From A Smart Bear: Startups and Marketing for Geeks

Most people start their first company while they still have a day job.

It makes sense: You don’t need loans, and you don’t need funding. If you “fail” all you’ve lost is time, but considering the fun, the stories, and everything you’ll have learned, that’s hardly a failure.

You just need to give up all your free time which, if you’ve caught the “founders” bug, is A-OK with you.

But you’ve also placed yourself in a hazardous, potentially legally ambiguous situation. If managed improperly, you’re unnecessarily risking lawsuits and worse.

I’ve been on both sides of the table: I’ve done a startup while working and I’ve employed people who either were or are very capable of having their own startup on the side. And I’ve known people who were sued because of it, and not all of them won.

Here are my tips for how to pull this off.

IANAL

Ho hum, hedging is so tedious. But I have to say it: I Am Not A Lawyer. None of this is legal advice. If you do or don’t do anything listed here and anything bad happens, it’s not my fault.

If anything good happens, I’m thrilled and honored to accept your munificent cash donation.

Pick a business that can thrive within your constraints

Your side venture has constraints a “normal” business doesn’t have:

1. You can’t answer the phone during normal business hours.
2. You can’t answer emails during normal business hours.
3. You can’t afford to hire three developers to add features and bugs.
4. You have to work in fits and spurts.

Your natural tendency is to fight these constraints, but that’s the wrong approach. For example, you know that to avoid social media shitstorms you’re supposed to have stupendous customer service, so you claim as much on your website. But then you don’t have a phone number and emails sent to you at 10:00am don’t get answered until that night (which means they’re not viewed until the following day).

That’s called a “missed expectation.” It’s also called pissing in the wind — it’s just going to come right back at you.

The right attitude is not only to work inside your constraints, but to turn them into competitive advantages!

For example, your regular income affords you the luxury of underpricing your service. So if anyone complains that there’s no phone number, you can just point out that for $5/mo you can’t afford a phone staff.

As another example, pick a product in which simplicity and having very few features is an advantage. “We do only one thing and we do it better than anyone” is a great marketing slogan. You don’t have the time to make a Microsoft Excel knock-off, so don’t!

Embrace slow growth

We all have dreams of stratospheric growth, whether it’s hoping the next blog post will get 267 votes on Hacker News and double your RSS subscribers, or hoping that the advent of release v1.1 will set the blogosphere ablaze.

Good work if you can get it, but it’s not a “plan,” especially not for a business you’re running in your spare time. In fact, any bootstrapped company should be aiming for slow, consistent growth rather than explosive growth.

This is not a bad thing! Slow growth maximizes your chance for success. Slow means your success is not dependent on some unlikely, massive event that’s totally outside your control. Slow means you can change drastically during the early days without sinking the company. You have a job, so you don’t require explosive growth to be successful anyway.

Remember, your immediate goal isn’t to make millions of dollars, it’s to build a business just solid enough to quit your day job. That might mean enough profits that you can already live (frugally) off the company. Or it might mean you have enough customers to have “proved” you have a viable business model, so now you can raise money with sensible terms.

Don’t lie at work

The best way to avoid a lawsuit is to prove that your employer knows you have a side project.

I know, you really really want to ignore me and operate in secret. You’re afraid to tell them because they’re might do something — fire you, distrust you, or look at you funny at lunch.

Yes, that might happen. But what’s worse — one of those things or a lawsuit? If you don’t think they’ll sue you, then you shouldn’t be afraid of telling them! They are going to find out anyway. You need to tell them on your own terms.

I’ve always told my employer, and it always worked out for the best.
Here are those stories.

How do you tell them? Write a simple document explaining what you’re doing. Here’s my template:

To Whom it may Concern:

I have a hobby which does not in any way conflict with work. I’m writing this letter to make sure you’re aware of it so there’s no misunderstanding.

My hobby is ….

I work on my hobby only at home and on my own time; it is not in conflict with my employee agreement. I own it; [Company] has no ownership or rights to it. Like any hobby, it could generate a small amount of income.

Although I don’t anticipate it, I understand that if my hobby ever became in conflict with my job that it’s my responsibility to notify you immediately.

Thank you.

Then you get this letter signed by someone with authority. “Authority” means someone who can legally represent the company. This will of course depend on the company, but typically C*Os or the company’s legal council is a good bet.

Getting a supportive boss to sign it isn’t good enough. He can’t speak for the company.

Check your employment agreement

There’s a phrase in the template letter about your side business not conflicting with your employment agreement. Is that true? It’d better be.

Employment agreements are typically biased in favor of the employer, sometimes with outrageous clauses saying that anything you do, even at home and on your own time and unrelated to anything at work, is automatically owned by the company, and that furthermore you’re responsible for identifying and reporting on those things, and if you don’t do all of the above there’s no limit to the damage you could have caused.

Courts have thrown out some of these egregious contracts, but that’s unusual, and you can’t depend on that. You don’t want to go to court at all. Besides, you signed it.

Read over your agreement and make sure it’s legal to have the side business. If it isn’t, you must write a letter like the one above specifically stating that this is a valid exception to your employment agreement.

Don’t use company property or Internet, for reals

Another clause in most employment agreements is that anything you do physically at work, or on software and equipment owned by the company (e.g. laptop, customer lists, Photoshop) is automatically the property of the company.

This clause is fair. If your project is really on the side, you have no business doing business at work. If your project is really yours alone, it cannot be assisted by a company laptop, company software, or company Internet connection.

When it comes to company property, be paranoid. Assume Big Brother is watching. Assume every laptop has a secret program that records all keystrokes, mouse clicks, screen shots, web sites, and emails you read or write. Assume everything you do on the Internet is recorded, cataloged, tagged, and monitored continuously by a methamphetamine-powered slave-army.

Now I realize you’re super clever. You want to sneak in some tech support emails during the day, so you use a cocktail of  Anonymizer plus GMail-over-SSL to confound the network admin. Because of course covering up your activity is a sure sign you’re doing something legal…

Even that is not enough. If they decide to sue, they get to look through your email records (it’s called “discovery”). Then they have 100 emails you sent during work hours. You lose.

Get the picture? Just don’t do it.

Time management is critical

I’m naturally awful at personal time management. I procrastinate, I’m disorganized, and if I’m not careful I’ll burn two hours ROTFL at FailBlog with nothing to show for it but tears of laughter puddled under my keyboard.

A startup already generates an infinite amount of work. It takes all your time, which for you is 40 hours/week less than it ought to be. You can’t afford to waste time, whether that means bad habits or working on the wrong tasks.

There’s no silver bullet — workflow is a personal matter — but here are some techniques to get you started:

• Check email infrequently.
• Inbox Zero — Processing email until nothing remains has both psychological and practical advantages.
• GTD (Getting Things Done) — This technique literally changed my life. Few people implement 100% of this system, but everyone can take away a trick or two that makes them more productive.
• Work in sprints — Short, focussed bursts of activity eliminate the surprisingly large waste that comes from context-switching and interrupt-driven behavior.
• If you don’t sleep enough, your productivity plummets. Trading an hour of sleep for an hour of coding is never efficient.
• Use a tool like RescueTime (free!) to empirically discover where you’re spending time; the waste becomes clear. P.S. Tony Wright, founder of RescueTime, started that company while employed and wrote about what he learned.
• Optimize slowest tasks first — Identifying and optimizing the slowest tasks increases your overall productivity more than you think.

From A Smart Bear: Startups and Marketing for Geeks

Non-native speakers of English tell me that the basic rules of grammar aren’t too hard to learn, but the idioms are murder.

(Ok, not literally “murder,” that’s just an expression…. nevermind.)

Idioms are used by many of God’s great creatures, not just humanoids, as I learned from The Oatmeal:

So to help all of us understand better understand American business vernacular or, as our UK brethren like to say, the American bastardization of the rich, beautiful language you so unashamedly defiled, I’ve prepared the following chart.

Leave a comment if you have more!

“To be perfectly honest with you, …”
– Everything I said before this moment was bullshit.

“Just kidding!”
– No I’m not.

“The deal is in the bag.”
– I’m lighting a votive candle and sacrificing a goat. It couldn’t hurt.

“In the fullness of time.”
– Maybe later, but probably never.

“It is and it isn’t.”
– It isn’t.

“Our company allows businesses to integrate, assemble and optimize available IT assets to drive business process productivity, delivering an innovative, enterprise-class business integration platform that incorporates proven integration technology with next generation capabilities into one interoperable set of tools that deliver a unique combination of efficiency, agility and control, combining industry leadership with a zealous commitment to customers to deliver tangible business value. “
– I have no idea what we do. Please give me money.

“It goes without saying that …”
– I’m about to say it.

“May be hazardous to your health.”
– Is unquestionably hazardous to your health.

“It’s not over ’till it’s over.”
– It’s over.

“It’s so hard finding good help.”
– I am a pompous ass.

“Less is more.”
– This is a steaming pile of excrement. Less of a negative is a positive.

“We’re a leading provider of …”
– I can’t think of anything else to say, and the lawyers tell me I can’t say “the” leading provider.

“Well bless your sweet little heart!”
– You’re a stupid bitch.

“It’s not personal, it’s just business.”
– I hate you.  Personally.

“It’s not you, it’s me.”
– …but you’re not helping.

“Congratulations again on being pregnant, what a wonderful journey you’re about to embark on!”
– I don’t have kids.

“Life starts at 40!”
– I am at least 39 years old.

From cdixon.org

Suppose there is a pre-profitable company that is raising venture financing. Simple, classical economic models would predict that although there might be multiple VCs interested in investing, at the end of the financing process the valuation will rise to the clearing price where the demand for the company’s stock equals the supply (amount being issued).

Actual venture financings work nothing like this simple model would predict.  In practice, the equilibrium states for venture financings are: 1) significantly oversubscribed at too low a valuation, or 2) significantly undersubscribed at too high a valuation.

Why do venture markets function this way?  Pricing in any market is a function of the information available to investors. In the public stock markets, for example, the primary information inputs are “hard metrics” like company financials, industry dynamics, and general economic conditions. What makes venture pricing special is that there are so few hard metrics to rely on, hence one of the primary valuation inputs is what other investors think about the company.

This investor signaling has a huge effect on venture financing dynamics. If Sequoia wants to invest, so will every other investor.  If Sequoia gave you seed money before but now doesn’t want to follow on, you’re probably dead.

Part of this is the so-called herd mentality for which VC’s often get ridiculed. But a lot of it is very rational. When you invest in early-stage companies you are forced to rely on very little information. Maybe you’ve used the product and spent a dozen hours with management, but that’s often about it. The signals from other investors who have access to information you don’t is an extremely valuable input.

Smart entrepreneurs manage the investor signaling effect by following rules like:

- Don’t take seed money from big VCs – It doesn’t matter if the big VC invests under a different name or merely provides space and mentoring.  If a big VC has any involvement with your company at the seed stage, their posture toward the next round has such strong signaling power that they can kill you and/or control the pricing of the round.

- Don’t try to be clever and get an auction going (and don’t shop your term sheet). If you do, once the price gets to the point where only one investor remains, that investor will look left and right and see no one there and might get cold feet and leave you with no deal at all. Save the auction for when you get acquired or IPO.

- Don’t be perceived as being “on the market” too long.  Once you’ve pitched your first investor, the clock starts ticking. Word gets around quickly that you are out raising money. After a month or two, if you don’t have strong interest, you risk being perceived as damaged goods.

- If you get a great investor to lead a follow-on round, expect your existing investors to want to invest pro-rata or more, even if they previously indicated otherwise.  This often creates complicated situations because the new investor usually has minimum ownership thresholds (15-20%) and combining this with pro-rata for existing investors usually means raising far more money than the company needs.

Lastly, be very careful not to try to stimulate investor interest by overstating the interest of other investors. It’s a very small community and seed investors talk to each other all the time. If you are perceived to be overstating interest, you can lose credibility very quickly.

From cdixon.org

If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it.  Be the opposite of secretive.  Create a Google spreadsheet where you list every idea you can think, even really half-baked ones.  Include ideas you hear about (make sure you keep track of who had which idea so you can credit them/include them later).

Then take the spreadsheet and show it to every smart person you can get a meeting with and walk through each idea.  Talk to VCs, entrepreneurs, potential customers, and people working at big companies in relevant industries. You’ll be surprised how much you’ll learn.  The odds that someone will hear an idea and go start a competitor are close to zero.  The odds you’ll learn which ideas are good and bad and how to improve them are very high.

Every conversation will contain some signal and some noise. Separating the two is tricky. Here are some broad rules of thumb I’ve developed for how to filter feedback based to the profession of the person giving it to you.

1) Employees at relevant big companies. These people are great at providing facts (“Google has 100 people working on that problem”) but their judgment about the quality of startup ideas is generally bad. They tend to have goggles on that makes them think every good idea in their industry is already being built within their company.  For example, every security industry person I talked to thought SiteAdvisor was a bad idea.  (If it wasn’t, they think, someone at McAfee or Symantec company would have already built it!)

2) VCs. VCs are good at telling you about similar companies in the past and present and critiquing your idea in an “MBA-like” way:  will it scale? what are the economics? what is the best marketing strategy?  I would listen to them on these topics but pretty much ignore whether they think your idea is good or bad.

3) Potential customers.  If your product is B2B, remember you’ll be selling to that person 2-3 years from now and by then the world and their priorities will likely have radically changed.  If your product is B2C, it’s interesting to hear how regular consumers think about your product but often they really need to use it fully built and in the proper context to really judge it.

4) Entrepreneurs. This is the one group I listen to without a filter.

Even though I have no intention of starting a new company for a long time (if ever), I still keep my idea spreadsheet and update it periodically.  Some of the ideas I wrote down a few years ago are now companies started by other people (some successful, some not).  A few I had the chance to invest in. It’s interesting to compare my notes and ratings of each idea with how those companies have actually performed. I also keep a list of “on the beach” ideas in case I have time in between startups. These are mostly non-profit ideas.  I don’t know if I’ll ever get to those but they are particularly fun to think about.

* Thanks to James Cham for inspiring & contributing ideas to this post!

From cdixon.org

There is a widespread myth that search engines have taken profits away from news websites. A few months ago, Rupert Murdoch said: “Google has devised a brilliant business model that avoids paying for news gathering yet profits off the search ads sold around that content.”

The reality is that news is a lousy business. Period. Even Google doesn’t make money on it. For example, here are Google’s search results for the phrase “afghanistan war”:

Notice there aren’t any ads on the page. This is because ads for “afghanistan war” generate such low revenues per query that Google doesn’t think it’s worth hurting the user experience with a cluttered page. Google can afford to do this on news queries (along with many other categories of queries) because their real business is selling ads on queries where the user likely has purchasing intent. Big money-making categories include travel, consumer electronics and malpractice lawyers. News queries are loss leaders.

It’s an historical accident that hard news categories like international and investigative reporting were part of profitable businesses. The internet upended this model by 1) providing a new delivery method for classified ads (mainly Craigslist), 2) increasing the supply of newspapers from 1-2 per location to thousands per location, thereby driving the willingness-to-pay for news dramatically down, and 3) unbundling news categories, making cross subsidization increasingly hard.

The internet exposed hard news for what it is: a lousy standalone business. Google arguably contributed to this in many indirect ways, including by helping users find substitute news sources. But the idea that Google takes profits directly from newspapers is simply misinformed.

From A Smart Bear: Startups and Marketing for Geeks

I hesitate to take issue with Jason’s Sacrifice your health for your startup — particularly after his wife gave her up-close-and-personal. His main point is dead on — we need to unhealthily obsess over our creations. But take this too far and your productivity drops off the cliff.

As founder of a run/bike app startup, I can write off my workouts. I have a ready excuse for squeezing in a little “sweat equity” — I need to get in shape to know my customers’ issues. However, I also know firsthand that exercise increases total productivity. I avoid colds and I have more mental staying power. Plus, I have a better attitude when I don’t resemble shtik fleysh mit oygen (Yiddish for a piece of dead meat with eyes).

Technology startups can be horrible for your body. Not mangle-your-arm-in-a-press horrible. But we have all sat in front of a computer for hours on end, tapping on the keyboard and lost in thought. Your only movement is reaching for the can of Mountain Dew or grabbing the bag of chips. Maybe you tear yourself away long enough to call for pizza delivery.

Perfect for veal, not so much for humans. It wasn’t always this way. Joel Spolsky notes that in times long gone, programmers got washboard abs while waiting for the compiler.

Think about exercise in light of a situation we’ve all faced: all-night coding sessions. Remember the all-nighters you pulled, heroically pumping out code until dawn to make a big deadline? Seemed like you were getting lots done while you took a bullet for the team. The truth is your programming was probably awful. Even a few hours’ sleep would have prevented your spaghetti mind from dumping spaghetti code. The worst part: as you got more sleep-deprived, the better the whole idea looked.

Workouts are the same – as you drop further into sloth, inactivity seems smart. Only the uncommitted have time for exercise, right?

Exercise is pretty useful for anyone in a startup even without the health and stamina benefits. Just as your best ideas appear while you’re soaping up in the shower, elegant solutions spring up when you’re out running. Your mind is searching for something to think about besides your body’s pain. And while you don’t have a pen in the shower, you can always use your cellphone if a brainstorm strikes during a run.

…

Let’s say you’re ready to start an exercise regimen. What next?

Some of us already know how to work out – we’ve just given ourselves license to be lazy in this one area. If you’ve never been in shape, start gradually. Choose an activity you already enjoy (biking is my favorite). Regular exercise is far more important than going Charles Atlas overnight. Couch To 5K is a great place to start.

A little goes a long way. You already knew you don’t have time to train for a marathon. Maybe get in a quick run before work – you’ll feel great all day. Or inch up to a hundred pushups while prepping for a sales call. Zen Habits has a detailed list of exercise hacks to help ease you into the habit.

The critical thing is to just get started. Close your door, wipe the crumbs off your pants, and give me ten pushups now!

From A Smart Bear: Startups and Marketing for Geeks

Most people start their first company while they still have a day job.

It makes sense: You don’t need loans, and you don’t need funding. If you “fail” all you’ve lost is time, but considering the fun, the stories, and everything you’ll have learned, that’s hardly a failure.

You just need to give up all your free time which, if you’ve caught the “founders” bug, is A-OK with you.

But you’ve also placed yourself in a hazardous, potentially legally ambiguous situation. If managed improperly, you’re unnecessarily risking lawsuits and worse.

I’ve been on both sides of the table: I’ve done a startup while working and I’ve employed people who either were or are very capable of having their own startup on the side. And I’ve known people who were sued because of it, and not all of them won.

Here are my tips for how to pull this off.

IANAL

Ho hum, hedging is so tedious. But I have to say it: I Am Not A Lawyer. None of this is legal advice. If you do or don’t do anything listed here and anything bad happens, it’s not my fault.

If anything good happens, I’m thrilled and honored to accept your munificent cash donation.

Pick a business that can thrive within your constraints

Your side venture has constraints a “normal” business doesn’t have:

1. You can’t answer the phone during normal business hours.
2. You can’t answer emails during normal business hours.
3. You can’t afford to hire three developers to add features and bugs.
4. You have to work in fits and spurts.

Your natural tendency is to fight these constraints, but that’s the wrong approach. For example, you know that to avoid social media shitstorms you’re supposed to have stupendous customer service, so you claim as much on your website. But then you don’t have a phone number and emails sent to you at 10:00am don’t get answered until that night (which means they’re not viewed until the following day).

That’s called a “missed expectation.” It’s also called pissing in the wind — it’s just going to come right back at you.

The right attitude is not only to work inside your constraints, but to turn them into competitive advantages!

For example, your regular income affords you the luxury of underpricing your service. So if anyone complains that there’s no phone number, you can just point out that for $5/mo you can’t afford a phone staff.

As another example, pick a product in which simplicity and having very few features is an advantage. “We do only one thing and we do it better than anyone” is a great marketing slogan. You don’t have the time to make a Microsoft Excel knock-off, so don’t!

Embrace slow growth

We all have dreams of stratospheric growth, whether it’s hoping the next blog post will get 267 votes on Hacker News and double your RSS subscribers, or hoping that the advent of release v1.1 will set the blogosphere ablaze.

Good work if you can get it, but it’s not a “plan,” especially not for a business you’re running in your spare time. In fact, any bootstrapped company should be aiming for slow, consistent growth rather than explosive growth.

This is not a bad thing! Slow growth maximizes your chance for success. Slow means your success is not dependent on some unlikely, massive event that’s totally outside your control. Slow means you can change drastically during the early days without sinking the company. You have a job, so you don’t require explosive growth to be successful anyway.

Remember, your immediate goal isn’t to make millions of dollars, it’s to build a business just solid enough to quit your day job. That might mean enough profits that you can already live (frugally) off the company. Or it might mean you have enough customers to have “proved” you have a viable business model, so now you can raise money with sensible terms.

Don’t lie at work

The best way to avoid a lawsuit is to prove that your employer knows you have a side project.

I know, you really really want to ignore me and operate in secret. You’re afraid to tell them because they’re might do something — fire you, distrust you, or look at you funny at lunch.

Yes, that might happen. But what’s worse — one of those things or a lawsuit? If you don’t think they’ll sue you, then you shouldn’t be afraid of telling them! They are going to find out anyway. You need to tell them on your own terms.

I’ve always told my employer, and it always worked out for the best.
Here are those stories.

How do you tell them? Write a simple document explaining what you’re doing. Here’s my template:

To Whom it may Concern:

I have a hobby which does not in any way conflict with work. I’m writing this letter to make sure you’re aware of it so there’s no misunderstanding.

My hobby is ….

I work on my hobby only at home and on my own time; it is not in conflict with my employee agreement. I own it; [Company] has no ownership or rights to it. Like any hobby, it could generate a small amount of income.

Although I don’t anticipate it, I understand that if my hobby ever became in conflict with my job that it’s my responsibility to notify you immediately.

Thank you.

Then you get this letter signed by someone with authority. “Authority” means someone who can legally represent the company. This will of course depend on the company, but typically C*Os or the company’s legal council is a good bet.

Getting a supportive boss to sign it isn’t good enough. He can’t speak for the company.

Check your employment agreement

There’s a phrase in the template letter about your side business not conflicting with your employment agreement. Is that true? It’d better be.

Employment agreements are typically biased in favor of the employer, sometimes with outrageous clauses saying that anything you do, even at home and on your own time and unrelated to anything at work, is automatically owned by the company, and that furthermore you’re responsible for identifying and reporting on those things, and if you don’t do all of the above there’s no limit to the damage you could have caused.

Courts have thrown out some of these egregious contracts, but that’s unusual, and you can’t depend on that. You don’t want to go to court at all. Besides, you signed it.

Read over your agreement and make sure it’s legal to have the side business. If it isn’t, you must write a letter like the one above specifically stating that this is a valid exception to your employment agreement.

Don’t use company property or Internet, for reals

Another clause in most employment agreements is that anything you do physically at work, or on software and equipment owned by the company (e.g. laptop, customer lists, Photoshop) is automatically the property of the company.

This clause is fair. If your project is really on the side, you have no business doing business at work. If your project is really yours alone, it cannot be assisted by a company laptop, company software, or company Internet connection.

When it comes to company property, be paranoid. Assume Big Brother is watching. Assume every laptop has a secret program that records all keystrokes, mouse clicks, screen shots, web sites, and emails you read or write. Assume everything you do on the Internet is recorded, cataloged, tagged, and monitored continuously by a methamphetamine-powered slave-army.

Now I realize you’re super clever. You want to sneak in some tech support emails during the day, so you use a cocktail of  Anonymizer plus GMail-over-SSL to confound the network admin. Because of course covering up your activity is a sure sign you’re doing something legal…

Even that is not enough. If they decide to sue, they get to look through your email records (it’s called “discovery”). Then they have 100 emails you sent during work hours. You lose.

Get the picture? Just don’t do it.

Time management is critical

I’m naturally awful at personal time management. I procrastinate, I’m disorganized, and if I’m not careful I’ll burn two hours ROTFL at FailBlog with nothing to show for it but tears of laughter puddled under my keyboard.

A startup already generates an infinite amount of work. It takes all your time, which for you is 40 hours/week less than it ought to be. You can’t afford to waste time, whether that means bad habits or working on the wrong tasks.

There’s no silver bullet — workflow is a personal matter — but here are some techniques to get you started:

• Check email infrequently.
• Inbox Zero — Processing email until nothing remains has both psychological and practical advantages.
• GTD (Getting Things Done) — This technique literally changed my life. Few people implement 100% of this system, but everyone can take away a trick or two that makes them more productive.
• Work in sprints — Short, focussed bursts of activity eliminate the surprisingly large waste that comes from context-switching and interrupt-driven behavior.
• If you don’t sleep enough, your productivity plummets. Trading an hour of sleep for an hour of coding is never efficient.
• Use a tool like RescueTime (free!) to empirically discover where you’re spending time; the waste becomes clear. P.S. Tony Wright, founder of RescueTime, started that company while employed and wrote about what he learned.
• Optimize slowest tasks first — Identifying and optimizing the slowest tasks increases your overall productivity more than you think.

From Startup Whisperer

I was talking to a friend of mine recently who runs a major national brand.  We were talking about the perils of running brand ads online.  His concern was that he didn’t have the ability to really understand where his ads were being placed or whether they were being seen by the right audience.  The folks at Mpire rolled out a service last year called AdXpose.  It asks as sort of the “Omniture for online advertising.”  Its an all-in-one solution to provide brand verification and campaign optimization for online ads.  The team put together a research white paper that you can request here that shows over 50% of online advertising is being wasted.

The chart below looks at the cost of delivering an ad impression.  As you can see for a standard $1.00 CPM remnant ad the cost of delivering it is typically .$10 when you load in all of the manual cost and technology.  This is basically a fixed cost so a higher CPM brand campaign ($10-$40 CPM ad) barely feels this cost.  Knowing that there is so much waste in advertising today – brands and agencies are starting to figure out that they have to tackle transparency and accountability.  The price of this brand protection is relatively small especially considering that there is so much waste.  Plus, the opportunity cost is huge since there is so much upside in having consumer brands move their budgets online.  If you no that 50% of your advertising is being wasted and/or harmful to your brand, then it would seem to make sense that you’d want to track your campaign(s) with a microscope.

A recent PriceWaterHouse Coopers study indicated that nearly 1 in 3
ads is never even seen because they are below the fold.  Today, only 7%
of the global US media budget is spent online.  80% of that volume is
distributed thru indirect channels like ad networks or ad exchanges.
The answer to the question on what is the price that a brand manager
would be willing to pay for brand protection – its priceless.

Some interesting thoughts from Mpire’s Kirby Winfield from this post on Adotas.  Kirby is always excited about talking to potential customers.

From cdixon.org

I’ve written a few times about what seems to be an exploding tech scene in NYC.  This is sometimes interpreted as arguing that NYC is a better place to start a company than the Valley. Most recently, Matt Mireles seems to be addressing people like me with his critique of the NYC startup scene (he makes some good points as does Caterina Fake in her response).

I’ve never meant my arguments to be about where it is better to start a company. California is a phenomenal place to start a tech company. NYC is a great place as well. (Note to Matt – it’s hard for first time founders everywhere). To me, the important question isn’t which place is better, but rather how we import the things that make the Valley great into NYC. As I said last year:

New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself.   Silicon Valley will always be the mecca of technology, but now that people here are getting back to, as Obama says, making things, New York City has a shot at becoming relevant again in the tech world.

I spent the past week in California and had the honor of meeting some legendary venture investors. I was deeply impressed: they are legends for a reason. Of course, they are incredibly smart and hard working and all of that, but most impressively, it was clear that they truly believe in making big bets on ambitious, seemingly wacky ideas to try to change the world. Every VC has this rhetoric on their website, but – at least in my experience – most just want to make incremental money on incremental technologies. (Side note: I noticed that the more powerful the VC, the more likely they were to pay close attention, show up on time, and not bring phones/computers into meetings.  I guess when you are changing the world, emails can wait an hour for a response).

California should be NYC’s role model and ally. The enemy should be people and institutions who make money but don’t actually create anything useful. In NYC, this mostly means Wall Street, along with the Wall Street mindset that sometimes infects East Coast VC’s (emphasis on financial engineering, needing to see metrics & “traction” vs betting on people and ideas, etc).

Matt should do what’s best for his company. God knows it’s hard enough doing a startup – you don’t need to carry the weight of reinvigorating a region on your back as well. That might mean moving to California. Meanwhile, forward-thinking investors and founders in NYC will continue trying to make things that change the world – in other words, trying to make NYC more like the Valley.

From Tony Wright dot com

My startup (RescueTime) has enjoyed some pretty ridiculously good PR (online, print, and video). It’s not a surprise that the most common questions that we get from other founders are about PR. How do you get press and the blogosphere talking about your product?

When you research this topic, you’ll see lots of technical and how-to articles that talk about how to build relationships with writers, how to use services like PRweb, how to format a press release, and more. In a lot of ways, this reminds me of SEO (search engine optimization). Research SEO and you’ll find a bunch of articles about page markup, link sculpting, meta descriptions, and all sorts of other mechanical processes. But what you won’t find much of is information that teaches you how to write great content and how to build your startup and features (from the ground up) with “linkworthiness” in mind.

Just like fabulous content solves 75% of your SEO problems, fabulous storytelling solves 75% of your PR problems.

I think there’s a lot of built-in contempt for PR and marketing among entrepreneurs (especially hacker-flavored entrepreneurs). We’ve all been in companies with fat communications budgets wasted by blow-hard marketeers, so many of us have dismissed the profession altogether. We’re so entranced by the concept that just building something people want will win the day. I remember cheering the first time I read the quote, “marketing is a tax you pay for being unremarkable“. I remember reading a statement on Hacker News that said, “my code speaks for itself“. Two years ago, I would’ve said, “Right on, brother! Preach it!”

But my mindset has shifted about 180 degrees over the past few years. I now believe that how you say something is at least as important as what you’ve built. The A/B testing and design/copywriting iteration that we’ve done over the past year (which has, over time, resulted in a 400% increase in conversion rate on our site) really has driven home this belief. What’s A/B testing if not a bunch of microscopic marketing/PR tests?

What you need to send to reporters and bloggers

If you’re reaching out to reporters and bloggers, you put yourself in the shoes of that person. They are looking to write a headline that causes readers to buy a magazine/paper or click on a link. They are looking to write a story to support that headline that causes readers to consume that content and (ideally) find the content so provocative (note that “provocative” can be VERY different from “valuable”) that they send the link to their friends and relatives, post it to Twitter, and write a supportive (or critical) write-up on their blog.

If you can truly empathize with a writer, you fairly quickly realize why your new social bookmarking app, web annotation service, or small business accounting app isn’t particularly newsworthy. You aren’t click-bait. You aren’t link bait. You aren’t going to sell a paper.

Which is why your most important problem from a PR point of view is this: How can you make your uninteresting (to a broad audience) company interesting?

The good news is that it’s quite do-able. If at all possible, read Made to Stick by the Brothers’ Heath. If you can’t read it, read this summary. If you can’t do that, just try to craft a story that succeeds in as many of these areas as possible:

• Surprising
• Funny
• Personal
• Has a story arc
• Useful

(notice how low “useful” is on the list? That’s not an accident. You have to be REALLY useful to be worth talking about.)

A boring company with good storytelling skills can do some amazing things on this front. Off hand, I can name a company that sells shoes online that did pretty well on the PR front, a personal finance app that a lot of people talked about, and a creator of small-business project management software that people can’t stop linking to. If you want to see smaller/earlier successes, check out Balsamiq or UntitledStartup (both are doing some clever things out of the gates).

So if you tell your product’s story at a party (which you should, over and over!), watch the listeners eyes. Do they glaze over? Or do they light up? Do they laugh? Do they argue with you? Do they ask questions? If a you’ve never had a listener at a party say, “wait a minute– John over there would LOVE to hear about this… Let me grab him!”, then you probably aren’t ready to work on the mechanics of outbound PR. If at the end of your story, the listener doesn’t often say, “Can you tell me that URL one more time?” as they reach for their smartphone, then you need to keep working on your story. Because charging forward on outbound PR with a shitty story is pretty much the equivelant of working on your SEO mechanics when you know you have crappy content. Your’e ignoring the most important part in favor of the least.

Post Scriptum – On the Value of PR

Having enjoyed pretty great PR success, I wanted to throw out a final thought. Like a lot of accelerants (marketing and funding being two other examples), PR can be like throwing gasoline onto a fire. Or it can be like throwing gasoline on a pile of wet wood. It can be especially exciting if your business is enjoying growth already. But PR (and, more broadly, your startup) is a marathon, not a sprint. The first couple times you get a PR hit, you’ll quite likely be flummoxed by the fact that your traffic and usage doesn’t really change that much as a result. TechCrunch might get you 5-10k uniques. Being in the print version of the New York Times might get you a few thousand uniques. PR is not going to result in a viral/word-of-mouth explosion, but it’ll speed things up nicely if you’ve already got one happening.

As Andrew Chen says in one of his many fabulous posts (why bloggers and press don’t matter for user acquisition), if you’re going to spent time on marketing and PR, spend it on things that will pay ongoing dividends rather than 1-time dividends. Andrew was talking about stuff like viral loops and SEO, but in my opinion he missed the most important marketing “gift that keeps on giving” – crafting and tweaking a story that makes you worth talking about.