BASES: A Resource for Tech Startups


I have been a subscriber to the BASES weekly digest for several years now (note: BASES stands for Business Association of Stanford Entrepreneurial Students). It is an extremely valuable resource to any tech entrepreneur, especially if you live in the valley or travel to the Bay Area often. They generally include a section on upcoming events and deadlines; for example, below is a list found in their most recent digest:

Monday, January 25th – Learn Web Metrics from the Master Featuring Dave McClure
Monday, January 25th – British Consulate / Seedcamp Reception
Monday, January 25th – Nordic Entrepreneurs and Venture Spinouts
Tuesday, January 26th – Girls in Tech: Catalyst Conference – 15% off
Tue & Wed, January 26th & 27th – Web 3.0 Conference
Wednesday, January 27th – Vator Splash Competition – Applications are Due
Wednesday January 27th – Social E-Challenge Speed Dating Mixer
Thursday, January 28th – FounderDating – Where Founders Meet
Sunday, January 31st – Lightspeed Venture Partners Grant Program Application Deadline
Wednesday, Februray 3rd – Bootup Labs (Canada) Demo Days
Wednesday, Februray 3rd – Geo-Loco! The future of geo-location services
Wednesday February 21st – 28th – E-Week at Stanford University

BASES recently launched their “Help A Startup Out” section to more efficiently match the needs of startups with their large and fast-growing global network of entrepreneurs, investors, and top-quality service providers. Startups, give them your input to help make this a success.

I had a chance to work with a few members from the BASES group last year when I volunteered as a judge and mentor for a student team competing in the 2009 Social Entrepreneurship Challenge. They are a great group of people doing great things for the community.

Which subscriptions to tech/startup newsletters and RSS feeds do you read religiously? I’m looking for more sources…

ExtremeU Pitch Day


Last Thursday, I had the opportunity to attend ExtremeU Pitch Day, put on by Extreme Venture Partners (EVP). The attendance was filled with VCs, Angels, media and members of the EVP team to listen to pitches from the 3 graduates of their first class at Extreme University. Those graduates were Assetize, Uken Games and Locationary.

ExtremeU was a summer technology start-up program that focuses on industry networking, technology mentoring and delivering a product to potential investors after only 12 weeks. The intensive program was led by Farhan Thawar (Dean of ExtremeU), who is also the VP Engineering at Xtreme Labs.

Assetize

Assetize helps Twitter users monetize their content stream by displaying ads from Google AdSense and other ad networks into your Twitter stream. They are hoping to be the AdSense of blogs, but on Twitter. Assetize will share revenue with content publishers (content publishers receive 60%). The company has a content analysis and targeting algorithm as well as an ad-matching algorithm that helps advertisers reach targeted audiences. Since they began coding 3 months ago, Assetize already publishes 15,000 messages per day across all channels and has published approximately 56 million ads to-date. Some early competitors in this space include Sponsored Tweets, Ad.ly and Magpie.

Uken Games

Uken Games, founded by Chris Ye and Mark Lampert, creates social games. Their first game is called SuperHeroes Alliance and is based on the Facebook platform, they have also recently launched an iPhone version of the application (with data synced on the server-side so that you can play the same game across platforms). Since their launch in March 2009, they have amassed 130,000 total users and over 50,000 monthly active users (MAUs). Even in their early days, they have found that people will pay for virtual goods for a whole host of reasons, and that a couple of users even spent over $2,000 to compete against others in the system. So far, they have been working hard to build their “Adaptive Game Engine” and they plan to use this the churn out more game in more verticals (that will remain nameless due to confidentiality). Look out for some more interesting games from Uken.

Locationary

Locationary is an interesting and massive undertaking, taken-on by Grant Ritchie, to create “The World’s Place Database … Created by You.” Essentially, the company is trying to create the Wikipedia of the YellowPages by crowdsourcing the information and subsequent updates and generating incentive through game mechanics and point-scoring systems.  So far the company has cataloged over 100,000 places. Locationary has ambitious goals (I like to see that) of having 15 million placed indexed within the next 12 months and 100 million places indexed within 2 years. This is a very difficult space and I wish the company good luck in getting the public to be their puppeteer!

Virtual Goods: Market, Types, User Psychology


Virtual Goods have begun to penetrate social networks like Facebook and mobile applications like Tap Tap Revenge (by Tapulous) and I Am T-Pain (by Smule). They have spread like wildfire, with game developers itching to better understand the economics of virtual goods and the psychology of gamers. This post will explore the rapid market growth, types of virtual goods, user psychology and steps to launching virtual goods in your application or game.

Market Growth

The estimated market size has gone from a nascent space in 2008 to approximately $500 million (Aug. 2009; Source: Viximo) to over $1 billion by end 2009 (Oct. 2009; VentureBeat) only 2 months later. If you are at all surprised by this vast market size, you should know that the Asian virtual goods market is seven times bigger than US (estimated at $7 billion for 2009).

Zynga, one of the leading social games companies, launched a game called Farmville in June 2009, and has already become the most popular game application on Facebook with 62.4 million active users as of October 29, 2009 and will easily break through $150 million in 2009 revenue.

Types of Virtual Goods

Developers are very creative. So far, the types of virtual goods can largely be placed into 2 buckets:

  1. Decorative Goods: Do not affect game statistics / game play (e.g. avatars)
  2. Functional Goods: Affect game statistics / game play (e.g. Farmville tractors — did you know users bought 800,000 of them yesterday)

Since functional goods affect game play activities, game developers should give users the ability to either earn these items/goods through game play or provide a shortcut in acquiring them with a virtual currency. Functional goods can be managed to have low or high value price points; generally, the value of these functional goods can be set by carefully managing and understanding scarcity. Ensure to have some items that are very common (Developers: ensure to “prime the pump” by getting users familiar with using some free and low-cost items), and some that are very rare and expensive.

While A/B testing how much users will pay for items, understand that as the aggregate number of social interactions per user increases within an application, each rare item’s value will proportionately increase for those users. Another consideration while establishing demand for your virtual goods is whether or not you need a secondary market where users can sell, trade or profit from their virtual goods (See more from Bill Grosso’s presentation on Managing a Virtual Economy).

There are many reasons why a user would pay more for certain items. Let’s try to better understand game user psychology.

Psychology of Purchasing Virtual Goods

Users will buy virtual goods for many different reasons. Buying decisions will be based on a number of factors including user motivation, several forms of influence, boredom and competitiveness. If you’re a developer, think carefully about users of your applications: Why would they want to buy a virtual good within your application? What added value would they receive? Which other people would see they bought this good, and could they benefit as well? Below, I outline a number of different reasons why users choose to purchase virtual goods:

  • People are impatient (time = money) and want to advance through game play more quickly
  • People are competitive and want to get ahead (of friends, peers, the world)
  • People want to express themselves in unique ways (akin to the culture of decorating cell phones in Japan)
  • People want to feel good about themselves (donating to charity and publicizing)
  • Gifting allows people to foster and maintain existing relationships with others in an increasingly electronic world
  • Gifting allows people to create new relationships
  • People will return gifts due to the rule of reciprocation (influence), which prompts us to repay what someone has given us
  • Provenance (e.g. did a famous user own this item in the past?)
  • Branding (virtual goods branded by real-world companies)
  • Rarity (scarcity)

5 Key Steps for Launching Virtual Goods

In a presentation by Amy Jo Kim, CEO of Shufflebrain, about why and how virtual goods work, she outlined 5 steps for launching virtual goods.

  1. Create meaningful content
  2. Prime the pump with free goods or currency
  3. Create demand for premium content
  4. Offer fresh content at a range of price points
  5. Make it easy to purchase currency

There are many different companies that offer solutions to help with your virtual currency. If you’re looking for good vendors, try: PayPal, Gambit, boku, Zorg or $uperRewards.

Why are your users buying your goods? How did you generate interest or scarcity in your application? Please share your story and learnings about user psychology and buying decisions in the comments area below.

Geeks Love Halloween


The rumors are true. Technology geeks do have a thing for Halloween. Mashable scoured the web and found some great pumpkin carvings well representing the current state of web technology and social media. The Twitter Fail-Whale (below) is great and there’s a fantastic carving of Diggnation hosts Alex Albrecht and Kevin Rose.
See more at: 12 Awesome Social Media Halloween Pumpkin Carvings.

failwhale-pumpkin

Source: Scott B. on Flickr via Mashable!

The iPhone App Store is also cashing-in on the Halloween frenzy. The App Store is promoting its “Halloween Apps & Games” section where you can carve virtual pumpkins with “iCarve” and play Halloween-themed games.

apple-store-smort-zombies

One notable oddity, a game called Attack Of The Zombie Bikini Babes From Outer Space was launched in the App Store two days ago. Smort (rumored to be Smule’s Evil-Twin by Techcrunch) launched the game. As TechCrunch puts it, Smort looked at common themes popular within App Store games, and generated a list: Bikini Babes, Zombies, Bombs, and Bloodshed. This game is the result of that (innovative? smart? creative?) thinking. What are your thoughts? (see video below)

Personally, I think this is really smart. Now, although this game doesn’t necessarily look that compelling, I think that Smort has the right thesis: Research. Build. Launch. Iterate. Repeat. App Store trends are constantly changing. Therefore, monitoring user behavior and download trends can lead to new learnings about your target audience.

My advice: If you’re a startup/entrepreneur, go research your market (do a quick market survey if you wish), build your app and launch it! Review your analytics/metrics, iterate and launch again quickly. There are some app-hungry consumers out there.

What Tina Seelig Wished She Knew When She Was 20


Over the last week, I had the opportunity to start and finish Tina Seelig‘s new book “What I Wish I Knew When I Was 20“. The book delivers a series of stories — among other things — each seemingly designed to teach a lesson or prove a point; a number of stories discuss very innovative and creative solutions people undertook to solve real-world problems and to create value. Together, these pearls of wisdom can inspire the uninspired, and give a gentle nudge to those needing a push to get going.

In her book, Tina discusses the Stanford Technology Ventures Program (“STVP“), and how it looks to create “T-shaped people” — described as having a depth of knowledge in at least one discipline and a breadth of knowledge in innovation and entrepreneurship. I think this is a fantastic approach, and that this recipe is the right combination to create truly successful entrepreneurs. It would be nice to see some Canadian schools taking that approach. She also discusses her class-turned-global innovation assignments, that have become the Global Innovation Tournament — I’m hoping to participate in a judging capacity for the Toronto contingent this year — but of course, I’d rather be in the competition itself. Maybe I’ll get a chance if I make it into the Stanford GSB next year!?

Later on in the book, Tina begins discussing risk profiles of entrepreneurs (I can relate closely with this), and I found it quite interesting to read that apparently most entrepreneurs don’t see themselves as big risk takers. Only after some reflection did I understand what she meant. To paraphrase her text, “After analyzing the landscape, building a great team, and putting together a detailed plan, [entrepreneurs] feel as though they have squeezed as much risk out of the venture as they can. In fact, they spend most of their efforts working to reduce the risks for their business.”

Wearing my VC hat, this actually makes a lot of sense. We, as VCs, constantly look at how well entrepreneurs de-risk their ventures and we calculate our willingness to invest by how well an entrepreneur has evaluated their market opportunity, filled their management team and advisory board(s) with competent and complimentary folks, and developed their technology to a stage where it can be demonstrable. Essentially, the reward that entrepreneurs can receive for successfully de-risking their venture is generally referred to as a better valuation from VCs, and consequently, higher equity ownerships for the entrepreneur(s) at the table.

I recommend this book to CEOs and decision makers that need to reignite their creativity as well as to students aspiring to do great things, but who are waiting for permission to do so from some authority figure. In this book, the author acts as an agent of empowerment to allow the reader the feeling that they should embrace their skills and capabilities, and act on their desires to create products, services and organizations that can change the world.

What have you envisioned that could change the world? I dare you to chase that opportunity.

Have you recently dropped everything to take on a new challenge? Share your story below! Was it worth it?

socialDeck Platform Demo


socialDeck, the creators of Shake & Spell on iPhone, Facebook and BlackBerry, have just launched a new demo on their website that discusses the various components in their technology platform and how it looks and feels across form factors.

The demo shows how the gameplay stays consistent across device types, and features such as their “trash talk wall” (or “chat”), leaderboards and social discovery engine all work.

For convenience sake, I’ve simply embedded the video below (view it at socialdeck):

Review: DemoCamp Toronto #21


Tonight I attended DemoCamp Toronto #21. It was my personal second time out at DemoCamp and I was loving the vibe in the room of the sold-out venue (approx. 250 people). Before I get to the meat of the post, I must throw out a big thank you to Leila Boujnane, who was awesome and gave me her seat at the packed event.

Below, I have done my best to provide some information on some of the demos from tonight’s event:

Zoocasa is an ad-supported, vertical search engine for real estate listings that allows visitors to search by neighborhoods and school district among other things. I’m not a huge fan of the ad-supported model as a sole business model and I believe that the business should quickly look for some innovative business models that they can layer onto their service offering to increase the monetization potential of their website.

ArtAnywhere was presented by an enthusiastic Christine Renaud. Her business is centered around a website that helps artists (painters, contemporary artists) meet and transact for their artwork with those looking to buy (or in this case — RENT). ArtAnywhere has a very interesting business model that charges people or corporate entities $XX/mo/piece of art (artist chooses the price) and the site takes a 15-20% tranaction fee. The company is launching in Montreal, Toronto and New York in September 2009. I am very curious to see if people will buy into her business model and find security in mitigating the risk of purchasing art by renting it on a monthly recurring model.

HomeStars is a website that allows home contractors to have a social media page with ratings and reviews. It doesn’t seem to be anything revolutionary, and certainly not a business that will scale to deliver venture-like returns, but it can certainly drive value to all of its users and potentially make a nice return for a business owner. Brian, who gave the demo, seemed like a nice guy and I wish him well in his venture.

Cascada Mobile is an interesting company that solves the problems of some mobile application developers who are looking to write-once and deploy an application across multiple devices. Their primary product is called “Breeze.” Using this product, a user can write code in HTML/ JavaScript/CSS and have it ported to a large number of devices (including the iPhone as of this week, albeit with limited functionality). They also host and manage distribution. Currently they have a free ad-supported version as well as licensing fees and revenue share deals for users who don’t want ads embedded within their applications. Very cool. I’d love to try out the full version and try to create my own mobile app!

MashupArts is a site looking to capitalize on social networks, collaboration, events and virtual goods. The company lets you customize one of a series of templates and integrate a number of mediums (pictures, slideshows, video, audio, text), and a commenting layer on top of this. The example given is a group-based collaborative birthday card to a friend or family member where all of the members of the network can contribute to card mashup. The website is currently in a beta, but if you really like the sound of this, let me know and I’ll see what I can do to get you a passcode into the realm of the private beta.

Guestlist is a sexy new event site by Ben Vinegar. Very slick and great use of AJAX elements here. It’s so good that DemoCamp mentioned that they are going to switch from EventBrite to Guestlist; so there, now you go try it! It’s in beta and just launched last week.

Guigoog is supposed to be an alternative to using Google’s “hard-to-navigate” boolean, advanced search. So for all the non-computer junkies, I guess there’s a market for this?! You tell me. In any case, Jason Roks got stuck demoing on a computer with IE6.0, and needless to say, it could not handle the advanced scripting necessary to pull of some of the snazzy UI elements he incorporated. Don’t worry Jason, I tried it on Google Chrome and it looks great. He describes the technology as: “If you’re looking for 2 things in a pile in front of you, you can filter out everything you don’t want, and you will be left with things that resemble what you are looking for.” Therefore, you can find things that you don’t necessary know exist, but think may exist given a number of parameters — great for searches where you know general characteristics but no specific names — I can think of many scenarios where this could be handy! Can you?

Great job everyone. It was a blast as always (i.e. last time). Looking forward to the next event.

Business and Military Strategy


I have been reading the book Guns, Germs, and Steel by Jared Diamond, and it has inspired a concept/theory on developing competitive online and mobile businesses that I am going to pursue further in my work with our portfolio companies.

At one point in the book, Diamond discusses the invent and adoption of guns by a number of countries. At the time, guns were the most powerful weapon. Countries that failed to adopt and manufacture guns for military use (the reason did not matter, whether cultural, tactical or lack of know-how), eventually succumbed to their neighbors or other invading troops in possession of such advanced weaponry.
A parallel can be drawn to online or mobile businesses in today’s world that have a product, but are not leveraging the necessary tools (or “weaponry”) to compete aggressively. Consider a small, vulnerable startup without “guns” taking-on larger industry giants with “guns.” The startup needs to get on level footing before any shift in market share or significant user adoption takes place. Another way to view this is to ensure your product has at least the same level of core functionality as your most significant competitors, and then innovate on top of that base. Note: There are obvious exceptions and I am being general in my statement.
Right now, there is an unprecedented number of free tools that allow business to increase the virality, social interaction, visibility and overall stickiness and competitiveness of a product or service. These can and should be leveraged to topple giants.
Virality and Social Interaction: I am referring to the use of Facebook Connect and Twitter/OAuth to increase social interaction, sharing of links, and recommendations to a user’s social network. The websites that have adopted the use of Facebook Connect have seen massive increases in hits to their website; laggards and late-adopters are suffering, and those who adopted early are reaping the benefit. Use Facebook Connect. Virality can be spread many other ways; remember content is still king — create a company/product blog and start a Twitter feed to inform your followers about industry trends and product updates; also make sure to address any concerns that users voice about your product. By using Twitter, companies can stop bad press before it starts, which could save startups one of their nine lives so to speak.
Stickiness: Give users a reason to return to your website or mobile application. Can you think of way to demonstrate continuous value to users of your site? If you can, you may enjoy more frequent visits from users. A user’s return could be influenced by social pressures (responding to a request driven/initiated by a friend), self-interest (check alert / view an update), curiosity and general need. Make use of different technologies to stay in touch with users, according to the preferences they like — allow them to select options including email, SMS (may be costly), Facebook, Twitter or through other widgets that may integrate with iGoogle or other portals.
I am going to continue to develop this theory. The next book on my reading list is Art of War by Sun Tzu; I hope that will be a good catalyst for a good follow-up post.
As always, I invite you all to contribute your thoughts below. Can you draw any other parallels between military strategies and business?

Building Businesses


Sitting down to write a whitepaper, I figured I’d find a good model to start with first! I was told to check out some of the whitepapers over at Khosla Ventures — and it was a gold mine of great information. I thought I’d go ahead and share it with you.

They have 2 main sections for “entrepreneurial resources:” (1) industry views, and (2) building businesses.

There are some fantastic whitepapers in these categories:
– entrepreneurship
– people & management
– product management
– sales effectiveness
– risk management

If you know of any other publically available sources of great whitepapers like these, I invite you to please leave a comment below, or Tweet it with the hashtag #UbiquitousVC

Global VC Blog Directory


Attention all entrepreneurs and start-ups!

A comprehensive list of VC-authored blogs have been compiled by Larry Cheng, a Boston-based VC. The list was ranked by number of Google Reader Subscribers as of May 2009.

If you’re getting serious about pitching for venture dollars, I suggest that you start subscribing to some of these blogs (just add them to your Viigo feeds).

It’s important for entrepreneurs to know about a number of things before pitching for dollars:
1. Understand the psychology of VCs
2. Understand the business models of VCs
3. Understand how to pitch VCs
4. Understand how NOT to pitch VCs
5. Understand WHEN to pitch VCs
6. Pitch VCs with a focus in your business sector
7. Don’t pitch VCs with your competitors already in their portfolios
8. Know your pitch cold
9. Spend a few extra minutes on the slide deck
10. Know the risks associated with your business (model) and suggest mitigating strategies
11. The list goes on…

Many of the blogs listed in the index will give you lots of tips in these areas. Happy reading!