Friday, October 31, 2008


I'm reading Tribes, by Seth Godin. If you are looking for motivation or just a really fun read, I highly recommend it. I'm halfway through and already I'm ready to save the world.

Monday, October 27, 2008

Insights from Gallery of Funds

Last week I went to a "Gallery of Funds" panel featuring Tom Dennedy, GP at Artiman Ventures and Brendon Kim, GP at Altos Ventures and moderated by Rebekah Wu of Right-Hand Partners. While I focus mostly on marketing tactics, it's always good to keep in mind why I am doing them, so I can offer insight to my clients and work in context of the big picture.

It was nice to hear both of their emphasis on the fundamentals. Brendan Kim brought up the analogy of hedgehogs vs foxes, where Altos goes for the hedgehogs - companies that are very persistent and do one thing all the time, really well. This is in contrast to the foxes, who are a bit more flashy, good at the glamor presentations, lots of PR. Also great, but according to Kim, "not our style".

When asked about their view on these troubled times, Kim's reply was "Don't worry, be scrappy", which he thinks applies to startups whether times are good or bad. He said,

1. Focus on what you can control and don't worry about the rest
2. Watch your cash
3. When in doubt, refer to #2

Tom Dennedy felt that while not ideal, the economic climate brings a few benefits to entrepreneurs, including the fact that there is a great pool of talent out there looking for work right now. At Artimus they look for companies that can leverage "white spaces", or areas of opportunity. They want to see good use of outsourcing, and a scalable business model from day 1. They are technology agnostic but look for companies that can dominate a market, whether via IP or other advantages. Their process is typically to invest $8 to $10 million per company.

Q and A

Wu - Why go to a fund like you vs an angel?

Kim -Angels can be good to get your product out the door and for good initial support. However it depends on what looking for. Down the road, an institutional investor may offer help in subsequent rounds of funding. Also, be careful not to price yourself out for down the road when you will seek additional funding.

Dennedy – If you opt for an angel investor, be sure you can be in a board room with this person for the next five years.

Wu - What percent of your deals were companies that were started with angels?

Kim - Nearly all had some kind of angel support. At least 70%

Wu - What percent of proposals do you accept? How do you measure failure vs success?

Dennedy - We do 5 or 6 deals/year. We accept 1% of what comes across our desks. We put serious time on 20 or 25 possible deals per year. Success really varies by the company - 1,000 paying users, or 1 big customer can be good metrics.

Wu - How would you describe a "fundable founder"?

Kim -
  • No CEO experience necesssary
  • They don't have a huge ego. They can handle bringing in a seasoned CEO down the road.
  • There are self aware - they know what they are good at and where they need to bring in help.

Wu - Where do you recommend we cut costs?

Kim -
  • Keep a low burn rate
  • Or, you can take the strategy to go big and "fail fast" - either succeed or fail very quickly. This is less in line with the Altos view.
  • Be realistic with your growth plan over the coming year
  • Budget for a worst case scenario

Wu - What is the driver for you to get involved with seed level funding?

Dennedy -
  • We still look for bigger investments. We can't afford to get in at the seed stage. However, this has opened an opportunity for smaller firms to come in and fill the void.
  • It's cheaper to start companies now than ever before. For example, I know of a company called Their first generation web site cost $10M to create. The second version took three months and cost only $350K.
  • Leveraging other infrastructures enables quick cheap development (infrastructures such as cloud computing)

Wu- What do you think of the IPTV market?

Dennedy - we have invested there but it's a tough space. It's mature with bigger players.

Kim - The market will take it's time to develop, to get to mainstream adoption. We're seeing greater adoption in Korea. It is highly competitive and takes time.

Wu- What do startup founders need to prove to be funded?

Dennedy -
  • Market size. $1B potential.
  • Differentiated product
  • A business model that makes sense
  • To show that you are disruptive, you can show that you can separate yourselve via your IP. Or you can show that you've created a barrier to entry, via the complexity of the problem you solve, via partnerships, via knowhow and time.

Kim -
  • Show traction - that you've bootstrapped yourself and delivered an early product. Prove that people want it.
  • If you can't show traction, show that this is a disruptive business model. Show a really good domain understanding.
  • Articulate the time involved in getting good at the thing that you do.
  • Emphasize your product and your experience
  • I'm not a big fan of publicity. I'd rather see more substance.
  • Show a quick high value user experience, especially if you have a consumer product. For B2B you have a little more time.
  • The financial projection slide is more an indicator to me of your mindset than anything. Does it seem grounded and realistic?

Saturday, October 11, 2008

Mind Meld for Better Messaging

Here is a technique I learned from Amy Kelm, an expert in branding and marketing communications. Amy's technique puts rigor behind mapping your key messages to where the customer is coming from at each step of the buying cycle, e.g., really getting into their head (think Dr. Phil).

So you've got much of your marketing strategy defined - target audience, influencers, value proposition, messages, key points in the buying cycle. Before you proceed to define your deliverables, this extra step will help you make sure each message is right on target.
  1. Make a big table.
  2. Across the top, list all of the members and influencers in your target market.
  3. Down the left side list the following:
  • What these members / influencers currently believe
  • What you want them to believe
  • What they need
  • Communication objectives
  • Value proposition
  • Messaging essence - just a few words
  • Messaging main points
Now fill it in. Start by paraphrasing their thoughts. Getting into their heads that way will really help you refine the communication objectives, value proposition, and messaging.

As you define and create your deliverables, refer back to your table often so you stay on track.

Remember, how do they feeeeeel....

Friday, October 3, 2008

Go For It

Welcome to my inaugural blog. I have a boutique marketing consulting business working with high tech companies. I'm an implementer and an evangelist.

My favorite thought of late comes from the groupery where I worked until this month. What they did, which I really loved, was if they got an idea, they'd definitely kick it around. But then they would try it. In the time it takes to meet, analyze, meet again, analyze, do research, meet... we could try the idea in real life and get real results. I joined them in the first place because of this. They put out their web service in just a couple of months and I saw it and I was hooked. Two years later they continue to refine and refine. But they got their earliest converts by delivering something useful for real life users, not with a lot of talk.

Of course a big key in this circle of trial and error is the other half of the circle - acting on the results, good and bad.

I know this sounds like common sense but just think - is this next discussion session or round of research really necessary or are you already ready?

This is a lot easier for startups than big companies. But, to use the words of the week, we can all be mavericks from time to time, doggone it. Go for it!