Friday, March 28, 2008
There's been a lot of news out in the last few weeks and months about OpenSocial, Google's social networking API. The basics behind Open Social is that it allows a set of interoperable API's that any supporting website can implement. This will allow sites to easily interface with other websites offering support for OpenSocial. You would be able to use an OpenSocial based photo app on any social network that supported it (Friendster, Orkut, LinkedIn).
OpenSocial was initially released with quite a bit of fanfare, mostly because it was viewed as a democratic response to the closed Facebook platform, providing greater openness and flexibility between apps. But there were problems early on. It was released without much functionality. Most of the gadget API's were not initially supported or just plain didn't work. This left a sour taste in the mouths of many of the companies excited to participate in the initiative. They did, however, receive initial support from some of the major players in the social networking space, like MySpace. They've since received even more support from some other large players in the game, Yahoo!, Hi5, LinkedIn, etc.
A few days ago Google, Yahoo, and MySpace announced the OpenSocial Foundation to "ensure the neutrality and longevity of OpenSocial as an open, community-governed specification for building social applications across the Web".
While this is all good and nice, I'm still waiting to see the value add for the consumer. In theory, it seems like a good idea if there are a wide variety of social networks and applications that users can take advantage of. Unfortunately, at this point, that just isn't the case. In addition, consumers generally use different social networks for different things. I don't think the social networking space is that fragmented. There are only a few major social networks in each category - for fun (Facebook, MySpace, Friendster), social networks for the corporate setting (LinkedIn, Doostang), and niche social networks (TripAdvisor, Ning). I guess it can help the little guy if he wants to make his app available across the board, but as long as Facebook isn't providing support and remains the leader, this just doesn't live up to the hype. Not yet.
Thursday, March 27, 2008
In the interest of keeping this blog relevant, I'm going to begin commenting more on companies in the startup world or tech sector - or maybe even some other stragglers. The reason behind this is that there isn't a great deal of information about Vyoo that I can share at this point. As we get closer to our alpha launch - which will hopefully be in May/June, I'll start sharing how that process is going. In the meantime, we're working hard on developing our product. As events come up, I'll happily share them.
Monday, March 24, 2008
I wrote a post about the ridiculous pricing of Starbucks bottled water last week. And, coincidentally, I saw a few articles the very next day about trouble at Starbucks. The articles were interesting and spoke about how the changing economy is affecting what people now purchase. And $1.80 bottled water is one of those luxuries. So is $1.75 coffee when McDonald's now sells drip coffee for much less. I can't say that it should be that surprising - common sense dictates you can only take people for a ride when the economy is good.
Starbucks tip problems
All of this got me to thinking about the economy in general, now that it's in the shitter. How could people not see problems coming? For example, does Starbucks really think that in a cyclical economy, people would continue to pay ridiculous amounts of money for their products (they raised their prices at the end of last year to boot)? And the whole mortgage crisis is beyond me. How could these incredibly bright people not see through the whole crisis? I mean, they've been studying this stuff for years. They understand that the economy goes up and down, housing prices rise until there is too much supply. And lending at sub-prime rates is sure to bite you in the ass if the economy every goes south. When in history has the economy ever not gone south at some point in time? Even in China, where it seems a long way off, the sustained growth will one day slow down.
Well, I got a little insight from a guy I met at the b plan competition last week. He said that nobody really cared about the mortgage crisis...sure they knew it was coming, but they were making so much money (the lenders), that they didn't want to stop. They just didn't want to be the one getting stuck with it, so they'd make their money and hopefully not be around when things crashed. They assumed that the downturn was a lot further off. I guess that's a total dick move. But that's business. In the real world.
Saturday, March 22, 2008
I have always HATED public speaking. I rarely raised my hand to answer questions in class because of that. I also rarely gave my opinions, for the same reason. I was fine with small groups or when I knew everyone well. When I got to business school, I was outta luck. I had to speak in class - it was mandatory. Yup, cold calling. And I dreaded it. And probably because of that, I got called on more often than not. There was one class in particular, my finance class, that I remember with dread to this day. The professor had this Excel spreadsheet with all of our names on a sheet. He would hold down the arrow key and the highlighted cell would cycle through all of our names. And when he lifted his finger, that's who had to answer the question. He called it the God machine. I can't tell you how many times my name came up. Man... I dreaded that class.
Now that the God machine is behind me, I've found myself in situations where I used to be uncomfortable. Presenting to investors or pitching our business would have normally made me uncomfortable. I've found that I'm getting very used to speaking in public. I guess it's a practice thing or being comfortable with the situation or material. Or maybe the fact that I'm just getting older. In any event, it's been good practice to get out of my comfort zone.
Well, we found out Wednesday night that we didn't make it to the final round of the business plan competition. I was actually quite surprised and a bit bummed out. But you move on and you realize that not everyone is going to be behind your idea and certainly not every investor. After we got the news, I went up to one of our judges to get some feedback, so we could see what needed to be worked on. He said he didn't have any additional feedback other than what he gave during our presentation. I didn't recall any feedback other than him saying that we're tackling a difficult problem. Well, last time I checked, solving difficult problems was a good thing. I guess it involves more risk from their perspective, so from a funding standpoint, I can understand, but for feedback for me, it was useless.
To give you an idea of how this round worked, all of the semifinal teams were grouped into similar categories. Each group of 4 to 5 companies pitched to a panel of 3 VC's for 15 minutes. There was then a 10 minute Q&A session. We were crammed into a tiny room which was sort of uncomfortable, but you gotta deal with what you get. Apparently some of the rooms were so hot, people were coming out sweating through their shirts. Not the way to impress people.
What Went Wrong (from our perspective)?
1) We didn't have a product yet. Thus, we have no customers or no idea who will use our service. Big risk. Now that's not the end all, but with a risky product it's more important than with others.
2) One of our judges had tried to solve the same problem we are trying to solve - albeit from a different angle. You never want to rely on someone who's been burned in the same market/with the same product as you. They'll be reluctant to give you the benefit of the doubt and wonder why you're idea is going to succeed when theirs didn't.
3) We had our series A funding request in our presentation even though we're not raising financing until we have a product. We had just assumed we should keep it in their since it's a b plan competition and they wanted to know what type of money we'll be looking for. They thought it was way too high for the stage we're in - though we did get to explain the fact that we weren't raising money yet. Now I realize we shouldn't have even had it in there. That's a lesson for all of you - if you're not raising money, don't have it in your plan. And don't ask for it. Sometimes it's good to pitch to people, get your idea out there, and then not ask for money. My friends at TubeMogul did just that. Now on the other hand, I have heard that it makes sense to take more money than you ask for if you can get it - it gives you more time between raising rounds. My opinion is that you shouldn't take money if you don't need it - unless it doesn't change your valuation and ownership structure.
Wednesday, March 19, 2008
Well, I had assumed the presentation for the competition was next week, but in fact it was today. We were definitely well prepared, because I realized this oversight earlier in the week, but it required us to put together a presentation that was ready for prime time. We spent some long hours putting it together on advice from our go to guys - Ed Harley and Guy Kawasaki (at least the pre 2007 version of him). These guys have excellent resources for presentations which I think I've linked to in the past. In any event, here they are again: Ed Harley's How Software Entrepreneurs can be Successful Presenters to Investors and Guy Kawasaki's 10/20/30 Rule of Powerpoint. His list of ten slides are great. We used something very similar!
As I mentioned in my last post, it's finally beginning to feel like we have a great message, a great business plan, and a great presentation. Maybe it was the b plan competition that drove us to get to this point, but regardless, it feels like we're finally approaching realization of our dreams.
Results are out tonight...
Friday, March 14, 2008
It's been busy on the work front lately. We had to submit our business plan for the semifinal round of the Berkeley Business Plan competition. Our mentor bailed on us (he went on vacation) so we were left up to our own demise. Fortunately and unfortunately, we reached out to a friend in the VC community and fellow Haas alum, Alex Ortiz, to take a look at our plan. The reason I said unfortunately, is that it required us to rework quite a bit of what we had. And unfortunately, because this was on Sunday night and our plan was due Tuesday. We had lots of work to do and little time.
It was actually quite fortunate that we had him look at it. I think after we incorporated his changes, it actually really started to look like a legitimate document the Rajiv and I were both proud of. I'd invest in this company after I read it! I guess I already am, so the true test is when we approach investors.
What we learned from Alex?
1) Know your audience
One of the main concerns he had was ensuring that we were directing the document to the right people. Know your audience! We were initially selling the idea as a benefit to consumers - to get buy in on the idea. Unfortunately, it's not your consumers that are funding you - it's your investors. So although proving the merit of your idea is vitally important, we had to focus more on showing them the money.
2) The more eyes the better
Since Rajiv and I had been the only ones who had looked at it, it was also good to just get some feedback on flow, grammar, and style of the document - which he had quite a few comments about. It was hard for us to see what we were writing since we'd read and re-read the document so many times!
3) Be explicit - don't make assumptions
Another important piece of Alex's feedback was ensuring that he understood what we were doing and what we were offering. If you are doing something new, make sure you spell it out - with images, mockups, or whatever else best describes what you are doing.
As for the rest of the competition: our presentation is due on Tuesday and the following Wednesday we will be formally presenting to VC's at Berkeley. We find out that day if we make the finals. Nervous? Yes. Excited? Yes. Curious to see what some real players think about our idea? Definitely.
Thursday, March 6, 2008
When we were thinking about filing a patent, we found ourselves in a situation that was quite similar to our "are we ready to incorporate yet" question. Since this was our first time dealing with the patent issue, we were really learning on the go. I spoke to some great attorneys back in July from McDermott Will and Emery who initially explained the process to us. When we later got representation from Fenwick & West, getting patent help was included. We had other priorities, so it sat on the back burner for a little while... now it's boiling over.
There are two ways you can approach filing a patent, which I'll explain here, along with the merits of both. You can file a provisional patent application or a full patent application.
Provisional Patent Application: A provisional patent application is really a lean patent or a placeholder patent. It requires far less stringent guidelines when filing and it is MUCH less expensive. Essentially, the provisional patent application is filed and sits in the patent office without being examined. It provides precedent or a date at which you can claim rights to the patent. That's usually where you see "patent pending". There are two concerns for filing a provisional patent.
1) You must file the full patent application within a year.
2) A bigger concern is that the provisional patent idea must meet the "best mode" and "enablement" requirements of a regular patent app. But as I mentioned above, the provisional app isn't looked at, so there's no way to tell in advance of the full patent app whether you met those two requirements.
Full Patent Application: A full patent application is a much stricter process. It pretty much requires you to work with a legal team to put together the patent application and the claims - as well as a much more formal patent search and filing. It's also a much more expensive process. To the tune of $10,000-$15,000 - or more. The way this process works is that your application is filed and it sits in a queue at the patent office. Once the patent gets to the top (it could be years), the patent officer reviews it and either approves it or sends it back for changes. You make the changes and resubmit it to the office and continue the process until it is approved or otherwise rejected. In this process, you know whether the requirements are met because an officer is actually looking at it.
Saturday, March 1, 2008
I'm not a huge coffee drinker, but I do enjoy a cup once in a while. While I prefer Peet's Coffee, Starbucks also makes a good cup. I seem to think that plenty of other people tend to agree because there are always crowds of people clamoring for their own cups inside. I do think that Starbucks is a great company and a great brand, but I'm not overly impressed with their Ethos Water initiative. In fact, it really bothered me when I noticed it as I walked through Starbucks a few days ago.
This is the deal - Ethos Water, Helping Children Get Clean Water. It's a noble cause. But it quickly loses its appeal when you notice the price of the water. $1.80/bottle. Now if most of that $1.80 was going to helping children around the world get clean water, it would be great. But a paltry 5 cents of each sale goes to helping these children. What the hell is that? What do they do with the other buck 75? Yup, they turn a hefty profit I'm sure. For Starbucks, a company that prides itself on fair trade and promoting other noble and humane initiatives, to seemingly mislead consumers or to at least be profiting (probably well) from selling water in the guise of helping children get clean water is disgusting. I wonder if people are falling for this crap or just buy the water because they want a water and they don't have an alternative there...? So, if you feel the urge for helping children get access to clean water around the world, just donate some money instead - to WaterAid America (donate here)