Entries Tagged 'Startups' ↓

Wieden+Kennedy, the advertising agency that made the absurdly popular Old Spice campaign on TV and the web called "Smell Like a Man" announced today that it is now accepting applications from brand-friendly tech startups for admission to its incubator program, the Portland Incubator Experiment (PIE). The Portland, Oregon company has partnered with Nike, Target and Coca Cola to create a shared office space, mentorship plan, partnership considerations and a small funding opportunity. The project hopes to draw startups from a national pool of applicants.

Previous iterations of PIE have housed some strong technology startups, including Urban Airship, PHP Fog and BankSimple. Collaboration between PIE and some of these big brands has been technically interesting as well. Nike worked with PIE this Spring to hold a data hackathon that brought developers together to create mashups and analysis of newly opened data about the company's sprawling manufacturing and supply chain network.

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The agency says it's looking for something a little different this time around: "We're looking for startups with an emergent opportunity in brand-aligned and business-aligned hardware, software, services or experiences, with a special focus on mobility."

Admitted startups will receive 3 months of collaborative office space (I've worked there before, it's good) and up to $18,000 in funding. Is that enough support to make interesting things happen? Can an advertising agency and big global brands really help create startups that are both meaningful to the program's sponsors and interesting to the outside world? Such are the questions that will be explored by the experiment.

The mentorships may be the most valuable part of the offering. PIE says that the participating brands will contribute "five cross-disciplinary mentors during the 3-month period, who collaborate with the startups, provide knowledge share and explore new business challenges and opportunities." I've agreed to act as a mentor myself as well, though for no financial compensation so I won't list it as a financial disclosure.

It probably won't be easy for an advertising agency to bring together huge global corporations and tiny little startups to build data-savvy, mobile, business-friendly technologies that have a lasting impact on the world - but it sure will be interesting to see them try.

Applications open today and will be accepted through August 1st.

Less than a year after the launch of the investment fund, Dave McClure's 500 Startups is going full throttle. That's the image that you should take away from the fund's press release today with a headline that invokes The Fast and the Furious at least. Speed, risk, victory - you get the picture.

500 Startups makes a couple of important announcements today, including some staffing changes (the promotion of Christine Tsai to partner and the addition of Paul Singh as principal) and the recipients of two of its microfunds, the d.fund (its designer-oriented microfund) and Twilio fund (for startups utilizing the VOIP API). Those winners are StoryTree, Culture Kitchen, and Volta.

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Those 3 startups will join another 17 to comprise the next batch of startups in the 500 Startups Accelerator Program. (The full list is below). This is the second class of startups for the program, the first class having graduated this past spring.

The participants in this round come from a pretty diverse set of backgrounds, with over a third of the teams coming from outside the U.S. That hardly seems a surprise with the amount of travelling that McClure has done lately. His network is broad, with a third of the mentors for the accelerator program also coming from outside Silicon Valley.

Also notable: 20% of the startups participating this time around have female founders (LaunchBit, Snapette, Vayable, Cardinal Blue and Culture Kitchen) and three of those teams (LaunchBit, Snapette, and Culture Kitchen) are 100% female.

I asked McClure about the lessons learned from the accelerator program's first round, and he stressed the importance of working with AngelList and getting the startups in front of investors early. "Launch early and often," quipped McClure, "and promote early and often."

The second round of the program is already underway already and will run for 12 weeks, culminating in a Demo Day on August 15.

500 Startups Summer 2011

• AppGrooves
• BugHerd
• Cardinal Blue
• Culture Kitchen
• Daily Aisle
• Hello World
• Kibin
• LaunchBit
• LaunchRock
• OVIA
• Scoopola
• Snapette
• Storytree
• ToutApp
• Vayable
• Vidcaster
• Volta
• vvall
• Welcu
• Zerply

Although Silicon Valley gets the bulk of the tech world's attention, as ReadWriteWeb's Never Mind the Valley series likes to highlight, there are actually thriving startup hubs all over the place. And arguably one of the most vibrant in North America is in Montreal, Quebec. So it's good news for the entrepreneurial community that there's a new accelerator program in town: FounderFuel.

FounderFuel is backed by the team behind Montreal Startup and Real Ventures (a $50 million seed-stage fund).

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FounderFuel will launch with a $2 million committment, with Ian Jeffrey, former VP at Tiny Pictures and Director of Marketing at Shutterfly at the helm as General Manager.

Jeffrey proclaims that "Montreal's startup scene is alive and kicking," and the proximity of the city to New York City and Boston let it tap into US-based mentors as well as the strong local entrepreneurial community.

FounderFuel boasts over 85 entrepreneurs and investors who will act as mentors for the accelerator program. Teams selected to participate will receive $10,000 in funding, with an additional $5000 per co-founder. The program says that 8 teams will be chosen for this first round.

Applications for the inaugural class will close July 1. The program will begin August 15 and will run for 12 weeks, culminating in a demo day on November 7.

The website mentions something about cold Montreal winters as the rationale for the summer kick off for the accelerator program. But don't let that dissuade you. Word is, Montreal is hot.

Y Combinator is already known as one of the most successful startup incubators in the tech industry. But just how successful is YC? And how successful are the 316 companies that have gone through the program?

According to co-founder Paul Graham, very successful. The combined value of the top 21 startups that have graduated from the program is $4.7 billion.

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Of course, success can be tracked a number of different ways: the amount of money raised and the valuation of the companies, for example. In the case of the former, YC is doing well on that account too. Even before the announcement earlier this year that 100% of YC's startups would raise funding, thanks to the $150,000 offer to each startup from Ron Conway and Yuri Milner.

But even before this, the vast majority of YC startups were successful in their fundraising efforts. Of the summer 2010 class, 94.4% either raised money or didn't need to as they were already profitable. "That number is about as high as I'd want it to be," writes Graham. "If it were 100%, I'd worry we were being too conservative in who we funded."

Graham notes that funding, while easy to measure, isn't necessarily the best way to gauge the success of the program's startups. "Getting funded is not success. It's just something that makes success more likely." But if the standard measurement for success is value, and if value is measured by exits, then the 6 years of YC's existence isn't quite long enough to adequately assess this. Of the 300-plus startups, "just" 25 YC companies have been acquired, 5 of them for over $10 million, and Graham says that he's estimated the values of the rest of the companies based on these acquisition figures in order to gauge that the average value of companies Y Combinator has funded to be roughly $22 million.

But coming up with an adequate measurement for success isn't really the point, says Graham. "The real lesson here though is how long it takes to measure performance in this business. We're 6 years in, and we could easily be off by 3x in either direction. Startup outcomes are unpredictable, and the outcomes of their investors doubly so, because it's hard to say whether the big successes are repeatable, or if the investors just got lucky. Even 6 years in, all we can say is that the numbers look encouraging so far."

As an entrepreneur it can be dizzying to watch Groupon and Living Social grow so quickly, raising huge venture rounds at massive valuations while contemplating multiple billion dollar acquisitions and IPOs. While certainly this is something even the most disciplined founders find themselves dreaming about, the experience is such an outlier it's not something you can build projections from. However, I do think there is one key lesson entrepreneurs should look at - we are moving into a new "default business model" for consumer software that many of the fastest growing startups are applying to their business.

While most consumer software over the last few years was commercialized by serving advertisements (and before that by charging licensing fees) increasingly I expect consumer technology to be commercialized by enabling purchases and taking a percentage of the transaction over the next few years.

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By "default business model" I don't mean that there will not be other ways to commercialize technology or that no one has made money using this model before today. eBay certainly has enabled purchases and built a very large business doing this. However, that was an outlier relative to the majority of tech companies focused on online advertising.

The Last Shift: License Revenue to Advertising

For perspective, it's helpful to look at why the last shift from licensing fees to advertising happened. Certainly one of the big trends that drove this was the amount of consumer software that became Internet-enabled. This change and connectivity opened up significant opportunities for targeted advertising to be delivered. It also become easier to monitor and more importantly adapt based on user behavior.

Beyond the technology driver, there was also some market implications that drove this. The market dynamics were succinctly observed by looking at the dominant consumer software business Microsoft focus on advertising. As Robert Scoble said when Microsoft launched adCenter (May 4, 2006):

"So, why does Microsoft care so much about the world that Google is the leader in? Well, cause the advertising industry is a lot bigger than the software industry. Translation: the MBA's here see a lot more growth potential in advertising-backed software than they do in software that you go to Fry's and buy."

It's also worth pointing out that at that point in 2006 Microsoft revenues were $44 billion and Google revenues were $10 billion . Today Microsoft does about $62 billion and Google does about $30 billion annually. While Microsoft still earns more revenue than Google, the MBA's were correct: today Microsoft does about twice as much revenue as Google as opposed to doing about four times like in 2006.

Trends Enabling this Change

Just like the last shift, there are both technology and business-model changes enabling this one. From a technology perspective, the increasing percentage of Internet experiences through mobile devices is one key driver. We have documented the increase in mobile broadband well.

However, there is also a similar market dynamic as the last shift. I imagine a lot of MBAs at Google are saying similar things in terms of the migration from online advertising to commerce. (I imagine this is how Google internally reportedly made the case to acquire Groupon and certainly justified the investments made to develop the recently released Google Offers and Wallet.) While Google and Microsoft both have impressive financials, Walmart did $418 billion of revenue at the end of its most recent fiscal year (1/31/2011). Obviously, it has a very different cost structure than either Microsoft or Google but that just shows how big the market really is!

What Should You Do?

As an entrepreneur, ultimately you need to pick the business model that makes sense for you. However, if my thesis is correct that this is increasingly a default model, it's important to become more conversant in both the enabling technologies trends and economic drivers. This will allow you to determine if it makes sense to use it as your next business' revenue model. There are three resources I'd recommend you check out to learn more:

1. A key enabling technology will be near field communications (NFC). Between increasing the speed that devices can synchronize remotely (think Bluetooth without the pairing process) to enabling purchases from mobile devices it's very likely that NFC will become a core enabling technology for this trend. If you haven't checked out our series on ReadWriteMobile about NFC I'd encourage you to go read every post immediately!
2. There are a few books in every industry that represent a number of the "first principals" either explicitly or implicitly understood by most of the market. From people I've talked to in the retail business, I understand Why We Buy to be one of these books. It's worth picking up.
3. Finally, we're going to have an outstanding panel at our upcoming RWW 2Way Summit: "Mobile Payments, NFC and Your Future Wallet". If you haven't registered for the event, do so today with the promo code PAYMENTS and get $200 off your ticket price. If you want to start to understand the payments part of this equation, you can look forward to insight from Qualcomm, Intuit, Mastercard & Rovio.

So what do you think? Is commerce the future default business model for consumer software? Let me know in the comments below.

Photo selected from iboy_daniel's pictures under creative commons on Flickr.

New Media Ventures, the first national network of angel investors focused on creating political change, launched last week in New York. Investors in the network intend to provide seed funding to new media and tech startups that are developing "disruptive uses of technology" and, according to the press release, "have the potential to build progressive political power."

The Obama campaign is often touted as the premiere example of how social change can be affected by new technologies. From text messaging to Facebook to Twitter, these technologies were seen as key to engaging and motivating voters. But the history of Internet technologies and progressive political change certainly predates the 2008 U.S. Presidential campaign.

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New Technologies for Political Change

As Matt Ewing, New Media Ventures director and former field director for MoveOn.org says, "MoveOn is a good example of the type of impact we're thinking about. Before MoveOn started (12 years ago), no one thought that online organizing could have impact on politics. The idea that people would donate online was seen as crazy. Now hundreds of millions of dollars are raised that way every year and it's allowed candidates to get elected that wouldn't have stood a chance if they solely relied on traditional fundraising."

In a Huffington Post article announcing the angel network, Advisory Board member Mike Mathieu writes, "Over the last three years I've incubated a number of projects in this space (ObamaCTO.org, CountMore.org, WalkScore.com, PredatoryLendingAssociation.com), and I have learned that real impact comes from backing passionate entrepreneurs and helping them build well-functioning organizations around their mission, not just creating innovative web sites."

According to Mathieu, more innovation in the tech sector will bring about more political change, and this notion was the impetus for forming New Media Ventures.

Investors Supporting Innovation and Political Change

"Our member investors know that supporting innovation is critical for the progressive movement's ability to continue to leverage new technology and new media," says Ewing. "We'll be taking lessons from the best angel investors in Silicon Valley and applying the model to progressive politics and new media efforts. We're looking for entrepreneurs with big ideas for creating progressive political change that could quickly scale with the right help."

James Rucker, another Advisory Board member says, "Our approach will allow us to work with organizations that have huge potential, but are too risky for traditional non-profit funders, and don't come with the expected returns of venture capital funded efforts," said James Rucker, New Media Ventures Advisory Board member and Color of Change co-founder.

New Media Ventures is a pilot project of the Democracy Alliance.

After the success of last week's ReadWriteWeb Mobile Summit in Mountain View, California, we are back with this week's best startup advice in the ReadWriteStart Weekly Wrapup. This week we discuss VCs and NDAs, balancing features between power users and newbies, geeky startups and how one startup shrugged off a lack of funding and made the money themselves. We also have stories about Diaspora, the open source Facebook alternative, as well as an interview with Gary Vaynerchuk about the bright future of geolocation.

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Why VCs Won't Sign Your NDA

There are several important documents you'll want to have ready when you meet with potential investors. Your mission statement. Your founding team's resume and responsibilities. A business plan.

But most investors agree: they do not want to sign an NDA.

While non-disclosure agreements are designed to protect your ideas, asking potential investors to sign an NDA is generally seen as unnecessary and unwise. Most VCs point to the following reasons for avoiding NDAs:

Balancing Act: Keeping Power Users Happy Without Overwhelming the Newbies

For many successful startups, there exists a point where their product is popular enough to grow beyond the minimum viable product, but is yet to be discovered by millions more that may be turned off if the service is too complicated. Internet startups need to find a balance between keeping the power users interested, while not overwhelming the newbies. According to Spark Capital's Bijan Sabet, Tumblr, a rapidly growing micro-blogging service, is one company doing a beautiful job of finding this balance by turning the "less is more" mantra into "less and more."

Is Your Startup Too Geeky?

If you tell most folks that Diaspora is promising to build a distributed, open-source social network, they are apt look at you glassy-eyed. Perhaps they'll nod and say, "Oh. Cool." Tell those same people that Diaspora is promising to build an alternative to Facebook, and they're much more likely to know what you are talking about. And as of late, it's much more likely they'll nod and say, "Oh! Cool!" - and mean it.

No Funding? No Problem! How Occipital Shifted Gears to Success

Last week during my stint at Boulder Startup Week, Occipital co-founder Vikas Reddy was gracious enough to let me stay with him rather than in a hotel. Oddly enough it wasn't until one of the late night mixers a few days into the event that I got a chance to talk with Reddy about Occipital and the company's history and evolution. As it turns out, barcode scanning, which the company is now well known for with its RedLaser application, was not their original plan, but rather a pivot made to take the company in a more profitable direction.">

The Diaspora Project and Kickstarter: The Power of (Micro)Funding a Good Idea

Since we broke the story about the Diaspora Project last week, the plans for an open source, distributed alternative to Facebook has seen widespread press. But just as importantly, funding for the undertaking has skyrocketed.

Gary Vaynerchuk Talks Geolocation and Answers Your Questions

Last week we asked you to send us your questions for our interview with wine connoisseur and social-media expert Gary Vaynerchuk. Gary and his consulting company VaynerMedia recently ran an experiment with the NBA's New Jersey Nets and geolocation app Gowalla (in which Gary is an investor) to see if location services could draw fans to games with free tickets. For all parties involved, the experiment was deemed a success, and the findings from it have provided a unique insight into the future possibilities for geolocationtional advertising.

While creating a profitable company may provide for a comfortable retirement, that's no way to plan. And many entrepreneurs, perhaps believing their businesses will be their retirement, don't plan sufficiently for their retirement. That's the finding of two reports recently released by the Small Business Administration.

Saving for Retirement: A Look at Small Business Owners, written by SBA economist Jules Lichtenstein, finds that entrepreneurs' retirement account ownership, contribution, and participation rates are low. Among his key findings:

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• Just 36% of business owners have individual retirement accounts (IRAs), and only one-third of business owners with an IRA contributed to one during the 2005 tax year. Only 18% of business owners have a 401(k) plan, and less than 2% have a Keogh plan.
• Business owners are more likely to own tax-deferred individually based IRAs if they are older, female, white, non-Hispanic, citizens, better educated, and married.
• Entrepreneurs who own homes and have other retirement accounts are most likely to have IRA, Keogh or 401(k) participation.

A second SBA study, Small Business Retirement Plan Availability and Worker Participation, surveyed the participation in retirement plans by employees of small businesses. Among the results:

• Approximately 72% of employees working for small businesses (almost 41 million workers) do not have a company-sponsored retirement plan available where they work. This contrasts with those who work for businesses with over 100 employees. 78% of employees for large firms have retirement plans available at their work.


• Of the employees at small businesses who do have company-sponsored retirement plans, 9% do not participate. Only 19.5 percent of workers in small private sector companies report participating in a retirement plan.

Lichtenstein suggests the findings in his study point to the need to develop ways to help owners of small businesses, especially home-based sole proprietorships and minority-run businesses, increase their retirement savings.

"There is a need to better coordinate employer-based retirement accounts with individual-based accounts like IRAs and make plans less complex and burdensome on business owners, especially for owners of micro-businesses."

Are you saving for retirement? Do you even have a plan? Let us know in the comments.

By now, South by Southwest is wrapping up and the legions of nerds and geeks that partied heartily over the last two weeks are slowly crawling back to their homes with their SXSW hangovers. Here at ReadWriteStart, we've kept on truckin' through that time, so here is this week's Weekly Wrapup. This week we discuss whether tracking pageviews is still worth it, how micropayments and subscriptions could be the future of startup business models, which mobile platform is best for small business development, and how credibility is your best friend.

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The Death of the Pageview

The Web has hit a point where tracking pageviews is useless for startups.

There was a time when all you needed to succeed on the Internet were lots and lots of eyeballs, and the best way of measuring those eyeballs was by tracking pageviews (measuring exactly which pages on a website are viewed by individual visitors). The dot-com crash showed us that the eyeball-based business model was a failure.

Micropayments and Subscriptions: How Business Models for Startups are Shifting

Back in early February, while aboard a red-eye to New York, Dave McClure wrote a long, humorous, rambling, profanity-laden rant of a blog post that focused on startup business models. While it makes for an entertaining read, McClure's post is also very insightful and makes a solid case for why startups should shift from advertising models and instead build their new businesses on subscriptions and micropayments. Earlier this month I had the chance to visit the headquarters of ZooLoo, a startup that witnessed this very shift first-hand with their own business model.

6 ReadWriteStart Lists: Our Best Startup Advice

In a recent conversation here at ReadWriteStart we were talking about what readers want most. Beyond stories about where the latest funding opportunities are found, and beyond wanting to know what startups are doing that works, we know that sometimes our startup readers just want some simple practical advice.

Towards that end we've posted many a list. And now it's time for a review. Here are six of our best lists in abbreviated form. From how not to kill your startup, to public speaking, to funders to follow, we at ReadWriteStart want to help. If you have ideas for future lists, please post 'em as comments below.

Which Mobile App Platform Should a Startup Focus on?

As much as startups want to launch their applications across all mobile platforms, it's often more realistic to focus on just one. But which one? The iPhone has the biggest numbers in terms of both apps and app buyers, whereas Android usage stats are rocketing.

Earlier today we wrote about a new mobile analytics report that showed that Google is no Apple. We explained the difference between these two as relates to phone sales and usage. Now we'd like to highlight the difference for startups that are deciding which one to do business with. It's tempting to go with Apple because of their current sales figures, but in the long run Google is going to be a far less limiting business partner.

Founding a Startup? Credibility is Your Best Friend

We hear a lot about how starting a company takes some serious entrepreneurial DNA with traits like ambition, drive, relentlessness, and above all, passion. But some might argue that these are just the good sounding attributes that can lead to success; what about the other characteristics that may not sound so great? According to WePay co-founder Rich Aberman, starting a company also requires some arrogance and naïveté, so here's his advice on founding a startup straight from the entrepreneurial front-lines.

Nestled in the foothills of the Rocky Mountains and fueled by leaders and social hubs such as Micah Baldwin, Tech Stars mentor, #followfriday creator and now chief community caretaker at Graphic.ly of Digital X, and Robert Reich, the founder of Boulder/Denver Tech Meet-up, Boulder's startup community is pumping, even in the midst of recession.

Boulder is the home of Blue Mountain cards, one of the first successful online greeting cards websites. In the 1990s, Fortune 1,000 tech companies popped up all over the Western prairie between Boulder and Denver. Since then, Boulder's creative, crunchy, beautiful mountain environment has nurtured a self-supporting startup tech ecosystem.

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We already wrote about Boulder in our Never Mind the Valley series, and recently had the chance to visit the city and lunch with four of the region's startups. Here is what we found.

Community Support

The Boulder startup community, continues to be a supportive, passionate community with talented individuals, inspired ideas that is affecting change politically and economically in the United States. Lunching with four startups that Micah Baldwin organized was like lunching with a family. The group we talked with share office space, mentor each other and talk proudly of each others ideas and accomplishments.

The Underground Rail Road

Attracting talent is foundational to any startup environment. Eric Marcoullier, co-founder of Gnip described the "underground railroad" of transients that have made their way from Silicon Valley to Boulder. "Weekly I would get emails asking about what Boulder was like. Eventually I just started telling people to come here, visit and ask the locals themselves," he said. Venture capitalists have also made their way from busy Silicon Valley to the Boulder Valley.

Affecting Change - The Startup Visa Act

Once you have the foundation of talented motivated individuals, ideas flow. Brad Feld of TechStars took the idea for a national startup visa bill and made it a reality. TechStars receives proposals from all over the world. Startups based in foreign countries come on tourist visas with great ideas - and potential jobs are being sent home with them. The startup bill seeks to change this. The bill will enable companies that do not have U.S. citizen or resident status, but who have blessed by at least $100,000 in VC investment, to start their companies in the United States.

Measuring Outcomes

The four thought-provoking, pioneering startups we met with had had nothing but positive things to say about TechStars and starting a business in Boulder. Each had a unique story; two of them were locals and all of them men.

Gnip

Eric Marcoullier, co-founder of Gnip, launched two years ago with the unique idea of providing data collection and analysis of social signals across multiple social websites to help companies improve their product and service experience. The Gnip platform and service bridges the gap between the data APIs between large companies and multiple social sites such as Facebook, Twitter and Post Rank. ReadWriteWeb has covered Gnip extensively. Since its launch, Gnip has changed its technology strategy and will be re-launching soon.

Everlater

Natty Zola and Nate Abbott spent one year sleeping on couches as they traveled across five continents before they came up with the concept for Everlater. Everlater allows travelers to easily record and share their travel experiences through Twitter and Facebook. The platform allows users to use data from across multiple photo sharing sites. People can also publish their travel "scrapbooks". An algorithm lays out the book automatically so you don't have to. For hopeless photo organizers like me, this is a godsend!

Next Big Sound

Alex White, co-founder Next Big Sound, provides cultural analytics specifically to music companies. Music professionals can track how fans interact with their music, or music from many musicians across sites such as MySpace and LastFM. It is currently developing a premium service.

Graphic.ly

Micah Baldwin is not only social hub-connector extraordinaire, but also works for the uniquely cool comic book community Graphic.ly. Graphic.ly, which is currently in private beta, hopes to open opportunities for comic book creators, publishers and enthusiasts that are currently suffering under a one distributor model - as well as reawaken America's and the world's love for online comics. Members can both purchase and discuss comic books on Graphic.ly.

Ties to the Universities

Startup's ties with Colorado universities are immature, but starting to materialize. The morning of our lunch someone from the Colorado startup community (who we promised not to name) had met with the University of Colorado. As the individual put it, "Universities are turning out graduates prepped for a traditional computer science career at the likes of Lockheed Martin. We don't need MBAs - we need coders." The local Universities are overlooking careers in startups that are based - literally - around the corner or down from "The Hill" as a viable career option. An exception, University of Colorado Law School is has been offering startups free legal advice in exchange for student experience.

Judging from the close-knit group of entrepreneurs we saw, Boulder has matured significantly since the dot-com boom and bust. The only thing lacking at lunch was more estrogen.