Tuesday, August 30, 2011

What Makes A Startup Successful? 14 of the most interesting trends identified by the Startup Genome Report

Every once in a while an article comes along that is just so awesome you want to quote it in its entirety.  I haven't read through the methodology so take all these findings with a grain of salt.  The most interesting finding for me was that "balanced" teams (one technical founder and one business founder) significantly out-perform business-heavy and technical heavy teams.  To often I think technical founders question the value of a business co-founder, to their detriment.  Build it and they will come only works in the movies and exceptional cases.

The below is quoted directly from the TechCrunch article "What Makes A Startup Successful? Blackbox Report Aims To Map The Startup Genome"  the Startup Genome blog (it looks like TechCrunch ripped this off as their own):
  • Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.
  • Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.
  • Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.
  • Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)
  • Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.
  • Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.
  • Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.
  • Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.
  • Most successful founders are driven by impact rather than experience or money.
  • Founders overestimate the value of IP before product market fit by 255%.
  • Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.
  • Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.
  • Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.
  • B2C vs. B2B is not a meaningful segmentation of Internet startups anymore because the Internet has changed the rules of business. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.
The full report is available here.

Enhanced by Zemanta

Wednesday, August 17, 2011

iPad vs the Rest: It's the Marketing, Stupid

James Kendrick of ZDNet wrote a nice article today on why no one can challenge the iPad.  His thesis is not that the iPad has an unassailable first-mover advantage, that consumers automatically associate "tablet" with "iPad," that the iPad has the superior ecosystem, or any of the other arguments that are usually made.  Rather, according to Kendrick, it is the end-to-end pre-purchase experience that Apple presents the consumer.  While I am sure the other factors play a role as well, I think that Kendrick is on to something.

Essentially, Kendrick's thesis is that no one cares about the technical features of their tablet. Unlike a computer, the majority of buyers don't think of a tablet as something they need, but rather something they want.  They want the "magical" experience that Steve Jobs offers them, from his initial unveiling of the iPad at a frenzied press conference down to the last detail of his gleaming white Apple stores.  

By comparison, other tablets are aimed at the tech-savvy crowd, and come from companies whose DNA - and marketing message - is computing rather than consumer electronics.  Even if a competitor could come up with a marketing message that appeals to the masses, Apple's "coup de grace" is "carrying the magical marketing experience right to the cash register." Other tablet makers simply lack the infrastructure to even compete on the retail front.  Not only do other tablet makers lack their own retail channels, but the shopping experience that is offered is abysmal, writes Kendrick:
Go in any Best Buy or other big box retailer that carries tablets and there’s no telling what you’ll find. Maybe there will be a counter with tablets scattered all over. Maybe some of them will actually work. The only consistent part of the retail buying experience for tablets is that the sales reps don’t know much about any of the products, much less help you decide which one is right for you. They don’t care, frankly, and that message gets through loud and clear.
In the online channel, where design is more fluid, cheaper, and under the manufacturer's control, the other tablet makers should in theory be able to compete on the shopping experience.  However, writes Kendrick, this is not the case:

If you don’t believe that, simply visit hp.com and try to buy a TouchPad. It’s in the Home & Home Office section, and the first thing you see is not magical marketing, it’s a small sales page that compares the two models of the TouchPad. No pizazz, no marketing, just click to buy.
The same holds true for all online retailers selling tablets. They are designed for selling computers [emphasis mine], and expect the customer to have some idea what they want coming in. Their sites aim to help you decide between competing products, which assumes some prior knowledge. There is no sales technique at play, simple point and click to buy. Or to leave, which is apparently what most customers are doing if sales numbers are accurate.

So what can tablet makers do to compete with the Apple juggernaut, besides having better marketing campaigns?  A couple of off-the-cuff ideas:

  • Control the retail channel: either do a better job partnering with existing retailers, or set up more stores like the Samsung Experience.
  • Find alternative distribution channels to the traditional consumer electronics retailers, where they can be the exclusive tablet offered in the store.
  • Create a more compelling brand story around their products.  Apple realized long ago that computing is personal, and that people would identify with their computing devices like they identify with their fashion choices.
Ultimately however it will depend on tablet makers getting outside of their computer-seller box and getting into technology-as-fashion.
Enhanced by Zemanta

Thursday, August 4, 2011

How iPhone, Android, and BlackBerry users stack up. Plus, 33% of Americans would rather go without sex than their smartphones.

This is a fascinating infographic on how addicted Americans are to their smartphones, as well as the differences b/w iPhone, Android, and BlackBerry users.  My favorite stats:

  • In favor of the appeal of Android's hardware diversity: 50% of Android users think their phone reflects their personal sense of style, versus only 35% of iPhone users and 43% of BB users.
  • In favor of the appeal of the iPhone to developers: Only 38% and 37% of Android and BlackBerry users have ever paid more than $1 for an app, vs 55% for iPhone users.  The dig on Android that users don't pay for apps might have some truth to it.
  • In favor of BlackBerry: nothing really.  Sorry RIM.


Posted via email from SYSTEMS ANALYSIS

Wednesday, August 3, 2011

Notes on the August New York Tech Meetup (#NYTM)

I finally got to go to the NYTM yesterday, for the first time since December.  I can't quite remember the format from last time, but I really liked this one: domes were done in groups of three, making it easier to remember your questions; big companies were allowed to present their tech innovations (although the focus remained on startups, as it should); the event featured a really fun hack demo of a web-controlled helicopter (that was not allowed to go higher than 10 feet to avoid setting off the sprinkler systems, which apparently cannot differentiate helicopters from fires); and the happy hour was held in a hall on site, which allowed presenting companies to set up "booths" for interested members of the public, and avoided the loss of people that shifting venues inevitably entails.  

Here are my notes on the presenters, taking in real time on my dinky little QuickOffice app on my Android phone.  Audience questions were jotted down and have the presenters answers in the same bullet point, following the end of the question.  I may edit and/or add more thoughts later if I have time: