Startable

Comcast appears to be preparing to limit residential internet users’ bandwidth, starting October 1st. Comcast’s Network Management Policy website puts this limit at 250 gigabits per month. As a user of Comcast internet, I find this a little bit of a bummer. I don’t make a habit of analyzing my monthly internet usage (anyone remember AOL when you had to stay under a certain number of minutes online per month?), but I’ll have to start paying a bit of attention. However, it’s highly unlikely that I personally exceed this limit, despite enjoying Hulu and other online video, downloading songs, tons of files for work and using a filesync program to keep my home and work computers files the same. I do worry about how this will affect startups and new internet business ideas.

Several things about Comcast’s bandwidth limit do really annoy me:

1. Working from home. What will this do to information workers who work from home on a regular basis? I imagine that self-employed computer programmers who work from their home office could be particularly hurt. What about people who edit movies and other media from their home office? Will they be unable to upload their files? Telemedicine - doctors on call use the internet to look at medical images from home before heading into the hospital. Those high resolution images are very large, and can you imagine a doctor saying to a patient, “well, I don’t want to go over my bandwidth limit this month, so you’re going to have to wait for me to get to the hospital to see the ALL the scans we took of your brain…” Sure, you are probably supposed to get a “commercial” internet subscription if you do these things, but do you really feel that someone who works from home on Fridays should have to??
2. Read the rest of this entry »

Pretend you are on the board of a startup. Unfortunately, this startup is not living up to its potential, and is failing to get sales traction as you and the team hoped. Why are sales not materializing? I had a brief, but insightful, conversation with one of my partners today. This partner (like most venture capitalists) is on several startup boards. Most of these startups are growing quite well; however, one of them is not.

The question is why? From a board level, it is quite difficult for a venture capitalist to determine the cause of the startup’s sales slippage. Is it the sales team? Or is it a market/product issue?

Read the rest of this entry »

Today I had the pleasure of spending time with an entrepreneur planning a seed fund raise for his startup. While most of my fund’s investments are at the Series A stage, we do occasionally get involved with businesses raising a seed. We (several partners, the CEO and me) put together a pretty simple list of objectives that we hope the startup will accomplish with the seed financing. While this list is pretty simple, I thought I’d share it since it makes a lot of sense, if I do say so myself! (It is important to note that this list is for a web service company that already has a bit of traction; the list would be different for a startup in a different space or at an earlier stage.)

Milestones (for more of my opinion on why milestones are important see my post on setting them check out my previous posting) By the time that the company has run out of the seed financing the following should be accomplished:

• Team - Critical technical, business and customer support team members should be in place and fully functioning.
• Read the rest of this entry »

What should greet me my return from vacation but yet another piece of real spam in my Facebook account. Similar to the Facebook virus/spam I wrote about earlier, this spam appeared as a message from a friend. This time I was directed to a random website that claimed to be a youtube video, although it clearly was not. This feels more like a virus (vs. traditional Facebook application “join me” spam) because the message was generated without her consent and directed the target user away from Facebook and to a site that was likely selling something or that had a malicious intent. It’s evil junk marketing generated without the user’s consent.

I’ve been excited by and met with a number of Web 2.0 startups who are planning on having an open API, and who believe that this will enable them to more nimbly develop relationships with their customers. I hope that this promise will not be destroyed by malicious developers who exploit the openness of Web 2.0.

It would really bum me out if Facebook became over run with nasty spammy messages like most of my email accounts have… I hope the folks at Facebook can find a way to keep their system open and yet avoid having virus writers and spam marketers take advantage of them.

When Facebook opened their API last year to outside developers they seriously accelerated their business and became the face and forward thinker of the real Web 2.0 movement. Supposedly in 2007 alone 12,000 applications were generated on the Facebook platform. The key to the success of the platform is that outsiders are trusted to help direct the evolution of a company’s relationship with their customers.

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Should a startup blog even before they are ready to tell the world about their idea? By blogging will you be giving away your idea? Is there a real benefit to creating a blog and updating it on a regular basis? These are questions I asked myself when we founded Pixily and in the ensuing months when we were in stealth mode.

Reflecting back on these questions, we at Pixily wish we started blogging within the first couple of months of founding Pixily. It would have helped us in a number of ways including acquiring customers, being perceived as an authority in the market and in recruiting employees. In this post, I will cover the benefits and in a following post I will talk about blogging strategies that a stealth mode startup can employ.

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Next week will be a light posting week for me, as I’ll be on vacation. Hopefully Prasad will hold down the fort. It is true that August is a bad time to try to raise funding, as things tend to slow down quite a bit as VCs and service providers take vacations. I didn’t realize how seriously people took their vacations, but it seems like there is a general agreement that most people in the early stage business will disappear for a bit and so not much is getting done.

This is the second of my posts on how to deal with a junior VC during your startup’s venture fund raising process. (My first post on interacting with a junior VC is here.) Obviously your most important goal when talking with a junior VC is to get to a partner. Just like it makes sense to know your customer when you are starting a business, it also makes sense to figure out what is motivating the junior VC with whom you are speaking.

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As an associate at a venture capital firm, I get to spend a lot of time speaking with entrepreneurs about their startups. Talking with founders and entrepreneurs is basically what motivates me to get out of bed in the morning; usually I find learning about new business ideas and technologies pretty freaking awesome. However, I can appreciate that most founders would likely rather interface directly with a partner instead of spending time with me. After all, I am not a decision maker, am not on the firm’s investment committee, and - given that the VC business is an apprenticeship business - am still in the “learning” phase of my career. However, entrepreneurs seeking venture capital should realize that the junior VCs can be either roadblocks or valuable allies in the search for funding.

This is the first of two three posts on best practices when you have to deal with a junior VC during your funding search. (The second post addresses some of the underlying motivations you may find in a junior VC.)I may be able to convince you that junior VC’s are not a total waste of time by the end of these posts! (I hope that these come across as helpful and not overbearing or pompous and welcome your feedback.)

If you find yourself in a conversation with a non-partner VC your goals are pretty simple:

1)  Read the rest of this entry »

It’s bad news when there hasn’t been a VC backed company execute an IPO in such a long time, and it’s sad that the company that attempted to break the IPO drought, Rackspace, had such a poor reception. Rackspace was sold on Friday at $12.50 a share, and priced down about 20% that day. It traded up a bit today, but still has not been a particularly successful offering, and thus won’t provide the jumpstart to the IPO market like I had hoped. This really isn’t a big surprise, but still it’s disappointing. The slowdown in the IPO market is also trickling down into the venture market and may be slowing some company’s VC fundraising efforts.

I don’t have any economic interest in the company, I just think it’s unfortuante that we are in such a tough IPO market. The National Venture Capital Association (NVCA) released a publication a while ago on the IPO drought, and Rackspace’s public offering is not likely to do much to fix the problem. One of the biggest reason for the lack of IPOs cited in NVCA’s publication was skittish investors. Unfortunately that problem can also scoot down the cycle and translate into skittish venture investors…

Most venture investors seem to be confident that the IPO market will reopen, and if good companies are being built then they should survive any sort of capital markets slowdown. That being said, VCs are only human and it’s natural that investments may take a bit more mental effort to actually get done. If the entire market is scared then you shouldn’t be surprised that your average venture investor may be a bit infected with this same malaise.

How should you combat this if you’re a startup founder seeking funding? Read the rest of this entry »

As Prasad and I think about different ways to promote the Startable blog a fun idea came up: Facebook ads. I love the idea that we can publish highly targeted advertisements right at the people who I imagine would like the blog (too bad advertisers with more than a $20 ad spend budget don’t seem to care that much.). As I went through the ad buying process I was a bit surprised by the “Common Ad Mistakes” in the Facebook Advertising Guideline section. In fact, it reminded me quite a bit of my 7th grade English teacher (a great teacher, by the way). For some reason she couldn’t get it into her mind that I really didn’t care that much about spelling and grammar… Facebook seems to have hired her, since the vast majority of the rules have to do with punctuation and spelling. Of the 12 common ad mistakes, 7 of them seem to be about grammar, while only 5 deal with actual deceptive advertising or inappropriate offers/targeting/images. I really would have imagined it would have been the opposite. Perhaps this lack of targeting enforcement is why I keep getting ads for a male balding solution - if they looked at my photos they’d see that I clearly have most of my hair still (I do, don’t I? It’s not noticeable yet, is it???)

Here are the 12 rules listed on the Common Ad Mistakes page:

1.  Capitalization of Every Word
2.  Capitalization of Entire Words
3.  Incorrect Grammar, Spelling, and Slang
4.  Inaccurate Ad Text
5.  Deceptive Discounts and Offers
6.  Irrelevant or Inappropriate Images
7.  Inappropriate Targeting
8.  Destination
9.  Sentence Structure
10. Unacceptable Language Choice
11. Incorrect Punctuation
12. Symbols and Numbers in Place of WordsCommon Ad Mistakes

Are you telling me the 3 most important rules on posting a Facebook ad are grammar rules, before inaccurate advertisements?? Check out rule 2; heaven forbid it should look like an advertisement is screaming at a user:

Or Rule 3, which deals with Spelling (Thanks Mrs Hicks!) Read the rest of this entry »