The user base increased more than 60% this year, plus the unique visitors increased significantly as well. The overall revenue doubled, and the company’s Hiring Solutions made up over 50% of LinkedIn’s quarterly revenue.
Launch a social media campaign that will build your brand and deliver results in our online Social Media Marketing Boot Camp starting June 7. Speakers include Abigail Cusick (Bravo Digital), Gregory Galant (Sawhorse Media), Alex Leo (Thomson Reuters Digital), Jim Tobin (Ignite Social Media), and many more. Read the reviews. In the latest episode of “Elevator Pitch,” host Alan Meckler grills entrepreneur Aaron Harris about his startup Tutorspree, a site that connects students with private tutors.
The social network can connect you with people you’re familiar with or are interested and only around the topics that you care to tweet about.
Many startups on the path of fundraising will endure a fair share of comedy and pain. Some investors will seem incredible savvy and others will tout themselves as “internet investors” specializing in Consumer Web – then ask you what SEO is. Some will say your cap is too high and others won’t understand your business model.
Here is the truth: you are storytelling and “she with the better spreadsheet” wins.
If it’s your first startup, fundraising is a game and the best way to play it is by getting fans.
Investors will follow – and here’s the seven types of investors you’ll find on this journey:
1) First Timer
Their company was just sold, they got acquired by Zynga, or an aunt died. Whatever it is, they have entrepreneurial experience and some liquid cash. THEY WILL NOT INVEST IN YOU.
More questions will pop up. They will refrain from investing in you for “business reasons” and ask for more spreadsheets or decks. Stop – it’s not worth it. At the end of the day, they will write a check to their best friend – the one they love and always talked about partnering up with through college.
2) Don’t Know SEO
These are the “internet gurus” or Angels specializing in “Consumer Web” but will ask what SEO is. You work in Internet and if part of your business model or strategy involves SEO, then the meeting is potentially pointless. Explain what it is and find a way to cut the meeting short.
3) Mr Decks a-lot
This is the sneaky angel or associate that before anything else – even the promise of a call – needs plenty of materials. These are Deck Snatchers. They will try to see what information they can get from you and share with friends and startups they are going to invest in. I like to make a mini deck or a product deck for these types – or share public video clips. There’s a couple reasons why:
1.) it shows you are organized
2) explains your product without giving out too much information.
If they ask for a spreadsheet before a call, you are doomed. This is your business model – hold it closely.
4) Mr. Addressable Market
This is a casual topic that should come up after a relative amount of information has been shared. If you have gotten less than $500k in funding or are less than 2 years old, you are likely still testing different parts of the addressable market.
This is also a fancy term that investors learn in business school. Most entrepreneurs can do the math:
100 billion annual market = tons of opportunity = $$$$$. Addressable market = a lot.
5) Confused Connie
She can’t find the dial-in number, mixes up dates, responds to emails in multiple responses (before you have a chance to respond) and is overly worried about details that are not within your core business model.
This investor is the worst kind because they drive you nuts before they have even invested. Imagine if they write you a check? Best thing to do is build a friendship and see if they have leads or people within their network worthwhile.
Confused Connie will also confuse your team and group: it’s contagious.
6) Earthlink or Yahoo Email Address
It’s not a myth. If you are a internet startup using Yammer, Evernote, 99Designs, AppSumo, VIMEO, social networks and widgets, how are you going to explain your current status to an investor that hasn’t realized they can have a Gmail account which includes easy to use chatting?!
If they have a Yahoo, Hotmail, Earthlink, or AOL email address, walk away. See also Confused Connie.
7) I’m too Sexy for..
You know who these investors are. They like to be cool and invest in hot things but usually can’t get in on the super hot startups and want to make you think they are, indeed, in short supply.
They want to brag at cocktail parties about their “awesome startup” they own and unless you can keep their A.D.D in control, they will bug you quickly for an exit or PR mention or huge traction stone.
They don’t care about long term value – they’re in it for the valor. The interest of these investors is flattering and a very good sign, but pick someone who gets what you are doing and sees the dream and passion – not the TechCrunch headline.
The latest pitching season has just ended at KAYWEB Angels, during which we invited approximately 30 of 200-plus funding applicants to present their ideas in person.
We allowed these individuals and groups 20 minutes to go through their prepared presentations, before firing away with questions from our board members for another 30-40 minutes.
While we have made our selections, I thought I would share some of my key pointers for entrepreneurs and startups preparing to apply for angel or VC funding.
I will not go into grooming details, as one clearly has to be well-presented and eloquent when presenting. My tips are designed to ensure the content of a pitcher’s presentation are adequate in answering key investor questions.
Here is what we need to know to invest in your startup:
WHAT’S THE PROBLEM?
Every business must be solving a problem. Your proposed business must be solving a problem. Whatever that problem is, you must define it clearly from the outset.
HOW ARE YOU SOLVING IT?
You must constantly refer to this problem as you pitch your solution, reminding investors that you are focused on solving your discovered problem.
WHAT IS YOUR MARKET?
Investors typically invest in many different categories, thus we do not know what the capacity of every single market is. You must prove your market case. If it is through third-party studies or surveys you have conducted, validating your market will go a long way to securing investment. Effort in this area will also show investors that you have already engaged with your potential market, which is a big plus.
WHO IS YOUR COMPETITION?
There is almost always competition. You never want the investor suggesting “have you heard of x” or “have you heard of y” as “these guys are doing something similar”. The deeper your knowledge of your competition, the greater an investor’s belief in your capacity to take them on.
WHY ARE YOU BETTER THAN YOUR COMPETITION?
Once identifying your competition, you must define how you are are better than it, or how your product differs from theirs. In some cases, you must also not overlook their capacity to replicate your product once they see it on the market. This must also be addressed if applicable.
WHAT IS YOUR BUSINESS MODEL?
No serious investor invests unless there is potential to make money. Your business model must clearly show a road to financial success. Monetization, staffing, growth opportunities, exit strategies, etc. must be explored and explained in this section.
WHO ARE YOU?
Advertise yourself, referring particularly to the startup idea at hand. Why are you the best person to steer this business to success? Investors will not invest in your idea if you cannot prove you have the ability to see it through to success, particularly if you are suggesting yourself as CEO.
WHO IS YOUR TEAM?
If you have assembled a team, present their credentials and explain what they each bring to the table. Also reveal what their share is in the business.
WHAT DO YOU NEED?
Explain what you think you need from the investor, and how you arrived at this conclusion. Be prepared to negotiate if successful.
HOW MUCH DO YOU WANT IT?
Passion is a key ingredient when weighing up whether to invest in an entrepreneur or not. If you are working on a dozen ideas with the hope that one of them will succeed, I don’t want to invest in you – your time, skills and abilities are too divided.
If you show that you are really vested in what you are pitching, by declaring you are leaving your day job or investing your own funds, etc., these are all great signs that will translate into you becoming more investable.
Hope this helps… and happy pitching!
A key lesson for web startups has emerged from the recent bad press and hostility directed at the online movie rentals powerhouse, Netflix.
Netflix provides on-demand movies and shows streamed online to subscribers, as well as a mail-order DVDs delivered by post at a flat rate to customers. The company has over 24 million subscribers and is expanding into countries other than the United States and Canada.
Last week, Netflix announced a price increase. Those who used to pay $9.99 for both the DVD (one-at-a-time) service and the live streaming will soon be forced to pay $15.98 per month for the same offering. They said the increase will be to improve streaming, as well as their collection of material available online.
Subscribers lashed out. Many abandoned Netflix. The company’s stocks took a dive.
The lesson for web startups lies in the ‘how?’.
Technically, $15.98 for the service Netflix offers is dirt cheap. With its offline competitors being cable television and video stores, Netflix is considerably more affordable despite the price hike.
Moreso, maybe they do need the extra cash for the reasons they propose.
However, regardless of how it is looked at, it is a strategic error.
A 37% price rise in one hit is too significant to whisper into a paying subscriber-base of 24 million! They will make noise. They will suspect you of a greedy grab at cash. And they will abandon you.
The strategic error lies in how this was rolled out. I suspect, having been involved in such decisions over the years, that this hike was a necessity to improve the company’s product, service or bottom line.
But the fact that this was not recognized as a potential need at the company’s inception or earlier in the course, meant that Netflix could not spread the 37% rise in price over a longer period and make it more of a gradual hit on its consumer-base rather than one big hammer.
If Netflix hit the market with its price for this service at $15.98 instead of $9.99, would they have suffered as much? I think not.
If Netflix rose $9.99 to $10.98, then to $11.52 six months later, then $12.09 12 months later still, and then to $13.99 after a further six months, before reaching $15.98 over a total of 30 months… would they have suffered as much? I think not.
Startups monetizing with paying customers (by subscription, product sales, etc.) must set their price very carefully at their inception. If necessary, they must then raise their price carefully also. Strategic price-setting and price raising, in accordance with the size of your customer-base, is critical.
The Netflix conundrum has shown this to be true and I hope web and mobile startups price with caution.
A good entrepreneur is always an optimist by nature. He or she must also be a realist, which is not always a characteristic that comes naturally to us entrepreneurs.
The roads to virality of the great internet startups that consume our everyday lives, like Facebook, Twitter and Groupon to name a few, have been less conventional than the roads to a similar result experienced by traditional startup businesses.
These great internet startups have proven that ‘quirkiness’ can replace the billions of marketing dollars spent by traditional businesses to build a brand and cult following.
Quirky could be the idea of virtualizing the everyday lives of Ivy League students like Facebook did to attract the majority of Harvard, then other College students before ending up with profiles of 1 in 14 humans living on planet Earth.
Quirky could be enforcing a 140-character limit on status updates like Twitter did before attracting a gigantic user base that includes world leaders, business tycoons and celebrities to its application.
Quirky could be coming up with ‘win-win’ deals with local businesses and spreading them as cleverly-worded coupons to a bargain-hungry audience, like Groupon has done to become a company that rakes in billions of dollars in revenue per year after less than three years in operation.
None of these businesses spent millions of dollars on television ads, bus stop advertising or a Times Square billboard. Planned or not, quirkiness was one of their key means to go viral and attract a critical following of their business. They have built online empires that are today valued at between $10 billion and $100 billion, depending on who you ask.
When starting your online business, plan quirkiness. It is an affordable way to take your business viral and save critical marketing dollars.
When asked in a recent interview with YoungEntrepreneur.com for a piece of advice for young entrepreneurs, I answered “dream big but act lean”. This is critical advice.
Wikipedia defines an entrepreneur as “a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome”. An entrepreneur is someone who is better served without the shackles that come with a traditional job, without a boss, without top-down imposed key performance indicators, etcetera.
I was at a prominent internet startup event in New York City last November, where one of the guest speakers was Justin Day, the Chief Technology Officer of huge web success story, blip.tv. He said that one should NOT build a web business with the goal of selling it, using himself and his friends as successful prototypes of that philosophy.
