Continuing
on the topic of Web 2.0 entrepreneurship (see last post),
Guy Kawasaki recently published a
great video on his blog from a
panel discussion at Startup Success 2006—the
Churchill
Club’s annual look at what it takes to build a successful startup. Check
out the video below or here.

Here’s a
brief synopsis of the session:

Recently, Business 2.0 reported that “a
typical VC-funded startup in the late 1990s needed roughly $10 million to carry
a company from business plan to product launch. Today that cost has been
reduced to just $4 million - and in many cases way, way less. The barriers to
entry have never been lower”…This panel of technology's leading innovators
will discuss and debate the challenges and critical success factors to landing
funding, proving long-term viability to customers, building a team, and leading
a startup to the promised land. What lessons have been learned from the past?
What advice do they have for future entrepreneurs?

Guy Kawasaki
moderates this candid discussion and is joined by five other prominent web/tech
entrepreneurs:

- Lauren
Elliott (Founder, Personal News Network)
- Reid Hoffman
(Co-Founder and CEO, LinkedIn)
- Joe Kraus
(Co-Founder and CEO, JotSpot)
- Daniel
Mattes (Co-Founder and CTO, Jajah)
- Alex
Welch (Co-Founder and CEO, Photobucket)

Once again,
this video is another great way to understand the mindset of a Web 2.0 CEO and/or
entrepreneur and here are a few sample “sound bytes” (transcribed):

Reid Hoffman, LinkedIn:

“…If you
look at the trends in terms of how people are consuming media—newspaper circulation
goes down year by year; television doesn’t reach young audiences; more and
more, people’s lives are moving online. If you actually think about how much
goes on in your life and, as yet, how little of it is facilitated online, I
think there’s still a lot of room for [startups]. So the trend is, don’t just
do a me-too, buzzword, bingo startup; but I also think there’s a lot of
opportunity in the next 10 or 20 years.”

“…As far as
consumer internet stuff goes—which I understand better than other things—frequently,
an entrepreneur comes up to me and says ‘I have this really killer consumer
internet idea’ and I say ‘Tell me about your distribution plan. How is it you get
to your first 1 million users?’ Because that’s what consumer internet is about.
In retail, you say the three words of retail are ‘location, location, location.’
In consumer internet, it’s ‘distribution, distribution, distribution.’ I’m not
even interested in anything else, until I’m basically told that piece of it.
And, I’m surprised still at how many times I see people trying to do consumer
internet stuff, where they come up and say ‘oh, we’ll solve distribution later.’
I go ‘well, zero distribution means zero value. Period.’”

Alex Welch, Photobucket:

“…We’re
really passionate about what we do and we look at the world as ‘let’s just
simplify the way that you do things’. I think a lot of the companies get so
tied up—How do we innovate? How do we have the perfect differentiator? We step
back and say ‘what does the main stream really want?’ What are the drop-dead
simple things that you can give them and keep it reliable, keep it safe; and
they tend to be pretty happy. You don’t always have to have the most bleeding
edged technology. So for us, we really think there’s huge opportunity in
solving problems for the masses, and that’s how we look at it.

Joe Kraus, JotSpot:

“…I really
think there are two kinds of entrepreneurs. I think there are top down
entrepreneurs and bottom up entrepreneurs. A top down entrepreneur basically looks
at where there is an established business model, potentially an established
habit, and tries to find a niche. So I would argue today, if you are a vertical
search company, you’re probably a top down entrepreneur…Search is a well
established business model; the risk is primarily in the execution. I’m not
that; I’m not good at that way of thinking, for whatever reason…I’m much more
the bottom up entrepreneur. I think the bottom up entrepreneur looks for
patterns that feel familiar…Take JotSpot for example: When we were looking at
wiki’s three years ago, we felt like it was the internet in 1993. Here was this
very useful, broadly applicable technology trapped in the land of the nerds…And
I went across companies in Silicon Valley and asked the CEO ‘Do you have a wiki’
[and they said] ‘No’. You go down to their product manager: ‘Do you have a wiki’
and they said ‘Oh yeah, we got like three or four, and we’d never get rid of
them.’ Those were two patterns that felt familiar. And my kind-of motto for
bottom up entrepreneurship is ‘It’s better to be a trend spotter than a trend
setter.’ Another statement is that ‘Being early is the same as being wrong in a
startup.’ Feels the same—your market isn’t there, which is why I think being a
trend spotter, and not a trend setter, is the right thing. Find something that’s
moving and attach yourself to it. You’ll have to guess less about how people
will react.”

I also
found a brief write-up on the panel discussion at the Sports
Lizard Entrepreneur blog, where Adam McFarland  says:

Each
entrepreneur said that their company has grown through some combination of SEO, PR (through the media, blogging, and
social networks), and viral marketing…Do you know what that list doesn't
include? PPC advertising, television commercials, magazine advertisements, or
ANY paid advertising. It seems like most new startups learned from the dot com
Super Bowl commercials and learned more effective techniques…It also seems to
me that you don't need hardly any money
at all to grow your business.

Besides the
above quotes, there’s plenty more pearls of wisdom in the video and I strongly
encourage anyone who’s interested in Web 2.0 startups to take the 1.5 hrs to
watch it. It’s well worth it.

If you’re only
just getting into the blogging, podcasting, RSS, social networking scene, check
out the Otter Group’s latest offering:
Everybody’s
a CEO Boot Camp.

As you can
see, I’m still struggling to keep up with the blog. It’s been a hectic couple
of weeks, partly because of my recent (lateral) transfer into a new department,
meaning: new responsibilities, a rush to implement/execute new strategies, and
a learning curve to boot. Oh well…not everyone can quit their day jobs and blog
full time (we should be so lucky, huh?). Anyway, I’ve been meaning to post this
one for a while, so—as they say—better late than never, I guess…

A couple of
weeks back, Business Week had a cover story on Kevin Rose (Founder, Digg.com) “…and the new wave
of young entrepreneurs running the hottest of the top 100 Web 2.0 companies”,
called Valley
Boys. It’s a fascinating read that (pardon the pun) digs deep into the
growing trend of the “community first” business model that is sweeping the Web
2.0 world (e.g. Digg, YouTube, MySpace, etc.), which has given rise to soaring
numbers and, ultimately, resulted in high valuations of these companies and
incredible post-bubble acquisition deals (e.g. MySpace
= $580 million). And with Digg’s estimated value at ~$200 million, Biz Week
pegs Kevin Rose—who retains 30-40% of the company—to have an estimated worth of
around a cool $60 million…in just 18 months (since Digg’s launch). Not too shabby,
huh? Here’s a
quick excerpt from the article:

That's why
some smart money is on Digg to become an ad magnet à la MySpace.com. Some even
refer to Digg as the new New York
Times. News sites are discovering they can benefit too: Get a story on
Digg's front page, and in comes a flood of traffic from people clicking on the
link to read the story on your site. Digg gets advertising via Federated Media,
the company Silicon Valley veteran John Battelle created to pair Web sites with
advertisers (Digg sparingly places ads in a narrow band at the top of the Web
page). So far, Digg is breaking even on an estimated $3 million annually in
revenues. Nonetheless, people in the know say Digg is easily worth $200
million.

It's not as dot-com déjà vu as it sounds. YouTube, the enormously popular video
site, posts similarly fledgling revenues, but some experts say it could easily
fetch $500 million. What's more, Digg registered users have been doubling every
three months. As such, Digg is attempting to follow the path laid out by Google
Inc. and now being adopted by many Web 2.0 companies: focus on building a user
community, and the ads will follow. “It's one of those things where we know we
could put crazy ads all over the site and clutter it up, but we don't want to
do that,” says Rose. “We have a clear path toward becoming a
profitable company, and we're fully funded. We don't have to worry about it
now, as long as we keep hitting our numbers.”

Accompanying
the article, is a light-hearted (but interesting) podcast
with authors Sarah Lacy and Jessi Hempel, who candidly discuss the rise (and
trends) of these 2.0 entrepreneurs and—with plenty of giggling and enthusiasm—how
some of these former high-school geeks have now been elevated to a status of silicon
stud-dom (not in the nip/tuck sense, of course):

Rose's
social stock has climbed, too. He has more than 11,000 friends on MySpace. He
was a runner-up in blog ValleyWag's “Hottest Guy in the Valley”
contest…and he co-hosts a hot weekly video podcast called Diggnation….At a
party for the 50th show, Rose was mobbed by fans and even photographed signing
a pretty brunette's cleavage. The snapshot was posted on Flickr the next day,
prompting one viewer to comment: “When did they become rock stars?”

So far,
Digg's traffic just keeps growing. And Rose is picking up a bit of swagger. His
shyness is fading, and his wardrobe has gotten a hipster upgrade. Girls on
MySpace swarm him…The tech bust notwithstanding, the Valley is still the only
place on earth where geeks with good ideas can become celebrities overnight.
But wannabes be warned: As nearly everyone found out six years ago, the fall
from rock star to pariah can be just as quick — and not nearly as much fun.

However,
while Biz Week paints such a pretty picture for Digg, it seems that the article
also incited a lot of attention in the blogosphere; and not all of it good. For
example, check out ValleyWag’s summary
of Digg
Fallout stories, including Jason Fried’s (pretty strong) response:

Wait a
second. This $60,000,000-on-the-cover figure came from multiplying the
fictitious “people in the know” number of $200,000,000 by an estimated 30%
ownership? 30% of $200,000,000 is $60,000,000. Is that the math that made the
number that made the cover? SLIPPERY. And then Rose and BusinessWeek
acknowledge it’s “only paper wealth” and “this could be a jackpot” which means
it’s not real anyway. So BusinessWeek is using fuzzy math to put a fuzzy number
on the cover that isn’t real anyway? All together now: BULLSHIT!

Of course,
there are also folks like Chris Pirillo who basically think quite the opposite:

I agree
with what some of these guys are saying: the number is wholly inaccurate. Kevin
and the Digg brand are likely worth twice that amount…I believe that Digg
(and its entire community) is worth more than $60m $200m today. Then again, I’m
an idealistic sonofabitch. Even if Kevin was a billionaire, I’d still insist on
buying lunch for him.

In the end,
I don’t really care (too much) about what Biz Week estimates the value of Digg to
be. What I do care about, is what this article is trying to convey about being
an entrepreneur in this Web 2.0 age and the current environment of startups and
investors. Clearly, times have changed from the first internet bubble and the
folks leading the pack are very different in nature and think very differently
as well (e.g. “community first, money later”), so I thought I’d end off with
one final quote from the article that depicts this rather well:

Clearly
much has changed since 1999, and Rose and his fellow wealth punks have little
in common with the sharp-talking MBAs in crisp khakis and blue button-downs who
rushed the Valley as the NASDAQ climbed. In the late 1990s, entrepreneurs were
the supplicants, and Sand Hill
Road, dotted with venture-capital firms, was the
mecca. Dot-commers relied on VCs for the millions needed to buy hardware, rent
servers, hire designers, and advertise like crazy to bring in the eyeballs. For
their big stakes of, say, $15 million for 20% of a company, venture capitalists
received board seats, control of the management levers, and most of the equity.

Now, it's more like: Maybe we'll let you throw a few bucks our way — if you
get it. Otherwise, get lost. That's possible because the cost of jump-starting
a good idea has plummeted. At the same time, the sources of money have
multiplied, swirling in from new VC shops, angel investors, and strategic
partners galore. The awash-in-capital environment has flipped the power dynamic…

HELLO ALL! I’m back…WOW—has it
really been more than a week since my last post? Sorry for the long hiatus…As it turns out, just
like Rod Boothby from the Innovation
Creators blog, I ended up canceling my trip as I was due to fly out of
Boston to London’s Heathrow airport on the same day as the foiled
bomb plot in UK. Oddly enough, things at work also got REALLY busy, so I
decided to take a mini “blog-vacation” for the week, anyway.

So, I’m now
back into the blogosphere and sooooo much has happened in the last week that I’m
not sure where to begin—how about starting with big news on blogging tools from
Redmond?

Microsoft recently
launched
a new blogging tool, called Windows
Live Writer. The free
download “…is a desktop application that makes it easier
to compose compelling blog posts using Windows Live Spaces or your current blog service…Our
goal in creating Writer is to help make blogging more powerful, intuitive, and
fun for everyone.” Of course this is not the first application
to do this (see Qumana and Ecto),
but it definitely shows that Microsoft is starting to take blogging really seriously!

If you own a Mac, you can stop
reading here…There’s no Mac version at the moment or any indication of when one
might be available.

For PC users, here are
some of Writer’s features:

WYSIWYG Authoring
You
can now author your post and know exactly what it will look like before you
publish it.

Photo Publishing
You
can insert a photo into your post by browsing image
thumbnails through the “Insert Picture” dialog or by copying and pasting from a
web page.

Map Publishing
Writer has the ability to
insert a Windows Live
Local map directly into a blog post. The map can then be customized
directly within Writer, including changing the view to show road, aerial
or bird's eye detail and by adding pushpins.

Writer SDK
The Windows Live Writer SDK allows developers to
extend the capabilities of Writer to publish additional content types.

Compatibility
Writer is a great client
for Windows Live
Spaces but also works with other weblogs including Blogger,
LiveJournal, TypePad, WordPress (and many others). Writer
supports RSD (Really Simple Discoverability), the Metaweblog
API, and the Movable Type API.

If you want
more info, start by reading a brief overview
at GigaOm, where Om Malik says “Live
Writer has the look and feel of Office 2007…It [has a] very clean interface,
and still retains some of the Microsoft Word features that would make it
attractive to a larger mainstream audience. It is not often, I say good things
about Microsoft products, but with this free blogging tool, I have to say: write on!”

For more
in-depth reviews, visit Robin Good’s MasterNewMedia blog, which includes a very informative video
(via YouTube) that really provides lots of insight into how it works. Also
check out Rod Boothby’s comments on WLW’s implications
on the Enterprise user, Tim Heuer’s blog,
a write-up on
ARS Technica, and a host of other
reviews.

Well, it’s
good to be blogging again, but there’s so much catching up to do after a week
off…Stay tuned for more!

I will be traveling over the next week or so and
doubt that I’ll be able to get a QOTW—or any other posts, for that matter—for the remainder of this week. So instead, I
thought I’d share a bit of my blogroll
(i.e. my frequently visited blogs) and probably resume writing again sometime next week.

Andrew McAfee

Business Innovation Insider

Corante Innovation Hub

Creating Passionate Users

Enterprise Web 2.0

GigaOM

Innovation Creators

Micro Persuasion

O'Reilly Radar

Official Google Blog

Otter
Group

Read/WriteWeb

Signal vs. Noise

TechCrunch

Techmeme

Vitamin News

Happy reading and have a great week!

A couple of
posts ago, I ended with a humorous video clip (by Ask a Ninja) that answered the question “What is Podcasting?” (see end of this blog).

Well, while
not as brief nor quite as high in comedic value, TechCrunch has just (AUG 8th, 2006)
published a FANTASTIC ~25 min video that features Michael Arrington interviewing
13 CEOs of hot, new Web 2.0-ish startups, who delve into the topic of “What
is Web 2.0? (Note: the video may take a few mins to load up—I’m
sure it’s getting lots of traffic, so click ‘play’ and be patient).

Here’s the
impressive list of CEOs who were interviewed:

- Aaron
Cohen (Bolt)
- Scott
Milener and Steven Lurie (Browster)
- Keith Teare
(edgeio)
- Steven
Marder (Eurekster)
- Joe Kraus
(JotSpot)
- Jeremy
Verbaa (Piczo)
- Auren
Hoffman (Rapleaf)
- Chris
Alden (Rojo)
- Gautam
Godhwani (Simply Hired)
- Jonathan
Abrams (Socializr)
- David Sifry
(Technorati)
- Matt
Sanchez (Video Egg)
- Michael
Tanne (Wink)

And the
topics that were discussed include:

1. What is Web 2.0?
2. Are we in a bubble?
3. What are the business models that
will work on the web today?
4. What is the role of publishers in
a user generated world?
5. How important and how big is the
early adopter crowd?
6. …as well as many others, such as VCs and funding, browsers, community,
etc.

Even though
many of the answers were rather concise, there’s a lot of insight to be gained
from them—they really provide a sense of what the current trends are for a
successful Web 2.0 business and where the industry is heading; but more than
that, they also provide a brief glimpse into the mindset of a Web 2.0 CEO,
which I believe is the key to building a great 2.0 business.

Overall, I
was really impressed by this video and really appreciate the time and effort
that was put into making it (thanks Mike and crew). I really wish TechCrunch could do this every quarter or
so with different CEOs—that would be fantastic! Hey, why not just make it a
quarterly video podcast via TalkCrunch?

So, if you’re
reading this blog, then you’re probably interested ET&T and this
video should therefore be “required watching”.

This week’s
QOTW comes from a brief (~4 mins) PodTech
interview with Charlene Li
(Principal Analyst, Forrester Research) at the recent
2006 Always On Stanford
Summit. The interview follows up on the topic of “Has Blogging and Social Networking Changed the Marketing
Game?” which was a panel discussion that—besides Charlene—included
the likes of Steve Rubel (Edelman) and Jay Stockwell (Nielsen/BuzzMetrics).

Firstly, here
are Charlene’s comments on “the need for
generosity in blogging for marketing”:

One of the
hardest things for companies to figure out is that “voice” that they want…Especially
when they come in and their nature is to say “I have a marketing message that I
have to get out there.” Well, that’s not a very generous approach to it, because
that’s really about you selling something or telling people versus saying “What
does somebody need out there?” And being generous is a learned trait—it’s not
something that comes naturally to companies. So, I thought it was a really
interesting metaphor that, if you want to learn how to develop that voice, you
have to learn how to be generous…What would you want to give to your audience?  What would you want to help them with? If you
take that kind of approach versus a marketing message approach, that helps you
re-think about the different kind of mindset that you have to have when you’re
approaching blogging…If you approach it as a marketing channel and a medium,
it’s not going to play very well.

Then,
Charlene was asked to comment on where the future of corporate blogging and
podcasting is going, and how the independent blogger compares with the blogger/marketer,
particularly in terms of consumer trust and controlling the message:

Look at
what Robert Scobel did. He was unapologetic about how enthusiastic he was about
Microsoft, but at the same time, he called it as he saw it, too. So you knew that
you trusted him. And he really is one of the most generous bloggers, as Steve
Rubel says…And I think that’s really what people are looking for—it’s that authentic
relationship that somebody has, so they’re not trying to pull the wool over
your eyes. Often times marketers are doing so much in terms of saying “Well I
think I know what you need” rather than listening, saying “I think I hear what
you need. Is this what you want? In fact, I’m trying to meet your needs. I’m
trying to be generous again. I’m trying to address what it is that you want.” Instead
of thinking “This is a blog. Here’s an opportunity to push that message again,”
it’s really much more about “I have an audience. What do they want to hear?”
And if you can understand what they [want to] hear and meet them, then I think
that’s really the success; in the end, not just of blogging, but marketing in
general.

I believe
that much of what Charlene said is very much true for all social media these
days and how to use them effectively to reach your target audience. The change
in mindset is a key component to success as people are no longer satisfied to
be “passive consumers” and are now proactive about their consuming habits. For
example, how many of you just go out and buy a new electronic device on a whim
or after seeing an ad for it on TV? Don’t you try to research it online first;
look for user reviews, price comparisons, merchant ratings, etc? Times are
changing and marketing—the traditional way—may no longer fit these new forms of
media.

For more on
corporate blogging, check out Charlene’s
blog. And on the topic of “generosity
in blogging,” check out Charlene’s post on the “Generosity
and Dell’s New Blog” and Kami Huyse’s blog on “The
Culture of Generosity in Social Media“.