Wednesday, April 23, 2003

Projections Don't Matter I saw a presentation this week with the usual hockey stick revenue projection... what I like to jokingly refer to as the $1m, $4m, $10m, $1 billion slide. The team didn't make the mistake of talking about their projections as overly conservative (which they clearly weren't) but they did click right through the slide as if it told the whole story and warranted no further discussion. Revenue and income projections just aren't that important for an early stage company, I can "predict" with 100% certainty that they will be wrong. The important questions, needless to say, are by how much and in which direction; simply looking at a 5-year projection of an income statement gives no way to tell. I would much rather see a slide of key assumptions that will drive a company's economic model than I would the result of those assumptions spread into an income statement. My advice to entrepreneurs presenting to VCs would be to focus on the most important financial drivers of your business. Depending on the specific model, these could include the price of the product, the cost to build or serve the product, the customer acquisition costs, the cost savings inherent in scale, the capital expenditure and development costs required to build the product and so on. Explain and defend the margins that should be realizable once the business gets to scale. And give a sense of what kind of market share you should be able to realize over time. But save the projected income statement for your business plan... it really provides no information content during a presentation. [VentureBlog] Now that I've completed a large portion of my business/marketing degree, I can absolutely understand why this is true. In this last paragraph, he basically listed the 4Ps of marketing: product, price, place, and promotion. 12:52:09 PM

Nerve-wracking, inflexible, and unintuitive. via Scott Rosenberg: There is an interesting survey on Radio UserLand usage among the bloggers at Salon.com. Reading the responses for the question "what do you like/dislike about the existing Salon/Radio features?", one gets the impression that using Radio is not a very pleasant experience. The words cumbersome, nerve-wracking, inflexible, and unintuitive are used to describe the software and the words pathetic, sporatic, and impersonal are used to describe the support. One respondent: "ask other bloggers, not Userland, when you need technical help." Hmmm... didn't Dave Winer say open source software makers were the ones who did not care about users? Sounds like us open source guys are not alone ;-) But seriously folks, I bet that many of those complaints also apply to Blogger, Movable Type, and, of course, Roller (OK, I have no idea about Movable Type). Blogging software makes web publishing a lot easier for non-geeks than it was with tools like FrontPage, but we've still got a ways to go. The responses for "what additional functionality is needed in Salon/Radio?" are interesting as well. Better get on it UserLand, Salon just did your market research for you. Good ideas for Roller too. [Blogging Roller] Of the twelve (count 'em, 12!) respondents to this survey, few use a news aggregator... not sure I can consider this conclusive data, though, can you? 12:30:11 PM

Charles Hudson On Software Charles Hudson (of In-Q-Tel) describes very nicely in a recent post how and why software is increasingly moving from being sold as shrink-wrap to a service. The services or ASP model is unfairly maligned because of a number of unsuccessful attempts at it during the late 90's. Those failures had more to do with the product than the model. I think the most important point Charles makes is that we don't even tend to realize that many of the services we use today (PayPal, Yahoo) are really just hosted software. [VentureBlog] I think Charles is right, but I don't know what this means for desktop software. SOAP, .Net, and other desktop network APIs continue to take hold, as people recognize the inherent limitations of applications via web browsers. While software services are a simpler business model than the software upgrade model, the technical challenges and historical customer perspective of controlling "things in" the computer seem large compared to "things visited by" the computer. And many software tools aren't transactional in nature... If I sell you a word processor service, do I turn it off if you don't pay the bills? 12:28:39 PM

An Advertising System for RSS The advertising problem? Again, if no one actually goes to the actual weblog to read the article, any advertising on the page will never be seen. Just like the above mentioned "traffic based" ad delivery system, there needs to be a technology capable of "attaching" ads to RSS newsfeeds as they are sent out. Again, this could be done manually but it would be very inefficient. Perhaps the simple auto-attachment of a Javascript might do the trick. [Adrants] Really, the server-side component that assembles the RSS feed needs to take several factors into account: who is requesting the RSS feed? Yes, I know what you're thinking… Most people describe about RSS feeds as a "fire and forget" delivery method, where everyone gets the same data. But I think we should be handing out unique RSS feeds for each reader, so that we can see who's reading what and how often. how often the weblog is updated? If there is only one weblog entry per day, then each entry should get an attached ad. if there are dozens per day, then some subset of those entries should have ads attached. In other words, if every entry has an ad, the signal to noise ratio drops considerably, thus diminishing the point of aggregators in the first place. Does the RSS feed include just the title, a short intro, or the entire piece? The kind/size of the ad should correspond to the kind/size of the entry. 12:07:51 PM

Beer Advertising Shocker! Puppies Instead of Boobs In a backlash from the mudwrestling jiggle-fest, Molson has a different approach: The Molson Man. A hunk for the ladies with an advertising twist. Sell the hunk to the ladies in Cosmo and sell the fact that the ladies are being sold to in men's magazines with this interesting copy: "Hundreds of thousands of women. Pre-programmed for your convenience. As you read this, women across America are reading something very different: an advertisement scientifically formulated to enhance their perception of men who drink Molson." [Adrants] I finish Integrated Marketing Communications today, and this ad story broke the same week we talked about appeals and creative briefs. 11:59:48 AM

A Comprehensive Review of the Email Marketing Scene Emerging Interests: Email Marketing 101 and Then Some A great report, helpfully split into the following parts: Introduction Industry Overview Industry Overview Chart List Development and Maintenance Tips The Importance of Relevance, Frequency and Consistency Ensuring Readability Email Success Stories The Spam Battle Rages on Anti-Spam Tips and Resources Recommended Resources Email Terms and Definitions Posted by Robert Loch at 02:22 PM Comments: (post your comment) [marketingfix] I predict that email marketing has hit its peak. Email marketing is disruptive marketing at its worst. Weblog marketing is permission-based marketing at its finest. 11:56:20 AM