TahoeVC

Decentralized Editorial

Stu has a couple of interesting posts on the rapid decentralization of publishing by professional journalists.  Matt Marshal’s announcement this morning that he is leaving Silicon Beat and forming Venture Beat offered another proof point of the accelerating pace of professional journalists who are disassociating with mainstream media.  He follows in the footsteps of a number of other such as Om Malik and he won’t be the last.  I know of a number of other well respected folks in the profession who have similar moves planned.

The reason for the exodus varies by individual.  Many see the rapid decline and commoditization of the news media and want more journalistic freedom.  But a number just want to work for themselves. There is however a universal set of enabling technologies and trends allowing this to happen.  It’s the explosion of user generated content as well as the decentralized publishing infrastructure and tools that enable it.

Demand is growing and publishing tools are being put in place to enable this kind of professional and semiprofessional content to be published at a prodigious rate.  But, the other shoe is waiting to drop.  As we decentralize publishing and eviscerate centralized editorial, how are readers going to find the editorial voice and content that resonates? There is rising demand for technology to replace human editorial. There are a number of approaches to decentralizing editorial.  Some companies such as Digg and reddit are choosing the “wisdom of crowds” approach by measuring what people “vote” for, others such as Google News are using machine algorithms to filter and rank.  But I think the most satisfying one will be a hybrid that aggregates and filters based on algorithms and collaborative filtering but goes further by adding the magic of the individual’s editorial voice.  The magic of publications like the Wall Street Journal and New York Times (plus every publication with which we identify) is after all, the voice of the editorial staff.  The need for that kind of voice isn’t going away, it’s just getting decentralized.

I became intrigued and convinced of this trend some time ago and have been fortunate enough to be involved as an investor and board member with a company, The Personal Bee, innovating in this area.  Next week the company will be launching a new version of the product that will enable journalists like Matt to not only publish more effectively, but also to act as micro decentralized editors for readers who are interested in their viewpoints and “voice” across topic areas and content not just through the content they produce.

I suspect this is just the beginning of whole new set of decentralized editorial tools and services to come.  Would love to hear of other ideas in the space.

Customer Feedback, the Secret to the BIG MO

IBD is accepting nominations for the Momentum conference which is going to be a showcase for companies that are showing real growth in the marketplace. It will be interesting to see the variety of companies that present, but even more interesting to see the common themes that emerge.  It got me thinking what is momentum after all? In the world of technology start-ups I would argue that it is all about repeatability, predictability, and extensibility.

   

To gain momentum you need to be able to build on success, step by step. Whether it’s finding a repeatable sales model in a particular vertical or establishing a consistent release cycle for products, repeatability is the cornerstone of growth. Repeatability leads to a predictable business which in turns simplifies planning and a gives a higher likelihood of attaining momentum and continuous growth. Stable, predictable growth establishes a platform from which to expand the business by extending to adjacent markets.

   

The real question is how to get started on the path to the big Mo. Generating early momentum is often critical to the ultimate outcome.  Take that to heart in the early stages of the company and it will serve you well. Your first entry into the market will set the pattern for months if not years to come.  Focus on a product and sales process that is repeatable and you are closer to gaining momentum.

   

In my experience most companies falter early because they fail one simple task; talking to customers. This is a simple concept, but in the heat of battle gets forgotten especially when you are an early stage company that has an exciting product vision and has just raised seed capital. You have deadlines to meet and shareholders to please.

   

The typical response is to put your head down, focus on development in the hope of meeting self imposed deadlines – but did you validate the market requirements???? I have never seen a company fail because they got too much market validation – too frequently companies fail because they didn’t get adequate feedback from real customers.

   

Too little market validation winds up with the company having more enthusiasm about the product or service than the customer – a sure recipe for failure. You wind up with an endless cycle of reworking the product based on user feedback that you should have got earlier. To say the least, this is expensive and avoidable.  Think instead of talking to customers early and often – this is critical even before you even start to develop the product.

   

Consider your potential customers; How can you segment them in a way to identify features and marketing techniques? What are the potential channels for distribution? Talk to your customer prospect.  Face to face meeting, focus groups, web surveys; use your creativity and get out in touch with your prospects.

   

Sample each potential demographic and distribution channel so that you can have enough feedback to confidently draw conclusions and make plans.  Don’t assume that you need to show a finished or nearly finished product. For web based products HTML mock ups work well, for software and physical products, paper prototypes and PowerPoint are more than sufficient. Don’t invest too much time and energy until you have determined you have a product or service that will generate sufficient demand to justify full scale development.

   

Take this approach and you will learn if people will buy your product or as importantly - why not? This feedback will help you modify your product or service to gain faster market acceptance. Doing this before releasing the product will shorten the sales cycle time saving time, money and frustration.

   

Early feedback from different market segments will tell you which verticals are likely to respond to your product sooner and the marketing messages to which they are likely to respond. This information provides critical feedback to your marketing plan and will shorten the time to a repeatable sales process – critical to generating early momentum. You can also use some of this early information later to prioritize and target future adjacent markets that will extend your business and continue the momentum. A topic I’ll cover in a future post.

   

Generating momentum requires repeatability and predictably; getting real customers with real revenue. Remember it starts with your first customer. Talk to prospects up front and you will be on your way to the big MO!.

Milestones not Millstones - It’s all about technology, markets and people

Milestones not Millstones It’s all about technology, markets and people

 

 

Since my post Choosing Wisely – Business Models to Profit By, I’ve had a number of questions on how to choose milestones and goals for your business. As I mentioned previously, it’s important to come to a point of view on what you want your business to be and how you intend to get there. Your point of view may change, but if you start with a well thought out point of view at least you will have the perspective and data to make considered changes. 

   

Milestones are simply interim way points or goals. They should be constructed so that the completion of a milestone provides a powerful indicator that you are on the right course. Missing a milestone requires that you consider the reasons for failure, rethink the ultimate goals of the company, or both.  

   

When I help companies construct milestones I usually like to bucket them into three categories: Technology, Market and People. I also like to consider what stage the company is in, again I usually like to bucket stages into three categories – Proof of Concept, Going to Market and Scaling to Profitability. Different milestones are appropriate for each stage but in general you want to pick things that are pivot points for both risk and opportunity.

   

In the proof of concept stage technology milestones should focus on proving the feasibility of the core technology. For example, in a software or Internet company, there are often key algorithms that need to be developed. What milestones need to be achieved so that these algorithms provide compelling results to justify the essence of your company’s value proposition? 

   

Market milestones should be chosen so that completion provides substantial proof that a large enough market exists to continue to the next stage. For example, you might complete a compellation of published market research on existing and related markets, gather market sizing information for your target market and conduct primary research and interviews with a representative set of your target customer base.

   

In the proof of concept phase, it’s important to measure the effectiveness of different people in their jobs, including yourself. When done early, honest appraisals of whether the right people are doing the right job can avoid costly and painful conversations later. Often this can be determined simply by evaluating who is achieving their goals and who is not. It should be obvious who is in the right role, and if it isn’t, well that is an answer too!

   

When your company is about to transition from the proof of concept stage (we are pretty sure we can build the technology, we are confident a market exists, and we have the right people and they are doing the right job), it’s time to think about milestones that will bring your product or service to market. In this stage, choose technology milestones that lead to a general release of the first product and a development process that allows for quick iteration to the next release or generation of the product based on initial customer feedback.

   

The most important marketing milestones will provide further validation of the market and identify missing elements of the product through feedback from a broad cross sections of target customers. It’s equally important to have milestones around developing a product specification based on that feedback as well as a marketing plan that includes initial sales or customer acquisition targets. Choose milestones and market metrics that prove to you and your Board the company is establishing market traction.

   

In the go-to market stage the company will hopefully be scaling quickly, requiring people to do a variety of jobs and exercise additional skills. Implement the milestone process deeper into the company will allow you to develop a broader evaluation process for more people than you put in place in the proof of concept phase. 

   

Once you have firmly established yourself in the market (good initial customer base, broadly used by consumers etc.), the next stage is scaling to profitability. For technology milestones you will want to consider milestones around product cycle times, cost to deliver and other goals that will allow you to deliver a cost and feature competitive product.

   

Marketing milestones will largely revolve around scaling the sales or customer acquisition process economically. If you are an Internet company you should carefully monitor customer acquisition costs against lifetime value of the customer and drive towards making the customer profitable. In a more traditional software or hardware company, focus on milestones that guide you to a set of customers and sales processes that are repeatable.

   

At this point in the company’s evolution you should be scaling rapidly and it’s likely you will need to augment the team. Sales and Marketing are likely places to focus, but you should also evaluate needs across the company and establish timelines and milestones that insure you have critical human resources in place at the right time.

   

I’ve suggested a few ways to create a framework and establish goals/milestones for your company. Each company is unique and you should adapt or create milestones and goals that work for you and your particular situation. The important thing is to “Just Do It!”. Creating Milestones will help you avoid building a Millstone around your neck and contribute to building a successful company.