What to look for in startups?
I've got a decent draft, but it needs some editing before being publishable, of a post on what I think a person thinking about joining a startup should look for. With quite a few company founders, startup employees and investors among the readers, feel free to share your thoughts on the subject in the comments or in an e-mail.
What VideoPlaza is not doing
I like VideoPlaza's not-todo-list. As a startup you cannot, and shouldn't try to, do everything. Once you decided what to do, writing down what not to do will make it easier to focus as you grow. In the case of VideoPlaza, I think they should be more specific about what kinds of 'advanced' targeting they are not doing (for the time being) and write that. I assume it would be image-based and behavioral targeting, but for a lot of publishers and advertisers providing something like good demographic targeting is still quite advanced.
Skype did $126 million in revenue Q1
Ebay reported Q1 financial results late Wedensday. Personally I find Skype's development to be the most interesting. Skype had $126 million in revenue for the first three months of 2008, 63 % higher than Q1 2007 and about 9 % higher than Q4 2007. Not as seasonal as eBay's core marketplaces business. It doesn't seem unlikely for Skype to be doing a little over $600 million in revenue this year. Not too shabby. =)
For comparison, revenues for eBay marketplaces was $1.484 billion and Paypal $582 million for the same period.
Four (good) Sunday links
Kevin Kelly - 1,000 True Fans. "A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author - in other words, anyone producing works of art - needs to acquire only 1,000 True Fans to make a living.
A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can't wait till you issue your next work. They are true fans."
More interesting than Chris Anderson's Free meme, imho.
Evan Williams - The Focus Paradox. "Both Facebook and Google had early success in (large?) part because of their focus. Google in terms of what they did, Facebook in terms of who could use it.
That success provided both pressure and opportunities to grow in new directions. Expansion is always tricky, and each company has handled it in different ways." (note: focus is not the same thing as niche)
Fred Wilson - One a day. "There's just something about limiting yourself to one a day that creates something special. You don't want to waste the opportunity on something average, so you carefully select the one thing you are gong to showcase or possibly create. And when viewed over time, it's way more than that. It's a timeline to your life."
Umair Haque (Edge Economy) - How to fix venture capital. "Let's revisit the spectre haunting venture capital. Why aren't there more Googles?
The answer's very simple. Because every company that had the potential to be economically revolutionary over the last five years sold out long before it ever had the chance to revolutionize anything economically.
Think about that for a second. Every single one: Myspace, Skype, Last.fm, del.icio.us, Right Media, the works. All sold out to behemoths who are destroying, with Kafkaesque precision, every ounce of radical innovation within them.
Let's replay the Google story. Google, despite serious interest from Microsoft and Yahoo - what must have seemed like lucrative interest at the time - didn't sell out. Google might simply have been nothing but Yahoo's or MSN's search box.
Why isn't it? Because Google had a deeply felt sense of purpose: a conviction to change the world for the better. Because it did, it held on and revolutionized the advertising value chain ? and, in turn, capital markets gave Google an exuberant welcome.
See the point? If all Larry, Sergey, and Google's investors had wanted to do was to sell out fast to the highest bidder, they could have done so at any time. But they didn't: they chose to revolutionize something that sucked - and so a tsunami of new value was unlocked. That's how Google was made."
Fokus on the Internet and the cloud
How to think about selling online ads
It is posts like the two below that make Andrew Chen's Futuristic Play my favorite blog.
- How NOT to calculate ad revenue. "In order to model out your CPMs, you should never ever do a straight calculation of:
Wrong revenue = CPM * impressions / 1000
The reason is that brand advertising is typically demand constrained - meaning that you need to field a big NYC-based sales team in order to do your sell, and as a result, you can only sell some percentage of your inventory."
- Your ad-supported Web 2.0 site is actually a B2B enterprise in disguise. "And brand advertising sales looks and feels exactly the same as enterprise sales, and has all the same annoying characteristics, including:
* You have to hire a big ad sales team, potentially with an expensive office in New York
* A small percentage of advertiser/agency relationships will supply a large chunk of your revenues. This means that "key deals" matter, and you will jump if they ask you to - for example University of Phoenix was worth $200MM/yr for AOL
* Everyone you talk to in the ad industry are not nerds - many come from traditional media backgrounds, again with a NY bias
* And fundamentally, brand advertising isn't a tech game - it's one based on great execution and great teams - so Silicon Valley tech companies often are at a disadvantage"
Thoughts on the Polopoly sale
Atex acquired Polopoly, a Swedish web-content management system, for 140 MSEK (about $23.5 million) this week (Swedish article).
For web entrepreneurs the sale has some takeaways.
- It is worth noting that Polopoly, like its Swedish competitor Episerver, is not a product that is generally loved by its users nor have massive cred in the tech community.
- Strategic investors/partners (like Bonnier and its newspapers in Polopoly's case) can be a good thing to drive adoption.
- Raising too much from venture capitalists will severely limit your exit opportunities. The founders Henrik Holmström and Gustaf Sahlman apparently made about $6 million and $3 million respectively (pre-tax, I assume). For a local, non-smash hit company that is good outcome. If you raise $10-20 million dollars (or in the case of WordPress $29.5 million), you cannot really exit below the $100-150 million level (and I guess the investors wouldn't be to happy at that level).