Native Monetization

[Original post written @http://startupiceland.wordpress.com] 

I dont get banner ads, let me be very honest with you I am Ad blind. If you really think you care going to get me to click on a banner, you are very wrong. I am not the only one thinking this way. We have become oblivious to all these flashy things shown on the websites. I wish we would have a cleaner web. I go to a website to do something, i.e read gossip, read news, watch a video or read about something my friend thought was cool, important whatever, I get sorely disappointed when I go to these site which have these ridiculous advertisements that really turn me off. Fred Wilson, had a very interesting post about 6 months back here is that video. The video is 22 minutes long, so check it out when you have some time. The summary of the video is that the online advertising medium is fragmenting, You have Google Ads which is based on searched content, Social Ads that is based on emotional/social sharing content, Internet Video Ads, Mobile Ads, Location based Ads, Streaming Audio based Ads etc. Managing the advertisement budget is not that simple anymore. I specifically want to emphasize there is a difference between Marketing and Advertising. I don't want to go into that discussion in this post. This post is about Advertisements. I believe websites need to focus on Native Monetization, I think that is the way to ensure you don't turn off your user base. What do I mean by Native Monetization? Look at the ads by Google, they don't sell banners they specifically encourage their advertisers to do the work on deciding how, when, what and where the ads needs to show up. More specifically, what search words are linked to the ads, what geography etc this actually enhances the experience of the ads consumer. The same is true of many of the platforms, like promoted ads on Twitter, location specific ads on FourSquare, promoted ads on Tumblr etc I am not so sure that it has been implemented that correctly in Facebook and that is probably the reason they are not able to monetize ads effectively. I hear through the grapevine that Facebook is having challenges in converting advertisements. I may be wrong in this assertion. One more titbit of information that I got out of Jonah Peretti of BuzzFeed (video below) is that the Content Management System that renders your websites contents needs to be used for the ads that you display in your website. Actually just following that advice you will be forced to do Native Monetization. [youtube http://www.youtube.com/watch?v=-oMBs9Uk9Ds&w=560&h=315]

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Social Media is Not Done! It is just getting started

There is a lot of discussion that Social Media is done, what with Facebook, Twitter, Google+ and your Mom wanting to start a social media company. I don't think so, I think like everything else there are leaders and followers. Here is a Techcrunch article titled "Beyond Facebook: Rise of Interest-Based Social Networks" Where the main idea is that there are interest groups forming around specific areas that define the new depth in social networking. I see this possibility with many things. In my view, this is the play of the Long Tail on social media networks. There is going to be a long tail whether we like it or not, will these special interest social networks be as valuable? Not so much but they will derive value for the network that it is defined by and for new members to find them and become part of it. We have already seen this form in Photo Sharing (Instagram.com) Fitness (RunKeeper.com) Finance (StockTwists.com), Gaming (GameHub.com), etc It used to be called User Groups but then again the idea of sharing rich media has made each of these networks more value and the ability to bring the value propositions from the main stream into special interest has also made the margins more valuble. We are starting to understand how all these connection really drive value to traditional businesses as well as new businesses. We can actually measure and validate all our business hypothesis without having to spend tons of money in building things. I have written about this learning before as Validated Learning, Business as a Hypothesis, it is probably the most fascinating time to be an entrepreneur and start a new business because you have so much data to learn from. We never had that! thats why I believe we are not done yet! we are just getting started. Just think about how long it would have taken a new Media company like Techcruch to get started?

Related articles

• Navigating Social Networks for Your Business (infographic) (chuniq.com)
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Business as a Hypothesis - 5th Meetup

We had a very good turn out for the 5th meetup to discuss the book the Lean Startup. We had a new interesting idea that was tried out, where one of the participant takes 5 minutes to talk about something that he/she found interesting and wanted to share with the group. Sverrir took the first stab at it and outlined a check list for making a business case for your product or service. His posting is here on Facebook, for those who don't want to go there and find the post I have reproduced it:
22 Power techniques to show that your product or service has characteristics and benefits to secure a unique position for your product and sell it (From Formula Five)
The core things need to be present (all products and services have these), how can you show that you have strength in each of these attributes?

1. The specific product or service, describe it
2. Any associated service or product
3. Bonuses coming along
4. Pricing
5. Quality
6. How is it used, how easy is it to use it? 
7. Perceived value and status element
8. Your delivery
9. Your deliverability
10. Is it readily available? How is it available, when?
11. Your customer and technical support
12. Your selection 
13. Your convenience 
14. Any warranty 
15. Your policies
16. Terms 
17. Your guarantee or risk revearsal proposition, how do you minimize the risk for the buyer?
18. Your reputation 
19. Reputation of people that own product
20. Joining the club 
21. Ownership
22. Experience
23. (more, not mentioned here?)

Set up your Super Value Proposition (SVP)

1. Find and show the financial value of the element that will positively effect the buyer. - Calculate and show the better value. - If you are giving bonuses, say what they are worth.
2. Free focus factor, if the product has lower cost, calculate when the lower cost has added up so that the product is really free after that point. Tell it. Show it. „Pays itself up/free in ten months.“
3. Instead of value, when pays itself up, show how much extra profit customer will make. Do the math for customers (most won‘t do it themselves).
4. If not cost and money, show how things are quicker, easier, simpler, better environmentally.

The discussion centered around the notes that I had shared from the previous blog post. There was a number of discussion around how validating and hypothesis testing is critical to learn whether what we are trying sell has a customer. There was also a lot of discussion around why traditional businesses do not try this method with their current customers. Overall fun evening and I learnt a lot listening to the group.

Related articles

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Isafjordur the next Startup Hub?

I saw this video on Bloomberg TV, the interesting thing is many of the new "hot" startups are cropping up in NYC because I believe there is a transition that is starting to happen, the technology is getting easier to put together the cost of creating a company is also getting to be not a huge hole in your wallet. NYC has many of the Fortune 500 companies, so if your startup is in the business of Media, Advertising, Fashion, Financial Services or even Pharmaceutical NYC is not such a bad place to be. Goes back to the Investment thesis that I wrote about, all the traditional businesses are now the users of new technology infrastructure built by Google, Facebook, LinkedIn, Amazon, Apple etc.
The investment thesis is quite simple, if one looks at:

• 1970s: Successful companies that created a lot of value were the hardware companies like Atari, Tandy, Radio Shack, Apple etc
• 1980s: IBM PC, Microsoft, Lotus 123, WordPerfect, HP, Compaq, Apple - Software companies that built applications for the Micro and Mini computers (back then Personal Computers were called that!)
• 1990s: Sun Microsystems, Cisco Systems, Microsoft, NeXT, Novell - Network related companies that made the plumbing of the Internet work
• 2000s: Google, Amazon, Ebay, PayPal, Yahoo, Apple, Microsoft - Software companies that build application on top of the Internet infrastructure
• 2008+: Facebook, Twitter, LinkedIn, Apple, Google, Amazon - Software as service companies that run on top of the software that connects the Internet.
• 2010+: Any company that is building applications on top of the software stack of Facebook, Twitter, LinkedIn, Google, Amazon and the Mobile Devices

What is even more exciting is that the companies in the future that are building things on top of the Internet Software Infrastructure can be located anywhere and still sell it to the entire world. This creates an  awesome level playing field for places like Iceland. You can be in Isafjordur or Egilstadir and still create companies that solve a global problem. The picture is from Isafjordur, not a bad place to start the next Google. Nobody says it cannot be done!

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Hacking, Hacker and Hackathon - words misconstrued

Facebook IPO S1 paper filing has given a lot of material for all the journalists, blogger(yours truly included) and everyone's mom to take stabs at what Facebook is, can be or cannot be. In addition, every word of what Mark Zuckerberg says in the document is up for grabs. I saw this tweet "Reuters totally clueless about the meaning of hacking" in the @newsycombinator twitter feed. The article was actually written by a syndicated partner column of Reuters called theWrap.com. I have had this experience myself when I refer to the word Hackathon, everyone gets really nervous as if we are going to break into a computer system and do something illegal. Come on folks, get up to speed, don't be like the elected representatives of Congress! See the Daily Shows excerpt here of what Congressmen think of "Experts" in the Internet technologies, you can skip to 3:43 in the video... it is hilarious. When did we all turn into Ogre?

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
KO Computer
www.thedailyshow.com
Daily Show Full Episodes Political Humor & Satire Blog The Daily Show on Facebook

I really think Mark is trying to re-define the word and bring it mainstream. I totally agree with his statement in the S1 filing "The word 'hacker' has an unfairly negative connotation from being portrayed in the media as people who break into computers, in reality, hacking just means building something quickly or testing the boundaries of what can be done. Like most things, it can be used for good or bad, but the vast majority of hackers I've met tend to be idealistic people who want to have a positive impact on the world." Of course the Reuters article does the PR spin to make it sensational with the title "Facebook IPO: Mark Zuckerberg's Bizarre Ode to Hackers". 

Lets look up the dictionary.com reference of the word Hack:

• Computers . to devise or modify (a computer program),usually skillfully.
• World Dictionary: to manipulate a computer program skilfully, esp, to gain unauthorized access to another computer system

Computer Dictionary:

hack definition

jargon 

1. Originally, a quick job that produces what is needed, but notwell. 
2. An incredibly good, and perhaps very time-consuming, piece ofwork that produces exactly what is needed. 
3. To bear emotionally or physically. "I can't hack this heat!" 
4. To work on something (typically a program). In an immediatesense: "What are you doing?" "I'm hacking TECO." In a general(time-extended) sense: "What do you do around here?" "I hackTECO." More generally, "I hack "foo"" is roughly equivalent to""foo" is my major interest (or project)". "I hack solid-statephysics." See Hacking X for Y. 
5. To pull a prank on. See hacker. 
6. To interact with a computer in a playful and exploratory ratherthan goal-directed way. "Whatcha up to?" "Oh, just hacking." 
7. Short for hacker. 
8. See nethack. 
9. (MIT) To explore the basements, roof ledges, and steamtunnels of a large, institutional building, to the dismay of PhysicalPlant workers and (since this is usually performed at educationalinstitutions) the Campus Police. This activity has been found tobe eerily similar to playing adventure games such as Dungeons and Dragons and Zork. See also vadding. See also neat hack, real hack. [ Jargon File] (1996-08-26)

Merrium Webster defines it as:

• To write computer program for enjoyment
• to gain access to a computer illegally

I think we need to revisit the dictionaries and change the definition.

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Marketing on a Shoe String

As Entrepreneurs we are always faced with constraints related to marketing and selling our products and services, that is natural and true for every company. Very few companies have a unlimited budget to spend on marketing. I have had my pet peeves with the Marketing departments while I was working for a bank. The problem I had was, I never knew whether the money we spent was worth it. This is no longer a problem, today technology exists to precisely build-measure-learn from your marketing efforts. I saw this post in The Next Web with the title "10 Marketing Hacks For Entrepreneurs", I think it is applicable to any businesses and I don't know why they have the title as a Hack? I wish established companies would run their businesses like a startup especially in the marketing and sales organizations because they never give you the metrics related to the spending they do. Here is the list if you have not gone to the article to read it:

1. Google Adwords
2. ReTargeting
3. Facebook Ads
4. Twitter mentions
5. Gist
6. Craigslist
7. Billboard space through ADstruc
8. Facebook Insights
9. WordStream
10. Social Media - Twitter, LinkedIn, Facebook, Google+, Quora etc

I would add your company blog is a great way to market your product or service or what you do. Marketing is a promise you keep with your customers. If you don't tell them what you are doing they usually don't know. All the above tools does not replace simple truth about marketing, as Seth Godin's post on Marketing says: 

The simple first rule of branding and marketing anything (even yourself)

Not a secret, often overlooked:
"Keep your promises."
If you say you'll show up every day at 8 am, do so. Every day.
If you say your service is excellent, make it so.
If circumstances or priorities change, well then, invest to change them back. Or tell the truth, and mean it.
If traffic might be bad, plan for it.
Is there actually unusually heavy call volume? Really?
Want a bigger brand? Make bigger promises. And keep them

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Valuation, Lean Startup and Uncertainty

Image via WikipediaAlbert Wenger has an interesting post about Valuation of startup companies and the main challenge in valuation of company on the exponential growth path. I could not agree more, this is the same problem that I have highlighted several times with my posts on Power Law and the failure of extrapolations and the Normal Probability Distribution. Albert points out a practical challenge from both sides of the venture table, as an entrepreneur you are not sure how long you need the funding to hit that inflection point and as an investor you are struggling to make sure you are not paying too much for a business that might not pan out. The solution is actually "common sense" but of course "Common Sense" is never "Common Practice", I digress, the solution is to get to a sustainable model where your revenues/cash flows funds the company... you grow your customers base, revenue and cash position... Problem solved! Really, is it that simple, YES it is. 

Image via Wikipedia

Of course all those companies that are building their business model on the Hope that they will draw enough crowd onto their site where in they can monetize the traffic with ads are working on a loosing premise. I know Huffington Post just got paid etc but there are so many content aggregators why only Huff Post got bought out? why not the others? once again the theory of the power law works here. So my take on this is very simple, entrepreneurs should focus on creating value by solving some problem for which someone is willing to pay a price for. If the universe of those willing to pay are price is HUGE then you are onto something.

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The Healthcare debat in the US

Image by Getty Images via Daylife

I saw a very interesting status posting request in Facebook by couple of my friends. It read :

" No one should die because they cannot afford health care, and no one should go broke because they get sick. If you agree, please post this as your status for the rest of the day."

I agree with the message... I don't believe anyone will disagree, let me rephrase that majority will agree. I am seriously confused about the debate. I think we are mixing the overall goal with the process and method. I don't think even the cold hearted Insurance Companies, Big Pharma or AMA will disagree with the above statement. I don't think it is a fair argument that Big Pharma, insurance companies etc are there only to make money. 

I think many of them actually have Good Vision statements that drive them. Just to clarify I went to their websites to see what they set out as their vision, here are some excerpts:

Pfizer: We dedicate ourselves to humanity's quest for longer, healthier, happier lives through innovation in pharmaceutical and consumer health products.

Our Mission
       
We will become the world's most valued company to patients, customers, colleagues, investors, business partners and the communities where we work and live.

Eli Lilly: Lilly makes medicines that help people live longer, healthier, more active lives

Three long established core values guide Eli Lilly and Company in all that we do:

Integrity

We conduct our business consistent with all applicable laws and are honest in our dealings with customers, employees, shareholders, partners, suppliers, competitors, and the community.

Excellence

We pursue pharmaceutical innovation, provide high-quality products, and strive to deliver superior business results. We continually search for new ways to improve everything we do.

Respect for People

We maintain an environment built on mutual respect, openness, and individual integrity. Respect for people includes our concern for all people who touch or are touched by our company: customers, employees, shareholders, partners, suppliers, and communities.

Ok with that said, yes, mistakes are made by Pharma companies of course it is exasperated because of the sector they are part of. I don't believe the Government can solve anything, it all comes down to the people. Government should GOVERN, not OWN, MANAGE or CONTROL businesses. I would say set parameters for the Insurance companies and pharmaceutical companies to work under. You don´t have to do that by launching a Governmental Insurance Company! If the issue is Insurance companies need to cover people with pre-existing conditions make that  a law, let the market decide what should be the price for such a service. Artificially subsidizing all the case through a pseudo government insurance plan makes the quality of health care go down.

I want to see the entire plan proposed by the White house because I see a lot of chatter and not much facts. Will post my finding after I read the proposal.