Month: October 2011 Page 1 of 2

Scalable pricing is a powerful tool to grow revenue in a SaaS or software business. It allows you to capture more of the revenue that your customers are willing to pay, without putting off smaller customers that are not able to pay high prices. It also provides a great way to continue to grow revenue from your existing customers. This post looks at how to create scalable pricing using multiple pricing axes, and discusses the different types of axes that can be used.

via www.forentrepreneurs.com

This is a great article for those entrepreneurs thinking about how to optimize the profitability of their consumer or enterprise SAAS business models. This includes freemium.

Do your kids use the “invitation” feature on Facebook to spread the word about parties and events with their friends? If so, make sure they know how to use the feature properly – or they could be putting themselves at risk.

Facebook invitations are fairly simple to use, and can be sent to anyone with a Facebook account or email address. Click “events” from your home account page and fill in the date and location, upload an optional picture, and customize the privacy level of your event (public or private.) The important part is this: don’t forget to triple-check the privacy level!

Last month a German teen identified as Thessa invited friends to her 16th birthday party using Facebook, but she forgot to mark the invitation as “private.” The result? The invitation went viral, causing 1,600 people to flood her street on the day of the party – even though Thessa later realized her mistake and cancelled the event. The police were called in to handle the crowd, and Thessa (who was nowhere to be found) had a very unhappy birthday.

Thessa’s real-life faux pas was preceded by a similar occurrence last year in Australia (which luckily turned out to be a hoax.) Facebook invitations for Kate Miller’s birthday went viral and Facebook ended up closing down the event after over 60,000 people RSVP’d.

via timwoda.com

A good article about how to safely use Facebook and protect your privacy online.

At the beginning of August, Betabeat began talking about a coming crunch for seed stage companies in New York. We believe that the bubble in early stage financing had peaked, and that in the coming months, many young startups would find it hard to raise follow-on cash.

At the time, local investors like Chris Dixon and Shai Goldman argued that this wasn’t some dire turn of events, but simply the natural cycle of venture capital funding playing out. But the drumbeat of seed stage slaughter now seems to have made its way to the mainstream press.

The Wall Street Journal ran a story yesterday, “Web Startups Hit Cash Crunch,” which claimed that valuations for these early stage companies had fallen by as much as half in recent months and the venture capital funding was at an all time low. AngelList’s Naval Ravikant said that startup financing is getting weaker by the week and that the survival rate for young companies is dropping fast.

But new data from CB Insights, a venture capital database here in New York, disputes that outlook. Their quarterly report shows a record number of seed stage deals over the last quarter and a steady growth in overall venture deal flow and funding since 2009.

via www.betabeat.com

This is another article disputing the WSJ's suggestion that the financing market is quickly going south for startups. Again, a good read.

If you read the Wall Street Journal, you could be forgiven for thinking that the venture-capital market is starting to crack at the seams. It's a striking premise, all right. Just one problem: it's wrong.

Earlier today, the WSJ reported that argued startups are now having more trouble raising cash than in the not-so distant past. The Journal pointed to Naval Ravikant, an entrepreneur and operator of AngelList, a site that lets nascent companies ask VCs for capital, who said that even though 50 to 100 startups are applying for funding each day, "only one to two are getting financing."

What's more, the Journal says, the trouble appears to be spreading across the entire industry, and could have a profound impact on the ability for any startup to raise the cash it needs to build its business.

Dire stuff, if true. But VCs were quick to cry foul, insisting that they're not seeing the same trouble the Journal is.

via news.cnet.com

The WSJ is suggesting things are getting bad for startups. I am not sure if that is true or not, but here is a counter argument.

Good read.

When you ask a successful entrepreneur how they did it, you are almost guaranteed to hear them cite “luck” as a prominent factor. Why? Because most major decisions in a startup are "life or death," and to succeed you need to make the correct call on many of these decisions. In such a context, survival and success appear lucky. Well, it's not.

With startups, being fast is actually better than being right. A founder needs to make hundreds of critical decisions, and any indecision can literally grind all progress to a halt. Hesitating, over-analyzing, or 'waiting to see what happens' are all forms of indecision, and when you are indecisive you let the world decide the outcome for you. Indecision leaves the outcome to chance, and your chances as a startup are bad to begin with.

Making decisions that are both fast and correct is no small feat, and is a skill that will develop over time, but here is a simple decision-making framework that I use to make decisions quickly. Indecision is death for a startup, so here's how you can avoid it;

via www.thefunded.com

A great post about startup decision-making on one of my favorites sites on the Web, The Funded (http://www.thefunded.com).

If you are an entrepreneur, a) read the article, and b) register with The Funded.

Is it ever ok to fire your customers?

Netflix increased price increased price by 60%. They are projected 1 million losses of customers beyond what they had expected: 200,000 from streaming and 800,000 from their traditional DVD mailing business.

Is this suicide? Is it ever a good idea to “fire” your customers?

via www.aonetwork.com

This is a great article about customer segmentation that you really should read.

Yes. It is okay to fire your customers! I just finished doing some of that in my business. It is great have folks willing to pay you, but you have to be able to grow and expand your business profitably, and if some customers are getting your way of that mission, you need to fire them so that you can find more profitable customers… or change your model to make your current customers more profitable.

It's rare to see someone get worked up about plywood. Much less a four-star general.

But plywood, yes, those simple sheets of pressed-together timber used to cover floorboards and broken windows, is a particular topic of passion for Gen. Stanley McChrystal, the retired U.S. Army general who served as commander of all U.S. and NATO forces in Afghanistan.

What gives?

"I'll let you in on the secret of plywood," McChrystal said to an audience of about 400 at the 2011 Inc. 500|5000 conference in Washington, D.C. "I lived in a room of it for more than four years. What we did in Afghanistan was we used our spaces to shape our culture."

via www.inc.com

The best quote of the day by General Stanley McChrystal… "Plywood is a state of mind!"

What? Read the article to get his thoughts. I am sure you will agree with him.

Good stuff.

The concept of innovation has been especially trendy at business school over the last decade, with business schools launching everything from design labs to classes devoted to the topic. The Wharton School has been part of this wave of interest, hosting events like the Wharton Sports Innovation Conference and creating the Mack Center for Technological Innovation. They’re now adding to their offerings in this field this fall with the launch of the new Wharton Innovation Fund, an initiative to encourage students, faculty and staff to come up with inventions or services that “show promise for making a substantial impact on business or society as a whole,” according to a Wharton press release. Alberto Vitale, a Wharton alum and former CEO of Random House, has provided the seed money for the fund, which will provide approximately $125,000 worth of grant money each year for projects. Vitale says he views the fund as “a catalyst to stimulate innovation at the school and to surface the brainpower of its students.”

Wharton Professor Karl Ulrich, also the school’s vice dean of innovation, will head the innovation initiative. “This fund will enable our work to have an even greater impact in so many arenas,” says Ulrich, who co-authored a best-selling book on innovation tournaments.

The fund’s advisory board will consider both student-led proposals and those that involve faculty, students and staff, the school says. Students who come up with new ideas will be allowed to retain control of the intellectual property of their ideas. However, if a team uses inventions or ventures that are part of the school’s intellectual property, proceeds that result from the project will be shared among the inventers, the school and the university, the school says.

via www.businessweek.com

My first business, buySAFE, was essentially a Wharton class project that I eventually turned into a business. I can't adequately describe how much I benefited from my Wharton experience in starting buySAFE. Without Wharton, there would have been no buySAFE.

Having said that, I really would have loved this new Wharton Innovation Fund. It is a great idea, and if you are an aspiring entrepreneur thinking about going to business school, this should make your decision very simple.

Wharton is the best business school in the world, and if you can turn your class project into a viable business idea, you might just get funding from Wharton to help you make the venture a reality. Does it get any better than that?

Well done Wharton!

There are roughly 265,000 active individual angel investors. If you want to go the route of tapping an angel network — a group made up of up to 150 individual investors who pool their finances and share the due diligence work — there are more than 300 of those. In short, there are lots to choose from and they’re ready to invest. The challenge is finding the right angel investor for you and your business.

What a lot of founders don’t realize is that not all angels invest for the same reasons. Backing a startup is a bit like shopping for a car: Do you want a sports car that does zero to 60 in four seconds? A dependable sedan? A Prius that appeals to your environmentally friendly side? Keep in mind that monetary gain may be a secondary reason for some investors.

Here are three of the most common types of angels and what motivates them:

via www.bnet.com

A good article on the subject of Angel investors. If you are a tech startup CEO, you probably already know how important angels are to your entrepreneurial ventures.

My advice… spend some time getting to know your local angel investors before you need $$ from them. Folks invest in folks they know, like and trust!

So you have the next great technology business idea, but you don't have a background in programming. You'll need to recruit a programmer who not only can design, write and test online and mobile code, but also share your passion and bring your vision to life. Your initial idea might be to hire a consultant or outsource those duties, but you may want to consider bringing on a software developer as a partner.

Hiring a software developer as an employee isn't always easy. Due to the proliferation of companies seeking web and mobile application developers, the best programmers are in high demand, says Amy Hoover, executive vice president and partner at Atlanta-based Talent Zoo, an advertising, marketing and technology recruitment service. And, if, like most startups, you don't have the resources to pay a great software engineer a salary on par with what a company like Google can pay, then you're probably at a disadvantage. Software engineer salaries in the U.S. can range from $53,000 to more than $140,000 per year, according to EngineerSalary.com. 

via www.entrepreneur.com

If you are a tech entrepreneur, but you don't know how to code, you are going to have to recruit a few folks to your cause to help you get your business up and running. This is not easy to do! I have been a tech entrepreneur for more than a decade and this is easily one of the greatest challenges for non-coders.

This article provides a few ideas for how to tackle the challenge. Good stuff.