Archive for October, 2008

Weekly Round-Up: Today It’s Okay To Freak Out.

Friday, October 31st, 2008

-Still trying to figure out exactly where you should make cuts in your business plan? Check out this advice from Silicon Valley’s “undertaker.” Yeah, it’s not a Halloween joke.

-Got a green business plan? Google has funding.

-If you’re an entrepreneur, you may be trying to devise ways to determine just how screwed your start-up is right now. Fortunately, VC Fred Wilson’s Survival Matrix makes it easy! Just don’t blame us for the results.

-Wondering what a $100 million logo looks like? Here you go.

-We’ve said it before, but it bears repeating: despite how smart, savvy, and well, psychic, some venture capitalists seem to think they are, they don’t actually have a crystal ball that allows them to see the future of the economy. If they did, they wouldn’t be VCs—they’d be brokers.

-Wondering what real people, ahem, entrepreneurs say about how to tackle the downturn? Watch this discussion group here. Don’t say we didn’t warn you about the geek humor.

-We’re still wondering if there’s anyone can make sense of this for us. Any takers?

-Google execs bought a fighter jet, fueling the dreams of wantrepreneurs and programmers toiling in their parents’ basements everywhere.

-In case you haven’t heard (and your only excuse is really a coma), there’s a presidential election next week. Find out how each of the candidates weigh on the issues that are important to entrepreneurs, according to Entrepreneur Mag at least, here.

-Need a reminder regarding why it’s important to have a good business plan? We’ve got it.

-And lastly, it wouldn’t be Halloween without a fright. Does this do?

kiss

The CEO of Southwest Airlines knows how to get down on Halloween.

Tags: weekly round-up
No Comments »

Facebook: We Have Your Business Plan!

Friday, October 31st, 2008

Here’s what the generic Web 2.0 business plan looks like: 1) devise cool free web toy 2) get users 3) get funding 4) get more users 5) get more funding 6) repeat. The trouble is that most of these business plans don’t have a revenue generating model. It’s true. Even Facebook has acknowledged that they’re still on the hunt for a viable business plan and model. While the hope of all Web 2.0 is that one day they’ll be able to generate profits through advertising, so far no one has devised an effective way to do that. Compound that with the reality that advertising is one of the sectors that tends to struggle most during a down economy, and you can see why some venture capital firms are encouraging their Web 2.0 start-ups to get profitable—fast.

Here’s an interesting and different idea, though from Slate magazine’s The Big Money: Don’t rely on advertising to bring home the bacon. And forget the model where users get a service for free. Make them pay:

“In the absence of ads, an IPO market, venture capital funding, and guaranteed acquisition, how can startups make any money?

Allow me to propose something crazy. Tech companies should start charging people to use their services. No, seriously.”

The article goes on to use social networking site Facebook as an example of how charging users for the service could generate the kind of cash that makes VCs salivate and start-ups seriously profitable. Slate argues:

“Let’s imagine that Facebook became a tiered service. A free plan would limit you to 200 friends, one status update per day, or some other non-Draconian combination of restrictions. But for $5 a month, the limits would be lifted. Certainly, many users would balk; tens of thousands would join Facebook groups to protest the new pay model. Let’s assume that 95 percent of users will refuse to pay a dime. That still leaves 5 percent, or 5 million people, to pay $60 a year. That’s $300 million in the bank.”

Of course, the question is whether any users would actually pay for such a service. Ask yourself: would you plunk down cash for access to Twitter, Facebook, or MySpace? And the other consideration is how a business that started charging for its service would compete with similar free web services? If Facebook started collecting membership fees, wouldn’t all its users simply over to MySpace if that service remained gratis? What do you think?

cashin

Tags: business plan, profits, web 2.0
No Comments »

Here’s Why You Need A Great Business Plan.

Friday, October 31st, 2008

You probably already know that you need a business plan to get your foot in the door with venture capitalists. But what some entrepreneurs forget (or willfully ignore) is that they need an exceptional business plan. Forget good or adequate—VC Vinod Khosla, the founder of Khosla Ventures and the co-founder of Sun Microsystems, reveals why that’s not sufficient to the International Herald Tribune:

“So far, he has provided seed money to nine companies, including EcoMotors, which is developing a fuel-efficient diesel engine; Kaai and Soraa, companies that focus on laser development; and Topanga, a lighting company.

‘But we’ve done the math; and for these nine companies, we probably received 1,000 plans, looked at 500 of them, selected to meet over 100 and did detailed due diligence on 20,’ he said.”

challenges

Tags: business plan
No Comments »

Start-Ups Still On A Layoff Bender.

Friday, October 31st, 2008

Start-ups continued slashing their business plans to bits this week with layoffs at a pace so rapid that it was hard to keep up with them. Here’s what happened, via the TechCrunch Layoff Tracker:

-TEN Israeli-based start-ups made layoffs this past week including Exanet, which dropped 20% of its staff, yoomba, which axed a full 50% of its employees, along with Puding Media, SupportSpace, Starhome, Extricom, Discretix, Olista, Amdocs, Delver, and NewACT.

-Here is in the States, Revision3 dropped 30% of their people, Smashface cut 30%, Intrepid learning axed 5%, while start-ups Evella, Emusic, Razorfish, and Sonic Solutions also handed out pink slips.

-Perhaps the hardest hit start-up of the week though was matchmine, a Needham, Mass-based start-up that actually gave up the ghost. The company, which generated media recommendations based on what you told them you liked and what you didn’t, didn’t appear to have been struggling. While company CEO Michael Troiano didn’t give an explicit reason why the company shuttered, he left a cryptic message on the company blog: “I could not have imagined this last Thursday, let alone earlier. It is one thing to be failed, quite another to have been deceived.” Snap?

-Yikes. Looks like Tesla Motors, the start-up that sells green sports cars to the uber-rich, may be in trouble. Company CEO Elon Musk admitted yesterday that the company only has $9 million in the bank, according to Reuters. While they say they hope to close a $20 million round of funding soon, the 1200 customers who’ve put down $5-$60K deposits for their as-yet-to-be-delivered cars may be feeling a touch nervous. So far Tesla’s only delivered 50 cars, Valleywag points out.

-In big business news, American Express, Time, Inc., Motorola, and Qwest also announced layoffs. Motorola says they’ll cut 3,000 jobs as a result of a $397 million loss. American Express painted a similarly gloomy picture, announcing that they plan to ax 10% of their workforce worldwide. Time, Inc. also spread the doom and gloom. Not only are they laying off 600 employees, but today the company CEO said that company’s October revenues were “looking like 1931.” Lastly, Qwest says they’ll cut 1200 jobs by the end of the year to offset a 93% drop in earnings last quarter.

-Aren’t video games supposed to be recession-proof? Electronic Arts, the maker of popular games like Madden NFL and Medal of Honor, announced this week that they’re cutting 6% of their employees and are lowering profit forecasts in an attempt to save $50 million.

Tags: failures
No Comments »

Crisis, What?

Friday, October 31st, 2008

These are gloomy economic times, no matter if you’re an entrepreneur working on a business plan or just a regular Joe. But despite what’s happened on Wall Street, and despite the credit crunch and the dour economic forecasts, we wondered whether you—the average American or entrepreneur trying to get your business plan funded—have actually felt first-hand the effects of the downturn. So, we held a survey. Much to our surprise, a full 50% of you said that you haven’t experienced any financial impact.

After some consideration, though, we realized that maybe that’s not so startling. If you don’t plan to cash out your 401K anytime soon, are not heavily invested in the stock market, or weren’t the proud owner of a sub-prime mortgage, you likely haven’t felt much of an impact—as yet. While inflation has been a problem—which is now waning—apparently none of you felt it was substantial enough to make any real impact on your day-to-day lives.

So, what about the remaining 50% of our survey respondents? You agreed that you haven’t felt any repercussions as a result of the downturn—but you’re making cuts to plan for whatever may come down the pike. Those of you in this category fall directly in-line with myriad of entrepreneurs running start-ups who’ve made dramatic cuts to their business plan to prepare for what may come next. While it’s yet to be seen whether such cuts are necessary, there’s a good chance there could be a pay-off down the road.

Of course, if you’re not prepared to make cuts as yet, you could always approach the downturn like reader benpirie:

“As the country’s financial outlook worsened, I took a disciplined approach and stuck closely to my strategy of not owning anything of value. This has largely insulated me from the crisis.”

Right.

Tags: economy, survey
No Comments »

News We Like To Hear.

Thursday, October 30th, 2008

Get your business plan! “Cleantech investement hits record $1.6B in 3Q,” reports Forbes.

windmill

Tags: funding, green business
No Comments »

Tools You Can Use: Free Marketing Webinar.

Thursday, October 30th, 2008

Let’s face it, unless you have a background in marketing, developing a strategy for your start-up that actually works is tough—at best. That’s why we got excited when we stumbled on a free webinar on email marketing from MarketingSherpa (who we’re personally a fan of) and ExactTarget. The webinar covers “actionable insights” from Sherpa and Exact’s 2009 Email Marketing Benchmark Guide. Translation: it’s the stuff you can actually use. That includes topics ranging from how to build customer email lists to optimizing your marketing emails’ performance. And if that’s not enough, just consider that the guide costs a whopping $397, and the webinar is free. We say that’s reason enough to check it out.

The webinar is eight sessions long and begins on November 6.

marketingsherpa

Tags: marketing, tools
No Comments »

Joe The Entrepreneur.

Thursday, October 30th, 2008

As you’ve undoubtedly heard (ha), we’re having a huge presidential election next week. While we’re assuming most everyone has decided who they’re siding with this year, you still may be curious where candidates Obama and McCain stand on issues related to entrepreneurs, particularly if you’re working on a business plan or operate a start-up. Good news. For the past few weeks Entrepreneur Magazine solicited questions for the candidates from scores of entrepreneurs like you. This week, they ran the candidates’ responses to some of those questions online. While John McCain’s camp didn’t respond (Entrepreneur cobbled together his “answers” from public domain sources), the Q&A is still interesting—and revealing about how entrepreneurs and small business would be treated under either candidates’ administration. To wit: reader John of Shakopee, Minnesota asked: “I want to start a business in 2009. What policies will your administration implement to help risk takers start and grow their small business?”

Camp Obama provided a long response, including his pledge to “help small businesses raise capital by exempting investments in small and startup businesses from all capital gains taxes,” as well as noting that “Obama will offer a new Small Business Health Tax Credit to help small businesses provide quality health care to their employees.”

Again, while Team McCain didn’t respond, Entrepreneur generated a response that’s in keeping with what what he’s said in speeches and other public forums: “John McCain will keep the top tax rate at 35 percent, maintain the 15 percent rates on dividends and capital gains, and phase-out the Alternative Minimum Tax,” and that “He has proposed permitting the first-year expensing of new equipment and technology.”

But don’t just read the snippets. Check out all the questions entrepreneurs asked, along with the candidates’ full responses at Entrepreneur. While sure there’s more than a little rhetoric and a lot of campaign promises in their answers, for now it’s the best insight we have into how they perceive small business.

mccainobama2

Tags: government, small business
No Comments »

Jim Cramer Gets Another Bullhorn.

Thursday, October 30th, 2008

As further evidence that you shouldn’t act on everything you hear, finance site The Street named crazy man/former hedge fund manager/CNBC host Jim Cramer chairman this week. For those of you unfamiliar with Jim Cramer’s seemingly manic rants (which we’ve featured here before—several times!), here’s a taste. While you watch this video from the Today show earlier this month, just try to forget that he’s now heading up a site that is known for solid financial market and business news.

Tags: economy
No Comments »

Entrepreneurs: Keep Your Eye On The Ball.

Thursday, October 30th, 2008

Yesterday, we posted a video from the VentureBeat Downturn Table talks with a group of entrepreneurs that included hit-makers like Jason Calacanis who operates Mahalo and Max Levchin of Slide. While the video is long (about an hour), it has a few good nuggets of wisdom. In case you haven’t watched yet, or won’t (it’s okay, we have a short attention span too), here’s one piece of advice from the panel that struck as particularly relevant. Entrepreneur Max Levchin told the group:

“Don’t listen to anybody. Nobody really knows what’s going to happen next. It’s better to be contrarian in times like this than not. Just hunker down and build a company.”

While, yes, Levchin’s statement is slightly ironic—he’s telling you to listen to no one while advising you what to do—we think the sentiment behind his statement is a good one. That is, you should focus on your start-up (or business plan) instead of the rabble around you. We made the point yesterday that VCs aren’t soothsayers, and the same goes for everyone else who’s making their best guesses (because that’s what they are) about what’s going to happen. Getting wrapped up in speculation is not only a waste of time, but could actually hurt your start-up if you acted on it and it turned out to be wrong.

Our one point of contention with Levchin’s statement is that we don’t think you should shut everyone out. Keep your ear to the ground, but take what information and advice you get with a heaping spoonful of salt. Don’t make any rash decisions or tweaks to your business plan based on speculation that you hear. And most important, keep your eye on the ball: your start-up.