Startable

Little overwhelmed right now, but thought I would share two links I’ve recently come across that I’ve found quite interesting. One is on the freemium business model for startups and the other is data on recent Series A venture capital financings in New England.

Freemium is Not a Business Model, by Mark Evans. Mark is a Canadian writer/entrepreneur. The comments section here is really interesting; worth scrolling through. I agree that many startups underestimate the difficulties of making a real business via a freemium. However, enough startups have succeeded with this model that it has to be taken seriously. To prove that you’ve got a startup capable of really creating huge revenues via a freemium model you’ve got to have a serious marketing and conversion engine (that’s my two cents…)

Quarterly Review of Series A Financings in New England, by Foley Hoag. (download the pdf for the report) Foley Hoag is a respected corporate law firm. Their attorney’s provide the following commentary: “Series A rounds are getting done despite the general economic climate; and yes, they are getting done at a more modest level because of it.” “The first two quarters in 2008 saw a general decline nationally in Series A transactions (down 8% from the same period in 2007), with a more marked downturn felt in New England (down almost 30% from 2007).” Keep in mind they are using a small sample set for their analysis, but it’s still an interesting read.

This is just a quick post to let startups who are using Amazon’s web services know about “AWS Startup Tour.” Amazon’s web services team is on the road meeting with startup CEOs this month, and will be in Boston on September 22nd. I think, besides me, several other venture capitalists will be there as well.

Prasad has posted on the cloud computing revolution and how it is enabling a new wave of startup innovation. As the cost of launching a new business drops we are seeing some very interesting web-based companies that would not have been possible just a few short years ago. AWS seems to be dominating the startup cloud services market. Here is a great chance for startup CEOs and CTOs to interact with the team behind AWS. I’ll be there and I hope you are too!

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?

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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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This is the quote Anand Rajaram, one of the co-founders of Pixily, used when being interviewed by Mass High Tech for their weekly journal. Christopher Calnan, the staff writer at Mass High Tech wanted to know how Cloud Computing was impacting hardware infrastructure for his article Cloud computing bursting on the corporate scene.

I think this quote captures the essence of what cloud computing is doing to hardware costs. I strongly believe cloud computing should be part of every entrepreneur’s technology strategy. Let me start by summarizing how open source has become part of a startup’s strategy before making a case for cloud computing.

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