Is Video in Your Company’s Future?

If you are starting a new company or expanding an existing one and video is not in your future, I have one serious recommendation, Re-Think Your Future!!! Many businesses are now adding video to their websites to take advantage of video’s ability to give exposure, brand the company, increase traffic and increase conversions.

Recent research from Vovici, a pioneer in the enterprise feedback management space, showed that about one third of online retailers use videos on their sites. Video is exploding in just about every demographic. Online video is expected to grow 45% from 2008 to 2009.  Think about these other stats:

• Comscore, a leader in digital market intelligence, reported that a record 14.5B, yes that’s billion, videos were viewed by US Internet viewers last December.
• Neilsen Online reported that 65% of online video views stream between 9am and 5pm Monday thru Friday. Their guess is that people are at work where faster Internet connections exist.
• Neilson’s Q3 2008 Mobile Video Report showed that 5% of mobile subscribers access video on their cell phones each month.

Now you just have to believe that all this hoopla about video must be grounded in results. Well one of the biggest results is that search engines, for whatever reason, like video along with web sites that are constantly updating their content. There are lots of articles about Search Engine Optimization (SEO). Well adding video is one of the techniques that can get you higher in search results.

You might be thinking, what types of videos can I use? How about using a video of the CEO on the home page talking about your products, technologies, or what’s new at your company? Or, how about using videos as part of your FAQ section? You can use videos for product demonstrations or training. After all, if you can get more than 10 million people to view what happens when you add Mentos to 1 Liter bottles of Diet Coke, than wouldn’t you think you can double or triple visitors to your site and then keep them entertained or informed about your company?

So, if you haven’t thought about using video, maybe you should. You can bet that some of your competitors are.

Are Startups Still Receiving Funding in Southern California?

I wrote this post earlier today and put it up on Startup Coast but thought I would re-blog it here.

This is one question that I have gotten quite a bit by entrepreneurs who are currently pitching or thinking about pitching their companies. There is a lot of rhetoric out there, so I decided to see if I could find some information on my own.

I went over to SoCalTech, where Ben Kuo’s team has been tracking investments in SoCal companies for many years, and here’s what I found out. 47 investing groups have invested in 105 early stage deals in the first half of 2009. The highest was Tech Coast Angels with five Seed and one 2nd round fundings. Now I am pretty sure that these numbers are down versus previous years, but not exactly zero.

Next, I thought I would see what the national numbers looked like. The Angel Capital numbers for 2009 are not out yet, but Price Waterhouse’s Money Tree Report is available for 1Q09. This shows that there were 549 deals representing $3.0B of investment. Of this, 47 were startup/seed investments worth $169M and 157 were early stage worth $683M.

Again not record breaking, but having $852M of VC funding going into early stage companies is no small amount. So, what exactly is the problem and why am I being asked this so often?

I think that one answer is that, overall, early stage investments are down while the number of people who think that a down economy is the perfect time to start a business. Result, is a bigger group of people going after a smaller amount of money. So the bar gets raised and entrepreneurs need to up their game to get noticed. You need a great story, documentation, with significant investor potential.

I also think that entrepreneurs are running in to investors who just don’t have available cash. The Exit landscape hasn’t been too rosy over the last 18 months. So, you have a lot of investors, especially in the Angel space, without cash. I think that a lot of them would rather tell you to get more traction, or fix some other problem with your opportunity rather than admit they are out of cash. Maybe if you work on your business a while, they will have money by the time you are done and come back to them.

The bottom line is that early stage companies will continue to be funded, but those that do will stand out head and shoulders above the rest. They will have compelling stories offering great returns for the investors, solve big problems that people are willing to pay for, and they will have squeaky clean documentation that meets investor expectations. What meets an investor’s expectation? Try asking before you decide to pitch!

Great Article in Today’s Wall Street Journal

Today’s Wall Street Journal Report is on Entrepreneurship with the lead article on “Why Business Plans Fail” by John Mullins. Along with his description of five common flaws, he also provides six telltale terms that should be avoided and why. A good read for any entrepreneur who is either in the process of, or getting ready to, put together a new business plan. It’s not so much that Mr. Mullins provides any of the “Ahaa Insight” topics that come up every so often. On the contrary, these are things that we see over and over again. He does have a way of describing them in a fresh way.

He also gives some common sense suggestions like don’t start out developing your business plan. Instead get out from behind your computer and talk to prospective customers about your idea and find out, first hand, what they like or don’t like, how they want to get it, and how much they are willing to pay. This gives you the ability to add primary research to your plan versus speculative and secondary research to support your supposition. Great advice!

I really enjoyed his listing of the six telltale terms. Two of them are especially interesting to me. The first is “no competition”. I am not sure who suggested or where the entrepreneur read that it is best to say that the have “No Competition”. I realize that the entrepreneur thinks that this will make their opportunity more compelling. In fact, it has the opposite effect. We assume that no competition means that there may not be a market or that the entrepreneur just didn’t do their homework. There is probably indirect competition someplace, and, as the article states, “competition may be a good sign, as it suggests that there’s a problem that someone besides you thinks is worth solving”.

The other negative term is “Conservative”. I really dislike hearing an entrepreneur’s rationale for weak financials is based on their using conservative data! If you think about the overall process of starting a business, especially if you will need other peoples money, there is nothing conservative about it. A large number of startups fail. Investors have very few successes in their portfolios. So, why wouldn’t you want to show what you believe you can reasonably do in three to five years? You don’t get to the next meeting by being conservative.

A couple of other things, there is a podcast listed where Mullins provides some additional insight. He also mentions that he has a book coming out and one of the subjects is that business success might come from the second or subsequent versions of your plan.

There is also an interesting video by Jerry Engel of UC Berkeley Lester Center for Entrepreneurship on pitching your opportunity. Engel describes in about 2.5 minutes why you have about a minute to get investors attention if you want them to listen to the rest of your presentation.

Between the article and the additional media, this is a valuable use of about 20 minutes of your time especially if you pay attention and incorporate these ideas into your plan and presentation.

My New Palm Pre

Well I waited a while to upgrade my phone and piicked up a Palm Pre the other day. A couple of.people have aaked me how I like it and it’s too early tosay. Although I must say that I am writing thispost onit while listening toa smoothe jazz station.brought tome by Pandora.
I hink I will get used to it. Beautiful screen and great spund. 
Now if % can just work through theack of desktop Outlook integration.

eBay to Unload Skype

I was never clear on why eBay bought Skype back in 2005. An on line auction site buys a global, essentially consumer, VOiP provider. Where were the synergies? Well apparently E-bay has concluded that there really aren’t any great ones. Wall Street Journal Deal Alert just published an article that included a comment by eBay:

“Skype is a great stand-alone business with strong fundamentals and accelerating momentum,” said eBay Chief Executive John Donahoe. “But it’s clear that Skype has limited synergies with eBay and PayPal. We believe operating Skype as a stand-alone publicly traded company is the best path for maximizing its potential.”

“Ebay bought Skype for $2.6 billion in 2005.”

eBay turned down a pretty significant buyout offer put to them by Skype’s founders and a few Private Equity firms saying that the offer didn’t reflect the true value of the company. eBay’s solution? Seems that they plan on testing the IPO market in the first half of 2010. That just might be the biggest bet eBay makes in the entire relationship. Maybe Donahoe knows something the rest of us don’t or he has a clearer crystal ball!

Earned Media – Fred Wilson Post

I just read through a post that Fred Wilson put up on the topic of “Earned Media“. I won’t go into here since he does a great job explaining it. One thing I do want to point out, a lot of people are hearing about Twitter. It is everywhere. Many TV news people give out their Twitter address for us to follow, the President has a couple of Twitter accounts to follow, and the list goes on.

A lot of business people are scratching their heads and wondering just how to use this in business. Well there is a great example in Fred’s post about kogibbq which is the twitter account of a Korean BBQ Taco truck that goes throughout LA and uses twitter to update people on their location. Now this is just pure genius. What a fabulous solution for someone with a wheels based business that allows them to keep their customers up to date and their whereabouts. And let’s consider the cost of the real time solution, oh yeah, that would probably be $0’s, free, nada,…

Thanks Fred for finding this and blogging about it. It was a nice way to end the evening.

Visit with Chris Cramer CEO of Karl Strauss

OK, OK, so I guess you are wondering how could a visit to a brewery be anything but great? Well, it is not just about the beer. You also have to look at who is making it, and what is the overall feeling you get about being there.

One of the first things you notice is that Chris Cramer, the CEO, is a man who enjoys what he is doing and Karl Strauss isn’t something that he fell into or ended up in by accident.

Chris is a self-described San Diego native who has grown up in the retail industry and Karl Strauss is an actual relative who came from a line of brew masters in Germany. Chris is also a graduate of Stanford’s MBA program, who back in 2000 when he graduated was thought to be an idiot for focusing on retail, especially micro brewing and food, and not some dot com business. After what followed in 2001-2002, I would guess these same pundits would claim he is a genius today.

I really like visiting a company where you can feel the positive energy. Everyone  at Strauss is smiling and looking like they genuinely enjoy their jobs. The only way this occurs is when the management team instills this type of feeling. Now the pessimists might conclude that of course they are smiling, they work at a beer company and are probably drinking all day! However, that is just not the case. Besides you might get away with that tactic for a little while, but not the 20 years they have been in business.

So, what is the take away? Well, investors always say we look at management teams and when you find one that is clearly passionate about what they are doing and just clicks, they are worth more than the technology or product they are pitching. And when they can energize the entire team to be just as passionate as they are and enjoy coming to work everyday, well you just know that success will follow.

If you are an entrepreneur just starting out, ask yourself if you express your passion every day and in every conversation. Do you have the ability to get everyone else who is involved in your venture as energized about the business as you are? If not, you have something you need to work on; sooner not later.

As for Chris and the team at Karl Strauss, there is no reason why they won’t be brewing a special lager in 2028 for their 40th Anniversary! Keep up the great work and let us all know when you finish your customer space for tours so that we can all come down and see where and how the magic happens.

Kudos to you and your team.

Cisco Buys Pure Digital – Flip Video

An article in today’s Wall Street Journal talks about Cisco’s purchase of Pure Digital the company that has brought out the wildly successful Flip personal video camera line. The first thing that grabbed my attention was the purchaser being Cisco who is paying $590M for the company adding yet another consumer brand to their Enterprise. I think this also supports the importance of Internet video in the future.

It was early last year when I first believed how Internet video would impact web sites in the future. There was still some question back then as to whether the value would continue to be consumers looking for another visual display of Mentos and Diet Coke, or would businesses embrace the technology and use videos to enhance their web sites?

I have had a Flip video camera for some time and really like it. It is compact, about the size of an iPod Nano, has a hard drive that will store 60 minutes of video, great audio capture and a USB interface to upload and recharge. I carry it with me a lot and can “flip” is out and record if I run into someone interesting during my day.

With Cisco’s entrance into this space and adding some serious credibility to Internet Video’s future, I am now looking forward to see what new applications, widgets and other tools that will come out to further support adoption and inclusion on websites.

Hmmm, “A picture is worth a thousand words, what’s a video worth?”

Is Social Media Now a New Buzzword to Entrepreneurs?

For some time, I have been writing and ranting about how Social Media/Networking tools are making their way into small and medium businesses. Well, it seems that more early stage companies are incorporating these concepts into their startups. You would think I would be happy about that; something I predicted coming true. Truth is I think it’s great, but the bad news is that many of these entrepreneurs really don’t know what this means and a few, like one I saw yesterday, must have been told to just add the words “Social Media” to their investors presentation and then claim that they are like Facebook or LinkedIn including creating completely ridiculous exit valuation predictions.

I did see a second company yesterday who is looking to brand and grow their busienss using a combination of on-line and social media tools in lieu of attempting to raise lots of funding for a major consumer marketing campaign. A real new tools versus old school thinking, and just the formula in these times when cash/funding is hard to come by.

So, if you are putting together your plan for a new startup and someone suggests that you somehow use the words “social media” or “social networking” and not necessarily incorporate these into your web presence, you are going to be caught and fast. More importantly, if an investor thinks you are trying to pull a fast one on them, they dismiss you immediately. You need to understand, we have all seen numerous social media/networking companies over the last few years. So, we are pretty familiar with these concepts.

My recommendation, for what it’s worth, embrace these tools and aggressively add them to your business and use them to work on your growth.

Don’t Blow it by Being Sloppy

On Friday, we saw a number of presentations by companies looking for startup funding. I found it hard to believe the number of companies that provided fact sheets with mistakes in the financial projections. How stupid can you be! All the work it takes to get to a point where you are finally ready to present your opportunity to a group that might just have what you need most, financing, and your being sloppy stops you dead in your tracks.

I don’t know how many times I have told entrepreneurs that investors, especially active ones, look for a reason to say NO, not Yes. Finding sloppy mistakes in presentations or other documentation is just that reason. There is no excuse for this.

You would think of sending an important customer a new product without making sure it is squeaky clean and in perfect order. Well a prospective investor is your most important customer when you are trying to raise money, and  making sure that every thing is in perfect order is critical. You don’t get many second changes.

My Grandfather used to say “Measure twice and cut once”. Entrepreneurs need to remember and practice this. It’s one thing to find out that an investor just isn’t interested in your type of product or service. You hate to hear NO but it is a little easier to take if the investor just isn’t interested. It is completely different when you find out that investors discounted your opportunity because you were sloppy.