Posts from June 2013

1984

“There was of course no way of knowing whether you were being watched at any given moment. How often, or on what system, the Thought Police plugged in on any individual wire was guesswork. It was even conceivable that they watched everybody all the time. But at any rate they could plug in your wire whenever they wanted to.”

George Orwell in “1984”

hat tip to Maureen Dowd for surfacing this quote in her column yesterday

Blip Enhance For The Internet

I keep thinking back to this comment left on AVC by Mike Nolan a few weeks ago:

How about Blip Enhance – a small piece of code that continuously sends false privacy data to Google…

Early naval combat in the post RADAR world took two approaches.
Minimize your return signal to the enemy, or exaggerate it. The first
proved to be a fool’s errand – as each side gets better at trying to
remain invisible, the other side gets better at detecting your
footprint.

The second technology used to defeat enemy radar was to return a
bigger radar signature to the enemy…Blip Enhance – fool the enemy
radar into thinking you were much larger, and much more complex than you
really were.

Someone should release Blip Enhance technology for everyone on
the internet. Imagine everyone’s browsing history containing thousands
of random sessions. Cookies indicating a million online purchases. Tens
of thousands of Facebook posts, tweets and relationships.

In the confusion, no data can be trusted.

Video Of The Week: Crowd Lending at Le Web

It's not often that there is a panel discussion where all the entrepreneurs on the panel are USV portfolio companies. That happened last week at LeWeb. The discussion was crowd lending and the portfolio companies on the panel were Lending Club, Funding Circle, and Auxmoney.

If you want to understand what is going on in crowd lending and why USV has not one, but three bets in this category, watch this discussion. It's about 30 mins long.

Feature Friday: Standing Up For Your Users

I saw this yesterday and it made me so happy:

The list of technology companies allegedly participating in a vast US government surveillance program known as PRISM, which was just reported by the Washington Post and Guardian, is notable for one name that’s not on it: Twitter.

When we think of features of services we use, we don't often think of the backbone that the organization behind the service has. But we should.

This week has been notable for the firehose of news stories coming out about how our government is spying on us. My partner Brad and I talked about it on the subway ride up to a lunch in midtown yesterday. Brad explained to me that in the analog era, the government had to do a lot to get a wiretap. It was possible, but not simple. In the digital age, it is a lot easier. And we are getting spied on more and more.

We've got bills in front of congress like CISPA and CALEA that would make it even easier for our government to spy on us. I am shocked that this issue hasn't become a mainstream political issue. Are we all that immune to it? Is it OK to treat all of your citizens like they are criminals? Shouldn't the fourth amendment extend to cyberspace?

Until the masses wake up to this issue, we will need the web and mobile services we use to stand up for us. And that is a feature that I value immensely. Thankfully, Twitter has that feature.

DIY Data Science In Action

I wrote a post about DIY Data Science back in March. In that post I said that hacking on public data sets and posting about it has the potential to be a big deal in the coming years. I saw a great example of exactly what I was thinking about this morning.

Alastair Coote pulled a bunch of turnstile data from the MTA and figured out what the most used NYC subway stations are during rush hour. And he posted his code to GitHub and embedded it on his blog.

If I were a high school math teacher, I would take his work and make it a project for my students to work on together. The MTA makes a lot of data available to play with. This kind of stuff is highly relevant to teenagers in NYC. They would understand the data and the exercise.

The data and tools to do DIY Data Science are becoming more accessible every day. I hope we all get into data hacking and start collaborating on this stuff together publicly. At a minimum, it will lead to more data scientists and we might learn some interesting things about ourselves and our world at the same time.

BTW – Union Square is the most active subway station at rush hour. Midtown south FTW!

The Three Letter Domain

As we were debating in our monday meeting yesterday about our brand, USV vs Union Square Ventures, I made the point that our URL is our brand and we use usv.com.

I am a fan of the three letter domain. Two is too short for me. Four is too long for me. I like three.I feel the same way about kids, but I do digress.

My mind started to wander in our monday meeting and I started thinking about how many three letter .com domains there are. I thought 26^3 = 17,576. But what I missed what that you can't repeat, so the correct answer is 15,600.

In either case, there are a finite and relatively small number of three letter .com domains. And I own one of them (avc.com) and our firm owns one of them (usv.com).

The story behind usv.com is about a team member taking initiative and doing an amazing thing without being asked to. Eric Friedman worked at USV for a few years at the tail end of the last decade. One monday he came in and told us that he had bought usv.com over the weekend for $10k. He didn't ask permission, he just did it. We were ecstatic and thought it was a steal. And it was. I have thanked Eric for that a few times, but I feel like thanking him again. Thanks Eric.

MBA Mondays: Sales Leads On A Small Budget

So today on MBA Mondays we are going to talk about something useful – Generating sales leads on a small budget. Every startup that wants to sell something runs into this challenge.

I asked Russell Sachs, who runs sales for our portfolio company WorkMarket to tell us how they do it. And this is what he put together. I think its terrific. I hope you do to.

—————————

Uncovering Qualified Leads Without a Big Marketing Budget

It is hard to debate the fact that leads are the lifeblood for virtually every sales
organization. Without qualified leads, scaling a business can be a tricky thing to maneuver. For
large organizations with big marketing budgets, there are many options at your disposal – trade
shows, conferences, SEO, social media, lead lists, outsourced sales and webinars to name a
few.

But for startups, early stage companies and small/medium businesses, uncovering
qualified leads on a tight budget is a very different situation, and one that many organizations
struggle to figure out. While I am not suggesting we have discovered the holy grail here at Work
Market, I am going to share some of the more effective methods that we have used, and look
forward to additional comments on what this readership finds successful.

“Calling All Customers”

One of the easiest and most accessible sources for new prospects resides in an all too
often untapped source; ­ existing customers. What we have found in our organization is that
there are networks and friendships that extend well beyond the walls of competition. If you are
doing a sound job of servicing your customers, they will happily (in some instances eagerly)
share the success with their peers; even those that work for a competitive organization. Asking
your customer who else they can recommend can uncover a bounty of qualified targets for your
sales team to go hunt. The obvious caveat here is knowing when you have earned the right to
ask for referrals and recommendations.

A great example was a recent trip we took to visit a customer in a major metropolitan
location. The customer was so impressed with our software and team that when we asked her if she knew anyone else she could refer us to, she picked up the phone and called her colleague
at another company right on the spot.

Leverage the Marketplace

For those who are not familiar with Work Market, we are a contractor management
platform tied to an online marketplace that lets enterprise organizations efficiently find talent and
manage the on­boarding and off­boarding process of that contractor and freelance workforce.
Literally thousands of jobs are run through our platform every single day, and we are proud to be
able to support such a vibrant community. Because our freelancers have a great experience on
our site, get paid every week by hundreds of companies and can essentially keep themselves
busy all year, they are all too happy to refer us to other companies that they do work for or have a
relationship with. In fact, some of our best customers are the direct result of our talented
community referrals.

Recognizing that not everybody has access to an entire marketplace that they can tap
into, there are countless similar ways to leverage the same “crowd” dynamics. Whether you
sponsor a specific user group in your community, get active in a local “meet­up” or become a visible member of a relevant organization, you can successfully create trust and credibility.
Having others sing your praises will drive interest in you and your company ­ after all, word of
mouth is some of the most effective marketing available! Volunteer to host or chaperone a
session, moderate an interesting discussion, or present on a topic of interest at a trade show or
event. People will not only approach you to get your perspective on what you presented, but they
will be more inclined to invite you into their office to learn more about your organization (and you)
since you have removed the threat that you are simply contacting them to “get the sale”. And,
they will willingly share your information with their peers if you are providing them with content
and direction.

Get Social with “Social Media”

I am not proclaiming that you should create a Facebook page to drive inbound interest
(since this is an obvious solution). But there are a variety of professional tools like LinkedIn and
Twitter that will enable you to find out who your customers are connected to and what their
interests are. Too often, people are looking to link with others simply for the thrill of accumulating
contacts or to help them get a job. But, by reaching out to your customers and partners and
explaining why it makes sense to truly network via LinkedIn, you will have visibility into who they
socialize with and open doors to a vibrant community of constituents.

Similarly, by using Twitter to communicate relevant articles, blogs and data to your
community, potential customers will start following you and be more receptive to your overtures
if they perceive you as a contributor and expert in their field. Creating a corporate and individual
brand are vital to differentiating yourself. In our organization, we try to share content about
contingent workforce topics, associated companies and pertinent data to our followers every
week and have built a strong brand in the process.

Generate a Newsletter

At Work Market, we strive to educate our customers and prospects on a variety of issues, including product updates and new feature releases, ways to improve and scale
contractor business, customer success stories and case studies, as well as industry topics.

For example, tax and compliance are of top of mind for organizations that leverage contractors.
To address this, we recently ran a series of short newsletters educating our database about the
pitfalls of improperly managing and utilizing those resources, and found the interest on this topic
to be overwhelming. We used the power of sharing knowledge to establish credibility and enable
prospects to feel comfortable reaching out to us to learn more.

In addition, there are plenty of wonderful, low cost tools that let you email your prospects
and understand their open and click­through rates, survey them to gather feedback and opinions
and have visibility and transparency into exactly what messages are resonating. You can then
share this information with your sales force and arm them with a more precise, targeted
message to serve as catalysts for powerful conversations.

Outbound Calling Team

To be clear, I am not saying that outbound cold calling is a “new” strategy, but I am
shocked at how many people have proclaimed that using the telephone to source opportunities
is dead. We have proven this model to be extremely successful, and have tied incentives to
ensure that we are promoting the right behavior. For instance, we reward our inside sales team
for setting up qualified appointments and provide an additional bonus if their appointments turn
into closed deals. Lists on the internet are in abundance, and should be leveraged to their fullest
capacity. In my experience, if you are calling a prospect with genuine intent to uncover whether
a problem or pain exists, and are respectful and intelligent in your dialog, you will uncover great
opportunities at every turn.

I am sure that there are dozens of other ways that people get effective leads without
spending big dollars for them and I am looking forward to hearing more! Please share your
thoughts.

Russell Sachs
@russellsachs
Vice President of Sales and Business Development
Work Market

Product > Strategy > Business Model

One of the mistakes I see entrepreneurs make is they move to business model before locking down strategy. The way I like to think about this is get the product right first, then lock down the strategy of the business, then figure out the business model.

Getting product right means finding product market fit. It does not mean launching the product. It means getting to the point where the market accepts your product and wants more of it. That means different things in consumer, saas, infrastructure, hardware, etc, but in every case you must get to product market fit before thinking about anything else. And, I believe, moving to business model before finding product market fit can be the worst thing for your business.

Once you find product market fit and start thinking about business model, I suggest you take a step back and work with your team (and investors) to develop a crisp and well formed strategy for your business. Investors, at least good investors, are very helpful with this stage. If you watched the John Doerr interview I posted yesterday, you hear him talk about strategy a lot (Intel, Amazon, Google, etc). The best VCs are very strategic, have seen strategies that work and ones that don't, and can be a great partner to develop a straetgy with. This is one of my favorite things to do with entrepreneurs.

I remember back to the 2009 time period at Twitter. The service had most certainly found product market fit. And the team turned its attention to business model. There were all sorts of discussions of paid accounts, subscriptions, a data business, and many more ideas. At the same time, Ev Williams was articulating a strategy that had Twitter becoming the "an information network that people use to discover what they care about." And so the strategy required getting as many sources of information on to Twitter and as many users accessing it. It was all about network size. That strategy required a business model that kept the service free for everyone and open to all comers. That led to the promoted suite business model. Twitter executed product > strategy > business model very well.

We have also had many portfolio companies build revenue models that did not line up well with the strategic direction. And in some cases, the companies really did not have a well articulated strategic direction at all. That led to a lot of wasted energy building a team and a customer base that ultimately was not of value to the business. We have seen teams walk away from parts of their business because of such mistakes. 

These kinds of mistakes are usually not fatal. Not finding product market fit is fatal. But going down the wrong path in terms of strategy and business model can be fixed. But it is painful, costly, dilutive, and sometimes can lead to a change in management.

So my advice is not to rush into business model without first finding product market fit and then taking the time to lock down on a crisp, clear, and smart strategy for your business. From there business model will flow quite naturally and you will be on your way to success.