Check out the blog, it’s got some great stuff. I’ve published a first video in an infinite part series on How to make the Mac not suck for power users and I’ll continue to produce video and blog posts.

Also, if you are a Mac enthusiast and want to share tips and technology, contact Adam, he’s looking for more authors!

http://venturehacks.com/term-sheet-hacks

With an online economy driven by advertising demand and not necessarily demand for your product or service how do you plan and compete?

Check out the article: 

http://www.emarketer.com/Article.aspx?id=1005997&src=article1_newsltr .

I tend to believe that technology amplifies humanity, human interaction, and human behavior. I don’t think it trends one way or another. Rather I believe it gives us greater potential for both good and bad.

http://www.readwriteweb.com/archives/is_web_technology_making_your_life_better.php .

http://www.youtube.com/watch?v=qU1fixMAObI .

http://www.wired.com/techbiz/it/magazine/16-03/ff_free?currentPage=all

A great event and a lot of fun.

This is another mobile blogging test.

I’m the guy in the center accepting the award. This is Las Vegas in 2005 when I was CTO of WebRaiser Technologies.

With advertising becoming the primary business model of the online economy it is critical that we as investors and entrepreneurs understand the advertising business model.

Its a very hard road. It takes a large network of eyes to make money advertising. Or, it takes a highly valuable targeted demographic of eyes. And even then, you must be savvy enough to draw in the advertisers and maximize the opportunity.

On a side note, this is the first post from my iPhone!

http://watchmojo.com/web/blog/index.php/2008/02/20/why-most-vc-backed-ad-supported-companies-are-doomed-to-fail/

It’s not from worry. It’s from excitement and analysis. Business scenarios, investment pitches, financing instruments, customer relationships, marketing, branding, legal work and banking.

It’s constant iterations of scenarios, ideas, and plans. Where are the holes? What are the risks? What can be mitigated? What are the priorities?

This isn’t the first night of entrepreneurial insomnia I’ve suffered. Sometimes I can cure it through reading a good mystery book. Some nights, like tonight, I blog. Sometimes I work.

I know it’s something that other entrepreneurs go through. What kind of strategies do you use to silence your mind at night? 

What is Google?

Let’s look at Google. At it’s core, Google is a content company that derives revenue from advertisement. If you look at Google’s 10Q, 99% of their revenue comes from advertising services.

Google looks at online, desktop, and mobile software as content that can be offered free to users in exchange for advertising.Rather than having a blog, or a wiki, or a magazine, or pornography, or some other form of content, Google’s driving content is software. Software to search the web, software for email, software for editing documents, software for managing photos, software for getting directions, software for reading news and blogs. Google provides free web, desktop, and mobile software in exchange for advertising attention.

I’d like to note an exception to the above with Google’s business services, but that business unit is an insignificant revenue stream and has insignificant market share.

Google is best defined as a content producer, monetized by advertising. They are unique from what we would traditionally think of as content producers in that their free content is software and web services.

What is Microsoft?

Microsoft is a pure software company at it’s core. Microsoft designs, develops, tests, and packages software for desktop, server, mobile, handheld, tablet, vehicle, surface, and other devices. From operating systems to games to productivity tools, Microsoft is a company that produces licensable software across a breadth of industries.

Microsoft licenses software and sells support and maintenance contracts; targeting both business and consumer customers. Microsoft has the sales, marketing, and support infrastructure to back up a large software business.Gaming, media, advertising, consumer electronics, hardware, and other businesses Microsoft has extended into. Leveraging their software business they develop or advance new markets to sell software into.

At the end of the day, Microsoft sells software and has an ecosystem built around it for support, certification, maintenance, and development.

Winning the Consumer Market

Google is moving more and more into the consumer space. A space where advertising is a legitimate form of revenue generation. Google can continue to offer free software content to consumers and monetize through advertising. By offering software and services for free, Google is granted more leeway from consumers regarding the quality of the software… whether it be bugs or lack of functionality. Consumers are also okay with software being in a perpetual beta when the software is free.

For traditional software sales, Microsoft is maintaining it’s dominance. Despite all the bad talk in the press and blogosphere, Microsoft’s software business is still growing, as is the company as a whole.

Microsoft is cognizant of the intrusions into the consumer space by free software and web services from Google and other companies and is putting together strategies and making acquisitions for when the time comes that their software unit becomes flat. Today, there is still a lot of money to be made with traditional software sales, and Microsoft isn’t about to jump into the advertising for software content business until they’ve finished milking the software licensing cow.

Winning the Business Market

Today, Google doesn’t have the pieces in place to serve the business community. They have not invested in the sales and support infrastructure, nor have they invested enough in their business software offerings. Their business offerings are not as feature-rich, end to end, or functional as Microsoft offerings. Google does not have the world wide sales teams and support infrastructure that Microsoft has. Google has no certification program and a weaker partner network.

Google is a consumer facing company today, and from their investments it looks to stay that way for a long time. Microsoft is business facing and has leveraged that market to get to the consumer.

Recently, Microsoft has made investments and acquisitions in cloud computing and web advertising (including their recent $42 billion bid for Yahoo). Microsoft is in a dominant position overall and is getting prepared to compete when software goes more and more online. Remember, Microsoft still has a large web presence, a large IM presence, a large email presence, and a large social networking presence (especially in other countries). Microsoft is already ramping things up to take over when packaged software slows.

Google has a long way to go to enter domains Microsoft is dominant in. Microsoft has much less work to upset Google’s consumer web dominance.

• Capitalization- the number one reason companies fail is that they run out of money. Make sure you have enough personal assets, debt financing, or outside investment to keep running. Calculate your startup costs and add 50% for a buffer.
• Networking- get involved in local entrepreneurial groups. Having relationships with a wide range of people in different industries and skillsets, and generally being plugged in is critical to success. Having a network of informal advisors opens up new doors, sheds lights on problems, provides insight, and is generally good moral support. This is all in addition to meeting potential customers, partners, and acquirers.
• Leverage- When buliding a startup think of leverage. You’re recruiting people, you’re signing deals, you’re partnering, you’re working with investors. Do what you can to build up your company portfolio of assets. Do what you can to build up your companies options. Assets increase value and options provide room to negotiate. You want some leverage when you talk to people so you aren’t speaking from desperation.

Team 

The team, in my opinion, is of the utmost importance. It doesn’t stand alone, a great team with a poor product and market is going to fail. But I put a lot of weight on team. Team is what generates the market and identifies and exploits the market opportunity. Team is the brains, the processor that makes the whole thing work.

Team is also relatively static. The founders in a startup will spend years and years together building product and addressing market. Markets landscapes change, customers change, and therefore products change. But it’s one team that gains the wisdom of living through this change.

Another concept in the startup world, that I agree with, is that it’s never your first idea that succeeds, it’s always the eighth idea. What does that mean? You start a business with a great idea, but through experience and gained insight you iterate and discover more and the business you succeed with sometimes never looks like the business you started with. But, the team is often the same.

I frequently have said that “the team is the same.” I say this because the core team needs to be cohesive. Needs to work well together. Needs to mesh. The core team must execute flawlessly together to succeed. You must have complimentary skillsets so that there is enough talent in the pool to address all the aspects of running a business. If you are missing skills, acquire them or find another team member.

Market

If team is first, market is second. Finding a great market opportunity is a hard thing to do. I’d argue it’s the hardest thing to do. Searching for a market with a gap or a problem or a need can be tricky. Trying to establish a new market is difficult to do, though not impossible. If you can find that gap in the marketplace and have a market strategy to exploit it you’re way ahead of the game.

In searching for a market I suggest to sticking with what you know and have experience with. You’ve spent time in a career, in an industry, in a market learning the ins and outs and getting paid to get an education in that market. Leverage that knowledge in your own business venture. If you seek out a market you are unfamiliar with be sure to solicit as much advice and input as possible. You need to learn some things as well as learn what you don’t know.

A usually overlooked aspect of the new entrepreneur is a strategy to reach a market. A need is identified, but how do you bridge the gap between your product and the customer. A strategy to get your product to market is just as important as identifying the market itself.

Getting your market strategy in place is tough. First you need to take your market and break it down. Then break it down again and again. Keep narrowing your market down until you have a sliver of the market that you can talk to directly. You want to know so much about who your customer is that you could describe their gender, age, income level, and other personal characteristics.

You have limited resources and by focusing in a very narrow sliver of the market you will have a clear message and focused efforts. By addressing a market segment as a whole your message gets watered down. By speaking to everyone you are speaking to no one. Once you have captured that sliver of the market, start knocking down the next ones like domino’s.

A good market is hard to find, it’s the intersection of what you have personal experience with, where there is an unmet need, and a method of reaching that market.

Product

In this case, think of product as actual product or a service. Product is a critical part of a successful company. Managing a product and especially a product roadmap needs to take several aspects into consideration. When you offer something is just as important as what you offer.

First, the obvious points with the product is that it has to meet your audiences need. You’ve identified a market gap and your product, at a minimum, must fill it. If you can do that then you’re ahead of the game. But, there are other considerations to make as well: can we make the product more pleasurable to use, can we reduce our costs in producing the product, how will we support the product, what are our measures of success.

Having a product roadmap is a critical aspect to the product. Some customers will demand it. But, more than that, you need to make sure to balance your time, resources, money, and opportunity. Forgoing features to gain speed to market. Leaving money on the table to capture a customer base. Delaying release to include a critical feature. Taking time to develop specific barriers. Make sure your first version meets your markets need, then, balance everything else with speed to market, lost opportunity, and barriers to entry.

In general, optimized business means greater operating profit. But, there are some times when you should consider putting your short term operating profit less than front and center.

• When you’re launching a product.When launching a product there are a lot of concerns. First, is even getting the thing off the ground. Then there are considerations of adoption rate, market success, customer feedback, supporting operations, and quality testing are also important. At this time if you are engineering down product and operational costs you could be sacrificing a few things of value: time and money. It takes time to optimize your offering, and in the mean time you’re not in business. It takes money to streamline your business, but you may never see adoption of your product and that investment was of naught. Or, maybe worse, a competitor makes it out before you.
• When you have a market but are entering new territory.If you have a product that is successful in a market and you are looking to expand, this could be another time to consider de-prioritizing profit. Business is fast and if you’re racing to grab market share you sometimes need to put product optimization behind you so you can control a market. This can mean entering contracts with less margin. It can also mean that those plans to engineer down costs are backburnered so you can capture a new customer base.
• When the cost/benefit doesn’t work out. Often times we see the carot. We see that we can increase our operating profit by a certain percent. Or we see that we can decrease our costs by so much per unit. We get tricked into investing time and money into chasing these margins. We don’t really do a cost/benefit analysis. Look at the man-hours and money it will take to reduce costs. Try to quanitfy for yourself the lost opportunity cost of time passed. Look at your increased margin per unit. Look at your sales projections. Look at the opportunity cost. Then, decide what the best course of action is.

So, with all that said. Optimizing your offerings and operations is a great thing. It can be easy money to capture. Just be cautious of the situation you are in before pursuing optimization.

It’s tempting for startups to look for increased margins, especially if they are thin to begin with. Sometimes you have to make the investment so your business can survive. Just remember, sometimes the search for optimization can kill you. I’ve seen it a lot.

If you’ve read a lot of books and articles on business and “how to win,” or “the top ten attributes of successful businesses,” or “how to execute” you’ll notice that you get somewhere between a couple morsels of applicable information and zero. Maybe you’ll pick up the latest buzz words.

So why do we read all these books and articles if what we get seems to be very little? Well, it’s to fill gaps, to build confidence, and to reflect. There is a lot of good information out there, it’s just sometimes the context of the writer doesn’t match the context of your business.

There is a lot of context missing from business advice. What is a priority for a company, group, or individual not only changes by individual but is also a function of change over time. Funding is most important, now it’s people, now it’s a sales strategy, now it’s protecting IP, now its [fill in the blank], etc., etc.

Take time to regularly evaluate where you stand. It’s easy to get caught up in the flow of things. Every week or two take some time to slow down, sit back, and think critically about where you’ve come from, where you’re at, and where you want to be. Give yourself some context, try to recollect all the advice you’ve gotten, and then modify your plans.

And, if you find yourself needing some advice, just remember to translate all that you hear and read into the context of your business.

The ideal state of a business is sustained growth, a nice gentle line that trends upwards.

A bad state, obviously, is a sharp downward slope. The only positive behind a sharp downward slope is that it’s obvious, you have to react to stop the bleeding or you have to cut your losses.

A not as obvious state of danger is a slow decline. Having a metric slowly go downhill is dangerous. The trend takes longer to see. People can still remain apathetic. It’s the kind of thing where people say “how did we get here?” If your performance metrics are trending down, even just by a small amount, be on your toes.

Probably the most dangerous times are high growth. If your metrics are off the chart it’s a time to celebrate… cautiously. Growth is good, sustained growth is what we want. If you have a peak, be critical. Is it a fluke? Is it sustainable? Be conservative, put money in the bank, don’t overspend. High growth leads to high emotion and that can lead to poor decisions. Get to a sustained growth and you’re golden.

1. Entertainment
2. Planning
3. To Generate More Information

Blogs serve the purpose of entertaining, this includes all the jokes and humor, updates about the next gadget, horror stories about failed companies, gossip, or even just news about local events. This is information that we consume for our own sake. It doesn’t get past a few conversations or an internal emotional response.

Blogs serve the purpose of informing so that people can plan. This includes product releases, events and announcements, technology reviews, etc. Information that people use to get things done. About how to plan a vacation, a day, a career, an education, a business.

Blogs serve the purpose of generating moreblogs. Weird. Blogging serves bloggers, as well as other media outlets. Blogging is viral and information is consumed for the purpose of regurgitation, editorials, or adding facts. Posts beget posts. Information generates more information.

Unfortunately, I don’t think blogs are as grassroots as we think. The blogosphere is not set up to be egalitarian, it is set up for competition. The blogosphere is a competitive landscape between publishers, viewers, and advertisers. These elements are common with traditional media; media many consider corrupted. And it’s these common elements that will lead to the corruption of the blogosphere. And it’s already begun.

A few of the problems:

• Blog searches use voting systems of pingbacks just like PageRank. These systems cause certain sites to bubble to the top and stay there.
• Pay per post services. These services pay people to write content and to link to other pages.
• Advertisers paying for product reviews. Self explanatory.
• Advertisers driving content, indirectly. Write the correct content, key words and key phrases and you’ll get popular ads on your sites.
• Search Engine Marketing. Again, write the correct key words and key phrases and you’ll get better search engine placement.
• Advertising networks that have sprung up to join blogs under a single banner.

The better the advertisement optimization the better for everyone. Advertisers get a better bang for their buck. Publishers see higher revenue streams. And the advertising network sees greater click-through revenues.

This new venture I’m working on focuses on that segment, advertising optimization… but in a new and unique way. Yeah, just like everything else, I know. Today advertising is optimized by contextual placement, pattern recognition, social activity, and recommender systems.

Well, I think I have a new way to optimize advertisements that compliments existing methods. Today the team, technology, and financing is coming together to execute it.

Stay tuned, this is the CEO’s blog and I’ll be keeping you informed about the goings one here.

There are a few direct ways to make money on the Internet. Subscription to services, sale of goods, and advertisements. For pure online plays, in other words businesses that are in the business of information, it’s either subscription or advertisement to monetize content.

As time passes, fewer and fewer companies can survive based on the subscription model. People want free access to online information. Today, advertisers provide a means for the average person to freely access online content.

This is why we see the domination of Google, a company that makes 99% of its revenue through advertising… $11.6 billion in 2007 to be exact. Advertising networks drive the monetization of today’s Internet. Content exists, people want it, producers and publishers rely advertisers to sponsor their content.

Here are some figures…

• There is $26.53 billion spent on advertising for Internet, mobile, video games and digital out-of-home
• Total Internet advertising is projected to to reach $61.98 billion in 2011, surpassing newspapers as the nation’s largest ad medium.
• Marketing segment is a $254.01 billion industry

The advertising market seems to be bubble proof and Web 2.0 proof. Regardless of the *what* and *how* of the medium, it’s going to be sponsored by advertising until there is a cultural shift or another clever way of monetizing eyeballs on digital content.

In an effort to capture this revenue, ad optimization is the game. Advertising networks such as Google, Yahoo, AOL, and Microsoft among many others are working on providing the best click-through and conversion rates to keep advertisers paying and keep content publishers paid.

Contextual targeting, recommender engines, consumer behavior tracking, and now social networking are the means for optimizing advertisements online today. Making sure the right person is looking at a relevant advertisement keeps this market growing. Undoubtedly there will be other methods of creating optimized advertisements in the future.