MyOwnPirateRadio

I attended the StartupEmpire conference yesterday, and had an absolute blast. Thanks to the organizers for putting this on.

Here are some of my notes. Sorry I don’t have time to make this more concise.

Conference format:

• Timing: the original 2-day schedule was just too much time away from product development for me. They scaled it down to 1 day, which was perfect: everyone stayed focused and we got a lot done. Given that the audience is entrepreneurs or would-be entrepreneurs, time is a key constraint.
• Networking: there was lots of opportunity to socialize inbetween and after the talks. I found the crowd very friendly, and I think keeping the numbers low was vital to this. I didn’t get much out of EventVue, as a pre-conference tool, but I probably didn’t put enough into it. Perhaps more useful after the fact.
• Content: good mix of practical advice with inspiration.  There wasn’t a speaker I didn’t like. I found Austin Hill particularly inspiring and worthwhile. As a bright entrepreneur and angel investor with great willingness to share his learnings, he was a real pleasure to listen to. I also enjoyed listening to Craig Hayashi of Maple Leaf Angels. He is doing a blog post series on angel financing, over on Startup North.
• Students: I loved seeing local students helping out as volunteers in exchange for tickets. Yes, yes, yes! We need to graduate more students who are fired up about creating original works and starting their own ventures, not just students who are trained to plug into existing businesses.
• Cost: at $65, this was a steal.  For me, the value provided was easily $100+.
• Venue: This is London was pretty much perfect. I’d guess the crowd was around 150 people.

We need more startup community leadership: I would love to see more local people step up to help nurture the startup culture and community in Toronto. It seems we have a very small handful — David Crow and Jevon MacDonald chief most notable among them — who do the heavy lifting at the events I’m aware of. Yes, there are smaller events that cater to niche interest groups (mmm, like, Ruby on Rails nights — love ‘em), and those are absolutely necessary, but not sufficient. In particular I would love to see some local Angels, VCs, and prominent entrepreneurs step to the fore. The municipal government, Ontario Centres for Excellence and perhaps MaRS should take a sponsorship role. I personally want to devote time to doing this next year. David Cohen spoke about what he and his colleagues have done with TechStars in Boulder, and I think it’s a fabulous example of what a few people can do with some spare cycles. More on this another day… it’s a big topic.

Inspiration = oxygen for entrepreneurs: one of the most difficult things I’ve found about starting a new venture is the sheer negativity you often encounter. Lots of people — the majority, I’ve found — are biased to believe that all startup ideas fail. It is certainly true that most startup ventures don’t make it past the first year, but not all. If would-be entrepreneurs took all that the doom and gloom to heart, there would be no startup innovation. So I found it very encouraging to hear several of the speakers advise founders to stay focused and ignore the noise. Hugh MacLeod, in the second-to-last talk, said it even more firmly: “Ignore everybody. Good ideas have lonely childhoods.”

Milestones should include risk reduction: I find this concept particularly useful. When you’re planning product milestones (or sprints, or whatever jargon you want to use), a key part of the planning is what risks you’re going to reduce or eliminate. For instance, if a big risk is “Will customers think our product design smells like doggie doo?”, then you’d better have a milestone that includes testing your product and acting on customer feedback. Or if you’re worried about your server falling over, you should deal with that. While a risk reduction plan is essential if you’re going to pitch professional investors for funding, it’s just as valid if you’re going it alone. You owe it to yourself, your customers, and your investors to identify risks and make concrete plans to address them.

“Lifestyle Businesses”: Several of the speakers in the professional investment arena mentioned how important it is to distinguish clearly between “lifestyle businesses” and businesses that a VC or angel would invest in. A lifestyle business is one that makes enough money for you to live comfortably, but is highly unlikely to bring in the high returns a pro investor is looking for. (Hmm… I wonder how Craig Newmark would have described Craigslist ten years ago?) As an entrepreneur it’s essential you get honest and clear with yourself about this, for otherwise you are wasting your time and the time of those you’re pitching to.

Austin Hill highlights:

• Austin used the analogy of a road trip to help convey some of the key things startups need to know. So, …
• “Keep your eye on the fuel gauge [money and other key resources], but also on the road ahead [competition, industry trends, etc]“
• Cash and runway is a critical asset. “You must have enough gas to reach the next service station. Don’t plan a lot of sightseeing trips.”
• Fit your product to the market’s needs. “Nobody wants to invest in a rickshaw, a hummer, or a submersible RV. Build a Prius.”
• (with investors): “You must present a clear, believable picture of how you will build a defensible market segment in 3-5 years”.
• “What to pack”: customer acquisition plan; analytics, in particular pirate metrics; waterfall and cash model;’ risk reduction model
• Look at Product Planner for user flows (boy how much did that domain name cost?) and Balsamiq for software wireframes and mockups
• “Build meaning”
• Advice for tough economic times
• potential customers = who is losing the most money, or most desperate to offset the downturn’s effects
• go talent shopping: “topgrade”
• watch layoff rolls
• get good at outsourcing (TopCoder, eLance)
• think diversely on fundraising strategies: friends, family, angels, VCs, strategic investors
• on pitching:
• the job of a pitch is to grab someone’s attention and convince them to ask for more.
• “talk to people’s hearts, minds, and wallets”. In that order.
• you must be able to speak fluently about competitors and industry trends
• offer customer references
• don’t talk about features
• referencing well-known real world parallels can be powerful
• “where are we” helps, e.g. “60 days out of a beta”
• “here is what we know and here is what we don’t know”
• on red flags when hiring people:
• lack of passion
• people who can’t pass “practical exams”, i.e. work tasks that test basic competence
• culture fit
• inability to discuss results — “every hire should have a mental scorecard of what they’ve accomplished in the last 30, 60 and 90 days”.
• on SRED credits: “There are way too many Canadian businesses eating zombie food. Walking wounded, should have died years ago.”

Typical Valuation Range for early stage startups

I believe this was a comment from Scott Pelton from GrowthWorks… he said he’s seeing valuations typically in the $1M to $3M range for initial funding. Higher end = great management team, product is real, and perhaps IP is particularly well protected.

“What should a startup CEO get paid?”

This was a great audience question asked of the professional investors who were presenting. A good deal of squirming ensued.

• Rick Segal: “JLA has funded a large range of companies, and the CEO salaries range from $0 (all equity) to $110K”.
• Craig Hayashi from Maple Leaf Angels: [long hesitation]… “it depends”… but eventually he held out $75K as reasonable.
• Austin Hill: “enough so that the CEO doesn’t need to take a 2nd job [keep them focused] or have troubles in family life. For a professional in their 30’s, maybe 90K to a max of 140K, depending on experience. For someone younger, a lot less may be approriate.”

On advertising-based business models for web startups

The speakers were uniformly negative about business models based solely on ad revenue. I’m sure a lot of that has to do with the current economic climate — everyone’s spending less, and ads are easy to cut — but there seems also to be a backing away from the hype about ads being a magical biz model for web ventures. A few people voiced a preference for transactional biz models, and for focusing more on enterprise-centric products rather than consumer plays.

Microsoft BizSpark = free stuff for startups

Microsoft sponsored the event and it showed… job well done. They also talked about BizSpark, which is worth any startup looking at. Check it.

Technorati Tags: startupempire

I can’t remember where I heard this, but it’s been on my mind a lot lately so I wanted to mention it.

When you’re designing something that’s going to be used by a lot of people, it’s vital you talk with some of your customers and get them to test your prototype to be sure you’re building something they actually like and find usable.  

Sounds like a no-brainer, right? Well, it ought to be accepted wisdom in any design-related job, but it isn’t universally so. I’ve worked a few places where talking to actual customers was considered a complete waste of time because customers “don’t know what they want”. (Not Microsoft, so much… most groups I worked in were very conscientious about trying to build products customers liked.)

In software, there is a useful accompanying rule of thumb: if you’re designing reusable code such as a library or an application programming interface, you need at least three different customers using your software successfully before you can be sure you’re anywhere near the right ballpark. If you don’t have at least three, you are just guessing at what a reasonable customer interface and user experience should be. And you will be wrong… you’ll miss something important, or design something the wrong way, or (my most common weakness) overbuild the product because you think they actually want all the bells and whistles that you do. In fact, you should save your energy, stop coding, and wait until you have three customers before moving ahead.

Of course, this isn’t to say that three is a sufficient number for getting a design right. For some products you need millions! But three is certainly necessary.

Here are two November events that might be interesting to folks in the Toronto-area startup space.

1) StartupEmpire. This is a 1-day conference on Nov 13th specifically for startups/entrepreneurs, put on by Jevon MacDonald and David Crow. Tickets are only $65. They have some great speakers and sponsors/partners lined up, including the  BlackBerry Partners Fund for people doing work in the mobile space. Jevon and David have put on some great events locally for tech entrepreneurs, so on reputation alone this is worth checking out. See blog coverage here.

2) GeoSocial is an informal social meetup inspired by Where 2.0, hosted by by Juan Gonzalez of PlanetEye and Mark Evans. This one is tomorrow Thursday Nov 6th, 6:30pm+. Juan describes it as “…a group for people interested in exploring the uses of geodata to enhance the relevancy of information on the web and create new means of social interaction.” Thanks Sandy for the heads up on this.

I will be at both of these.

I’ve just switched MyOwnPirateRadio from hosting on iPower.com to WordPress.com. 

If you subscribe to the email version of this blog you probably noticed a few duplicate posts mailed out last night. My apologies, and fear not, for I haven’t yet stooped to duplicating my own blog posts. It was a glitch in the import process.

Why leave iPower?

• Poor availability. 5 hours of downtime in September, a whopping 49 hours in July. Not that this blog is mission-critical, but still, doesn’t 2 days seem a little excessive? Maybe they forgot to plug the server in.
• iPower recently started charging for domain privacy, with no warning. Deceptive.
• Their hosting prices have stayed the same while everyone else’s have dropped. $100+ a year is too much for a simple blog.
• Their web host management UI is geared at selling services, not helping customers get stuff done.
• Switching a domain to iPower is easy, switching away to another registrar is a devilish process. Again, bad business practice.
• Support: not so much.

So, after many years as a customer, I’m moving all my business away from iPower. This blog is going to WordPress.com, my domain registrations are going to namecheap, and 5 Blocks Out is now ticking along happily over on slicehost.

Why rehost on WordPress.com? There are other places I could have hosted, but for running a simple blog with minimal customization requirements it’s a great value. I can just "set and forget"… I don’t worry about security updates, spam, bandwidth, etc. The only downsides I’ve experienced are (1) advertising is present unless I pay to remove it, and (2) there seems to be no way to import images. If anyone knows an easy way to fix #2 (read: takes less than 20 minutes!) I’d love to know.

Zillow CEO Rich Barton announced yesterday in a blog post that they are laying off 25% of their work force. I guess they are taking to heart the advice in the Sequoia Capital "R.I.P. Good Times" presentation: cut the burn rate so you can survive the recession. Or maybe, as Michael Arrington speculates on TechCrunch, they are also joining the trend of using layoffs as a way to get rid of deadwood employees.

Zillow still hasn’t reached profitability. They are cutting back on marketing and engineering, and investing further in sales. I wonder what their workforce composition will look like in a few years. My guess is they will continue to shift from engineering-heavy to sales-heavy.

Inman News says:

The 5.4 million unique visitors to the site in September represented a 42 percent increase over the same time last year, and revenue is growing "at a rapid pace."  … Launched in February, 2006, the company has raised $87 million in venture capital from employees, individuals and several leading investment firms including Benchmark Capital, Technology Crossover Ventures, PAR Capital and Legg Mason Capital Management.".

Zillow isn’t alone… TechCrunch has a web page tracking other tech industry layoffs.

Here are links to some pieces on the economy I’ve found most useful over the past few weeks. I’ve posted many of these on my Twitter feed but thought it might also be useful to bundle them into a blog post.

For everyone:

• The Globe and Mail has an excellent web page that answers readers’ questions in common-sense terms. For example, "Do the interest rate cuts mean my mortgage rate or credit card interest rate will go down?", and, "Should you lock in your mortgage?". They update it daily.
• This American Life put together a 1 hour broadcast that attempts to explain the financial crisis. It’s the definitive thing to listen to if you want to understand what’s happening. It’s also funny, which is a welcome relief from all the panic evident in most media right now. There is also an older episode called The Giant Pool of Money which explains subprime mortgages.
• NPR has an ongoing blog, Planet Money, that digs in deeper on a daily basis.

For startups:

• Sequoia Capital did a secret presentation called "R.I.P. Good Times" to their portfolio companies this week. They gave their analysis of the current financial turmoil and advised the companies on what to do in order to survive. Someone has helpfully leaked the presentation, which you can find on VentureBeat. In short, they are telling companies to move to a strong cash position (e.g. by making cuts to reduce burn rates), consider M&A, and lower expectations of additional funding. Their punchline: "Get real or go home".
• Angel investor Ron Conway gave similar advice to companies he has invested in. 

I just read on ScottGu’s blog that MS has decided to support the jQuery javascript library. That’s a great decision. It’s a really elegant library, and it makes sense to tap into something that already works and has strong community and momentum.

It’s also a significant departure from the "Not Invented Here" attitude that dominated while I worked at Microsoft. I’m pleasantly surprised.

I’m curious now to see how long it will take to ship solid support for the Ruby language atop the .NET runtime and Visual Studio. That would be really compelling from the developer tools standpoint, and a big step towards supporting Ruby on Rails.

In the past few weeks several friends and colleages of mine have had their laptops stolen. Work files, personal files, software… poof! All gone. ¡Ay, caramba! Their misfortune inspired me to send out a quick note about how easy and cheap it is to do backups now.

Backup the old-school way meant buying a separate hard drive or computer and some backup software, and then regularly (1) backing up, (2) praying it worked properly (honestly, who has time to test restoring files? yawn.), and (3) praying nobody breaks in and steals your backup drive.

Over the past few years a host of online backup services have emerged that make it way easier and, at least in the short term, cheaper, to do backups. The idea is to set it up, and then forget it. Whenever you’re online backup just works silently in the background.

I am not yet using any of these online backup services (I’m still old-school), but I’m getting ready to, and from what I’ve read so far these are the two I want to try:

• Mozy.  Automated online backups. Free for up to 2 GB, or unlimited storage for $5/month per computer.
• JungleDisk.  Automated online backups and file sharing. You can share an account across as many computers as you lke. Pricing is harder to predict, since it depends on usage. This blogger says he’s paying "less than $5/month for about 26 gigs of storage plus daily backups across four machines - no per machine cost." (He uses Mozy too, by the way.)

Both Mozy and JungleDisk support PCs and Macs, which is a must for me.

Mozy is the simpler of the two products, and several friends of mine swear by it as a cheap and easy-to-use solution that just works. The 2GB free offer also makes it a no-brainer to try.

From what I can tell JungleDisk is a more cost-effective and flexible solution for techies and small businesses or home offices with multiple computers. It also lets you use your online backup as a shared network drive, which Mozy doesn’t do. JungleDisk costs a $20 one-time fee plus Amazon’s S3 fees… details here. The downside is a little more complexity than Mozy. 

Both services should also be long-term reliable: EMC recently acquired Mozy, and JungleDisk uses Amazon’s S3 service for file storage. EMC and Amazon aren’t going away anytime soon.

Also worth mentioning: apart from online backup, I’m increasingly using other online services to get stuff done. All of my email is in Gmail, for instance, and we’starting to use Google Docs as our online document sharing solution for Mukodu. Using services like these makes my computers a lot more disposable, which I find to be a great relief.

So… what are you waiting for? Go get yourself some backup!

—

Notes and links:

• ars technica did an excellent review of online backup solutions in July 2007. They looked at Carbonite, Mozy, AOL XDrive (don’t go there) and Iron Mountain’s Connected Backup/PC.  Mozy was the winner of the crop… they gave it a big thumbs up for its simplicity and price/storage ratio.
• TechCrunch, The Online Storage Gang. Jan 2006. A comparison of 13 online storage companies.
• PC World reviewed WebRoot Secure Backup Service. Looks interesting, especially the file sharing capability.  No Mac support though.
• I checked out Microsoft OneCare, assuming it would have online backup too. Oddly, OneCare only offers online backup for photos, at $50/year for up to 50 GB. Wuh?
• Microsoft also offers Windows Live SkyDrive, which gives you 5GB of free online storage. Appears to be aimed at file sharing rather than backup.
• Amazon S3 is an online storage service geared at techies. JungleDisk, which I mentioned above, is a consumer product that sits on top of it. (Hmm… maybe Amazon should just buy JungleDisk.) For techies, check out this interesting writeup by Jeremy Zawodny of ways to back up to S3.
• Google is rumored to be coming out with an online backup service too.

Let’s imagine that you live in Toronto and, having recently seen the light, want to get an iPhone. You have two choices: Rogers, or Fido. (We will not speak of the evil third choice, having to do with hacking US iPhones.)

Let’s also imagine you already have accounts with both Rogers and Fido, and you’d like to simplify your life by consolidating those accounts to Rogers.

Since we are playing pretend, let’s also imagine you’d like to minimize your spending. (This is Pretend-World. Just play along.)

OK, ready? Great. Just a few rules before we can start:

Rules 1-3, having to do with Rogers and Fido being Entirely Different:

1. Don’t ask Rogers staff questions about Fido, or vice versa. Doing so is considered to be very rude, especially on the phone with customer support. Yes, it’s true, Rogers owns Fido, but these companies have absolutely no integration. Their sales, support, products, pricing plans, billing, and web sites are completely different. Their support staff and retail sales people seem to know nothing about each other.

2. Do not compare the web sites, for you might go mad. While both Rogers and Fido offer the iPhone, the web sites make it difficult to figure out if the pricing and features are the same. (I think they are… but after 20 minutes of studying them I still feel I may have missed some fine print.) Phone support and retail sales at both companies can’t tell you.

3. Miserly voice plans don’t qualify. Fido’s $10 a month "emergency plan" doesn’t qualify for use with the iPhone. (That’s $10 a month + voice calls and texts at a flat fee. You may be offered this as a customer retention ploy if you try to quit Fido. Makes sense for people who make very few calls.)

Rules 4-9, having to do with the Rogers retail store:

4. You must pay to activate. If you sign up with Rogers for an iPhone, Rogers will charge you an account activation fee, even if you’re "coming over" from Fido. However if you talk nicely with Rogers support, and explain that you already have a Rogers account, and now you’re considering signing up to give them even more money for at least the next 36 months, even though you’re on-principle opposed to the whole idea of long-term legal commitments to a phone company, you might find them willing to waive this fee. Maybe.

5. Data is cheap, for a little while. The 6 GB data plan for $30 is a nice plan for data. It’s almost like the plans US telco’s offer their customers. This offer expires at the end of August.

6. You can get a purchase credit, if you pay more, every month. If you maintain a monthly voice plan that costs more than $30 you will get a $50 credit off the phone itself, i.e. you pay $349 for a 16GB phone minus $50.

7. Don’t ask about battery life. Retail store staff don’t  have info on battery life, which is generally acknowledged to suck. You might want to keep the warranty handy.

8. Roaming is nice for Rogers, not nice for you. You really, really don’t want to roam with an iPhone, especially not outside of Canada. Very expensive.

Rule 9, having to do with a kick in the pants:

9. Breaking up costs money. If you port a phone number from Fido to Rogers, you will still be required to give 30 days notice on terminating your Fido account, and possibly pay fees for those 30 days, just as you would for porting a number from Fido outbound to any other company.

So… now that we know the rules, what’s the least you can get away with?

$30 for 6GB data plan + $30 for voice + at least $8 for voice mail + $7 for system access fees = $75 monthly, plus taxes. 

To this, add $349 for the 16GB phone itself, minus your $50 credit for having a >$30 voice plan, and a $35 activation fee. That’s $335. Plus taxes.

Finally, don’t forget your Fido break-up fee: a month’s worth of account fees, assuming you don’t call 30 days ahead of time to cancel.

The iPhone promises to be a huge winfall for Rogers, but I have to say the experience of getting one has been excruciating. I hope for the sake of Rogers and their customers that they figure this out. Lower the barriers to adoption and more will come.

Kieran Huggins and Kevin Branigan have been working on an online trip planner for the Toronto Transit system called MyTTC.ca. It’s been a fun side project for them over the past year or so.  Kieran just announced the site is now available for public tire-kicking and feedback. Their site is cool… you should go give it a try.

The backstory is interesting. As Kieran writes on the site, he and Kevin are not the TTC. They’re just two software developers who decided this needed to be done. As they detail on the MyTTC About page, the idea was born out of frustration with the official TTC site, which has always been impossibly hard to plan trips with.

I share their pain. Several times after moving to Toronto I tried using the official transit web site to figure out how to get around the city. After much wailing and gnashing of teeth, I simply gave up. All the route maps were and still are provided only in PDF format, instead of simpler and smaller GIF or JPEG images. The system maps — which are the only way to figure out which route map you need — are gigantic PDFs that take ages to download and render. (Don’t try to find these maps from the main page of the TTC website, which for some reason links prominently to even stranger and less useful maps on the Toronto.ca site.) Meanwhile, the new beta TTC site has no system map yet, and no trip planner. A forlorn spot on the beta site home page proclaims, "Future home of Trip Planner".

Tragic.

So if you’re an entrepreneur who wants to buld your own trip planner, how do you get the data? Woe betide you, for the TTC won’t give it to you. The information sits in a database somewhere in the bowels of the organization, where it is periodically used to generate the aforementioned PDF route maps and now the new route pages on the beta web site. But the TTC won’t make the raw data available for public use. So Kieran and Kevin had to compile an entirely new dataset of their own by pulling the information out of hundreds of PDF route documents. Then they had to scrub it, by hand, because the data was buggy buggy buggy. The scrubbing continues.

Wow.

Unlike the TTC, Kieran and Kevin are making their dataset available to anyone who wants to play with it. This means anyone can build their own Toronto transit map or trip planner now. It also means we are a step closer to having Google Transit support, since all that’s needed to enable that is a suitable data feed. (Google has offered in the past to set up Google Transit for Toronto. Vancouver, Montreal, Ottawa, and even Fredericton have Google Transit support. Toronto? Sorry. No data from the TTC.)

Shame on you, TTC. Shame on government organizations that hoard power by keeping public data under lock and key.

And congratulations, Kieran and Kevin, for rolling up your sleeves and building a great public service that Toronto really needs.

[cross-posted on Mukodu Blog]