington and Jefferson so that they all left the building shouting "To arms! To arms!".

It got me thinking about the entrepreneurs in my portfolio who are most successful. Whether they know it or not, they all live by this phrase. You do not get to be successful in this world without telling it like it is, taking serious chances with other people's money and staying the course even when the going is tough.

Here are a few qualities that I value most in my portfolio company entrepreneurs:

1. They Challenge Conventional Wisdom–it is one thing to have a new idea; it is quite another to change the way companies do business. Incremental change is the way in which established companies grow. Radical change is the way start-ups succeed. Going conservative in the vision for the company is one sure way to get into trouble.
2. They Stand Up for What is Right–Customers, investors, board members, employees and many other "advisers" may tell them they are wrong. They need to stay the course and do what they think is right. Of course, they need to listen to advise, but they need to make their own decisions. After all they are the ones closest to the dream and best know whether or not it can work.
3. They are not Afraid to go Down with the Ship–Patrick Henry said it clearly and concisely. He was not afraid of telling it like it was, even though it meant risking his life. Treason was punishable by death and he knew it. Of course, he did not want this to happen, but was willing to take the risk that he was right and that others needed to follow his lead if the fledgling democracy was to succeed. The same deal goes in start-ups. Everyone needs to be on board for the company to succeed. Disagreements can arise but need to be resolved and all must march on in the same direction towards success.

I look for entrepreneurs who have the courage of Patrick Henry. With all they have to face in starting a successful company, they will need all the courage they can muster. We should proclaim March 23rd Entrepreneur's Day in the U.S.

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Start-Up Reviews: ChubbyBrain

April 18, 2009

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I am usually not a big fan of web sites offering "reviews and rankings" of funded start-ups, like ChubbyBrain. One often does not know much about the credentials of the reviewers. ChubbyBrain is a bit different, in that the reviewers are clearly identified by name and affiliation, such as Satya P. at Battery Ventures. You can become a fan of Satya if you are interested in his investing space and learn about new companies that he is following. I do doubt, however, that Satya or other VC based reviewers are going to publicly expose their potential investments until they have a signed term sheet.

ChubbyBrain is still in beta, so the number of companies and detailed information on the companies is limited. I did find some interesting start-ups that bear further exploration from an investing perspective. However, many of the reviews read like Amazon book reviews, which can be useful if you are looking for consumer/user rather than technical feedback on a start up.

One can also search by investor and find out what interesting companies they have in their portfolio. Again, information is limited, often just one or two companies per investor, as investors apparently have few reasons to update the site.

It would make sense for the fledgling start-up to get listed on ChubbyBrain as well as get some users to review the product. Very few information sources exist on how users like or dislike the experience of working with a start-up. Alternately, bad reviews can hurt you, especially if sites like ChubbyBrain become more influential in determining consumer choice.

Finally, a note to the ChubbyBrain entrepreneurs: your company does not come up in your web site search engine. I would consider adding your company to the list of start-ups.

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CEO Wannabes

April 11, 2009
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What's going on here? For the third time in as many months, I am dealing with a board member who is trying to become CEO of one of my portfolio company. Note: these are all different companies. The wannabes are making blatant attempts to convince other board members that the current CEO is "incompetent", should be chucked out and that they are best able to run the company. And oh, they want 5% of the company as well as a hefty salary/bonus to do it.

These are all successful companies, well on their way to the next level of performance under current leadership. The present CEO's all have some improvement areas we need to deal with, but all are capable of successfully running their businesses.

It appears to be pure greed on the part of these Board members. It's not that these wannabes could not run a company. But if we wanted them to run these companies, we would have asked them.

How can a CEO avoid/deal with CEO wannabes on their Boards?
- Careful selection–make sure the board members have the best interests of the company in mind before asking them to join. Beware the board member who is always shopping your company to VC's–he probably wants to run it after they invest.
- Stay in touch–CEOs need to be close to all Board members to constantly take their temperature and to make sure they are helping the company be successful. This is also a good way to root out any dissatisfaction with your performance.
- Have your allies–you will always have board members you are closer to than others. Use them as a sounding board for your performance. They can also give you insights as to who said what in the executive sessions of the board meetings.
Renegade board members can cause a lot of havoc within a company and take valuable executive/board time to deal with their issues. Make sure that you work to not let this happen.
Targeting Users or Sellers for Revenue?

April 4, 2009

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A major issue facing web-enabled software start-ups is whether to target users or sellers as the primary source of revenue. Well, the gods have spoken to Google on this issue.

It's the users, stupid. Google has shut down its expensive ($200+ million investment) adventure into aggregating unsold radio and newspaper ad inventory and selling it on line. The whole grisly story behind the radio debacle is slowly emerging as Google shutters the web site and sells the IP off to a large media company to try and make a go of it themselves (Rupert, up for another adventure?).

We have already seen this story play itself out on the main stage during the early part of this century. The venture financing of on-line "marketplaces" , seeking to aggregate sellers across many industries to offer their wares to users was a huge and expensive bust. Apparently, Google thought that it was immune to history on this one.

For all entrepreneurs looking to monetize their SAAS business, remember that providing good value to users who will pay to access that value is the best way to grow revenue–and also attract premier sellers to your site. Few VC's are funding ad or seller based revenue business models at the moment.

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Faster Horses or Just Invent Cars?

March 28, 2009
"If I had asked people what they wanted, they would have said faster horses"Image via Wikipedia

——Henry Ford

A few weeks ago, I Blogged about companies having to re-tune marketing for the our "new" (and recessionary) economy.

Entrepreneurs also increasingly are asking me how best to understand whether the market wants their products, before they spend a lot of time investing in the wrong solutions. "You may only get one shot at success in the current economic environment and you better be right the first time" is the underlying theory. Often, they want to do a customer survey among their friends on Facebook (seriously), visit a bunch of industry analysts, or do beta launches with potential customers. All these are valid ways of gaining market intelligence, but some work better than others.

What are the best ways to garner information on your markets in an uncertain economy? Let's examine some of the common and uncommon sources for understanding emerging customer needs.
1. Ask the Analysts. I know, the younger entrepreneurs reading this Blog would rather be caught dead than speak to an aged industry analyst. Wrong. Not only do the best analysts have an incredible network that may be valuable to you, they know a lot about your potential competitors, their offerings and their customers. I always tell entrepreneurs that analysts should be the first stop when you are trying to figure out what your potential customers want to see in your solutions.
2. Do Beta Installs with Early Adopters. Another good tactic is to find an early partner who is willing to work with you on the design and implementation of your solution. My most successful portfolio companies have all found an early adopter customer who believes in the entrepreneur and the proposed solution. Their insights are invaluable as the solution gets fine tuned for release.
3. Hold Frequent Webinars. A well run webinar program, offering quality speakers with insights on how to improve potential client businesses is a great way to collect market insights. Not only can you capture interested customer emails, you can run short surveys during the webinar to gather insights on solution features and functionality, for example.
4. Attend Industry Conferences. This is one of the best ways to collect a lot of industry information very quickly. Go to competitor presentations, hear what they have to say, and then approach their presentation customer speaker to go to lunch. Ask them over sushi to give you some insights on their business issues and how the competitor solution solves their problems.
5. Search the Web. The amount of quality public data on your potential markets, competitors and complimentary solutions is incredible. You can put together a pretty good dossier on just about any industry problem area, along with potential solutions and customers, in a few hours. I recommend doing this before you initiate the above intelligence gathering activities.
Many entrepreneurs focus their time on building a world-class solution without much thought on how to market and sell it to customers. In the initial stages of your company, you should devote equal time to product development and sales and marketing. Otherwise, you may end up with a great product and few customers.

Update: My friend, Karthik Mani, VP Product Management at TrueDemand added another successful tactic (I should have thought of it!) to assess emerging/current customer needs–"One thing I
learned from both Sanjiv Sidhu (CEO,i2) and Eric Peters (CEO, TrueDemand) is that sales pitches are an invaluable way to collect this information during the early stages of a company.
They are a good a way to figure out the
excitement factor, which is critical (and may be the best way available to clearly understand customer desires), even
though it is more expensive that the others that you laid out." Thanks, Karthik for the additional insights!
Who Needs an Expensive Office?

March 21, 2009
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CIO Magazine had an excellent article in December 2008 titled "Go Home" by Meridith Levinson.The article describes how Chorus, a successful software company focusing on health care providers, has no headquarters or leased office space. The driver for dumping their office space was that maintaining office space is expensive and that telecommuting can save money and enhance productivity. Not new ideas, but one that will likely become more popular in the next few years (beware, perhaps, of investing in office park REITs).

I have been dealing with the issue of multiple office spaces at a number of my companies in recent months. Sometimes the companies want separate R&D professionals in their own world–a popular concept in the early 2000's–perhaps nearer sources of high quality employees. Other times, mergers and acquisitions have to confront multiple office locations as part of the rationalization process. Finally, cash flow problems may force companies to move into cheaper quarters.

It got me thinking about why companies need offices in the first place. Accenture, for example, went to shared offices years ago as a way of cutting real estate costs. Many software companies now prefer that sales and support staff live where they choose and work from home, since they have to travel to client sites most every week. But the question of no offices at all had not really crossed my mind. It may make a lot of sense in the emerging world of "less is more" in terms of resource allocation. Why spend it on offices when it is better spend on, for example, R&D?

Start ups looking to keep cash burn low should consider having all or some of their office needs virtual. The article had a number of good suggestions of how Chorus keeps telecommuters tuned into what's going on in the virtual company:
1. Daily morning executive team meetings–a conference call first thing in the morning to discuss top priorities, getting the team to buy into what needs to be accomplished immediately and in the coming weeks.
2. Daily morning reports–a report each day to all managers detailing the projects each team is working on, where they need assistance and where they have resources available to help other teams.
3. Daily infrastructure calls–IT support, database administrators, etc. get together in the afternoon to discuss issues that came up in the morning meetings and who will take responsibility for resolving them.
Of course, telecommuting can create as many issues as it can resolve. Finding people who are self managing is key as the home has numerous distractions to reduce productivity (no fishing off the houseboat during working hours!). On the other hand, allowing telecommuters to better organize their lives, instead of showing up 9 to 5, is a great way to keep professionals happy.

Entrepreneurs should consider the pluses and minuses of having a telecommuting organization in developing their business plans. Likewise, small companies should ask themselves if office lease costs could be better spent on serving customers better. Either way, finding creative processes for keeping office costs at a minimum should be part of the annual budgeting game.

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