The WSJ has a good article on the “ new VC” model. In a nutshell, since it takes a lot less to get a startup to traction now versus late 90’s it has spawned a new age of VC’. Since I started and sold 2 companies during the “bubble of 90’s era” I can give you some perspective as to what’s cheaper and why is it a lot less expensive. The number 1 cost in any software / Internet startup is people (initially until you get traction). Another big area of cost is infrastructure and G&A etc.

1. Lower technology operations costs: This is by far the biggest cost that’s been removed. At Interfinity, (which built order management systems for large companies), we had to hire 5 people to do system administration, database administration, monitoring and SLA management. Today with Amazon web services most companies have 1 (if at all). Besides you dont need to spend a few hundred thousand on hardware (Sun, Cisco, DELL, Compaq) any more. The cloud makes it a lot less expensive and since its not an upfront investment (pay-as-you-go) you can try stuff out cheaply.

2. Lower G&A costs: Today’s business has the same number of people but 80% less costs of telecom (all employees at my previous startup had Skype), free email (Google Applications) and an extremely cheap laptop ($1099) minus Windows Office (saving $700 almost per employee). Overhead costs the way I calculated it were close to $2100 LESS per employee per year.

3. Lower Marketing & business development costs: I had 2 people doing marketing and building relationships (yes I admit my company had a few Barney relationships myself). If I were doing it again I would rather be a consumer startup and have a facebook application to get the word out virally. The marketing costs for an enterprise startup (those that build software and solutions for large companies) have not significantly reduced but consumer startups costs have dramatically gone down.

4. Lower development costs*: I have heard of several of my peers outsourcing development to Romania, Prague, India and other places. In the valley its still very difficult to hire good, talented engineers and they still cost a lot. I am not sure I would do the outsourcing for version 1 or 2, but to scale the company beyond the initial few developers the costs of adding developers has reduced on average by 2/3rds.

On average if you add all these up, you are looking at building a startup to momentum costs lower by 60-80%

No wonder there are so many startups being started daily.

Lois Kelly talks about 10 ways to overcome the boss’ objections to social marketing. Most of the items are a good starting point if one of your 2008 goals is to engage with your customers by leveraging social media. There’s one point that I disagree with though:

“Hint: a company blog is usually a bad first foray into social marketing.”

As part of my previous role I was VP of Marketing for Inovis, where the blog was our first foray into social marketing. Why?

1. Easiest way to share relevant and useful industry information in a single place without flooding them with email daily. Since we could get many people within the company engaged with the blog you have multiple perspectives and opinions, which adds to the mix and makes the conversation diverse, yet relevant.

2. Customers appreciated the ability to comment and add to the conversation on specific topics that were of interest to them. Nothing drives more customers away than seeing a discussion board or forum without many people there already. Couple of customers mentioned they felt more connected to the company after we started blogging.

3. Quickest way to join the discussion. There are several other bloggers already talking about topics that are of interest to your company, customers and partners – the blog is usually the easiest way to be heard and the starting point of least friction.

Are there downsides? Yes. We did get some feedback from customers when the “blog agenda” was starting to border on self promotion than (industry) information dissemination and that was the best lesson we learned.

In a highly anticipated move to prevent multiple people from reading the same newspaper, the NAA (Newspaper Association of America) followed the RIAA (Record Industry Association of America) in suing over 12 Million readers who purchased newspapers. NAA spokesperson Eyedon Knowitall said “People are purchasing our newspapers and tearing out sections to give it to others. This is not fair use”. Going after key bloggers who quote sections of the newspaper in their online blog is the next anticipated move.

Newspapers have been very concerned that like the RIAA they are under attack from bloggers and indifferent readers resulting in falling subscription rates. This in addition to several experts calling newspapers “vertical monopolies” has them in a very aggressive mode said Knowitall.

The RIAA case in Arizona  has been extensively reported by several notable newspapers.

“I couldn’t believe it when I read that,” says Ray Beckerman, a New
York lawyer who represents six clients who have been sued by the RIAA.
“The basic principle in the law is that you have to distribute actual
physical copies to be guilty of violating copyright. But recently, the
industry has been going around saying that even a personal copy on your
computer is a violation.”

“The Howell case was not the first time the industry has argued that
making a personal copy from a legally purchased CD is illegal. At the
Thomas trial in Minnesota, Sony BMG’s chief of litigation, Jennifer
Pariser, testified that “when an individual makes a copy of a song for
himself, I suppose we can say he stole a song.” Copying a song you
bought is “a nice way of saying ‘steals just one copy,’ ” she said.”

Many bloggers were convinced after seeing the “BETA” mode on the NAA website that they had no clue what they were doing and still needed a lot to learn from the RIAA.

I had a very enlightening conversation with Dan Neely of Networked Insights today. They are about 10+ people company (and growing) based in Wisconsin focused on delivering customer insights from your community. They have some very unique software offerings giving you visibility into customer interaction and communication that happens with your online community. I liken it to proactive customer intelligence instead of reactive customer reporting.

Over the last few weeks I have been talking to several publishing company & media marketing executives, and the “spend categories” for 2008 include
a) Customer intelligence – both reactive for marketing and proactive for trend spotting
b) Customer engagement – blogs, wikis, etc. – (you’ll be still surprised how many media companies still dont allow blogging by their reporters / associates and
c) Consolidation & consistency of all online efforts. There are several companies that have grassroots efforts in community / social media, etc.

Here’s the key point that I learned from Dan: Do you want a community for “community sake” – because everyone else is doing it? Or do you want to really engage and learn from customers and are going to use the community as a platform to do so?

I can pretty much tell right-away by the first 2-3 questions a person ask about their community effort (if they already have one) if this has management buy in or NOT.

If I get questions like:
1. How can I have more people commenting on our community?
2. Our pageviews on our community site are very sporadic. How can we make it more linear?

This is a grassroots (not a bad thing BTW) community and the community manager looking for tips to improve interaction.

But if I get the following questions:
1. How do I justify the community resources from a tangible perspective?
2. How do we align and deliver integrated marketing campaigns with out social media and community efforts?

Then I know they are being asked questions from their VP of Marketing / CMO to leverage the community effort as another means to listen and learn from customers.

Now, back to Networked Insights. They target Retail and Financial Services industries and have a set of applications to help you get that knowledge  based  on interactions amongst your community members. 

This is a very valuable tool that you can leverage in putting together good metrics and value KPI’s for how to measure your success with your community.

I will do a more detailed review of this application in the coming weeks and will have a better perspective on how to use it.

If you have not seen the statistics yet, a quick preview:

1. US spends almost 16% of its GDP on healthcare – $2 Trillion. This equates to approximately $6697 per person. No other country spends more.
2. Over 56% of us insured are covered by employer sponsored plans, about 30% by Medicare, Medicaid and SCHIP. The rest (14%) are insured.
3. Healthcare costs have been increasing 2.5% more than US GDP and more than double the rate of inflation over the last 30+ years.
4. Spending on drugs (prescription) is about 10% of the total spend.

There are 5 major constituents in the healthcare “space” – Patients, Providers (Physicians, Nurses, etc.), Payers (Insurance providers), Government & Pharma/Biotech/Drug companies. There are several others (Employers, etc., but the 5 major ones influence it to a large extent.

The major trend is towards “consumerization” of healthcare – providing and arming patients with more information at their fingertips so they can make better choices. Hence online communities (where patients, doctors, etc.) can connect and get information quickly so they can make decisions or get second opinions.

Over the next few weeks I will have a series of posts on the healthcare community space, but here are the companies I am reviewing.

There are several (about 50) broad and niche sites focusing on several disciplines or diseases so its going to be difficult to categorize them. For policy information I recommend the Healthcare Blog. Others talking about it more eloquently than I do are Paul Krugman and also do visit the Kaiser Foundation.

Here’s the list of communities that I have reviewed. There are several more for sure, but I am looking at comScore and other metrics to get a sense for the ones with traction / traffic before I dig deeper.

1. WebMD
2. Medhelp.ORG
3. SteadyHealth
4. HealthyPlace
5. Revolution
   Health
6. Health
   Talk
7. Health Line
8. Health
   Board
9. Health
   Vault (Microsoft)
10. My Self
    Help
11. Healthy Circles
12. Kryptiq
13. Pure Wellness
14. Sound Health
    Solutions
15. US
    Wellness
16. American
    Heart Association
17. Cap Med
18. Daily
    Strength
19. Zoc Doc
20. Patients
    Like Me
21. I C You
22. Organized
    Wisdom
23. Relief in
    Site
24. Nurses
    Rate Doctors
25. Health Tools Online
26. M D
    Junction
27. Gimme20
28. Psych Central
29. Hesperian
30. My Health
    Gate
31. Health
    Grades
32. Patients
    are powerful
33. iVillage Your Total Health
34. Health
    Central
35. Vimo
36. Healthline
37. TauMed
38. Wegohealth

Following up from my Moving away from Office on the desktop to Office on the cloud, where I wanted to give up Word, Excel and PowerPoint, today I completely switched off from Microsoft Outlook.

Cold turkey. Gone. Dead. End of Outlook.

Moved to Google Applications for my domain. Done. (It was a lot of work though, changing MX records and CNAME records, etc.)

No more desktop applications. Everything is in the “cloud”.

BTW I prefer Zoho applications to Google for now, (mostly for application offline support) but over time I can give up even that for Google applications only.

Right now Zoho’s my productivity application and Google’s my organizer.

Since Google Reader has a new friend recommendations, I am seriously considering removing hundreds of RSS feeds from my reader. Why?

I am outsourcing my information “filtering” to Robert Scoble, Gaurav and Mario (for starters) since they represent 3 facets of things that are important to me. I am hoping to add others.

I would love it more if more topic areas could be covered –

Wall Street – Paul does a GREAT job, but he’s doing it on Twitter – which has little permanence so I dont like it as much.

Economics in general. There are only a handful of good bloggers on Economics, so that’s currently not a problem.

Technology Marketing – Jeremiah does a good job of social media, but I need a broader scope.

Retail and Healthcare – Nothing good here yet.

The other great feature I need is for Google reader to ELIMINATE duplicate feeds. That’s going to be awesome.

David Lazer has a great pointer to a NY Times article on Silicon Valley – Shaped by Technology and traffic.

Some important quotes:

“For a consumer Internet company, this is where everything happens,” he
said. “It’s true that things can be done anywhere on the Internet, but
at the end of the day it’s still a people business.”

The shared backgrounds, interests and schools make for frictionless communication that fosters rapid innovation.

“But in general, the nerds with minimal social lives like me are well
down in the Valley, and the cool kids with the trendy glasses and Prada
shoes who like to go to parties are in San Francisco,” Mr. Andreessen
said in an e-mail message. “You can guess who has the leg up in
building companies.”

Now David’s point “It is not surprising that identity and background play a key role in silicon valley networks. The statement The shared backgrounds, interests and schools make for frictionless communication that fosters rapid innovation.,
in particular caught my eye. The potential downside, one would think,
is that these homogeneous clusters do not foster the innovation that is
the result of different, complementary, backgrounds; of the
recombination of existing ways of thinking (cf Reagans and Zuckerman
2001 on the role of diversity on teams).”

I am torn on this one. On one hand its MUCH quicker to start a community when you have people with a lot of things in common. At the early stages of the community you need this “special bonding sauce” to keep people together. Once you get past that early stage, getting people with “clusters” and “more diversity” helps.

What do you think?

I attended the Lunch 2.0 event at Oodle yesterday. It was supposed to be from noon to about 2pm at San Mateo. This was my first Lunch2.0 event BTW. Heard from many folks that they are fun, casual and you make some great connections.

So I show up at 1230 assuming I’d get about 10-20 people and meet some old friends – and oh yes, free lunch.

Getting on the elevator to the 4th floor I entered the office to find 2 guys drinking beer and chatting. Whoa I thought, lot less than I expected. They told me “Everyone’s in the other room”. Ahh

The “other room” had standing room only with the CEO of Ooodle giving his pitch. They help you search and manage classifieds on the web. There were about 100+ people in the room. Really good humus, pita bread and food.

I got a chance to meet the CEO and asked him about why they decided to host Lunch 2.0. His answer was he was looking at it as a recruiting event. Good turnout for a recruiting event for sure.

I did get a chance to meet Randy Corke from Utterz. More on that in a different post. Here’s the top things I re-learned from this event.

1. There’s no substitute for a face-to-face meeting to get your community together. It makes new connections and also reinforces existing ones. Always supplement your online community with live events.

2. There were a few folks looking for a new position. I got a chance to talk to 2 of them and help them make the connections back to my network. Helping your community selflessly gets you great rewards.

3. There was a lot of goodwill for Oodle (who I admit I had not heard of before this event) from this lunch. 3 folks who I talked to off line praised their “nice digs”, “open and friendly employees” and “casual business environment.
 The goodwill from this event will definitely build Oodle’s community even if that was not their intent.

Pictured: Chris Heuer and Scott (Oodle).

Christina Wodtke has a good (long, 73 slides) presentation on communities. Good place to start.

http://static.slideshare.net/swf/ssplayer2.swf?doc=designing-communities101507-1192637120231725-1

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