Startable – Healy Jones’ & Prasad Thammineni’s Blog

We’ve been having a lot of luck with our online videos. At OfficeDrop, we use them both as teasers/commercials to get people interested in using our services and as how-to videos that explain features and integrations. People seem to like them, and we see a real correlation between people who watch the videos (even a portion of them) and who sign up as customers. Here is an example of our main “teaser” intro video – I’m going to have to update it soon based on several new features that we’ve recently introduced.

I also try to use them as “link bait” i.e. putting some educational content out there and hope that other link to it based on the good info we basically give away; see our digital office page as an example. Online video is a pretty important part of our site and building and marketing strategy.

Prasad has a new post on Small Business Trends that lays out some simple tips for creating better online video. If you have a site, I’d recommend using simple online videos to promote and sell your service. Or at least make it more personal and give potential customers the chance to see what you look like and “bond” with you!

One of OfficeDrop’s cofounders, Anand Rajaram, and I (and the rest of the team too!) recently learned a lot about our customers during a site redesign. Anand really used some cool, cutting edge online tools to help us with this redesign – and as a consequence we were able to nicely increase our site’s conversion rate.

He is writing a series of posts on this redesign on Performable’s blog. The first is up, Optimizing Conversion Rates with Simple Tests. I’m not going to lie, it’s a pretty good post! Online testing tools are pretty powerful, and I’d encourage you to try some of the ones we used, like UserTesting, Feedback Army, and FiveSecondTest.

CB Insights’ data is showing that Massachusetts early stage fund raising, as a $ volume, really dropped in the past quarter.

Massachusetts Funding Plummets – The state sees a five quarter low dropping below half a billion dollars of funding while dealflow stays consistent. Healthcare remains dominant but loses some share of dollars and deals to internet and software. Portion of state’s deals going to seed deals significantly less than New York and California.

While the number of deals in the state remains the same, the dollar volume is way, way off. A chart from CB Insights’ report:

Basically, it looks like the size of dollars invested by deal has dropped in half since Q1 (~$10mm per deal vs ~$5mm per deal.)

It also seems like NYC has surpassed Boston for early stage internet deals. This is actually a pretty big thing. I’m not against NYC doing well, and also postulate that there is some positive spill over to Boston for a good funding environment in NYC – in fact, OfficeDrop‘s funding source in NYC based.

But what is prompting the drop in Boston, while both CA and NYC have gone up? What is going on?

Some potential ideas on the funding situation in Massachusetts

Healthcare seems to have been hit hard this quarter. Healthcare has been a very important part of the Boston venture scene, and also tends to have higher average deal size. Over the past three quarters, for example, the average healthcare deal size has been about $10mm per deal, vs about $6mm for internet investments. See page 41 of the report to see some charts on this in Mass.

Lack of big deals. Other regions have some serious Series C deals – that have lots of capital invested, thus dramatically popping the average + total deal size. Did Mass have any really big later stage deals?

Lack of clean tech. “energy and utilities” are 7% of deal volume in California – but only 3% in Mass. These tend to be bigger deals than internet. Did Massachusetts miss the cleantech boom?

Are Mass companies too quiet? For example, when my company raised funding last year we didn’t really let any of the data providers know, do a press release, or even a blog post. I know of several other MA companies that have raised $500k+ that haven’t announced it. Maybe fund raising isn’t enough of a status thing in MA?

Is seed funding too popular in Mass? This chart is from page 42.

Actually, now that I compare the above chart to California, I think the answer is no. CA not only has more seed deals, but also has more Series D+ deals. Maybe the real idea is that MA companies get sold before needing huge capital raises? IDK.

This is a very good report. Download it.

I’ll be speaking at a very cool event next week in Cambridge on the 5th in the evening. The event is called “Customer Development: The Second Decade — with Steve Blank’s co-author Bob Dorf.” Come out and hear some pretty interesting folks talk about startup marketing. The main speaker will be Bob Dorf, and the event is moderated by Simeon Simeonov. Other speakers include:

• David Cancel, serial entrepreneur and founder of Compete, Lookery, Ghostery and Performable.
• Andy Moss, founder and CEO of ESMZone.
• Andy Greenawalt, founder and CEO of Perimeter eSecurity and Continuity.net.
• Healy Jones, founder of Startable and VP Marketing at OfficeDrop.
• Rob May, founder and CEO of Backupify.

The event is free (sponsored by General Catalyst, a local venture capital firm.) To register for the customer development event click here. The event will start at 6 PM and will be hosted at Microsoft’s NERD Center, One Memorial Drive in Cambridge, MA. Everyone should come!!

The conference is organized by General Catalyst Partners and FastIgnite. Bob Dorf will provide an exclusive peek “under the covers” at some of the many new rules and advancements that Steve Blank, Bob and the ecosystem of thousands of entrepreneur, marketer and investor practitioners have developed over the past several years. The event will feature a keynote by Bob, guest appearances by entrepreneurs and executives who have successfully applied customer development in their businesses and a discussion led by General Catalyst Executive in Residence and FastIgnite CEO Simeon Simeonov.

I recently did a post on DIY Marketers, a site dedicated to helping CEOs with limited budgets get the most out of their marketing, called “5 Tips For A More Professional Website.”

We learned a lot at OfficeDrop when we remodeled our website, and these are 5 things I think many small businesses (and startups) should be doing on their website – things I often see overlooked. They mainly revolve around the idea of generating “social proof” that your service/product is trustworthy and worth putting money into.

This is my second post on what makes a good technology platform company, from the point of view of the companies that integrate into the platform. (I’m calling these companies “platformees.”) Here is a link to the first post, “So you want to be a platform? part one.” Again, this is focused on SaaS applications.

Good communication with partners on your platform. In my previous post on what makes a good platform I mention “consistent strategy.” The world is not perfect and companies do need to make changes sometimes! Solid and early communication with platform partners is the best way to prepare your platformees for change. Email seems to be the  best way to manage this, from my experience. It is also very helpful when the platform itself has good internal communication. When a startup (like mine) has a conversation with a member of the partner team at a platform we use that conversation as a basis for making important decisions (like committing time or effort to developmental or marketing plans.) If another person on the partner team at the platform then does something that destroys the effort we’ve spent it is very costly to us. Companies that want to be platforms need to realize that startups have very, very limited resources. We can’t afford to waste effort, because if we are not growing then we are dying. As an addendum to this, I would add that having a person or team that manages the relationships with your platformees is very helpful.

Reliability. When a big platform app goes down and the customer can’t use the little SaaS company’s integrated offering… well, the customer tends to blame the little guy. Telling a customer who is trying to access critical business data that “so-and-so big company is experiencing technical difficulties again and there is nothing I can do” really doesn’t help him/her have confidence in your app. Secondly, if new users can’t sign up then it means I’m not growing through your channel when you are down. Third, and I think a lot of SaaS companies tend to forget about this – we are still early in the adoption curve for SaaS. Most small business owners and many consumers are still not entirely comfortable with using/storing critical applications online. No one is going to be comfortable switching to online services if they are prone to outages.

I’ve got a few more points that I will try to make in the next post on platforms. Until then, happy integrations!

I’ve had great luck at OfficeDrop using the “crowd” to help us with important decisions. We very actively survey our customers on new features, pricing changes, etc. Our most important use of the crowd was when we changed our name from Pixily to OfficeDrop. This name change was an important step for us, since we wanted to reposition ourselves from a document scanning company to a digital office provider. SmallBusinessComputing recently quoted me on using crowdsourcing; check out the article!

Prasad has a new piece on Small Business Trends on Turning email newsletters into customer insights. I’m a little partial to this newsletter since I helped OfficeDrop create these testing tactics (I’m not claiming that these tactics are unique, just that I was the person to bring them to our marketing efforts.)

I really like the point about allowing replies to the marketing emails. I send a lot of emails our to our new subscribers, and let customers reply to me directly. This helps cut off customer service issues early in the process, and also can get a good dialog going with individual customers.

One point that that did not make Prasad’s piece is that we also let customers know about upcoming new releases/products via the newsletter. It is a great way to get early-bird signups to new products.

Hiring talent is one of the most challenging things facing a startup. Hiring the best programming and technical talent is even harder. Taking data from The Entrepreneurs Census, which I wrote about yesterday, we can get a glimpse into how hard it is to hire programmers in Boston, Palo Alto and New York.

It may be easier for startups in Boston to hire programmers than startups in Palo Alto

Startups in Boston may have a better time hiring programmers, as measured by how long it takes to fill an open position and by the percent of startups that have open positions.

Hiring Programmers in Boston vs Palo Alto

The two thirds of startups in Boston were able to fill open positions in under three months – verses about half in Palo Alto and 63% in New York City. (OK, the difference between New York and Boston is probably statistically insignificant.) Three months is a lifetime for many software and web startups; being unable to add a critical developer in that period of time could derail product launches and critical feature updates. Heck, a lot of startups are out of business in 6 months to a year, so if you can’t fill your positions by then who knows if it’s even worth still looking…

The data collected by the study would fit with anecdotal evidence that I have heard from friends starting companies in Palo Alto. Many people have told me that it’s impossible to find talent in the SF Bay area… especially at a reasonable price. I know it is hard to find good people in Boston as well, but this study would suggest it is a bit easier here than in Palo Alto.

Compensation of programmers in Palo Alto is higher than Boston and New York

And of course the other important part of the equation is how much it costs to hire talent. From the study:

Compensation for Programmers Palo Alto Boston

Doing some really crude math, it looks like programming talent in Palo Alto is 13% more expensive than Boston and 36% more expensive than New York. (I very roughly calculated that the average comp in Boston was $66.85k, Palo Alto 75.65k and New York $55.75k; I assumed the comp for each salary range was in the middle of each range for my calculation. Again, the numbers are small so the difference may not be statistically significant.)

The other data point in the above compensation chart that I’m trying to get my head around is low end and high end. The high end is easy enough to understand; you have to really pay up to get good talent in some cases in Palo Alto (and NYC). This doesn’t surprise me too much, but it is interesting that the high end is zero for Boston. Maybe due to a small sample set? I just don’t know enough.

The low end is also pretty intriguing. I’d bet that most of the sub $50k programmers are working for equity. It looks like regions OTHER than Boston have more programmers working for a pittance, trying to get equity. Does this mean that Boston has less of a founders culture???

Pretty ironic and not really very important, but Gmail decided to add in this little advertisement to the top of an email conversation that I’m having with someone about this post… it looks like Google is hiring developers in Boston!

Looks like Apple is going to have to delay the international launch of the iPad due to higher than expected demand in the US. The company said in a press release:

Although we have delivered more than 500,000 iPads during its first week, demand is far higher than we predicted and will likely continue to exceed our supply over the next several weeks as more people see and touch an iPad™. We have also taken a large number of pre-orders for iPad 3G models for delivery by the end of April.

Faced with this surprisingly strong US demand, we have made the difficult decision to postpone the international launch of iPad by one month, until the end of May. We will announce international pricing and begin taking online pre-orders on Monday, May 10. We know that many international customers waiting to buy an iPad will be disappointed by this news, but we hope they will be pleased to learn the reason—the iPad is a runaway success in the US thus far.

This is an interesting development. I am a bit surprised that 1) expectations were only for half a million in the first few weeks because I believe that I”ve seen estimates from analysts that showed much higher projections and 2) this does indicate that the iPad is doing well, even though I was under the impression that they actual success wasn’t matching the hype. Good for Apple!