I’ve gotten a lot of feedback for my last post - “There’s Nothing Wrong with Buying Traffic” - and have given the subject a lot of thought since writing it. The more I think about it, the more it troubles me. Because while one of my main observations was that the pendulum would swing back toward startups “buying traffic”, it could be argued that the shift to focus on customer development is not a part of a pendulum, but a sign of a second internet bubble about to burst.
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I’m writing this post following a recurring theme I have had when meeting entrepreneurs over the past several weeks. When asked about their go to market and their initial scaling (or - how do you get to 1 million users? - see some examples of successes here), their answer is “community management” or “customer development” - by which they essentially mean nurturing your early adopters, building strong viral loops, improving through feedback and iterations, etc. All of these things will help drive down your average customer acquisition cost to almost zero, which is always great. But while this is the most fashionable modus operandi, it isn’t the answer I would have gotten 4 years ago, and I believe that ‘scale through community management’ is one side of a pendulum that will soon make its swing back to a more level ground.
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This post follows a talk I gave at a Mobile Apps and Beer event a couple of weeks ago (another outcome of that talk is my former post Should we meet pre-traction?). The subject of my talk was financing vehicles for mobile apps, and one of the key messages that I was trying to get across was that as an entrepreneur of a mobile app startup, you need to understand what asset you’re trying to build - in many ways, the type of asset will define the different types of financial vehicles you should use, and the timing/progress you need to achieve before a fund raising pitch should be made.
So I am following that talk up with a post that is trying to dive into the major assets one can build in a mobile app (but in many ways, this is similar in consumer internet). It is important to note that oftentimes, what seems to be the base asset of the company isn’t really what it is trying to achieve. I encourage all entrepreneurs to spend the time and think about the asset that will enable mass scalability for their product and for the company they are trying to build. So without further ado, here are a few assets to think about:
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What I’m writing here may be obvious to some, controversial to others, and downright stupid to a few. But I think the war over world dominance in mobile is over, and 2012 will be the year where the dust settles and the outcome will become clear.
Android won. It’s over. Giving it away for free is a game-changer. Once you don’t charge for the operating system, the cost of devices built on top of android will be inherently cheaper than those built on top of others. And given cost is such a critical component in consumer decision of which mobile to purchase, Android will just need to be ‘good enough’ in all other parameters to come out ahead. So having said that, let’s look at the other players and compare them to Android
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Privacy has been a huge issue in discussions on the future of online services and advertising technologies. Many publishers and bloggers have written about it in the recent past. Fred Wilson claimed that you should keep it black and white - either you have or you don’t (his post here). The FTC would love that approach, as it has been trying to promote transparency in privacy for a while. Facebook, one of the major sources for data that leads to privacy concerns, recently went as far as to create a Chief Privacy Officer role (announced here). It seems that everyone is trying to ‘manage the beast’ - create boundaries and industry norms around what data remains ours, and what can be left to explore.
I, on the other hand, am a big believer in a different notion, which has been well described in eWeek’s “Web Privacy Is Gone Forever: 10 Reasons Why”. I think our privacy is gone. It is just a question of time until people realize it. Why? Because the value of losing our privacy exceeds the cost, because we’re lazy, and most importantly, because the new generation of consumers doesn’t really care. Let me explain…
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This is the first in a series of posts on what I feel are the trends to watch in 2012. And the first, and possibly the most interesting, is the introduction of automation in consumer software that will make our life simpler.
It has been an increasing trend in the past few years in platforms and applications that can predict the things we would want to do, or can pre-plan them for us. Some people used to bundle it into artificial intelligence, others bundled it into semantic analysis, and today many would include it in the ‘big data’ trend. It’s all the same IMHO. It’s the usage of data and patterns to determine the things one would want, and the actions taken to do them for you in advance. Let me explain through a few examples from 2011:
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OK - so you’ve been going at this startup thing for a few months now. Maybe you have an initial product. Maybe you even have a few users trying it out. Now it is time to hire your first paid developers, to improve the design and process flow, to begin scaling - and for that, you need to raise outside capital. So how much capital should you raise? What should be your thought process when looking at seed financing?
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It is that time again (or a week after) when a lot of different publishers post their summaries of 2011. I’ve read a few. Didn’t like them. Some were partial. Some didn’t pass the right message. So instead of criticizing them, I decided to write one of my own. This isn’t comprehensive - it’s just the things that came to my mind when looking back at the year we’ve had, and what a year it was for Israeli innovation!
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It is relatively often that I talk to entrepreneurs who tell me “it is too early to meet”, “we’re not ready” or “the product is not mature enough to meet”. Sometimes they’re right. Actually, they’re always right, because it’s their prerogative to choose if and when to meet who and where. But, I feel that in many cases, this statement is derived by a misunderstanding of the day to day business of venture capitalists, and where we feel we can add value to companies pre-investment. So I am writing this post to help clarify how I see my role and why I think it is never too early to hold a first meeting.
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Technical co-founders are a scarce resource. Over the past several months, I have met quite a few good entrepreneurs with a business background who were desperately seeking a solid co-founder to join them and get the venture going. When you go to industry events that enable entrepreneurs to ‘voice what it is that they need help with’, you constantly hear of people on the lookout for developers, co-founders, and pretty much anyone who can write code. It has become a huge challenge to build that initial technical team, especially if you want your first hire or co-founder to be a rockstar.
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