Monetizing A Startup

Image via WikipediaI am a huge fan of the freemium model. Keep the basic product free, get lots and lots of deeply engaged users, and monetization will happen. But that is not the only way. Some great services charge right away. Whatever floats your boat. You can delay making money, but not forever. Shorter the delay, better it is.

How To Monetize Your Social Web Startup there really is no secret sauce to making money on the social web: you’re either selling ads or selling a product. ..... While it’s possible to generate revenue through a number of models, there are really only a few core monetization models. ..... Since ownership of mass distribution channels is becoming fragmented, advertisers are looking for targeted audiences that are most likely to purchase their product. ...... Whether it’s an information product or a physical good, there are massive opportunities to generate revenue from selling things. ..... Brand advocacy in the world of social media is something that has many marketers drooling but rather than spending all your time monitoring the conversation, try developing a high quality product or service. .... many internet entrepreneurs pretend as though there is a secret monetization model that they’ll release in the near future. There isn’t one.

Venture Capitalists And Their Thesis

Image by paulamarttila via FlickrYou can waste time as an entrepreneur knocking the doors of the wrong venture capitalists. VCs tend to have sectors they are knowledgeable about and are interested in. If you are not a fit, you are not a fit. You might have a brilliant idea, a brilliant team, a brilliant product, but if you approached the wrong VC, you will still get a no.

Venture Capital Investment Thesis Myths For venture capitalists, an investment thesis states the main idea of their fund–essentially, why your venture fund exists, and what it proposes to invest in ..... does the company mesh well with our macro-economic analysis? Are they operating in a market we understand? What are the future expectations of the sector? .... many venture capital firms don’t have investment theses. Those firms also tend to not last. .... Like writing a presentation/business plan/executive summary, there’s no set procedure for creating an investment thesis. ..... investment theses only last a couple years ... investment thesis will most likely be constantly tinkered with

Patrick Chen's Entrepreneur Exchange Summit

I met Patrick Chen at this Hackers And Founders MeetUp. He is a great guy. He said he was a MBA student at NYU, and he had teamed up with a techie friend, who was a full timer with a hedge fund, to form a gaming startup. I paid him the ultimate compliment. I suggested the two of them should team up with me on my startup. He said we can talk. We did talk. We became Facebook friends. We exchanged a few tweets. A few days later he said it is best he stuck to his gaming startup.

Long story short I am going to Patrick's conference on Friday. I tried to suggest they should waive the $45 fee for me since "I will be blogging about the event extensively before and after." Let's put it this way. I ended up having to pay.

Two AVC MeetUps Two Days In A Row

Image by placenamehere via FlickrAVC MeetUp Tomorrow

I thought I was headed to an AVC MeetUp tonight. I thought so yesterday. I still think so. But then I have an email this morning about an AVC MeetUp that is scheduled for a different day - tomorrow - and a different venue, although still near Union Square.

I did some digging. I have come to find out there are two AVC MeetUps two days in a row, and I don't think Fred Wilson is coming to either of them, which I believe is fine. The guy puts plenty of time churning out blog posts, and reading every single comment left at his blog.

So here's the update.

Tuesday, March 8, 2011 7:00 PM

Olives @ W Hotel - Union Square
201 Park Ave. South
(@ 17th St.)
Gramercy

Wednesday, March 9, 2011 8:00 PM

Smyth Tribeca
85 W Broadway (Chambers St 1/2/3)
New York, NY 10007

Bloggers' Block For Fred Wilson: 10 Blocks Of Emergency

Image via WikipediaI learned the top VC blogger in the world has hit some kind of a bloggers' block. That is an emergency situation, people. I am declaring an emergency for 10 blocks in every direction from Union Square. All startups in the vicinity, please take note.

You are being urged to participate in the comments section here. If you don't, the emergency is not going to be lifted. And you are going to be deprived of your daily staple of blog posts from Fred Wilson. Think about that.

When Vinod Khosla Took A Break From Tweeting

I sent out a tweet to Vinod Khosla. Chances are he never saw it. But for a guy who had been tweeting near daily to that point took two weeks off after that. That is not a good sign.

Immigration Mess/Humiliation And Window Shopped Tech Entrepreneurship

Image via WikipediaOnly a few months back I got out of my immigration mess/humiliation. The immigration laws in this country are insane. They are racist. They make no logical, economic sense. They make no globalization sense. They make no internet sense. They make no 21st century sense.

I am not even fully out of it yet. But now I got a little bit of a legroom in these United fucking States. This fucking country. Thank God for the internet, or there would be no breathing room.

For a few years now I have gone from tech event to tech event like some guy whose startup never really took off. It has been humiliating to say the least. I know that is not who I am. I am as good as they come.

Normal People Easy To Get Along With

Image via Wikipedia

Fred Wilson: Difficult Is Good: He then said, "sometimes we make money with brilliant people who are easy to get along with, most often we make money with brilliant people who are hard to get along with, but we rarely make money with normal people who are easy to get along with."

I am so not a VC. I am on the other side. Fred Wilson's best MBA Monday post - according to me - is one where he got an entrepreneur - Charlie - to relate his story.

This quote from Dan Valentine makes total sense to me. And I understand it 100%.

The best entrepreneurs tackle the biggest problems. Those problems are, by definition, badass. Others have not touched them because they are big and bad. But we operate in paradigms. You already know what a McDonald's burger looks like. That is a paradigm. That gives you peace of mind. You know.

50 Hours Into One Five Minute Pitch

I might have a major pitch/presentation to make some time next week. And I think I will be putting about 50 hours of work into it. A lot of it will be bifurcated blogging. When I talk about the state of the global microfinance industry, that is a public blog post. But then the DNA formation that is taking place for my startup, that is stuff for my private blog.

There is also the no small matter of having a slide deck. I am not a huge fan of PowerPoint presentations. You can pack more into one blog post than you can into 50 slides. But slides have their place. And people still ask for them. So what I have come up with is a hybrid model. You get a slide deck, some words and phrases there link to some of my blog posts.

250K Or 500K: How Much To Raise?

Image via WikipediaI am in mind to raise 250K from Union Square Ventures. That would be my first choice. I can guarantee you I can get Fred Wilson to give me 15 minutes of his time any day for me to able to pitch him. That much I know. But the deal is up in the air. I am not going to assume it will happen. That part is not in my control. What is in my control is I am going to leave no stone unturned to get him. My part is in my control.

Serenity Prayer - Wikipedia, the free encyclopedia

Another idea that is being floated by some people on my team is that I raise 500K, but without giving equity. It would be like I get 500K, and in my next round - which could happen in as little as six months - I give that money a 600K valuation. I would be very open to that.

The Best Way To Deal With Venture Capitalists

Image via WikipediaVCs are money people. And many entrepreneurs fall for that stereotype. VCs are not rich people - well, many are - but my point is VCs are not big money people who are itching to get rid of the money that is, oh, such a burden on them. VCs are entrepreneurs themselves. They go raise money. They raise money promising to grow that money. The good ones do. The best ones grow the money like money were raining from trees. If you put that first 100K into a company like Google, you see a growth that is better than any winning lottery ticket ever.

There are many, many VCs out there. There are many, many, many would be tech entrepreneurs out there. As an entrepreneur you should not need money. You should be able to generate revenues and profits.

Angel Bubbles: No Bubbles

Image via CrunchBase

Naval Ravikant: There is No Angel Bubble. There are Many Angel Bubbles.: The total amount of additional capital flowing through the Silicon Valley early-stage ecosystem, thanks to Super-Angels and newly minted millionaires, is on the order of half-a-billion dollars or so. It’s no more than a middling-sized VC fund. Would the emergence of a new VC fund be considered a bubble? Would the collapse of one signal disaster? ..... Most of the small companies being funded will fail, but the ones that hit will generate fantastic returns. And because of their small size and operating costs, a greater percentage will be able to get “ramen profitable” than was traditionally possible. ..... we’re all going to have to become even more comfortable with failures, re-starts, and the kind of team re-combination that one sees from one Y Combinator Demo Day to the next. ..... Angel investment valuations have been climbing very quickly ..... a small number of high-profile Angel investments, moving small amounts of capital but at very high valuations, can make the entire market look overvalued. ..... Seed is the new Series A .... an incredible renaissance in technology, with smart phones taking computing to local arenas and social networks taking it into the mainstream populace ..... we’re going to see the equity gap narrow between the founders of raw startups and early key team members.

I think this is new, uncharted territory, rather than bubble territory. Bubble would be if we were a year or two from imminent collapse. I don't think we are.

Racism Caused Recession

Image via Wikipedia

Farrakhan: Levee May Have Been Bombed To Flood ... flood poor black people out of New Orleans after Hurricane Katrina.

You could argue it was cyclical. It happens every 70 years. The last time was the Great Depression. And there was something like the Great Depression about 70 years before the Great Depression. I guess I will not see the Halley's Comet or another Great Recession in my lifetime then.

Bubble, Boom Or Froth?

Image by placenamehere via FlickrFred Wilson has been calling it a bubble. John Doerr says it's a boom. And that's just two guys, although high flying, legendary types. I think what we are seeing is a froth. Let me explain.

A bubble is something waiting to burst. As soon as people wake up, they hunker down, and then where are you? The whole thing collapses like a ponzi scheme. There are some bubble aspects to what is going on. Do you think all startups that are getting funded will grow the money for their investors? That has never happened. Even a seasoned VC like Fred assumes one third of his investments will go down. But are too many flaky companies getting funded? The question is are more than the usual number of empty shell startups getting funded?

Mark Suster At Columbia

CVC Discussion With Mark Suster from Tobin Schwaiger-Hastanan on Vimeo.

(Source: Mark Peter Davis)

Ben Horowitz: Hip Hop Mogul

Ben: As Kanye says, hip hop is 1/2 what you say and 1/2 how you say it, so I put the tracks up on the blog http://bhorowitz.com
Me: @bhorowitz The hip hop quotes make your blog stand out and gets me to keep coming back. Although the posts are also good.

First Time Entrepreneurs Getting Screwed

Mike Arrington: "That first company I started made a lot of money for the venture capitalists – nearly $30 million – but next to nothing for the founders."

I have heard this story from someone else I know. His first company got sold for a lot of money - multiples more than Mike's - but he made only a tiny bit of money in the process. In other words, he got screwed.

Vinod Khosla's Green Tech Sweep

TechCrunch: Khosla Completes The VC Triumvirate At Disrupt: In 2004, he created Khosla Ventures to invest his own money and began to dive deep into greentech, while still keeping his hand in infotech. Always known for being a risk junkie and identifying big opportunities early, he started to build one of the deepest portfolios of greentech investments in the Valley. Last year, he finally took outside money, raising $1.1 billion for two new funds, including a seed fund.... His greentech portfolio covers everything from power generation, batteries, and advanced hydrocarbons to water, plastics, and chemicals.

VCs Have To Raise Money Too

Intellectually they know, but at an emotional level a ton of tech entrepreneurs end up feeling VCs were just born with the cash to dispense with, if they will just open up the wallet and dole out the money, don't they realize the world needs to be changed?

Big Churns In The VC Industry

Image via Wikipedia

Paul Graham: The New Funding Landscape: After barely changing at all for decades, the startup funding business is now in what could, at least by comparison, be called turmoil..... the previously sharp line between angels and VCs has become hopelessly blurred. .... Super-angels compete with both angels and VCs. .... most of the changes will be for the better.

To those who have been regular readers of the blogs of the major venture capitalists, this churn is not news. The fact that there has been some major churn has been talked about for months. But what people make of the churn, now that's a different story. The best minds have been overall positive with the developments. Looks like entrepreneurs now get to shop around more. There is much more early money available. And that money is not blind money. Early stage investors tend to be more hands on.