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Wednesday
Aug132014

Harrisburg Startup Week - Not Just a Festival, It's a Movement

Recently I wrote about Startup Weekend which we’ll be holding on October 3rd through the 5th at Harrisburg University. Startup Week caps off a seven day tech festival of over 20 events spread across Central PA.

So what exactly is Startup Week?

It began in 2013 as a small three-day festival focusing on entrepreneurship, startups, their founders and our ecosystem. Today, Harrisburg Startup Week is seven days and over 20 events celebrating Central Pennsylvania technology companies, the organizations that support them and the outstanding people that make it happen.

Harrisburg Startup Week runs from September 29th through August 5th.

This year, our tech community opens its doors, hosts events and rolls out the red carpet for both locals and visitors who are interested in learning more about the technology and startup scene in Central PA.

Our 2014 lineup is packed with daily events consisting of morning coffees, epic mentor office hours, a High School Pitch contest, technology conferences, technology meet-ups, open houses, happy hours, a Startup Movie Festival and Cocktail Party, a Technology Gala and a Startup Weekend where more than 100 entrepreneurs and would-be entrepreneurs build a startup in weekend.

The week consists of five Keystone Events:

Building a Better ACO - September 29th, 2014 @ Hershey Medical Center - It’s a full-day event focused on the challenges faces by Accountable Care Organizations and how technology can help the ACO achieve its goals and objectives.

HYP Tech @ the Movies - September 30th, 2014 @ Midtown Cinema - It’s movie night with the Harrisburg Young Professionals and the Technology Council of Central PA. We’re screening a few startup movies and set about networking with technologists in Central PA.

Fish Tank - On October 1st, 2014 High School Seniors from around the Harrisburg Region will meet at Central Penn College to pitch their business ideas to a panel of judges. The teams are vying for college scholarships and other amazing prizes.

The TCCP Gala, Tech Lounge - October 2nd A dress-to-impress networking event where we celebrate technology and the technologists of Central Pennsylvania. Join us for cocktails and hors d’ oeuvres in the Tech Lounge, enjoy the music, reconnect with friends and colleagues and celebrate while we induct the inaugural class of technologists and tech companies into the Central PA Tech Hall of Fame.

Startup Weekend Harrisburg - On October 3rd through October 5th entrepreneurs, technologists and designers meet to build a company in a weekend, pitch their ideas to judges and win over $20,000 in products and services. We startup companies in a weekend.

We also have a number of other mini-events scheduled such as: Women In Technology, Branding Your Startup and Small Business, Funding Your Startup or Small Business and Introduction to StartupBox#Harrisburg and open houses across the region.

You can find out more about Startup Week Harrisburg at: http://www.hbgstart.com . I hope to see you at one or more of our events. If you have any questions feel free to message me.

Saturday
Aug092014

Harrisburg Startup Weekend t-minus 55

Well it’s August 9th and we’re 55 days out from another Harrisburg Startup Weekend.

Startup Weekend is a three day event where ideas are transformed into business models by teams of software developers, designers and entrepreneurs. We award prize packages to the top three teams - this year the winning team will win over $20,000 in products, services and support. You can find out more about the history of Startup Weekends here.

This year Startup Weekend is the final event in our Harrisburg Startup Week festival. 20 Events over 7 Days. It should be an amazing week and it will be capped off by an equally amazing weekend.

We’ve picked the perfect location for our event. We’ll be invadingHarrisburg University at 6:30pm on October 3rd – the facility is incredible sporting a spacious auditorium, well equipped meeting rooms and it’s conveniently located within downtown Harrisburg. We provide all the WIFI you need and you’ll be surrounded by some of the top startup entrepreneurs in Central Pennsylvania. We’ll feed you breakfast, lunch and dinner throughout the weekend and make sure you have all the caffeine you need.

Preparing for Startup Weekend is dependent upon you. Do you want to pitch an idea, build a team, create a product and show it off to the judges? Or would you prefer to participate as a team member where you’ll learn lean startup methods, design something spectacular or hack a bit of code?

Let’s talk ideas – you have 60 seconds to pitch it in front of an auditorium full of developers, designers and entrepreneurs. Yep – you only have a minute, we call it fire-pitch. So be prepared. Practice the pitch. Use a stopwatch. When pitching, identify the problem you’ll solve, the technology or solution you’ll build and your targeted customer. Pitch the value proposition. Before you’re done ask for the skills you’ll need on your team.

One caveat: your idea is out there in the ether as soon as you finish your fire-pitch. There are no NDAs, no IP protection – just you and an auditorium full of people who’ve heard your big idea and want to help build it. That what’s unique about Startup Weekend. A business emerges over a 64-hour period. Each team member owns the intellectual property, builds the business model and constructs the product or service.

If you’re there to participate and are bringing your technical, creative or business skills to the table -well- awesome. You’re going to listen to others fire-pitch and you’ll be able to choose the BIG IDEA you find most interesting. You’ll have three votes – we do Roman Scoring. Choose your top three ides. The ‘pitchers’ that get the most votes are asked to recruit team members. As a participant you choose the team you’ll work with through the weekend.

How many ideas are chosen? We’ll that depends upon the number of participant attendees. We like to construct teams of 5 or more. Trust me you’ll need the bandwidth a team of that size provides. It’s a sprint – no – it’s a drag race to the finish and you’re team will need to quickly form and norm with a clear division of labor and responsibilities. This isn’t easy.

Now, a dose of reality: you have 64 hours to build a Minimum Viable Prototype (MVP) that implements the business model you’ve pitched. You’re idea should be demonstrable.

So bring tools with you. If you’re a hardware or software engineer you better bring your toolkits. Choose a development style and technology that lets you rapidly build the MVP. Think Ruby on Rails – not C++. Think Makerbot or 3D printer – not injection molding.

If you’re a creative type bring your laptop, pad and phone with you. Be prepared to innovate rapidly, iteratively and efficiently – you’ll have time to build a brand.

If you’re a sales or marketing wizard bring your tools, slide decks and spreadsheet models along and be prepared to discuss Customer Segmentation, Product Market fit, Partner Ecosystems and Revenue Generation scenarios.

Get ready to move fast. The weekend goes by in a blink of an eye and then it’s Sunday pitch night.

Throughout the weekend you’ve been thinking about your product’s value proposition, the reason it’s marketable, why this thing scales. So you’ll construct a pitch deck, prepare a demonstration of your MVP and you’ll pitch a panel of judges in order to convince them that your idea and execution is a winner.

Think Shark Tank - except our sharks don’t bite.

You’ll have 5 minutes to convince the judges that your idea is worthy of incubation, acceleration and perhaps funding. That’s the goal. After the pitch you’ll be asked a few tough questions about your business model, MVP and projections – so be prepared and practice the pitch.

After all the teams have finished pitching, the judges do what judges do: they judge, they score, they offer a bit of insight as to why they’ve chosen you the winner. You’re team, if selected first, second or third will receive a prize package. Seriously. First prize this year is valued at over $20,000 in products and services. We’ll be announcing the complete prize packages over the next couple of weeks so stay tuned.

You see, our goal is to help entrepreneurs build a viable company in a weekend. We want to demonstrate to you that you can do it rapidly by using lean startup techniques. It’s one part contest, one part startup boot-camp and one part incubator.

If you’re interested, have questions or you want to help out please message me. I can’t wait to see you at Startup Weekend Harrisburg.

Monday
Sep022013

Infographic - Startup Weekend Teams Accelerated 

Startup Weekend IncubatedThe Infographic on the left depicts the Startup Weekend teams that have been accepted into startup incubators and accelerators.  The winner of Harrisburg Startup Weekend will earn a spot @ the TechCelerator Carlisle and the team will be invited to attend in their fall/spring entrepreneurial program. 

Sunday
Sep012013

Harrisburg Startup Weekend Prize Packages Announced

We’ve been able to construct an amazing prize package for Harrisburg Startup Weekend, an event where participants build a company in a weekend. The event will be held at Harrisburg University of Science and Technology on September 13-15th, 2013. 

The Prize Packages are:

First Prize – Sponsored by Carlisle TechCelerator and Ben Franklin Technology Partners:

  • 4 Months of Co-working Space at the BF TechCelerator at Carlisle
  • A spot in the Fall or Spring Entrepreneurial Program @ the TechCelerator
  • An opportunity to pitch your business idea directly to Ben Franklin Technology Partners.

Second Prize – Sponsored by Startup Harrisburg, Harrisburg Chamber of Commerce and CREDC, Harbor Business Compliance and WebPageFX:

  • 3 Months of Co-working Space at Startup Harrisburg, Harrisburg PA
  • 1 Year Membership to the Harrisburg Chamber
  • 2 Hours of SEO analysis by WebPageFX
  • Business Filing Services by Harbor Business Compliance

Third Prize – Sponsored by the Technology Council of Pennsylvania, Harbor Business Compliance and the Central PA Founders Roundtable:

  • A 1 Year Membership to the Technology Council
  • Pitch Practice mentorship from a Central PA Founder Member
  • Business Filing Services by Harbor Business Compliance

Prizes will be awarded for the best & brightest ideas and business models concocted by Startup Weekend participants in a frenzied, 54-hour business and technology hackathon.

Judges for the event are:

  • Pam Martin,  Executive Director of the Ben Franklin TechCelerator Incubator@Carlisle
  • Ed Harrell, Entrepreneur in Residence, Harrisburg University of Science and Technology
  • Michael Hund, Attorney at McNees Wallace & Nurick LLC
  • Dave Bonsick, President of the Technology Council of Pennsylvania
  • Chuck Russell, Senior Partner of Collective Intelligence Inc.

Event prize package sponsors are:

Thursday
Aug292013

Lean Startup - Part 1

I’ve uploaded a slide deck that I’m using to present Lean Startup Methods to our Central PA treps in preparation of Harrisburg Startup Weekend. It’s part one of a ‘many-part’ slide deck aimed at being Lean over a Weekend. Enjoy.

Sunday
Aug182013

The MOOC Organism Evolves

Over the weekend the Institute of Technology announced plans to offer an Online Masters Degree in Computer Science for $6,000 - contrasted with the on campus cost of $48,000 - this promises to forever disrupt the tech space in Higher Education. Startups like Udacity and Coursera have proven that massive online courses attract quite a few participants - although results, measured in the number completing the courses, have been less than stellar.

The question is - what value will employers or potential employers place on this experience and will prospective students spend $6,000 to find out?

The university also plans to offer certification for those that complete a certain number of credits so the continuing education angle may be a hedge against initial degree-granting enrollment.

Friday
Aug162013

Harrisburg Startup Weekend - First Pitch

On September 13th we’ll be kick starting Harrisburg Startup Weekend at Harrisburg University stating at 6pm. After several brief comments from the organizing committee and our Startup Facilitator we’ll move directly into team formation. I gave an overview of what goes on during a Startup Weekend and how you can prepare for it in my previous article T-Minus 30. In this installment I’d like to discuss the initial pitch - where you describe your big idea in under 60 seconds.

Everybody has at least one big idea every day. You look at a product and think: “I can make that better”. You look at a business model and wonder: “Why do they do it THAT way?”.  Next time you have a great idea - write it down and bring it to Startup Weekend.

Startup Weekend is all about the pitch. First you pitch the idea, product or service you’d like to build over the weekend. Next you surround yourself with people who’ll make that idea a reality. Lastly you’ll pitch the completed idea and demonstrate your minimum viable prototype to the judges.

So let’s talk about the first pitch. It’s done in pitch-fire format. Think of it as product management meets speed dating.  This is your opportunity to convey in 60 seconds or less what you intend to build over the next two days. 

That’s not much time so you’ll have to prepare and practice it before you arrive. Let’s break it down:

 

  • Introduce Yourself and the Name of Your Product or Service
  • Identify the problem the product or service will solve
  • What team members do you need on your team
  • Come up with a name for the ideas - you can change it later

 

For example:

“Hello everyone I’m Chuck Russell, Sr. Partner at Collective Intelligence and I’m a product manager. The 2009 economic crisis really took it’s toll on young people between the ages of 16 and 20. 22% of people in that age group are actively looking for work but are unemployed. Yet, there are dozens of part time - micro tasks - that the elderly need performed on a daily basis. I want to create a mobile application platform that connects unemployed young people with the elderly on an ad-hoc, as needed basis. Think ebay meets elance. To build it I’ll need at least 2 developers with rapid dev skills including IOS or Android experience. I’ll need at least one designer to help with graphics. Thanks, and please join me while we build TeenTask.”

Keep it short, get the point quickly and let your idea sell itself.



 

Tuesday
Aug132013

T-minus 30 @ Harrisburg Startup Weekend 

Well it’s August 13th and it’s about 30 days until we kickoff our inaugural Harrisburg Startup Weekend. We’ve picked the perfect location at Harrisburg University – the facility is amazing and sports a spacious auditorium and well equipped meeting rooms. The auditorium is an audio-visual engineers dream – we’ll be live streaming the event on pitch night. You’ll have all the WIFI you need and you’ll be surrounded by some of the top startup entrepreneurs in Central Pennsylvania.

SW Harrisburg kicks-off Friday September 13th at 6:30pm.  There should be plenty of on-street parking in and along Market Street Harrisburg. There are a number of covered parking garages within walking distance including a garage attached to the university facility. We’ll have light refreshments ready for all who attend on Friday night. Be prepared for a varied menu as we’ll feed all of the participants and coaches three square meals on Saturday and two square Sunday. That leads me to our next topic- Preparation.

Preparing for Startup Weekend is really dependent upon how you’ve chosen to participate. Do you want to pitch an idea, build a team, create a product and show it off to the judges? OR would you prefer to be a team member where you can learn lean startup methods by building a business model canvas?

Let’s take the first case – pitching your ideas in under 60 seconds. Yep – you only have a minute – so if you’re coming to the table with your big idea you must be prepared. Practice it. Identify the problem you’ll solve, the technology or solution you’ll build and your view of who the customer is – pitch the value proposition. But do it fast. One caveat on pitching: the idea is out there, in the ether as soon as you’re done speaking. There are no NDAs, no IP protection – just you and an auditorium full of people who’ve heard your big idea and want to help build it. That’s the cool part of Startup Weekend: build a company over three days in an ad hoc setting where everyone on the team owns the idea, builds the product and amazes the judges.

If you’re there to participate and are  bringing your technical, creative or business skills to the table – well- awesome. You’re going to listen to others pitch and you’ll be able to choose the big idea you find the most interesting. You’ll have three votes – we do Roman Scoring. Choose your top three. The ideas that get the most votes will be allowed to form teams. At that point you can choose the team you’d like to work with.

How many ideas do we choose? We’ll that depends upon the number of participant attendees. A good rule of thumb is take the number of attendees and divide by 5. We like teams of 5 or more. Trust me you’ll need the bandwidth a team of that size will provide. It’s a sprint – no – it’s a drag race to the finish and you’re team will need to quickly form and norm with a clear division of labor and responsibilities. That’s the hard part.

Now for the harder part. You have only 2.5 days to build a Minimum Viable Prototype (MVP) and a business model. You’re idea should be demonstrable. So you have to come to the weekend with tools. If you’re a hardware or software engineer you better bring your toolkits. Choose a development style and technology that lets you rapidly build the MVP. Think Ruby on Rails – not C++. Think Makerbot or 3D printer – not injection molding.  If you’re a creative type bring your mobile computer, pad or phone with you and be prepared to innovate rapidly, iteratively and efficiently – you’ll have time to build a brand. If you’re a sales or marketing wizard bring your tools, slide decks and spreadsheet models along and be prepared to discuss Customer Segmentation, Product Market fit, Partner Ecosystems and Revenue Generation scenarios.

Get ready to move fast. The weekend goes by in a blink of an eye and then it’s pitch night.

Throughout the weekend you’ve been  thinking about your product’s message, the reason you’re it’s marketable, why this thing scales. So you’ll build a pitch deck, construct a demonstration of your MVP and you’ll have 5 minutes in front of a panel of judges to convince them that your team is the bomb. Poor choice of words – let me try again… You’ll have 5 minutes to convince the judges that your idea is worthy of incubation, acceleration and perhaps funding. That’s the goal. After you’re done you’ll be asked a few tough questions – it’s called the hot seat – s0 be prepared and practice the pitch.

Once all of the teams have pitched, the judges do what judges do: they judge, they score, they offer a bit of insight as to why they’ve chosen you the winner. And then you’re team, if selected first, second or third will receive a prize package. Seriously. First prize  this year will be 6 months of team space at the Techcelerator in Carlisle plus a bunch of other valuable consulting services and mentor support to help you commercialize your idea.  We’ll be announcing the complete prize package over the next couple of weeks so stay tuned.

You see, that’s our goal at Startup Weekend. We want to help entrepreneurs build a company in a weekend. We want to demonstrate to you that you can build it, you can build it fast and by using lean startup techniques you can increase the odds you’ll succeed. It’s one part contest, one part startup university and one part incubator.

I can’t wait to see you at Startup Weekend Harrisburg.

Thursday
Apr112013

The Cloud Portfolio - 4 Years Later

In 2009 I created a cloud portfolio consisting of a number of well known and not so well known companies. I was certain that the value of these firms would appreciate over the coming years due to the coming cloud mobile convergence. I took a mythical $13k and distributedd it amongst 14 stocks that I promised myself I would buy and hold until the momentum was lost. Here’s a snapshot of that porfolio. I would not have guessed that four years later the highest return was going to come from NetSuite. All investments were made on 4/16/2009.

 

Saturday
Mar092013

Startup Weekend Lancaster - Feb, 2013

Friday
Oct052012

Revenue Generation for Startups

Every startup should be focused on building  a customer base and then driving revenue within that base. Product development aside, customer and revenue acquisition are often the missing pieces of the business model puzzle.

I’ve created a list that stratifies some of the more common revenue generation models that internet startups have employed. I’ll start by identifying a list of ‘general’ revenue generating methods. In a later post I’ll discuss pricing models in competitive and/or cornered markets. Finally, I’ll tie it all together by using several going concerns as examples.

The model is a bit muddy right now but I think it provides a framework for product planning, pricing strategy and customer acquisition. 

The revenue geeration models are:

  • Subscriptions - freemium and premium per function pricing. Premium features may have multiple tiers each tier driven by functionality, additional user/per seat license.
  • Content Consumption Subscriptions - fremium through monthly/yearly access to content. Fremium content can be metered e.g., access to a maximum number of assets/content per period.
  • Ad Impression / Ad Network - usually piggybacked with free services, content or community functionality. This can be integrated within the fremium subscription model, premium subscribers receive no ads. Placement of the ad can be withiin web page, as commercials in videos, within a social stream or deliverd to a mobile device.
  • Transaction Clearinghouses - companies facilitate transactions and take a percentage (the rake) from the transaction. A number of user interface, messaging and analytic features are often provided which increase customer acquisition. The clearinghouse model can also be tiered; where certain transaction types are free or at a low cost.
  • Ecosystem Mining - Content warehouses (pictures, video clips, essays & blogs) offer methods to repurpose the content eg., print photos, place photos on mugs or photobooks. The ecosystem requires partners to accept the content and seemlessly deliver the physical good.
  • Virtual to Physical - the ability to move digital assets from online view to offline delivery. Essentially an eStore for existing content; think the NY Times photo archive. 
  • Donations - The consumer decides if they want to pay and if so, how much. Think of the PayPal contribution model of donating. Probably best for non-profits; I really can’t imagine this as a viable revenue generation practice, but quite a few organizations attempt it.
  • Access Convenience - fremium or pay sites can offere mobile access to content, alerts etc., for a preimum price. Think of the the cbs.com mobile application for viewing network content from within a mobile platform.
  • The Per Unit Price Model - it’s really a web store, virtual catalog and shopping cart. Physical or digital products are sold and delivered via drop ship, direct mail or digital download. Think iTunes Store, Amazon.com or Dell Direct.
  • Social Revenue - methods of paying with social broadcast are emerging. Companies agree to exchange a digital good like a white paper, eBook or audio/video file in exchange for a Tweet, Facebook like or other social endorsement.
  • Per Use - access to content, data or system functionality on a pay as you go basis; think of the movie rental principle applied to ebooks, contact lists or data mining applications. This is perhaps a subtype of subscription services; the transaction provides access with a predetermined time to live.
  • Affiliate Networks - create a network of affiliates to help sell and/or distribute physical or virtual goods. Revenue is shared across the network on a per unit basis. 
  • Pay for Influence - this method is tricky because it is more like social arbitrage. It is as much a business model as a revenue generation scheme. A communty of individuals is aggregated. The influence of the community is sold to a customer as a product: the community will provide some service to the customer. The customer pays the arbitrager. The community is compensated at some discount for participation. 
  • Free to Subscribers - services like Twitter or Facebook have attracted customers en mass because they offer a product with high utility at zero cost. You can’t beat infinite ROI, and that’s the strategy for attracting customers. Monetizing the community is done through many of the other methods above, most notably giving advertisers (messengers) the ability to deliver a message at a price to a targeted audience. There is also an element of the ecosystem play there…I guess I could write an entire post on methods of revenue generation within social - perhaps I will.

I’ll probably add to this list over time but wanted to get it out there, attract some feedback and refine what I have. Drop me a line if you feel this list is incomplete, confusing or let me know if you have other thoughts on packaging and pricing an internet product or service.

=chuck=

Friday
Apr062012

The Future of US Innovation

FEW DOUBT THE LINKAGE BETWEEN BASIC RESEARCH and technological innovation. Historically the US government has funded the majority of basic research done in the US. However, government spending on basic research as a percentage of GDP has been declining for the last 20 years. What is the future of innovation in America?

We’re all familiar with the term research and development (R&D). It’s a phrase measuring the amount of money a corporation invests in gathering new knowledge or creating new products. Investors use a corporation’s expenditures on R&D as one factor in determining its potential for growth and competitiveness. But let’s dig a little deeper into the macroeconomic view of R&D.

First, let’s focus on the research component of R&D. Research can be divided into two sub-components: basic and applied. The National Science Foundation (NSF) defines basic research as “systematic study directed toward fuller knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications towards processes or products in mind”. Applied research focuses on acquiring knowledge related to solving a particular problem or meeting a particular need.

Why do we care about research? Well, basic research breeds innovation. This is evidenced throught the increase in patents filed over the last 5 years and the corresponding rise in these patents’ citations to scientific literature. More and more patents rely on core aspects of basic research.

Universities responsible for basic research are acting as publicly subsidized incubators. The Massachusetts Institute of Technology (MIT) has spun off 4,000 companies with 1.1 million employees and annual revenues of $232 billion, according to the Alliance for Science and Technology Research in America (ASTRA).

If basic research breeds innovation then innovation breeds economic growth. Several studies have indicated that 45-75% of all economic growth is directly attributed to innovation. It manifests itself in high-tech job creation, new infrastructure technologies like the telecom/internet industry and technology enabled, ‘new’, business models.

So what is the primary funding source of basic research in the US? Well, in 2003 the US government was responsible for funding 85% of all basic research (60% Federal, 25% State/Local) most of which was performed in universities and national laboratories. Private industry funds the remaining 15%.

The trend in government subsidized basic research is disturbing:

  • Federal funding for basic research grew moderately in the 1990s.
  • Funding for the Physical Sciences and Engineering has flattened since 1980
  • Federal Funding for Physical and Mathematical Sciences and Engineering are now .16% of GDP compared to .25% in 1980.
  • The US government’s fiscal year 2005 budget proposed record funding for federal development due to large increases in defense and homeland security expenditures. Because of severe restraints on discretionary spending, most federal basic research and even favored R&D agencies of past years, like the National Institutes of Health, will see increases barely above the expected rate of inflation of 1.3 percent.

Where are we spending our basic research money? Six departments and agencies are expected to account for 93% of research obligations in FY 2010: the Department of Health and Human Services, the Department of Defense, the Department of Energy, NASA, NSF, and the Department of Agriculture. The life sciences are expected to account for over one-half of the total research funding (54.3%). Engineering is projected to receive the next highest amount (16.9%), followed by physical sciences (10.0%), environmental sciences (7.0%), mathematics and computer sciences (5.2%), social sciences (2.2%), and psychology (1.9%), with “other sciences” receiving 2.5%.

The US economy has been milking the research done years ago in telecommunications, aerospace and electronics. The US has prospered due in part to the invention of the transistor over 45 years ago. Since 1980 the US government has under funded basic research

The basic research spending trends must be reversed. It is time for the US government to manage its deficits and invest in the future of innovation.

US executives were recently surveyed by BusinessWeek and asked: “what are the largest threats to innovation in the US economy?” The executives cited reduced R&D spending (46%), the public education system (45%) and corporate bureaucracy (36%). The online survey was conducted by BusinessWeek Research Services.

Executives get it. Will the US government?

Thursday
Apr052012

Systemic Unemployment and Disruptive Tech

I’ve been a technologist for over 30 years and have always felt a certain optimism about our country’s economic future. We humans have the ability to discover, invent and adapt. And our economic model rewards those successes like no other. It does so with wealth, job creation and an enhanced standard of living. 

The exponential increase in the power and sophistication of information technology is proof that a capitalist system creates wealth and power through creation of productivity enhancement. It’s the power curve or exponential increase in infotech that is unique with capabilities on processing power increasing every 18 months. Our modern economy, for the most part, is based on Moore’s law. 

Technology and productivity are directly proportional, linked together in a recursive dance each driving the other. The traditional economic thought process goes something like this:

Advancements in technology drive larger and larger increases in marginal productivity. Productivity is the main driver of improvements in standard of living and economic growth. Productivity is a destroyer of existing jobs, but a creator of wealth. Wealth enables spending on additional products and services, replacing jobs eliminated by advances in productivity.

Two years ago I began taking a deeper look at the economic fallout created by the financial meltdown of 2007 and 2008. I like to sift through data and maybe considered, by most, to be a data nerd. The data I focused on was: unemployment, productivity and gross domestic product (GDP).

As we emerged from the recovery I noticed that productivity peaked at the zenith of unemployment. This IS to be expected as the productivity curve has peaked at the height of unemployment during 4 out of the last 5 recessions. However, as unemployment began to fall, the productivity curve fell at a slower marginal rate than ever before. And employment rose more slowly than other recoveries and was at higher than expected levels given the rising GDP. 

I blamed the disruptive technologies that were leveling the retail, publishing, manufacturing and many service industries. What else could it be?

I understood that technology had the power to destroy jobs; I didn’t think about it much, but I observed it first hand throughout the first decade of this century. I was always confident that technology would create more than it destroyed. However, during this recession, the reverse seemed to be true. Jobs were reappearing more slowly and there was no observable, proportional drop in productivity.

It was a form of systemic unemployment, not just a trough in the business cycle. 

I’m not now nor nor have I ever been a Luddite. But I was confronted with evidence that was pretty startling. Others noticed too. John Hagel et al wrote in The Power of Pull about the incredibly shrinking economic phenomenon. They described the ease at which jobs are shipped to the lowest cost provider overseas, and how service industries, leveraging explicit knowledge bases, were replaced with technology or were globally relocated because of technology.

This phenomenon surfaced during the 2008 recession and it became obvious to me as I read the economic tea leaves from 2008-2011. So with regards to job growth technology can take, but what does it provide in return?

I believe the answer lies within social, collaborative technologies. These technologies enable the rapid dissemination of information and ideas from the edges of the social network transferring it to the social core. Technology promotes rapid learning, it lowers cost and eliminate the time/location constraints. The Power of Pull enables us to learn at our own pace, at any time from any place. 

Is this a zero sum game? Can our labor force learn and develop new skills quickly enough to offset these systemic forces? Put another way: will the disruptive nature of technology overwhelm our economy’s ability to retool the labor force which has been disrupted? The rate of disrupiton is increasing. I’m not sure that our out-moded educational infrastructure can adapt.

So what’s the solution? I’d love to hear your thoughts.

 

Saturday
Mar102012

Startup Says What?

They are the little white lies entrepreneur like to tell partners, investors, potential employees and their spouses. 

It’s like a code. Every sentence can be translated from startup-speak to the English equivalent. I know I’m in for a long conversation, meeting or pitch when I hear any of these. 

Startup Says: ”We are a pre-revenue startup with a great team that has a proven track record. We’re getting early traction, our product has viral potential…just as soon as we get out of stealth mode.“ 

Translation: We’re giving our innovative product away to our friends and family, my mother-in-law really loves the dancing cats but nobody else knows we exist. 

Startups ought to leave this BS out of their elevator speach or product pitch opening. 

Startups Says: “We’re looking for $100,000 at a pre-money valuation of $1,000,000.” 

Translation: The actual valuation is closer to zero. We all know that. I’m totally open to negotiation. 

Every startup picks a muliple of a million dollars for preliminary valuation because it makes the math so much easier for angel investors to compute. Let’s face it; startups without performance metrics are impossible to evaluate…any attempt to determine value is a SWAG. 

So what are the common metrics? Well, it could be something like: customer acquisition over time, average number of minutes spent by user on site per visit, frequency of returning user, the number of transactions (pick one…) performed per user per day. Thes metrics can be turned into revenue projections, revenue into return and then return to valuation. 

Startups Says: “We’re a disruptive force…”

Translation: I heard someone at Y-Combinator say this about thirty times. Quickly check for a copy of The Innovator’s Dilemma in their briefcase but only after you’ve asked for their definition of disruption. Giving the product away isn’t disruptive, working 24/7 only disrupts their social life, ‘customerlessness’ is certainly not disruptive. It’s just a trendy way of getting attention. 

There are plenty blogs that have provided exhaustive definitions of what it means to be disruptive and the definitions often depend upon whether its a product or service. I’m not going to get into that here.

Startups Says: “We started up several years ago but after a lot of feedback we’ve pivoted…”

Translation: we’ve assembled a team of crack engineers or developers that were building a product that nobody really wanted. We’ve fired our product management team and are starting over.

Now don’t get me wrong, there’s nothing wrong with mid-course changes of direction…as long as your pivoting with your customer base, not away from them. Of course that assumes you have customers in the first place. It’s always best to talk about pivoting after its worked not in conversation with an investor or partner.

Startups Says: “We’re going to change the world…

Translation: “I’ve recently returned from a Tony Robbins seminar and… I really love you man”

It is essential that entrepreneurial startups believe in their product or service; they have no other choice. I can’t imagine spending 3000 plus hours a year building a company that I didn’t believe in. So the startup gets points for enthusiasm but looses all credibility for the delusion. Put that sentence anywhere on your slide deck and you’ve lost me. Feel fre to talk about changing the world once you’ve actually started changing the world.

Startup Says:The product is … a breakthrough, patented, innovative, yada-yada-yada

Translation: “Lipstick is on the pig get ready to watch us make bacon”

When I hear these adjectives I’m prepared for a crappy demo or an unfinished product. My advice is to dispense with the adjectives. I want to know what the product does, who the target customer is and then I want a demo. In almost every case I’ll be able to detect the secret sauce if it’s there and I’ll be more excited because it was my discovery. After the demo reiterate the opportunity and then just shut up. The questions will come.

Startup Says: “We have no competitors…”

I never really know what to say when I hear this. The startup is either incapable of doing the research OR they’re pitching a product that has no market.  Competitors indicate that the market is prepared for the product or service; that’s a good thing. No competitors: bad sign. Go find some competitors…

OR be prepared to pivot because you can’t be disrupt a nonexistent market.  ;)

Tuesday
Mar062012

The Big Data Startup Equation

Kickstarting a Big Data firm? Pick any three, choose a vertical market and focus: