Tag Archives: startups

A Primer on Startup SEO

As I advise startups on growth, one of the most common questions I receive is “should we be working on SEO?”. At this point, I tend to remind them of the three phases of scaling startup marketing or show them Andrew Chen’s great post on the few ways to scale user growth. In today’s mobile-first landscape, with the limited scale of the App Store/Google Play, the answer is actually a bit more nuanced. So I created a guideline on how to answer this question for any startup.

Step 1: Keyword Research
The first question to answer when thinking about SEO for your business is “what should my business show up for?”, which really is asking the question, “what is my business about?”. Unlike branding, where the point is to synthesize that answer into as few clear words as possible, keyword research is about generating as many answers to that question as possible. These will be your potential keywords. I like to use the framework: who, what, when, where, how to answer this question. Let’s take the example of GrubHub:

Who: GrubHub, restaurant names we represent
What: food, delivery, menus, pizza, thai, indian, chinese
When: breakfast, lunch, dinner, late night
Where: every city, neighborhood, zip code, college covered
How: online ordering, mobile app, iphone app, android app

Take these words, combine them all into new keyword combinations in Excel e.g. “late night pizza delivery berkeley”, and check to see how much search volume they have. To do that, use the Google Adwords Keyword Planner. Click “Get search volume for a list of keywords”. Take the keywords from the exercise above and paste them in. Click “Get search volume”. Click on Keyword Ideas tab. You can also do this process again to find new keywords by clicking “Search for new keyword and ad group ideas” at the beginning.

You can now see how much search volume is closely related to your business. Search volume determines how much your prioritize SEO for your business. Now, there is no hard and fast rule for how much search volume there needs to be for you to get excited about it as an opportunity. It depends on purchase size, how much you want to grow, etc. Generally, I recommend taking all of those keyword’s search volume, assuming you can get a very small percentage of it to your site e.g. 1%, and seeing if that would make an impact on your business.

Now that you have an idea of the search volume for your business, you need to know how competitive that real estate is. Fortunately, Google estimates how competitive they think each keyword is next to the search volume estimate. It lacks the granularity I’d like, but it’s a good starting point. What I do in addition to looking at this gauge is do some spot searches and see what the results look like. Here, I’m looking for two things:
1) Are the results primarily businesses you would consider competitors or blogs?
2) Are the pages that are showing up well optimized for the keywords you searched or not? Are they dedicated landing pages or home pages?
(I’ll go into more detail on how to measure this a little later in this post)

Step 2: Picking an SEO Strategy
Now, you should have an answer to two questions:
1) Do my keywords have a lot of search volume?
2) Are those keywords competitive or not?

This creates four scenarios:

High Search Volume/Low Competition: Make Priority
This is a rare opportunity, and you can build a great business just off of SEO here. You should make SEO a priority and one of your primary growth strategies.

High search volume/High Competition: Play for Long Term/Make Core Competency
This means the ROI is there with SEO in the long run, but it will be hard to get it as a startup. You will need to organize the entire company around SEO to win, by making SEO a core competency of the company.

Low Search Volume/Low Competition: Content Marketing
This is common with startups that are creating new products or product categories, especially in mobile apps. They do not have enough demand yet. The general approach here is to expand your keyword target to the broader industry that does have high search volume, and pursue a content marketing strategy around those keywords that mentions your product/service occasionally in them.

Low Search Volume/High Competition: Ignore
Feel free to ignore SEO as a strategy here unless something changes.

This allows us to build a 2×2 to express SEO strategy options:

Step 3: Actually Working on SEO

Assuming you’re not in the low search volume/high competition bucket, you’ll want to start figuring out how to work on SEO. To do that, it’s helpful to make sure we define what we’re doing. Search engine optimization is the process sites use to appear in the organic results of search engines. To have a process, you need to understand what search engines do.

1) Search engines use crawlers to discover pages across the web.
2) They read any content they can find (mostly text)

So, in order to succeed, you need to be discoverable and readable. Once your page is discovered, search engines determines the authority of the page
Once your page is read, search engines determines what the relevance is for certain searches.

Determining Relevance: On-Page Factors
So how do search engines determine relevance? Well, here’s a rough hierarchy. They look at the title tag of the page first then the H1’s and H2’s, thing that typically indicate importance in HTML. Then they read normal text, and they look at what the URL says. They also look at this page compared to all the pages in their index and see how unique this page is compared to the rest. Search engines prefer unique content. They also look at the last time the page was updated. Frequently updated pages are seen as more reliable to Pinterest. They also look at the # of links on the page. A page with a ton of links is associated with a worse user experience and having less relevance. They also look at where the keywords are on a page. Google breaks up the page into header, footer, sidebars, and content area. Keywords in the content area are weighted higher. They also look at the # of content types. A page with text, video, and images is seen as better than just a page with one of those. They also look at the # of ad blocks on the page. A page with a bunch of ads is seen as less relevant. I know that sounds like a lot to pay attention to, so just keep this short list handy:

  • Title Tags
  • HTML Tags
  • Text
  • URL of the page
  • Uniqueness
  • Freshness
  • Number of Links on the Page
  • Keyword location on the Page
  • Diversity of content types
  • Number of ad blocks on the page
  • Make no mistake about it. This is mostly engineering work. You have to be messing with your site to get it to rank better. Mostly, this means creating pages specifically for keywords you want to target, and optimizing the above for these pages. I have seen so many startups think they can cover SEO by hiring a marketer to manage it. Unless they get engineering help, it will not work.

    Note: this is what you check to answer if your keywords are competitive in Step 2.

    Determining Authority: Off-Page Factors
    So, how do search engines determine authority? Well, the main two things are quantity and quality of external links to the page and domain. Search engines see links as votes, so if another site links to you, that’s a vote that you’re an authority. Now, not all votes are ranked equal. A link from the San Francisco Chronicle will be worth more than a link from my blog. They also look at how other sites link to you. So, the anchor text is very important. If a link says home decor, that will help more than a link that says click here. They also do look at internal links within a site. So, us linking to something from our home page indicates that we think it’s very important, where as a link from our Help page is not as important. Search engines also look at the data they accumulate about a page. So, when a page gets clicked from Google, they look at the bounce rate. When Google shows a page in a search result, they also look at its click through rate. They also look at which parts of the page people link from. A link from the content area of another page is worth more than a footer link. They also look at the diversity of link types. A page that gets links from blogs, news sites, and social media will be better than just a bunch of links from blogs. Too much detail again? Don’t worry; I have you covered with another list:

  • Quantity of external links pointing to page/domain
  • Quality of external links pointing to page/domain
  • Anchor text of links
  • Internal links pointing to the page
  • Metrics from search engines (bounce rate and click through rate)
  • Area on page of internal/external links
  • Diversity of link types
  • If you’re building a good company, this is mostly public relations and business development work. Also, if you’re working on content marketing, the quality of the content alone can drive links, which is why you see every company trying to push their infographics everywhere. Widgets have traditionally been a strong strategy here that may be waning in importance.

    Appendix: Tools at Your Disposal
    Now, search engines give you some tools to help you do this. So, I’ll describe them.

    Google/Bing Webmaster Tools: These destinations give you a host of information on keywords you rank for, crawl rate, errors etc.
    Meta Tags: By default, search engines will use your title tags and meta descriptions to populate how your listings appear on their sites
    Sitemaps: This is a way to send search engines every page you want them to index instead of waiting for them to find a link to it. No guarantee they’ll index all those pages, but they’ll look at them.
    Nofollow Tags: With the explosion of user-generated content and social media, spammers started flooding these sites with links to rank on search engines. Given that it’s very hard to monitor all that content, search engines allow sites to add rel=nofollow to outbound links, saying you can’t vouch for the site you’re linking to. Pinterest uses nofollow to external links as do most other social media sites.
    Canonical Tags: another cool tag. As we said before, Google likes unique content. But Google may figure out how to access the same content from multiple URL’s. If that happens, when Google finds a duplicate version of a page, you can add the rel=canonical tag in the head to indicate that if this page gets a link, use it for this other URL with the same content.
    Hreflang Tags: helps tell Google which version of a page to show users in different languages and countries.
    301 redirects: URL’s change all the time. But if a URL changes, normally that would be considered a new URL that needs to generate its own authority. If you 301 redirect the old URL to the new URL, Google will transfer some of the authority of the old URL to the new URL.
    robots.txt: Search engines obey operatives in your robots.txt file or in meta robots on which pages to crawl or index.
    Rich snippets: This will show different content under your listing, like star ratings and other meta data to help your listing stand out.

    Three Phases of Scaling Startup Marketing

    Quite a few people have asked me recently how to scale their marketing efforts. The short answer is: as leanly as possible. I have realized that while many entrepreneurs intuitively understand that statement, they do not understand what that means in terms of what types of marketing you try and in what order. I have developed a framework to easily identify how to think about this process that scales across different types of startups that I will present below.

    Pre-amble I: The Three Costs

    The first thing that’s important to understand before delving into this framework is that lean = with as little cost as possible, and that costs come in three areas: marketing expenses, development expenses, and payroll expenses. Marketing expenses are pretty easy to explain. If you spend $5,000 on Google AdWords this month, and each ad promised $5 off, your marketing expenses are the $5,000 for AdWords plus $5 times the numbers of conversions that redeemed the $5 off promotion. Development expenses are a little more difficult. If you outsource development, it may be easy to think that the development expenses are how you paid your developers, but that would be incorrect. The real issue here is the opportunity cost. Whether you have your own developers or outsource, if your developers work on, say, SEO initiatives, that is time they are not spending on new features for your customers, infrastructure scalability, et al. The third cost is payroll expenses. This is the cost relating to paying the marketing people on your team. Early on in startups, payroll can be the largest expense, so adding people to your team, especially in marketing, needs to be carefully considered as payroll expenses are harder to adjust than marketing or development expenses. The only way to adjust them is to fire someone or reduce their salary, and both can have a negative effect on employee morale and company culture.

    Pre-amble II: The Metrics

    After you understand costs, you need to understand the metrics on how to evaluate marketing decisions. For startups where a customer pays you for a product or service, this is a little bit easier than if you have yet to determine a business model. A couple key metrics for me (forgive me if some of this is basic):

    CPA (Cost per Acquisition): For this metric, you take the amount you spend in marketing expenses, and divide it by the number of new customers you acquired. So, in our previous AdWords example, let’s say I acquired 500 customers with that effort. That would make my CPA:
    Cost: $5,000 + ($5 * 500) = $7,500
    New Customers: 500
    CPA: Costs/New Customers: $15

    Revenue/User/Time frame: The CPA is not very meaningful until you know how it compares to the revenue those new customers brought you. The important thing here is not to just compare the revenue of the initial sales of that customer if they are likely to purchase again. If they are likely to purchase again, use cohort analysis to determine how much in revenue those new customers will make you over a certain time frame. The obvious question is how long a time frame should I use to compare against CPA. The short answer is as long you can reasonably predict. So, if you have enough data for a marketing channel to accurately predict how much a new customers from a new channel will make for your business over a two year time frame, you should feel comfortable comparing to a two year value. In reality, a startup almost never will have the data to accurately predict that far ahead. At the start, you may only have three months of reliable data. Reliable means both statistically significant i.e. not just 12 customers, but a reasonably sized population, and a situation where historical customers are representative of the newest customers. Once a startup reaches some scale, the latter requirement is the hardest. As a startup attracts more and more new customers, it typically has to start targeting customers that are less likely be early adopters and less likely to experience the pain your product solves as acutely as those who found it early on. Both of which will likely make new customers today less valuable than new customers from a year ago, keeping all other variables static. I almost always advise startups to keep their revenue metrics to a year or lower. After a year, you are waiting a very long time to prove your assumptions correct, and need to start discounting for the time value of money.

    Volume: This basically asks is a marketing channel generating 12 customers or 1,200. This will determine how to prioritize resources among marketing channels.

    Potential: This asks if a marketing channel has room to grow, and just needs more budget/people/development resources to achieve that potential, or is it already maxed out.

    Marketing Profit: In this sense, profit equates to Revenue/User – CPA. Channels that have high Marketing Profit are going to be the areas you want to invest more time/money/people in, if the potential has not been reached and the volume is significant.

    Note: Some marketers may want to add in the promo costs not in CPA, but subtract it from the revenue side. I dislike this approach, as it increases variability on both sides of the CPA vs. ARPU model, which makes it harder to compare the effectiveness of specific marketing channels just by looking at CPA.

    Phase 1: Product Driven Growth
    Scalable, Measurable, Engineering Opportunity Cost Driven

    The leanest way to acquire customers is not to spend any money on them and not spend any money on marketing people. The chief ways to do that are to use the product you have already built to acquire more customers. There are four main ways:

    Product Quality: This is the case where your product is so damn amazing that every person that uses it naturally tells everyone they know about it, and that’s what drives growth. In another, this is the build it and they will come strategy. Also known as a pipe dream. But improving the core product every day helps grow it, and people sometimes forget that.

    Search Engine Optimization: This is the process of designing your site to appeal to search engines to rank for relevant queries to your business. Depending on the business, this may be a large opportunity or a very small one, and a very crowded space or a relatively sparse space. The main question to ask is: are people on search engines currently searching for keywords that closely match the product or service I provide? If so, can I reasonably expect that by designing by site using Google best practices with some well placed content that I could rank in the top five for any keywords that in aggregate would drive a meaningful amount of new customers? You may offer a product with a ton of keywords, but heavily competitive for SEO e.g. consumer real estate, or a product with no keyword volume, but also sparse for SEO e.g. a technical solution for resin casting.

    Referrals/Viral Loops: This is the tactic of asking current customers to invite others to the service, perhaps offering a financial or psychological incentive. This is a fairly low development tactic with high upside and little downside, so it is very popular.

    Conversion Rate Optimization: This is the process of making continual changes to a website/mobile app/landing page with the goal of increasing the amount of visitors who turn into conversions. The only costs here are development costs, but the effects are very measurable. This may be difficult to do until you have enough traffic on your site accurately measure lifts in conversion rate.

    Main constraint: Development resources
    What should happen here: You start here, iterate as much as you can until your development pipeline gets too clogged. Then, as you wait for development to catch up, you move onto Phase 2.

    Phase 2: Performance Marketing
    Measurable, Scalable, Marketing Budget Driven

    The next leanest way to acquire customers is to develop marketing systems that, once created, can scale from driving dozens of new customers to thousands with the only additional input being more marketing expenses. Early marketers in a startup can focus on marketing efforts that scale without having to hire more marketers and have vast potential. If you don’t have a business model yet, most of these tactics (besides email or push notifications) will be off limits, as you will have no Revenue/User/Time frame to compare CPA’s against.

    Search Engine Marketing: This is targeted specific keywords on Google and Bing and bidding to show an ad for your product or service to potential new customers at the top of the page. Like SEO, you need to determine if the search engines have enough search volume to make this an effective channel. You also need to determine how expensive it is for you to bid on keywords and convert them. If there is a lot of search volume and not a lot of competition, this can be a very effective way to drive customers, and is very trackable to CPA goals down to the ad and keyword level.

    Email Marketing: This is sending either mass or, preferably, targeted and personalized emails to your existing user base to either convert them into a paying customer or entice repeat purchases. This is probably the most cost-effective and under-utilized tactic for most startups.

    Online/Mobile Display Advertising: This is showing banner ads on websites and mobile apps. Most startups use retargeting to reach people that have already been to their site but not converted. More sophisticated startups are experimenting with real time bidding to find ad impressions that are likely to reach their target market. The challenge here is determining effectiveness of spend as few people click ads, and correlating views to purchases is a dicey proposition. There is near limitless inventory to spend on if you can determine effectiveness.

    Main constraint: Money and diminishing returns
    What should happen here: You experiment with a few paid, scalable channels, find the ones that work, and scale them until you see diminishing returns. If your team still has bandwidth, then you have them contribute with Phase 3 tactics. If your team doesn’t have bandwidth to scale these techniques, but they work, you should hire a dedicated resource for them.

    Phase 3: Brand Marketing
    Non-Measurable, Non-Scalable, People Driven

    These are techniques that have one-time value, and/or require not just increased investment, but also increased resources (read: people or development) to scale. They are also frequently going to only work in one market or for one type of customer.

    Content marketing: Content marketing has many names, but is the creation of blog posts, articles, videos, of infographics that are of interest to your target customer. They can be great content to help rank for SEO, especially if your business does not have more direct keywords to target. It is even more impactful as content for social media or distribution to media outlets. It is non-scalable because if you want to do more of it, you have to produce more of it, and it’s time consuming to do it well unless it’s user-generated.

    Out of home: This is the process of buying billboards, bus shelters et al. out in the real world and placing ads for your business in them. This can be very expensive, but also very valuable if there’s a way to use them to target a very valuable audience e.g. hungry urban professionals right before dinner in GrubHub’s case. It’s non-scalabale because only certain geographies will have good opportunities, and what will work in one geography may not even be an option in another.

    Community management: This is either using a section of your site/app or more likely social media channels such as Twitter and Facebook to communicate with your audience in conversations they are interested in having with you. This is a great way to provide quality customer service and create evangelists. It is non-scalable as it requires a dedicated resource to monitor these channels, and as you scale, to keep up quality, you need to add more dedicated people for it.

    Public relations: This is the process of getting news outlets to showcase you. It is non-scalable because it provides a bump, not an engine, requiring constant efforts to make it a consistent source of traffic.

    Marketing promotions: This is the process of a creating a compelling campaign that attracts people to your business, whether it’s a contest, event, etc.

    Main constraint: People
    What should happen here: Use your existing team to determine which of these is important for your company, and then staff accordingly.

    Running All Three Phases

    These phases do not imply that you focus all of your efforts on phase I, max out, and then move onto the next phase. The reality is that the constraints of the various phases set in quickly. So, it could that in close to no time at all, you are executing programs in all phases. This blog post just provides the framework for prioritization and best practices for maximizing how you grow your marketing programs.

    Make Choices (And Stick By Them)

    Above is one of my favorite scenes from Wonder Boys (2000), about a writing professor who can’t seem to finish his new book because he keeps writing so many different parts. Now, at over 2,000 pages long, he sees no end in sight. I see this problem in the world of startups quite a bit. Growing startups see someone else doing something that is gaining traction, and then they add that use case to their company as well. Instead of sticking with the earlier choice of their business’s direction, they now try to remove that direction and accommodate more choices. Need I remind you of every company launching their own daily deals arm, or Facebook copying every social startup ever.

    For growing companies, it’s a very common feeling in a business to always be jealous of what another business has and neglect all the things your business has going for it that the other one does not. But it is still wrong. You made a choice, and it looks like it’s working. Don’t undo those choices you made and ruin your growth. For companies with some growth, the lure of an attractive market segment can be overwhelming at times, but choosing to focus has more advantages. The first is that you develop a concrete brand for your customers. They know what you stand for, and what you are trying to achieve. What the risk of expanding too early? For growing companies, the main one is alienating your core customers. Let’s say you operate a luxury good, and to expand your market potential you offer a lower cost offering. What your brand used to stand for (exclusiveness, personal service) changes as the market is expanded. Those core customers may no longer identify with your company of your other customers and may now seek alternatives. What also happens is all that thought and development time that went into the expansion did not go into your core business.

    I would argue you should choose to focus on one use case for one customer segment for as long as humanly possible as a growing company. That runway ends when you anticipate either a technology shift away from your use case (for Dropbox, that would be something like less reliance on files due to cloud services in the future), you are running out of ways to add value to your core segment’s core use case, or your use case stops growing for that segment (note: this is different from the game theoretical or innovator’s dilemma problems of more established companies where action should be taken quicker, but isn’t). I think a lot of startups fall into the trap of “this isn’t a large enough market”, as if acting like venture capitalists responding to their pitch. First off, market size only matters if you capture a meaningful piece of a market, so you should focus on capturing a meaningful piece first. That will also give you a much better understanding of how big the market could be. Second, you are most likely not a VC. You don’t need a home run to be successful. VC’s do, because most of their other investments will fail.

    To wrap up, starting a business a is a choice, and you should make sure the product of your business reflects strong choices as well. You need to give that product a chance to show you made the right choices, and if you did, don’t second guess your direction because another business has made some good choices as well.

    The Contradictory Nature of Mobile Unbundling and the Emergence of Niche Marketplaces

    Two specific, but highly related, points of view are gaining widespread acceptance among venture capitalists in the technology industry. The first is succinctly explained by venture capitalist Albert Wenger in a post called Facebook’s Real Mobile Problem: Unbundling. The gist of the post can be summed up by this comment: “Mobile devices are doing to web services what web services did to print media: they unbundle.” Fellow venture capitalist Andrew Weissman expanded on this idea in a post called The Great Fragmentation. In it, Andrew goes further, arguing that unbundling might be a core feature of the internet.

    A second, but related point, is the emergence of the niche marketplace. Venture capitalist Andrew Parker has a post called The Spawn of Craigslist in which he shows how the behemoth marketplace Craigslist is getting slowly disrupted in a vertical-specific way. Venture capitalist Chris Dixon expands on this idea, saying that the only way to be successful as an online marketplace now is to take a vertical-specific approach.

    Together, these venture capitalists describe a future in which there is a specific app or specific marketplace for every need a user might have. Instead of going to Craigslist to find an apartment, movers, a maid, a freelance web designer for your home business, a date, and last minute tickets, a mobile user would instead have an app for Padmapper, TaskRabbit, Homejoy, ODesk, HowAboutWe, and WillCall. The key to being a successful venture capitalist then shifts from finding businesses that tackle very large markets e.g. Craigslist to finding businesses that target markets that could be much bigger with unbundling e.g. Airbnb.

    All of these VC’s are clearly smarter than me, but I take a somewhat contrarian view here. I hope the above example points out the main problem with this theory. In the above picture, in order for this mobile user to accomplish his/her goals, instead of needing to just know about and have an app for Craigslist, s/he now needs to know about and have apps for six separate businesses. One other thing venture capitalists agree on is that mobile app discovery is hard, and that the amount of apps mobile users will download and use is limited by both device memory as well as human memory. This same problem faces the sellers of services on marketplaces. With no aggregate marketplace, it may be harder for a seller of multiple services to know which ones exist for which product/service they are selling. Marketplaces thrive on a multitude of buyers and sellers. Unbundling of marketplaces makes building that two-sided network harder.

    Something has to give here. You can’t have a future where everything is accomplished online via a mobile device, consumer’s preference on mobile is for apps, there will be hundreds of specific services for anything a user needs that are more powerful than aggregate services, app discovery is difficult, and people will only have 41 apps per phone. I think there is some sort of equilibrium here. Even if app discovery is solved (and that’s a hard problem), the rate of successful unbundling certainly seems like it has to be limited by 1) the amount of space on someone’s phone, and 2) user’s inability to be aware of hundreds of niche services they may need at any time. If you think a recommendation engine could solve this with big data, I recommend you read this article about how successful that’s been for other services.

    If I had to guess, I would surmise that user unbundling will not be a trend in and of itself, even if it is a trend in technology startups building new businesses. Unbundling will continue when either 1) the frequency of the activity that is being unbundled is high (my standard would be weekly), or 2) the advantage of the unbundling is exponentially more valuable than the bundled version of the same activity. For criterion 2, that advantage will also be a moving target where the advantage has to become greater and greater to justify phone/brain space as more apps improve their utility. Number of apps per phone will continue to grow, but a decreasing rate, and with that growth, there will be a decreasing state of awareness for both apps that are on a user’s phone and ones that are not. If you doubt this, just think of how many websites you visit regularly. Think hard. It isn’t that high, is it? Now think about apps? Even less? Me too.

    So, what does this all mean? Well, my take is that high frequency services like chat or picture taking continue to become unbundled from any aggregate services consumers use for them because of the ability of mobile to create superior user experiences for succinct actions. But, marketplaces that aggregate niche activities that users need only occasionally can continue to thrive e.g. eBay and Craigslist. One should expect only a handful of the dozens of services hoping to disrupt Craigslist or eBay or Amazon to survive, because of fantastic user experience or a high frequency of use. Finally, one should not be so quick to anoint the niche marketplace model as the emergence of mobile presents as many limitations to their success as it does opportunities for growth.

    Online News is Broken, or A Brief History of Online News and a Startup That’s Re-inventing It

    I am not a news expert. For most of my life, I never cared for the news. So, there are probably details below that are wrong or over-simplified. Consider that a caveat. Once I started working for a startup, news began to have value. It was the only way to learn about a growing industry. And it presented opportunities startups could seize before others became aware of them. So, now I care about the news. The problem is that the news sucks. It really does.

    The way we receive and share news online is wrong. But it’s not our fault. All the main ways to receive and share newsworthy content have fundamental flaws. Now, I won’t take this space to rail on blog culture and how it’s a 100 articles a day of recycled press release garbage (I could, but I won’t). Instead, I’ll make the argument that I think we’re all going to have to accept that news is going to be the way it is for some time to come. That is, at a fast and furious pace, without a lot of context, and largely filled with what companies want to get out instead of what they don’t want to get out. As Rocky Agrawal said, and I’m paraphrasing here, “Quality news is like luxury airlines. If there was a market for it, it’d already exist.” With acknowledgement of that fact comes responsibility. If not the New York Times or TechCrunch, who is going to provide the context we need to make news more actionable and educational? No, the answer should not be MSNBC or Fox News. The answer is that it has to come from us, the readers.

    This makes sense, right? One could argue the internet’s main disruption is its empowerment of the individual. And many individuals do provide context to the news in a way that is meaningful. Popular bloggers provide context to news all the time. In my industry, this certainly happened during the recent tech IPO’s, from Rocky Agrawal’s trashing of Groupon’s IPO in a completely analytical way to Mark Cuban’s defense or Facebook’s IPO to Bill Gurley’s examination of LinkedIn’s successful IPO.

    But, as you can probably tell, these kinds of interpretations of key pieces of news are rare, and the exception. Most news gets posted and forgotten without any interpretation at all. Yet, a correct interpretation is where all of the value of news is in a professional context. If you can’t answer “what does this mean to me?”, then it wasn’t worth reading it. Further complicating the problem is the abundance of news and news sources today. What publications and bloggers should you read? Which articles from them? These questions are left up to you to figure out.

    Before we dig deeper into the current problem, let’s do an extremely simplified (and in many ways, probably wrong) history of online news…

    Online News Phase 1: Professional Curation of Content

    In the early web, most people received news from newspaper sites like Chicago Tribune or portals like Yahoo. Content was surfaced to users the same way it was before the internet; an editor decided what was important. Users read what looked interesting, and went on their way. Content contained various levels of depth and context. Some of it was high quality, and some of it was just timely.

    Online News Phase 2: Crowd-sourced Content

    With the rise of blogging, a technology that existed for years but suddenly exploded in usage with the emergence of easy publishing tools like Blogger in 1999 and WordPress in 2003, editor-curated content suddenly had competition from thousands of non-professional, news-focused blogs, which were focused less on depth of content and more speed of delivery. Portals and news sites needed to adjust and did, using their capabilities to re-work the editorial cycle so that by the time their articles were published, they weren’t already “old news”. Content with more depth and research was de-prioritized. Blogs also provided opportunities for the community comment on stories, but comments stayed at the bottom of blogs and were public, but not easily share-able.

    Online News Phase 3: Crowd-sourced Curation

    With the rise of so many more potential news sources online, it became harder to find the right content to view. Quickly, the internet responded to this problem. Digg launched in 2004 to help users share and discover the best content. Digg was primarily a vehicle to keep up with the latest and greatest news, and featured a home page that showed the most submitted stories from Digg users. Reddit launched soon after with its mission to be the “front page of the internet”. More news surfaced and was shared than ever before.

    Online News Phase 4: Social Networking

    Digg and Reddit exploded in popularity among the tech elite, but became closed doors in a way to less savvy internet users. These sites formed tight-knit communities and gamed algorithms to provide certain content an extreme amount of visibility while most content stayed completely hidden. This was great for superstar bloggers in technology and politics, but felt impenetrable for quality writers not as devoted to building networks or writing about the latest technology fads. It also juxtaposed political news with funny internet .gifs, creating a confusing experience for a normal person that lacked direction.

    In 2006, Twitter emerged, and combined easy publishing and curation into one format, with some lightweight commenting as well. With only 140 characters max, content was concise and easily digestible. No need to set up a blog. It took seconds to sign up and post. Twitter also easily allowed you to build a network where you could follow other users to see their content and easily comment back and forth. You curate your own feed of users and news, and don’t have to rely on Digg power-users.

    Twitter has its problems as well though. With only 140 characters, most news is shared just as a link, with no context at all. This is no better than Digg or Reddit were. Again, a ton of news is shared, but very little is discussed.

    Online News Phase 5: Crowd-sourced/Social Context?

    So, what’s the next phase for online news? Well, I certainly hope, and will make the argument it will be, crowd-sourced context. Crowd-sourced context means that the meaning of the news and its importance will be derived and examined by its readers, and communicated for everyone else to enjoy in an ongoing conversation. Our immediate reactions to stories should go from our heads to a feedback loop on the news that is immediately shared with others. They should be recorded and contribute to an enhanced understanding of the news and its importance. Enter Quibb. Quibb is a new website where users share what they are reading for work and comment on what their colleagues are reading. It offers an easy way to discuss news with colleagues outside of the traditional blog comment environment, and catalogs all of this into a stream of noteworthy articles for your job. In the future, I can see this being the de facto way people catch up on news in their industry as it’s curated by you and your peers and you get the context for why people think these articles are noteworthy.

    Why is crowd-sourced context the future? Well, as described above, the main ways we share and comment on news are broken. Commenting on blogs is something most people won’t do out of some sort of fear, but even if they did, those comments are only heard by people who scroll to the bottom of the page. Unless your peers go to that page, they have no idea you read this article and posted a response. Twitter is broken in another way; it only gives you enough space to really just post the link to an article. You get no context, and no opinion of why the person tweeted it. Digg and Reddit surface the most popular news content, but seem completely impenetrable for non-geeks, and again, lack discussion. Sites focusing on crowd-sourced context can deliver the news that’s important to you, why it’s important, and can make sure your team or your peers read the same thing and can also contribute to why that news is important. Comments could be public or only shared to your network.

    Note: Quibb is in invite-only mode, but you can apply for membership via me to get a speedy acceptance.

    Be A Silent Killer

    Monologue from The Devil’s Advocate (1997), starring Al Pacino and Keanu Reeves (Warning: contains language)

    In the business world these days, most startups seem to follow a similar formula to attempt to have success. Every press release will say something about a company’s “millions of downloads” or “10 million users”. Savvy journalists call these “vanity metrics”, in that they make you feel good and on the surface might impress people, but they don’t really mean anything (what metrics do mean something is another blog post entirely, but they usually start with “active”). They’re also easy to manipulate with money. It’s easy to get a million people to buy a $1 gift card if you’re paying them $10 to do it.

    On the entrepreneur side, the tactic is typically described as “fake it ’til you make it”. A less suggestive name that still applies if you aren’t faking anything can be called “get hype”. Whatever you call it, it’s almost universally accepted as a good strategy. I don’t necessarily disagree that it can be. But, I think it might be on its last legs as a viable strategy for a growth business. The speed of business today is, well, let’s just say it’s hard to keep up with. The reason entrepreneurs fake it ’til they make is that, like puffery, as much as people know it’s bullshit, the tactic works. Blogs and other media outlets print those stats, potential investors, acquirers, and users read them, and the stories drive sign-ups, fundings, and acquisitions. The problem is that those three groups also can form another group: your future competitors. And, a future competitor adopting your strategy, or, put in a less polite way, cloning you, becomes almost a guarantee. It used to take years for this to happen. Now, it takes weeks.

    Now, your little project that may or may not have some traction (and you’re telling everyone it does) becomes a “space”, and, before you know it, you’re in a race. A race where you don’t know what the track looks like, don’t know what the rules are, don’t know if your competitors are running or driving a Ferrari against you, and don’t know what you win if you get to the end first. Sound ridiculous? Well, let’s look at a case of it happening right now.

    In my Design and Business Inspirations post, I wrote about Postmates, an on demand service for same say shipping. Postmates, originally a B2B business, was having trouble getting business customers with existing relationships with FedEx, UPS, and the like on board. But, they noticed that affluent San Franciscans were using the app to request food from places that didn’t deliver. They pivoted their service to “Get It Now”, a consumer app to request food or product deliveries from local businesses, delivered by bike messengers looking for extra gigs. They started getting some usage, shot out a bunch of promotions to drive even more usage, and hit the press on May 17th about their successful pivot. They picked up a few more stories from a couple more places, and things were looking good. Investors surely saw these stories. They’re now in a good spot to pitch to investors about a Series A to help launch this in more cities.

    If you go back to that original piece of press though, you’ll notice Postmates wasn’t the only company mentioned. Here is way the “get hype” strategy starts to hurt. The press loves to compare. And every company these days, if they’re not already reading the blog your press is in, is monitoring mentions of their brand in press (see my How to Track Your Brand Online post for how). The competitive response happens in record time for Postmates. On June 21st, TaskRabbit launches DeliverNow, a direct competitor. On August 1st, YCombinator-backed Instacart launches for one-hour shipping for groceries. On August 5th, eBay launches eBay Now for same day shipping on all products. On September 6th, Business Insider declares same-day-shipping the next billion-dollar startup opportunity. This all happened in four months. Soon, it’ll start happening even faster. Postmates still has not even raised that Series A yet.

    Now, one could make the argument here that this was bound to happen whether Postmates existed or not, and that all this competition actually helps raise their profile (a picture of Postmates’ CEO in sunglasses was the lead picture of that Business Insider article). You may be right. But, I bet it makes fundraising that much harder when every investor asks you how you’re going to compete with TaskRabbit and Instacart and eBay and Amazon and Shutl and numerous others. It’s really hard to tell if hype helped or hurt their chances of success. This is just one example. If you’re a geographic business and go after a “get hype” strategy, prepare for competition to pop up in other areas and countries copying your business before you even get there.

    Okay, sorry for the long rant, but it’s needed to show there’s another strategy that Mr. Pacino more than adequately describes in the above video. If, instead of focusing on convincing everyone you’re successful in order to become successful, you actually spend the time doing other things that make you not have to pretend, what can you do? I call companies that do this silent killers, because you don’t know what they’re doing until they’ve already crossed the finish line and you weren’t even in the race. If you’re a silent killer, you can actively not seek press, actively not publish your numbers, drop that PR agency entirely and not alert future competitors as to what you’re up to. This allows you to build a defensible business before anyone knows what you’re doing and get a real headstart on any future competition.

    Now, it’s hard for me to describe a good example of this for a current startup (if so, they wouldn’t be very silent now, would they?), but I can tell you about an example from the tech world. The press loves to talk about the tech giants, even though the giants change all the time. First, it was Apple and Microsoft. Then Google and Yahoo. Then Microsoft and Google. Then Apple and Google. Now, Google and Facebook. Facebook used a “get hype” strategy to achieve $100 billion valuations in private markets with many pundits suggesting they would crush Google despite profits a tenth of Google’s. Instead, Facebook’s hype crashed its IPO, and its market cap is over 50% below peak valuations. Every other “get hype” IPO has suffered similar fates (Groupon and Zynga, most notably).

    Facebook Stock Performance

    Facebook’s stock performance since its IPO (graph courtesy of YCharts)

    Meanwhile, two silent killers have thrived. Amazon, which has been around for longer than Google, but until recently, has never been much discussed as a tech giant, wasn’t fighting it out in the press for mind share dominance. Instead, they acted like a silent killer. They had some engineers in South Africa innovate on cloud computing, entering a web services business with entrenched competitors that they totally out-innovated. With a debut in 2006, Amazon Web Services is now a $2 billion business, and one which no traditional web service company has been able to catch up to, despite having been working on web service solutions for tens of years longer than Amazon. Amazon Web Services was a not a “get hype” strategy. In fact, it probably couldn’t be. Most people still have no idea what cloud computing is. And that helps Amazon, because it means not just anyone can copy their strategy, because most don’t even understand it.

    Amazon Stock Performance

    Amazon’s stock performance since launch of AWS in 2006 (graph courtesy of YCharts)

    Another example is LinkedIn. LinkedIn launched as a business social network well before Facebook and grew steadily for years while MySpace and Facebook secured all the headlines. Instead of just growing users via a “get hype” strategy, it grew a business as well. While CareerBuilder and Monster spent billions trying to entice job seekers to post their resumes online for job openings, LinkedIn figured out that network referrals, not application processes, create the best candidates, and built tools for recruiters based on that premise. LinkedIn users gladly gave the company their resumes as content to build their profiles. LinkedIn IPO’s well before Facebook did, and their stock price jumped from a $35 offering to over $100 on the first day. After delivering solid results quarter after quarter, its stock price is at $120, whereas Facebook is down over 50% from its IPO price, and Monster’s stock is down from a peak of $57 to just $8.50. Other silent killer IPO’s have performed well also (examples include Zillow and Palo Alto Networks).

    Now, this is not to say that the silent killer approach is for everyone. For example, as much as he may have wanted to, there is no way Jack Dorsey, the founder of Twitter, could have grown Square quietly. There are just too many eyes on him. Nor do I want to imply being a silent killer is a strategy you can pursue forever. Amazon is certainly no longer a silent killer, nor could it stay that way after it disrupted web services with AWS and content distribution with the Kindle. But for most companies, no one cares what you’re up to until you try to make them care. Using hype to make people care is a strategy you should carefully consider the pros and cons of in today’s environment. You may be better off building a silent killer and shocking the world when you’ve already won a multi-billion dollar race no one else knew had started yet.

    Before You Try to Win, Figure Out What the Prize Is First

    Keep Your Eyes on the PrizeWorking in the startup world, I see a lot of ink written and a lot of who will “win” a market. That is, who will be that one service out of many competitors that eventually has all the users using it vs. any of today’s competition. Every industry in the startup world is assumed to be a winner take all market where “all” is world domination in some form. In some cases, this is true. If a market has strong direct network effects, it can definitely be the case. This is why Google+ is having such a difficult time becoming a legit competitor to Facebook. Facebook accumulated all of the value from direct network effects creating very large switching costs because with all your friends are on it already, and that made it more valuable to you than sites that didn’t have all your friends on it. But very few industries are like this, even in technology. There are many successful sites that have equally as successful competition and many positive components to co-opetition i.e. being friendly with competitors to make sure there is a market. Also, the ability to get out ahead of competitors is much harder with the ease of development and the cloning phenomenon.

    I think this logic is flawed in a much more dramatic way than just assuming every new technology space will be winner take all. In the emphasis to win ever-emerging new markets in technology, one of the main questions that is frequently lost is what is the prize in winning. The prize should be profits, but I think many companies are going to realize that’s not necessarily a given. Look at Groupon. I think it’s fairly consensus that it “won” daily deals, but at the cost of winning, they struggle to find any actual profit from it despite 50% margins. Their value is now less than what Google offered to acquire them for. And the “losers” of daily deals are in worse shape. Living Social is bleeding money and trying to get into any other business besides daily deals to find profits. BuyWithMe was liquidated, and Gilt is laying off people left and right.

    A similar situation has now emerged with check-ins. Foursquare “won” that market, beating out competition from Gowalla, Loopt, and even Facebook to a certain extent. Sure, it got them a $600 million valuation, but they just pivoted to a local recommendations app (read: Yelp competitor) where its business model comes from paid recommendations by national chains. Not only is this change baffling and frustrating/contradicting for foursquare users, but it is unlikely to be source of profits for its investors as Yelp as a market comparable of $1.2 billion. At best, venture capital investors will double their money, and that “best” is very unlikely. The prize of winning the check-in game seems to be abandoning all the data check-ins create to shill corporate branding to users to used you in the first place to support local businesses.

    This emphasis on “winning” can be very dangerous for young companies. First, it creates a rivalry that prevents competitors from learning from and working with each other when necessary. Second, it creates an emphasis of growing a business to build market share instead of to build future profits. Market share doesn’t matter if the market doesn’t have any value. These mistakes can be very hard to recover from, and we have some cautionary tales in the market currently that should remind us to stop harvesting a “winner take all” mentality and start thinking about how to develop your business to make long-term profits.

    Design and Business Inspirations: A Reflection on the Remarkable

    With the end of the year approaching, I thought I’d take some time to reflect on some of the things that have impressed me this year in design and business.

    New Businesses:

    Everlane Logo

    Everlane is a new startup that sells designer quality clothing for under $100. They premiere a new collection monthly of different types of items. The first month was shirts, the second month ties and bows, etc. They have also featured scarves and backpacks so far. Especially as a man, the ability to find quality clothing at an affordable price can be quite the challenge. Everlane solves the problem by consistently producing quality “basics” every person needs. Everlane has been in a limited launch where it requires you to get others to sign up to get access. This tactic is not without its hiccups as some people have been waiting forever that are early adopters, but it spreads the message and anticipation and continues to motivate even after you are granted access because more friends = more perks. See below.

    Everlane Loyalty Program

    Postmates Logo

    Postmates is an on demand service for couriers. As someone who has the iPhone app, you can request a pickup/delivery, and Postmates sends the orders to couriers that have signed up to receive more business who then can accept or deny the order. This is the classic approach of a two-sided model where a particular industry has idle time and can use more business. At the same time, this service makes it easier for people to find courier services so they can get packages across town without using the post office. Postmates will take a fee from each courier transaction.

    OneReceipt Logo

    OneReceipt is an online home for all of your receipts. Just sync up your email and have all of your email receipts organized in one place. Snap pictures of offline receipts to add them as well. OneReceipt will itemize and categorize all of your spending and provide reports. Long-term, they will attempt to use your spending to match you to targeted offers. The business model end will be a work in progress as it’s unclear how they will get past deal fatigue or even if what people want from a service that’s telling them how much they spend where to spend more. I had the pleasure of talking with the founders before their beta launch, and they are sharp guys, so they will figure out the right way to monetize. That said, the sync technology is impressive, and something competitor Lemon doesn’t have.

    Fab Logo

    Fab is a flash sales site for design. Fab has curators that handpick vendors to provide flash sales on the site and their mobile apps. The sales are categorized in such a way that you can immediately tell if it’s something you are interested in or not. You can purchase easily through the site or the app, and the merchandise seems to be of consistently high quality. My experience with Fab has been so nice that it made me think I’ve just been missing out on the whole flash sale scene. So I signed up for some other flash sale sites, and no, Fab is just special. The site and app are so enjoyable to use that I don’t need a daily email to remind me to come back to the site. It is fun to just browse the app if you have a few minutes to waste on the bus ride home. That said, the Fab website has a bit of a confused identity, as part of it is flash sale site and part of it is Pinterest competitor. I also question their ability to scale here as they definitely do not have drop ship relationships with all of their vendors, so inventory and warehousing control is a very important issue for them I imagine. It also needs personalization long-term, and no one’s doing that right yet.

    Fab Mobile App

    Existing Businesses:

    Evernote Logo

    It’s hard not be impressed with what Evernote has done this year. The company broke 20 million users and raised a $50 million Series D round that values them at somewhere north of $500 million. That’s only scratching the surface though. They bought their first company Skitch, and then helped it pass 3 million downloads on Android. They also started pursuing a multi-app strategy using the Evernote brand. In addition to Evernote and Skitch, they released Evernote Food and Evernote Hello. By separating these new functions as new apps, they get the benefit of using their brand to promote usage while not having what these apps do become hidden as just one of the many features of the main Evernote app.

    Path Logo

    Path launched in 2010 as a photo sharing service. Its differentiator was that it was a private network for sharing special moments with those close to you. Well, that value proposition really limited their virality, and photo sharing became a crowded space with an increasingly clear winner with Instagram. Path had already rejected a $100 million acquisition offer from Google, they needed to regroup. Path 2, as it’s been called is more of life a journal than photo album. The most important thing to know about it is that it is beautiful. The mobile app is at the forefront of interaction design, and their home page is even innovative (go check it out right now, seriously). The most impressive parts to me are the + button that is so easy to use the and going to sleep/waking up experience (though it does remind me of a joke from Kicking and Screaming). This update still makes me wonder if Path as a company is just a bunch of talented designers without a real problem to solve, but ever since the relaunch, my Path has been way more active with fellow users, so they are gaining traction.

    Counterselling

    Working in marketing for a startup in the early days, I was always challenged with building awareness. There were mainly two ways to do that:

    1) spend money on awareness advertising initiatives

    2) create an environment for awareness

    For the former, we identified a few affordable ways build awareness and spent money cost-effectively. For the latter, it was all about being out and about. Going to events, posting comments on blogs – anything that you get your name and your brand noticed, hopefully with a bit of a story behind it. A big thing is getting the rest of your employees to do the same.

    Once you start to spend money on awareness advertising initiatives, it doesn’t matter how effective that initiative is; it will build awareness for one group guaranteed: salespeople. Particularly salespeople for other advertising companies. Most marketers probably consider this annoying because they are now inundated with cold calls and emails about a ton of marketing initiatives on which they don’t have money to spend. But this phenomenon presents a huge opportunity for the startup marketer. That opportunity is counterselling. It functions primarily the same way you would want to convert your target market: awareness leads to consideration which leads to trial.

    So now you have a targeted group of potential customers emailing and calling you to find out more about your business. Who cares if they ulterior motives for that behavior? They’re still potential customers. So what I did is I responded to them. I thanked them for their emails. I set up phone calls. What did I do on those phone calls? First, I pretended I had money. Second, I told them the truth in that I had very little time. Lastly, and most importantly, I countersold.

    Now, I want preface this by saying I am not a natural salesman and that I’m not saying all startup marketers need to become salespeople. The beauty of this group of potential customers is that their job is to listen to potential clients. And once you are on the phone with them, you are a potential client.

    So what is counterselling and how does it work? Well, if a salesman is any good at their job, on that phone call their main job is to ask a lot of qualifying questions to make sure you can be a successful client for their company. These will vary by company, but mainly their intention is to make sure they aren’t selling forks to an ice cream shop kind of stuff. What these questions do though is give you a chance to tell the story of your company: how it was founded, the value proposition, a funny anecdote about how some people are using the service, and ideally, something that makes the company look bigger than it is.

    Now, I know what you’re thinking. Sounds a lot like one-to-one marketing. I need a million users not to get fired. I don’t have time for this. Well, firstly, one customer is better than zero customers, and two, it’s isn’t one-to-one, and I’ll tell you why. The goal of your answers to their qualifying questions should be two-fold. First, you want to get the salesperson excited about trying your product him or herself. This is much easier to do than for normal users as it helps them qualify your product as a good potential sale or not, and they think it will impress you that they’ve used the product, making it more likely they can close.

    Second, you want to sell the salesperson on the fact that you’re a serious potential deal. This is not hard as salespeople are notoriously optimistic, and because you pretended you have money, their biggest obstacle. What this second objective accomplishes makes sure of is that this salesperson at least tells one other person at their company about you i.e. their boss, and more likely, their entire sales team. The reason for the latter is because he wants to protect himself from one of his team members also calling on you and stealing his sale. So what you have after one call is basically a brand evangelist at that company.

    Now, I don’t want to create the illusion that this always works, but it’s been pretty effective for me at enticing trial of the service. And if your product is good, trial can very easily lead to a repeat customer or a few repeat customers at that company. Also, I want to make sure you know that this is a good thing for the salesperson. They get to tell their story more often as well, and have a shot at convincing you they normally wouldn’t have gotten.

    I also want to mention that the sales process does not stop there for this company. They are going to come back with two things (lots of dualities in this post I’m noticing):

    1) a more serious meeting/proposal

    2) some feedback on using your product.

    It’s important to take both very seriously. If you dismiss the first, you will not have a repeat customer out of spite. If you dismiss the second, you’re just a bad marketer. I’ll assume you’re taking care of the latter, so let’s discuss the meeting/proposal in more detail below.

    When a salesperson asks for a meeting or sends a proposal, it’s important to respond with something. First off, taking a meeting is not a bad idea if it’s genuinely a solution you may consider. You can learn about costs and implementation and add it to your marketing plan once you are ready for it and/or have the funds. But you may decide there is no value for you to taking the meeting. In this case, you have to handle things gracefully to keep them on your side. I generally like to blame things on the boss, saying that we re-prioritized some things and won’t be able to consider this for another six months. Something like that. Always thank them for their time and give compliments about their service.

    All a salesperson wants is a fair shot at your business. So make sure they know they got one, and you can use counterselling to effectively build awareness, consideration, and trial within other companies.

    My Building Internet Startups Class Final Presentation: Cartogram

    For Brad Keywell and Eric Lefkofsky’s Building Internet Startups class at the University of Chicago, each student was asked to build a 5-10 page presentation for a new startup idea. Out of the 100 students in the class, seven were selected to be presented in front of the class. Mine was one of the seven chosen. See it below.