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My Ten Favorite Tweets – Week Ending 122509

From the home office in the North Pole, where I’m packing up a for a couple months relaxing in Hawaii…

#1: RT @nenshad No spoilers but I agree! rt @twailgum “The Business Application of the Decade: And the Winner Is…” http://bit.ly/53BdZ2 my blog on CIO.com

#2: The Benefits of Pissing People Off http://ow.ly/OHEA #innovation

#3: Radian6 Sentiment Analysis Review – Does Natural Language Processing Work? http://bit.ly/5ckKPa > Sentiment analysis still work in progress

#4: Accept Defeat: The Neuroscience of Screwing Up | Magazine #innovation (via @jorgebarba) http://post.ly/Ftqa

#5: The Consumerization of Enterprise VC http://ow.ly/Osck by VC Bill Burnham | what works in consumer web doesn’t inside orgs #vc #e20

#6: What motivates external innovators? (MIT Sloan) #innovation http://post.ly/FfKm

#7: RT @jhagel: Drafting an entire workforce into the company’s brain trust – lessons from Toyota http://tinyurl.com/yfnh87d

#8: RT @brucenussbaum Ingenius use of space.Train goes through Thai market! Unbelieveable! http://bit.ly/4TEva9 /via @brucemaudesign (via @Rishadt)

#9: RT @marylynn3 How NORAD keeps track of Santa- A behind the scenes peek from @CNET News http://bit.ly/6Py9BY

#10: Wrapping paper, Two Buck Chuck, It’s a Wonderful Life > Christmas Eve 2009

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My Ten Favorite Tweets – Week Ending 101609

From the home office in a balloon 7,000 feet above Colorado…

#1: Well, this was unexpected. The Spigit funding news has hit Techmeme http://bit.ly/3ETPFp #e20 #innovation

#2: LinkedIn: 50 million professionals worldwide http://ow.ly/uq7s “Last million took only 12 days” Wow. Tipping point?

#3: RT @mwalsh: Seth’s best post of the year – get over yourselves…you’re not that cool, interesting or smart. http://bit.ly/3HwrV6

#4: Is Social Media the New Cigarette? asks @billives http://ow.ly/u8IY Looking at social media addiction

#5: RT @nyike First Jive, now Spigit building #e20 and collaborative functionality on top of Sharepoint http://bwbx.io/hina

#6: Within firms, collaboration technologies are dictated by most powerful person involved in the collab http://ow.ly/tJgf by @amcafee

#7: Just as interesting as this WSJ piece is, Why Email No Longer Rules… http://ow.ly/tZpj are the skeptical cmts left by readers #e20

#8: If companies like $GOOG and $MMM excel and incl employee 15-20% personal time for innovation, why haven’t others adopted same?

#9: Wind farm firm makes sure its wind mills are 30 miles away from nearest Starbucks. http://ow.ly/tRQP Why? Best way to avoid NIMBY’s

#10: When a company gets funding, all sorts of interesting “opportunities” emerge. Just got a solicitation for Spigit to sponsor a NASCAR driver.

Warburg Pincus Invests $10 Million in Spigit

Warburg Pincus SpigitWell, this is pretty cool. I’m pleased to announce that Spigit has received a $10 million equity investment from Warburg Pincus. The investment will be used for the usual things a growing start-up needs: product development, sales and marketing and program management. Here’s coverage in the New York Times and TechCrunch.

I’ve been with Spigit for 6 1/2 months, during which time I’ve seen firsthand how things have progressed. Both the company and me.

If you’ve ever checked my bio, you’ll know I worked in investment banking from 1996 to 2000. If not for a banking merger that shut down my San Francisco office, I’d likely still be there as a Managing Director, doing financings for companies.

OK, wait. Considering the recent financial market collapse, let me rethink that…

Rather, I moved into technology. And let me tell you, it ain’t easy making the transition from banking to technology. You have zero geek cred (note the name of this blog). Since 2000, I’ve worked for several small technology start-ups. From each of them, I’ve learned a lot. I will say that in Spigit I’ve found a place that nicely combines my MBA company performance orientation with my social software enthusiasm. Innovation management meets Enterprise 2.0.

The team at Spigit is a hard-working one. I’m impressed with the seriousness of purpose each of them brings to the job every day. When we closed the funding this week, our CEO Paul Pluschkell got a couple bottles of champagne for a company toast. After we drank a bit of champagne (not too much, customers reading this blog…), everyone quickly went back to their desks to do work. Dorks. :-p

Which is appropriate. There’s a lot of work to do. I’m looking forward to it.

My Ten Favorite Tweets – Week Ending 091109

From the home office in Athens, Santorini and Crete…

#1: Salesforce emerging as a competitor to Jive, Socialtext, Atlassian, Telligent? http://bit.ly/71hbn That’ll be tough #e20

#2: What Exactly is a Social Business? http://bit.ly/2g9u82 by @lehawes #e20

#3: 15,000 Thoughts per Day – Why We Need Constraints for Innovation (via Spigit blog) http://bit.ly/ltaxP #innovation

#4: “Innovation is one of the easiest & least risky areas that can be tapped by organizations” http://bit.ly/uLk6K by @dhinchcliffe

#5: RT @armano “innovation happen in the corners of an organization—they need to be connected” (we call this Ecosystem) #futurebiz

#6: McKinsey has created the “innovation performance score” http://bit.ly/2YWPQ9 It’s, of course, a smart analytical tool #innovation

#7: Love @fredwilson‘s attitude here: The Foursquare “Crush” http://bit.ly/10g4kb Using his blog as valuable feedback for future investments

#8: RT @GraemeThickins Wall Street Journal & New York Times plan San Francisco editions http://bt.io/AwZ (via @thefutureofnews)

#9: RT @skap5 Is it possible to have an economy where everyone is a consultant?

#10: RT @Danny_DeVito I just joined Twitter! I don’t really get this site or how it works. My nuts are on fire.

Would Twitter Have Emerged If Current Pessimistic Attitudes Were Around Last Year?

Although well-used by many and even relied upon by some, Twitter has yet to turn on a revenue model. It’s not like the company would lose users, if it set up a minor advertising strategy as a test; people want to see the company make some money. Please, Twitter, turn on the revenue before it’s too late.

Rafe Needleman, 11 troubled Web companies: The next Kozmos?

We’re all watching, rather helplessly, what is happening to the global economy right now. It appears we’re in for a chilly period economically. Click here for a Twitter search on recession.

And there’s no shortage of advice on how to handle the upcoming winter. The most talked-about advice came from legendary venture capital firm Sequoia, who put their thoughts into a presentation. This slide describes their advice to their portfolio start-ups:

The above slide is the equivalent of a cold splash of water in the face. The general theme seems to be: cut back on experimentation and things that take a while to mature.

Later on slide 53, Sequoia includes this advice, which I have seen in many other pieces:

Become cash flow positive as soon as possible

Cash flow positive, cash flow positive…always good advice. And here are the two levers affecting cash flow position:

  1. Increase revenues
  2. Cut costs

But that advice seems to be for companies that have a specific profile. I think the approach for entrepreneurs is a little more nuanced.

What a Start-up Needs to Do Depends on Its Maturity

The graph below graphs the two levels affecting cash flow, and considers the distance between a company’s revenues and its costs.

I put this graph together because I think it’s too simplistic to say, “cut costs”. Cutting costs is advice that applies to companies along all levels of maturity in down economic times. But for many companies, that’s not enough. If the distance between sales and costs is too great, there’s no way to cut costs to preserve the company. The focus of the entrepreneurs needs to be on raising equity, not doing more with less. If there’s a good base of revenues and a decent post-financial crisis pipeline, the focus is on closing deals, not cutting costs. “Deals” meaning partner deals in a consumer web app, client deals for an enterprise app.

There are promising companies that do not yet have the topline revenue nailed down right now. Per the Sequoia note, these companies need to cut back on experimentation. Yet, we hear this sort of thing a lot:

The Great Tech Bust of Ought Two gave us 37Signals, Flickr, and del.icio.us

But…aren’t those examples of experimentation? For instance, Flickr didn’t start out life as a social photo sharing service. It was an experimental feature for an online gaming service called Game Neverending by Ludicorp. The “feature” of photo sharing didn’t have a revenue model, and I’m going to guess it wasn’t the core strategy discussed at Ludicorp board meetings.

Not surprisingly, there are plenty of mixed messages out there: “Cut back and focus on what’s core!” “Great innovation emerges from economic downturns!”

Would We Have Twitter If the Economic Slowdown Was in 2007?

I put together a two graphs of Twitter’s traffic, as tracked by Google Trends. The top graph is Twitter’s traffic during 2007. The bottom graph is Twitter’s traffic overall from 2007 until today.

Assume today’s chilled economic outlook was in effect at this time last year. If a VC was making decisions about companies in its portfolio, how would Twitter fare? The 2007 numbers show a service without a real growth trend. And Twitter still doesn’t have a revenue model.

Using Sequoia’s advice…Twitter would be dead.

But look at Twitter’s numbers starting in April 2008. The network effects have kicked in, Twitter is getting press everywhere, CNN is even using it. Per Rafe’s post cited at the top, an ad revenue model certainly seems doable and promising based on its metrics.

However, I’m not convinced Twitter would survive under today’s dire outlook for start-ups. It’d be a  victim of the “throw the baby out with the bath water” mentality we’re seeing right now. And wouldn’t that have been a mistake.

Let’s hope some sense of proportionality and a longer term view kicks in soon.

*****

See this post on FriendFeed: http://friendfeed.com/search?q=%22Would+Twitter+Have+Emerged+If+Current+Pessimistic+Attitudes+Were+Around+Last+Year%3F%22&who=everyone

My First-Ever VC Pitch

I recently had the opportunity to pitch a VC firm. Hummer Winblad, to be exact. As someone who never thought he’d ever do that, I have to say it was all rather cool. Here are the details:

THE IDEA: Over the past couple months. I dreamed up an idea for online retailers to connect to social networks. I won’t say too much about the idea, because you just never know if it might see the light of day sometime. But I did take the time to lay it out via Google Presentation. That was pretty fun, I have to say. I had all these hack graphics courtesy of Microsoft Paint. Primitive, but it worked.

ASKING AROUND: Once the idea was written down, I needed to find out if it has legs. I didn’t worry about someone stealing the idea or anything. You can’t learn anything keeping the idea bottled up. So I asked a few friends to take a look at it. To my surprise, I got a lot of “great idea” responses. Followed by, “isn’t Facebook going to do this?” The feedback pumped me up, even if Facebook was going to do it.

CO-FOUNDER: I don’t code, can’t code, shouldn’t code. I needed to have a development partner. Well, I met a dev buddy and shared the idea with him. He liked it, and agreed to be a co-founder. So, good feedback from friends, and a co-founder who could actually make the idea a reality. Things were going well.

MARKET FEEDBACK: I talked with two different e-tailers about the idea. Both really liked it. Each had his own take on what he liked, and I was pleased with the responses. Good feedback from trusted friends, a dev co-founder, good response from potential customers. Check, check, check!

THE PRODUCT: Uh…we actually hadn’t built anything yet. Hmm…was this going to be a problem?

THE VC INTRO: I sent a link for my Google Presentation to a contact at Hummer Winblad. I had met with him a couple years ago to interview for a VC associate position (didn’t get it). To my surprise, he emailed back and said he’d be delighted to hear more details. I was thrilled, despite having no actual product to demo.

VC PITCH DECK: I needed to convert my original, handcrafted presentation into an investor deck. This was really pretty easy. First, a couple of VCs have written blog posts about what ought to be in a pitch (here’s a good one). Having spent several weeks researching the idea, the slide contents were pretty easy to pull together. The hardest thing was the financial projections. But even those weren’t too bad. See Glenn Kelman’s post on Guy Kawasaki’s blog for some very useful advice.

THE PITCH: My dev buddy and I arrive early for our pitch. We set up in a spacious conference room with a flat-panel screen. We’re a little nervous, but our attitude is “we have nothing to lose”. The VC runs late. Finally, my VC contact and an Associate arrive. We start the pitch. Good attention, questions are asked, dialogue is occurring. I’m feeling OK about it. Then they ask about what stage we’re at. “Seed. No product built as yet.” At that point, the pitch came off the rails. We were gracefully pointed toward the angel investor route. Alas, no follow-up meeting would be needed.

POST-MORTEM:

  • In this web 2.0 age of free software and services, it’s safe to say you’d better have some actual product to demo. Only well-known successful entrepreneurs could get away with not having an actual product while raising money, and it’s unlikely they would ever do so.
  • The entrepreneurs are the best prepared and most acknowledgeable people in the room when it comes to their idea. VCs can seem intimidating given all the pitches, investments and experience they have, but they’re generally learning in real-time from the entrepreneur.
  • Don’t sweat getting a ‘no’. Is it the idea, the company or the VC? Focus on your own view here. If it’s the idea, what needs to be fixed? If it’s the company, what can improve things (e.g. actual product)? If it’s the VC, there are many others.

So that’s my first-ever VC pitch. I’m noodling on what to do next. The product remains, as of yet, unbuilt.