Archive for April, 2013

Startup Revenues: The Final Frontier

Good old fashioned revenues are making a comeback of sorts, not that they ever went out of fashion.

I earlier wrote that Traction is Job 1.  Ash Fontana’s presentation is getting a lot of press these days. Sales often are more important than product or team as a factor in VC evaluation.  It’s certainly critical in reducing risk.

At BAE Investments & Workshop we see a wide range of startups from concepts to  those seeking several million dollars in funding.  You don’t have to have revenues.  Our program helps plug holes like that.  But there is no denying that traction is and has always been important.

Indeed revenues are becoming currency in deals.  The Next Stage of Angel Investing: Revenue-based Funding from the Texas Entrepreneur Network highlights revenue sharing as an emerging vehicle for startup funding. Typical deals have a 3 to 5% revenue share that’s capped at a 3 to 5X return. It’s venture capital meets factoring.

The run to cash is a natural economic response to the changing capital markets. Demand has increased with the rise of self-funded and angel startups, while later stage money continues to tighten with diminished IPO and VC markets and low returns.  It’s why many angels today have moved to real estate deals.

If you’re an entrepreneur, the question is how well are you positioned for revenues?  If you wait until you start looking for VC money, you’re too late.

The tech culture today is tightly focused on product, as it should be.  As I noted in Exponential marketing VC Fred Wilson proclaimed “Marketing is for companies who have sucky products.”

But it’s becoming increasing clear that revenues are just as important.  A revenue strategy needs to be designed and executed earlier rather than later in your startup’s development. That’s exactly what we do at Power CMO where we work with both investors protecting their investments and entrepreneurs.  We couple innovative revenue-focused marketing strategy with a marketing system for regular, reliable, and scalable revenues. Give us a call at (972) 200-3490 to see what we can do for you.

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Traction is Job 1

Ash Fontana from AngelList presented  Want To Raise A Million Bucks? Here’s What You’ll Need.  He says that Product and Team aren’t that important if you reach a traction milestone, such as

  • 1K seats at $10/mo for enterprise
  • 2 pilot contracts for big enterprise
  • 100k+ downloads/signups for social
  • $50K revenue/mo for marketplace or e-commerce

One can quibble with numbers and nibble around the edges,  But I agree  that such traction is critical when you’re looking for VC money.

Build your business and show that you can bring in subscribers, or more importantly revenues, and the the investors will come. That’s what I look for at BAE Investments & Workshop.

LinkedIn – another design failure

Here is yet another example of LinkedIn updating a feature that is one step forward … and two back.  They continue to use an architecture that fails its top users.  It stuns me that a billion dollar company can release code like this with insufficient testing.

Here’s the challenge.  I’m trying  to send an update to my local Dallas LinkedIn connections.  I have over 4,000.    I’d be happy to simply export my connections and send it directly via my email marketing service.  But LinkedIn hasn’t allowed top users to download their own connections for about 5 years now. The process times out.  LinkedIn has never fixed this or provided a solution.   Even if you’re a paying customer.

So I’m forced to use LinkedIn’s own messaging.  LinkedIn limits messages to 50 recipients.  You can do the math.   That’s a LOT of group sends.  Previously, unless your tag or filter results were under 50 you had to individually click each connection to add him to the recipient list.  Yes, you can see how wonderfully yummy that was.   It would take several hours to go through the forced machinations to  reach a few thousand of your own connections.

Note that one of LinkedIn’s many limitations in connection filtering is that you can only apply one at a time.  So if you have a filtered group like my Dallas connections there is no way to have Location is Dallas AND Last name is ‘R’ connections, or Location is Dallas AND Industry is Recruiting.  To message or tag connections in a filtered group,  you have to run the filter and page through it repeatedly.  This is painful if the group is large.

There’s been a recent update.  Now when LinkedIn displays a page of connection results you can click a box to select all of connections on the page.  Yippee!  No more individual clicks. …  But not so fast, buckaroo.  They also hugely reduced the number of  connections displayed in the results from 50 to 10.

So let’s say you’re contacting 1000 people.  Bear with me so you can see the insanity they force on their users.  To select the first 10 connections  is just one checkbox click. Hey, that’s much better than clicking each connection individually, right?  For a moment. It only goes downhill from here.

The next ten connections require a scroll or page down in the filtered results, click Next, click the checkbox. That’s three clicks. Repeat for five pages to select the 50 recipient max. That’s 13 clicks. Not bad. Be sure to tag that group if you may use it again in the future.

After you send your message to that group does LinkedIn return you to filter state and display you just had?  Of course not, you have to start from the beginning.

So click your filter, scroll or page down, click Next, repeat 5 times to get to the next batch.  That’s 11 clicks plus the 13 to select 50 recipients once you get on those pages for a total of 24 clicks. We’re already nearing one click per connection.

Let’s fast forward through the process to the end of 1,000 connections. You just sent your 199th message to a batch of 50 connections. You start at the beginning of the list again. There are 95 pages that you have to wade through, or 196 clicks. This batch of 50 connections requires 209 clicks, far more than one click per connection.

But it only gets worse.  LinkedIn’s filtering and connection display remains highly unstable. The display can easily freeze, time out, or quit. What’s common here is that you click Next page.  Instead of displaying a new page the connection results pane blanks and the connection detail pane displays “Quickly view and organize your connections? Select a category or individual to see contact info, send a message and more.”

When this happens you’re screwed in this AJAX display where the display state is lost and reset. There is no way to go back and redisplay the last connection page, to resume and try to go to the next page again, or otherwise recover where you were. Your only option is to start all over again. So whether you were on page 1 or 100, you have to start back on page 1.  All those clicks you spent time on to get to page 1 or 100 are totally wasted.

I tested this with about 200 searches and over a thousand Next page clicks on two different browsers. The blanking error appears to happen randomly. It has happened on the first Next click. It virtually always happened by the 15th page displayed. And to get to the 10th or 15th page means dozens of tries and hundreds of clicks in addition to the many clicks required if it worked without error.

That’s not all.  Given that the error forces a page restart, that’s a hard limit. So the discussion on the ridiculous amount of clicks to reach 1,000 connections, much less the 4,000 that was my goal, is moot. The effective capability of contacting your connections in one filter is 10-15 pages or only 100-150 connections.

You will never be able to reach the connections in a group after that, whether it’s to send a message or just to tag them.

More like one step forward and ten backward. Oops, LinkedIn reset that at seven.  Gotta start all over again.

UPDATE: 10:16 pm.  The random error where clicking Next resets the filter display and forces you to start over again is fixed.  For now.  Paging works quickly and smoothly.

On the flip side an annoying problem that’s been around for several months (a few years?) has returned – duplicate listings, apparently random,  in the filter results.  While a page may display 10 connections, only 8 or so on average are unique.  Now when you select the page LinkedIn doesn’t select the phantom dupes (which it used to do), but the dupes do require additional pages of filter results to get to the 50 maximum and they do screw up the tag counts, which are inflated.

An efficiency tip to reduce time and clicks – LinkedIn resets filter results on message sending but not tagging.  So you can avoid the annoying filter reset and paging described above.  The optimal strategy is to work your way one time through the filter results to select 50 connections, create a tag even if you’ll never use it after this, clear the selection, and then repeat so that all filtered connections are tagged.  Then click on each tag just created to send a message to that group of 50.

UPDATE: 7:30pm CT April 15. It’s baaaaaaaack.  The random error where clicking Next resets the filter display and forces you to start over again has returned.  This flavor of flakiness, where  an error happens intermittently or more typically and in this case most of the time, has been around for five years or so on LinkedIn.  It unfortunately shows both the brittle nature of its architecture and the lack of care by the company in letting such problems persist.

 


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