But how good is this wave of mergers and acquisitions for the future? ( By future I mean upcoming innovation and future of Startups which target innovation not business)

Whenever your biggest competitor takes you over, it blunts the competitive spirit that can drive innovations. Thats what concerns me most, the spirit of innovation is somehow compromised because of takeovers.

Not always always a potential Merger or Takeover can be taken as a positive sign of ever increasing competition and globalization. And particularly not right now when it comes to web and social media startups, many of which are still more focused on innovation and building up audiences than on making profits. Rushing them into deals to fulfill long-delayed plans for an exit strategy could derail the evolution of a strong business plan.

From an investment standpoint, founders and venture capitalists have good reasons to cash out now. Market caps of public tech giants are rising — the Nasdaq gaining big time – and so are their cash stockpiles. For Instance Microsoft has a stock pile of about $49 billion in cash; similar is the story of Google with $24 billion. High-profile Multi Billion dollar deals like the ones we had in recent times have a way of spurring on other acquisitions.

TimeWarner buying AOL and eBay buying Skype come to mind. Even snapping up a hot startup for its technology or talent — Google buying Dodgeball or Yahoo buying Flickr – can lead to culture clashes, customer anger and other disappointing results.

I  tried to re-compile the list of some major takeovers which are substantial enough to change the future of computing.   We are talking about some multibillion dollar mergers and acquisitions, where the Big gets even Bigger.

Oracle eclipses the SUN @ $7.4 Billion

This Merger can be coined as “father of all the Tech Mergers” announced last year. If the announced the deal went through, Oracle,  the industry’s largest database software vendor would get an entry into the server and storage markets worldwide.

The acquisition, still pending, was announced in April, and may even be blocked because European regulators are contending that combining Oracle’s technology with Sun’s open source MySQL database would violate competition laws. Lets see if this deal goes through.

Xerox snaps up ACS in $6.4 billion

Another major takeover, Xerox pays about $6.4 billion in cash and stock for Affiliated Computer Services (ACS), a large IT and outsourcing firm. With this merger Xerox hopes it will give it a bigger foothold in the business services space. While the deal will surely boost Xerox, investors wondered whether it overpriced the deal.

Calling the ACS deal “a game-changer” for Xerox, Burns, CEO of the company, said it would help Xerox “expand our business and benefit from stronger revenue and earnings growth.” The deal will triple the service component of Xerox’s revenue to roughly $10 billion annually from $3.5 billion, according to the company.

Dell – Perot Catch-Up Deal worth $ 3.9 Billion

Buying Perot was a part of Dell’s plan to expand its footprint in the IT services market, which was  a necessity in a time when hardware sales were falling. Dell offered a staggering $3.9 billion for Perot Systems, a 68% premium over Perot’s actual stock value. Dell’s purchase can also be seen as a response to rival HP’s $13.9 billion acquisition the previous year of EDS — another services company founded by Perot.

Cisco-Tandberg worth  $3.4 billion

Cisco, already a major player in collaboration products with WebEx and TelePresence, signed an agreement in October to purchase videoconferencing vendor Tandberg, which makes both video devices and network infrastructure products. The acquisition, if completed, could have both a direct and indirect impact on Cisco’s bottom line, because expanded use of videoconferencing may increase network traffic, letting Cisco sell more switches and routers.

HP Acquires 3Com For $2.7 Billion

HP launched a straightforward assault on Cisco in their own Game of Networks. HP’s increasing influence in data center networking and convergence markets will have a big boost with its purchase of 3Com, a maker of switches, routers and security products. HP says the acquisition will further its data center strategy “built on the convergence of servers, storage, networking, management, facilities and services.” The acquisition of 3Com also help to expand HP’s Ethernet switching offerings, add routing solutions and significantly strengthen the company’s position in China thanks to 3Com’s strong presence in China. The transaction is expected to close in the first half of 2010.

I have collected the figures and numbers from various sources including PCWorld, Gigaom and Wikipedia. Let me know if you have a suggestion or correction to make. Please forgive me for the grammar, I was always bad in Grammar since school

Article Previosuly mirror-posted by me at Global Thoughtz.

Anand

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Sarah Lacy writes about SMSONE, a ultra-local news provider in India similar to Outside.IN, a Union Square Ventures funded US-only company that provides news updates via the web. SMSONE does it, as the name suggests, via SMS. And it spreads through a franchising model, working with local entrepreneurs that pay a franchise fee and also collect a share of the advertising revenue from locally focussed businesses. It is able to do this because of something that apparently doesn’t exist in the US (but does in Europe): receiving an SMS in India doesn’t cost the recipient anything.

When reading about this, I was immediately reminded of a similar business model employed by a Dutch entrepreneur in Russia, Ms. Annemarie van Gaal, founder of Independent Media, a company that distributed Russian versions of magazines like Cosmopolitan, Marie Claire en Good Housekeeping (source). When she spoke at the Star entrepreneurial seminar in Rotterdam a year ago, she told us about how she differentiated herself from the competition (paraphrased as I haven’t got my notes with me):

The trouble with getting your magazines distributed in Russia was that you had to pay quite a lot of money (some would call it bribes) to companies that would then take care of it… badly. Instead van Gaal decided to do it differently. She would hire street kids to distribute her magazines, similar to the gold days of newspapers: the newspaper boy.

If you read Sarah Lacy’s account on Techcrunch, you’ll see that SMSONE does it similarly, hiring local kids, often without much education, to take care of distribution. Doing it via official channels is likely a nightmare over there, and centralising distribution kind of defeats the purpose of micro-news.

It’s a different way of thinking, which many of us westerners don’t have. I mean, would you entrust your products to a beggar on the street or to a street musician? Not only is it probably against the law (except if the government does it), we pride ourselves on our super-organised infrastructure, where anything from temp-workers to interns are there to provide companies with a flexible workforce, and anything from printing presses to mobile internet exists to produce and distribute your stuff.

Of course, I wouldn’t just leave you with these two examples. In the beginning of 2008, Boston Consulting Group published a study of “local dynamos”— domestically focussed companies, which use creative business models to capture value from emerging markets that are filled with challenges, like lacking infrastructure and low-income consumers. The map below shows how widespread these companies are.

Some very interesting examples are mentioned, like:

• Shanda, a Chinese gaming-company, that, in order to combat software-piracy, focusses on providing interactive services through gaming, services that are impossible to pirate. And to overcome a lack of a financial infrastructure to pay for online services, they work with pre-paid cards.
• Indian CavinKare, which sells cheap sachets of shampoo through small local retailers, while using educational marketing to teach customers how to use their products.
• Goodbaby, which targets the many 1-child families in China, who are both willing to spend more on their child than multi-child families would, but are also in need of education.
• Amul, an Indian food-and-beverage-marketing-organisation, which collects and pays for milk locally, while tracking all operations via satellite and uses ERP solutions to make analysis based on the data and gauge whether future supply needs to be increased or decreased.
• Wimm-Bill-Dann Foods (Russia), which works extensively with local partners, and has devised leasing schemes for expensive machinery to boost their production and is able to serve 280 million consumers nation-wide.

The BCG, of course, takes the stance of its customers, Western companies, and the study is mainly aimed at how multinational companies (MNCs) can replicate 6 of these dynamo’s advantages, in order to compete with them. They are:

1. Customising to local needs – which involves first understanding these needs, and then meeting them.
2. Devising innovative business models that overcome local challenges – a logical follow-up to the last point, how to make money from the info you gained.
3. Leveraging the latest technologies – meaning that these emerging economies are less burdened with traditional infrastructure and quicker on the uptake of more affordable, newer, and easier-to-spread technology, e.g. mobiles.
4. Benefiting from low-cost labor and overcoming shortages of skilled labor – there’s two ways to look at this; a local workforce will be better equipped to interact on a local level, a highly-trained workforce will be better equipped to run a business. Tough call.
5. Scaling up fast – Russia, India, China, Brazil, etc. are all giants with the promise of huge rewards when you capture them. Many of these dynamos grow quickly through both through acquisitions and building up their network of suppliers and distributors.
6. Sustaining long-term hypergrowth without imploding – this kind of follows on to the last point

Some of the Western companies mentioned, which have managed to compete on a local level, include:

• General Motors, which has adapted its luxury-liners to meet the demands of its Chinese customers, who are usually sitting in the back;
• LG, in China, which has learned that the audio-quality of its televisions is more valued by its customers, who often reside in noisy environments;
• Carrefour, which has started to work with local municipal governments in China, as these don’t meddle in their operations like local dept. stores would, and are able to provide access to prime locations;
• Perfetti Van Melle, in India, a candle/chewing-gum manufacturer, which has found local means to advertise, interacts frequently with local partners, and has adapted its products to local tastes;
• and Yum! Brands, which owns Pizza Hut and KFC, and has adapted its menus to meet local Chinese tastes, started a new food-chain aimed specifically at the market, and uses its international expertise to integrate IT, lean supply chains, and a higher level of food standards into their offering.

It shows the value of out of the box thinking in terms of reaching people, and I believe that traditional “Western” thinking should long ago have been thrown out the door anyway, particularly in light of the troubles that media-, automotive, and financial industries are going through. We are in the flux of disruptive innovation and only those quickest to grasp new technologies and ways of thinking are able to survive another day.

No shortage of lessons on that from entrepreneurs in emerging economies…

Vincent out

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A good friend of mine, Zihni Ozdil from the Netherlands / Turkey, Historian Extraordinaire, is now publishing his wisdom online. If history, politics, and culture (“beyond the superficial”) is something you find interesting, I encourage you to check it out. On his site, I found an article entitled ‘the real Evil Empire,’ which, ignoring the provocative title, deals with the interesting topic of the cold war and the ‘demonification’ of Russia and communism at that time.

Yesterday, I had an interesting discussion with some Canadian Swedes that moved to Florida with their kids and had trouble finding a school. The only way, it seemed, to guarantee that their kid ended up in a good one is to have an A-class school in your district (which you can find via a website that profiles attendees according to race and economic background… wow…) and to have paid your electricity bills. It worked out well for them, but clearly suggests the underlying problem of a long-term selection bias.

Last night, meeting the Canadian Swedes, where I was also in the company of a Russian and a Japanese, I noted that it was strange that while both Russia and Japan, being superpowers in their own right, have infamously challenging education systems, which result in some pretty smart people graduating from either country, the US does not seem to follow that pattern, at least not at the high school level, and certainly not across all demographics. Yet, by all accounts, the US is a superpower, if not the superpower of this and the last century.

My post today is not about comparing countries’ education systems, it’s more about the strategic purpose of education. Many people don’t know this about me, but I don’t vote and I don’t generally care about (regional) politics. To me, our planet should be one country, where anyone can move and work anywhere, and services don’t have to be moved just because you physically moved  XX km/miles to another country. But I do recognise the power of competition and how that can lead to excellence. Versus a ‘group think’-like mediocrity where everyone just tries to be like everyone else and no one exceeds. So, in a way, I endorse a system of divided regions, because I think it leads to competition and thus excellence.

Education plays a strong role on the competitive advantage of nations, as it does in certain companies. Last year, applying to a lot of consultancy companies and working as one myself, I was struck at the importance that the accumulation of knowledge plays in this industry. If I were to start my own consultancy, continuous education of the staff would most certainly be a cornerstone of the business strategy, because knowledge is your product as a consultant.

I know that this thinking plays a strong part in government circles as well: how to make your/our country as strong as possible, not (just) in military terms, but in the sense of knowledge, mostly measured by the no. of graduates and the no. of patents that are published every year (as well the commercialisation thereof, which doesn’t go quite as smoothly).

I know that the no. of graduates coming out of Chinese universities is tremendous, and the no. of patents coming out of US ones is among the highest in the world also. So clearly, the US, superpower extraordinaire, is doing something right. I don’t however entirely understand why the primary/secondary school system is so abysmal then in the US. My only explanation is that, in academic circles, there are no national boundaries, and a Russian researcher can just as well (if not better) produce patents in the US as anywhere else.

There are other dimensions to the US superpower status as well, of course. It’s a military superpower, it is a cultural superpower (in terms of films, music, and literature), it has a large consumer-base. These three dimensions—safety through military strength, an easily adopted culture, a consumer’s paradise—also have the effect that they serve as an attraction point for outside academic or other talent. And while other countries may have strong educational bases, the other aspects are perhaps ignored just a little too much, still making the US a prime export location for knowlegde.

In the strategic literature, there is the concept of the resource-based view, which stipulates that company strategies are nothing more than a collection of resources, some of which are internalised and some that are not. I think that in the context of the US and education, the resources that must be internalised are those that lead to the commercial exploitation of technological advantage, which sounds abstract, but basically means making sure that the best technology/knowledge is produced in-house and generates economic benefits in-house as well.

But there other resources that must most certainly not be held onto in-house. These include standards, which facilitate the assimilation of knowledge. In education, the standards that we use are the bachelor-master-phd system, which can easily be studied in different combinations and locations. And text-books, which as many students know, are often from US-origins.

In many ways, the cultural exports from the US—movies, music, literature—are nothing more than the spreading of a standard, that of a language and a way of thinking, which makes assimilation of outside talent easier. And as long as that outside talent is used for the benefit of the US, in the form of patent exploitation, the US benefits, even if their own primary/secondary education system is quite uneven.

As mentioned, I don’t care about politics, country-differences, or governments. But if my logic is correct, I wonder if a metaphor exists for commercial superpowers, i.e. companies that are market leaders and remain so by attracting the greatest talent and finding ways to turn that into economic benefits.

Organisations are not complete economies like governments are and also have the benefit of being mobile—by law they are considered single persons, which have residence, pay taxes, etc. just like everyone else. So, as long as they obey the law, they can choose where they stay and choose to ignore local conditions, much like, I theorise, some governments do, instead focussing on the bottom-line: attracting excellence and turning that into profit, while keeping ‘unnecessary’ expenses as low as possible. Well, at least that is the stereotype of an organisation, while pressures have certainly lead some to adopt a more socially-responsible attitude.

Clearly, the question of talent, whether attracting or training it, remains a vital one for both countries and organisations. But I don’t think there is necessarily a correlation between talent and local conditions.. at all.. though local conditions do play a part in the quality of life, or lack thereof, which affects the talent’s in question desire for a certain location.

Vincent out.

(Picture courtesy of thehindubusinessline.com)

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UC Berkeley: Center for new Music and Audio Technologies.

Prof. David Wessel showed us a new instrument that was basically 32 touchpads. Each was connected to a sample loop and the x- and y-axis and pressure modified that loop. It was an interesting idea, because it didn’t look like just pushing buttons to make sound.

Fail whale at LHS

UCB: Raymond Yee, “Mixing and Re-mixing Information”

A lecture from a course on web mashups. Yee has written the book, Pro Web 2.0 Mashups. The students need to plan and work on a mashup project. There were lots of interesting ideas, but I was worried that most of them were remixing for remixing’s sake and didn’t add value along the way.

Lawrence Hall of Science

Our contact at UC Berkeley had warned this place was mostly for children, and sure enough, this is a place to avoid unless you’re 7 years or less. Almost as complete waste of time as our Google visit.

We had also pizza available for but no-one from UC Berkeley came (we were too scary). Except one guy, whose name I forget. But he took some of us for drinks downtown, so that was great.

Digital Chocolate / Trip Hawkins

Hawkins really loved "Bowling alone"

Trip Hawkins talked a lot about how leverage is the key to successful business and what are the differences between the supply chain in when he was at EA and in operator-controlled world of mobile gaming. He told how he built EA so that it was NFL who wanted them to use their brand, not the other way around. This is why he sees that his competitors who just put out license games based on movies will ultimately be driven off the market, because they do not control the IP.

He thinks that the iPhone is the coolest thing in all time and how the rest don’t get it: “If you’ve played around with Storm or Android you know, wow, these suck”. In his view, the others had focused in Features (“What it is”) and not on Advantages (“What it does”) and not at all at Benefits (“Who cares?”).

Digital Chocolate’s game development doesn’t depend on the device, because they change all the time and they can publish all their games in every device. This is the only way to make the business work in the mobile space. Hawkins doesn’t see that there will be any standardization, because that would move the leverage away from mobile operators to handset manufacturers.

He also believes that the social starving that began around 1950′s because of TV is the reason people are so keen on the social gaming and internet services and is the driver for “omnimedia”. His suggested reading are The Innvator’s Solution and Bowling Alone. Even in the old days, he didn’t see gaming as waste of time. When playing, he said that “I was thinking, learning and motivated”.

He recommended that we try Tower Bloxx, their Facebook game. I was a bit disappointed, the game itself isn’t that bad if you want to kill time, but it is really spammy. Not only is more screen real estate spent on questionable ads than on the game, not only does it notify your timeline every time you play the game, not only the “social aspect” is just a high score table of your friends, but it also spams your friends every time you play to add the game. Not exactly what I’d expect from the guy who’s partly responsible for the great games EA pushed out in the early days. I asked why is it that as a former hardcore gamer, the only interesting game I played last year was World of Goo. In his opinion this down to how big corporations work and can’t innovate. If Tower Bloxx is Digital Chocolate’s answer to this, I don’t think it’s just big corporations.

Sun Microsystems / Mårten Mickos

FAQ: "If heating is a problem, why is it black?"

We were given the tour at Sun’s Executive Briefing Center. They showed the SunRays and other stuff and it was pretty nice to see up close the Black Box.

Afterwards, Mickos gave us a presentation about open source development and MySQL. He said that MySQL is like “New Orleans” of web apps in that if you want to control an important river, you need to control the important cities and this was the reason Sun acquired them. He also anticipated the question about superiority of Postgres, which is probably asked from him all the time. “When I joined MySQL, Postgres was better. Some say it still is. But who cares?”

He also started a discussion about “Why are web companies so closed?” – a poke directed among others Google, who benefit a lot from GPL software, but due to a loophole in the agreement can get away without publishing their improvements because the software isn’t redistributed. This is what he calls the hypocrisy of open source: “People just want to get stuff for free”.

Like Hawkins, he said that the most important thing for startup business is category-leadership. One advice he gave for Finnish start-ups was “not to be Finnish”: MySQL didn’t have sales offices in Nordics, only in the US. Other thing was that if something sounds good in Finland, it takes 10-15 years for until it’s widely accepted as a good thing, so don’t go to market too early. “There’s still time to make a Google-killer”, he said.

This was one of the best sessions we had, not only because Mickos isn’t there anymore and looks like Sun won’t be either but also because we got vodka and swag. You could see there was an economic crisis, because elsewhere we didn’t get anything.

Nexit Ventures / Michel Wendell

Wendell, from Nexit Ventures, a VC firm interested in Nordic IT startups, told how the VC market works and what kind of mistakes Finnish companies usually make. He told how he ended up in the business of helping Nordic companies make it in the US. Being a VC has lot to do with knowing people.

Lots of interesting discussion, but it was late in the evening and it’s pretty hard to upstage either Hawkins or Mickos.

IDEO

We got a standard theme park tour at IDEO. If you have seen the documentaries on TV or at YouTube, there’s not much to see. I was surprised that they actually avoid any systematic or analytical approach to design and focus more on a holistic, iterative and therefore probably pretty expensive (to the client) approach. As a case study they presented Nokia N-Gage platform they did concept work for. A surprising choice, because not only being old was also a spectacular flop. I guess they thought that being from Finland and the course given by ex-CTO of Nokia, we’d be interested in Nokia or something. If we were, we probably didn’t need to come all the way to Palo Alto for that.

Stanford University / VHIL

At Stanford, we got a nice presentation from Jeremy Bailenson from Virtual Human Interaction Lab. He was talking about the Proteus Effect, or how avatars change humans and their behaviour. For example, even though Blizzard has nothing in World of Warcraft code that gives advantage to taller avatars, they nevertheless level up faster than shorter ones. Also, taller avatars get better results in the Ultimatum Game, the real world height of the human is irrelevant. As I’m interested in behavioral decision making, it was nice to see that it might be possible to do empirical studies in virtual worlds, where we can control many variables that social sciences haven’t been in the real world.

Nokia Research Center at Palo Alto

First NDA of the tour. They showed us some research projects they were working on and had the worst slides of the tour. Most of us came out there frightened how out of touch Nokia can be.

Stanford University / Entrepreneurship Week / “Next Big Thing” Panel

Tim Draper, Tony Perkins and Michael Moe talked mostly about Twitter and iPhone and how making revenue is irrelevant. Draper really loves the free trade. Apparently ad-supported business model is the next big thing.

These guys were either drunk or lived in a bubble of their own. Probably both.

IBM Almaden Research Center / Ray Strong

There's pr0n in it, I'm sure.

Strong talked about how IBM tries to predict the future. First of all, the Almaden Research Center looks like a super-villain’s secret lair from Bond movies (it didn’t help that the guy we met had a Bond-esque name). Forget Google, this is the place to visit. There was the world’s first hard drive in the lobby, which was a nice monument to how long IBM has been in the game.

The main thing Strong told was that it isn’t possible to predict technology in to deep future, only in to the business horizon of up to 5 years. This is what they told to an unnamed government agency that wanted them to do so. As government usually gets what it wants, IBM decided to find a way to do it. They brought in people from academy, futurologists and social scientists. Their approach is half scenarios and half technology landscapes, but their ideation emphasizes backcasting from deep future (>50 years) using trends that can be with high probability assumed to continue.

One problem with scenarios has been that it’s really hard to transform them into strategic actions a company should take. IBM tries to close this gap between scenario planning and strategy by using what they call signposts. These signposts are future events that are both recognizable (when they happen) and actionable.

Strong also talked about how predicting future, it’s important to stay in the qualitative side of things, not only because quantitative side of things usually doesn’t work and might be harmful because of the tendency to use numbers to calculate expected values or other figures, even though they are full of uncertainty and can be harmful.

This was by far the best visit during the tour.

Google

NDA. It was a standard theme park tour. It was pretty clear that Google is exactly as “open” as SEC demands it to be, not an inch more. I guess many for many of us the myth of Google was totally burst.

To be fair, this was the only place where our contact wasn’t executive level so we might have gotten a better experience with a more suitable contact. Even though our host was great and all that, he probably wasn’t the right one for our group.

HP Labs

Runner-up in best architecture for a research lab.

NDA, but they mostly showed published academic research about nanophotovoltaics or something to that end. Our guess is that they didn’t want to tell us anything but out of courtesy showed something. When they talked about things I could understand, they talked about MagCloud and how HP is transforming from a printer and computer company into printing and computing company.

Next day, couple of us went to see the garage (more like a shack) Hewlett and Packard started from and what is considered as the “Birthplace of Silicon Valley”. Not much to see, but at least it had some historical value.

All pictures by me. All rights reserved. Originally published in my private blog, but I decided to get rid of it so I republished this thing here for people interested.

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Har har,

Vincent

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During the fall, we were divided into groups and my group’s task was to write about the implications of carbon nanotechnology until 2025. The other groups wrote similar papers on other technologies such as Processors & Memory, Telecommunications and Printed Electronics. Now, during the spring, we’ll do similar papers but on much broader topics: intelligent machines, globalisation, future of media and future of living. These papers will be combined into a book at the end of spring term (thanks to the Sitra, the Finnish Innovation Fund). To get a feeling of what we are writing, here’s an excerpt of our nanotechnology report’s introduction (PDF).

But, now to the more important part. As a part of this course, we’re going to a week-long study trip to California at the end of February, between 23th–28th. We’ll be visiting Berkeley, Silicon Valley, Palo Alto, and some other places and most of us will spend the week-end at San Francisco. If this sounds familiar, long time readers of this blog might remember Jeremy’s original Tech IT Easy SV trip in 2007.

The program for the trip is starting to form and these are some of the places and people we’re probably going to visit. The official program isn’t out yet, but this is what I quickly jotted down.

• University of California, Berkeley; David Messerschmitt
• Stanford University, and coincidentally, Stanford Entrepreneurship Week (We’ll also be attending the Fair on 24.2.).
• Trip Hawkins at Digital Chocolate (he’s probably more better known as the founder of Electronic Arts)
• Mårten Mickos at Sun Microsystems (was CEO at MySQL)
• The Google
• Ideo
• IBM (most likely one of their research centers somewhere in Palo Alto)
• HP Labs
• Nokia lablet & Nokia Research Center at Palo Alto
• Michel Wendell at Nexit Ventures
• And probably some others that I already forgot about

It’s starting to look like a busy week (perhaps not as busy as Jeremy’s, though.) and the guys we’re meeting with aren’t exactly small players. So, here’s my question to you: What should we/I ask from these guys? We have the amazing opportunity to talk with these guys and it would be nice to know what the Tech IT Easy crowd would be interested to know.

This is my second trip to USA and first to San Francisco, so another question from me is: What should I do and see at SF? Basically we have four days of official program and two “vacation” days.

The above program is just the official program, and there’s a group of us eager Ph.D. students from Finland’s top universities who would probably want to see more of what’s going on in SF. All ideas are welcome, but keep in mind our strict time constraints.

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I abandoned the project, after making this super-complex mindmap about it. I decided, I just wasn’t interested enough in the topic and that the reason was probably a very boring thing, like taxes.

(click on pic to see full pdf in Scribd)

Yesterday, I had a pretty cool meeting with a software-company that has been running successfully for about 10 years. Only it was in the middle of nowhere, close to some Dutch village that you will never have heard of. After the meeting, I asked why on earth they had located there (no thesis-related motive at all)!? Turns out that when you start a company and start hiring locally, your loyal employees won’t be so loyal anymore if you decide to move to e.g. Amsterdam (about 2 hours away).

Sometimes the simplest answer can be hidden under a lot of complexity…

Vincent

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5. Raphaël Encaoua now an author on Tech IT Easy!

As promised, I’ll be focussing more on innovation on Tech IT Easy these coming months, and you can be sure that my search for content will focus on universities and other institutes, rather than the internet.

It’ll be interesting challenge for sure, particularly as I’ll be reading a whole bunch of dry scholarly articles and dissertations, as well as tracking down interesting organisations for interviews, to hopefully produce something of value for you and me.

As I’ve asked before, if you have interesting ideas for content of this nature, or even want an interview, article, or thesis (summary) of your own to be published here, please drop a comment or mail!

Bookmark this site for more info!
Vincent

The opinions expressed within this blog are those of the authors alone. ©2011 Tech IT Easy. All Rights Reserved.

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The one thing I came away with was that networking is in… “Hah!” you say, and I wouldn’t blame you. With the rise of social networks and its media attention, of course it’s “IN.” No, but what I mean is that about 70% of the thesis-topics I heard being presented yesterday, were in some form or fashion centred on networking. And I can’t remember it being so dominating a topic before.

As was mine, incidentally, being in part about incubation and innovation systems, and how to improve the connection between tech-startups and investors, but there was one thing I didn’t look at, which was: Weak ties, strong ties, and their implications. I won’t explain it in great detail now, if interested, you should definitely read this pdf, I just uncovered, by Mark Granovetter, the originator of that theory and how to measure (!) it.

The idea is that we are surrounded by possible ties, some of them non-existant and potential, some of them strong, meaning that we meet frequently and that psychic distance is low, some of them weak, meaning that we see them rarely and that they are perhaps based on less emotional factors. If you’re in a university environment, it’s of course easy to imagine that you have a lot of strong ties. As everyone enters their careers, your ties to to each other become weaker and weaker. The same, to some extent is happening on this blog: some I have stronger ties with than others, simply because of the frequency of interaction. Of course, I’m hopefully a not-to-weak tie to all of you on this blog

Regarding the power of weak ties, Granovetter also writes:

The macroscopic side of this communications argument is that social systems lacking in weak ties will be fragmented and incoherent. New ideas will spread slowly, scientific endeavors will be handicapped, and subgroups separated by race, ethnicity, geography, or other characteristics will have difficulty reaching a modus vivendi.

In other words, strong ties aren’t everything either—they, rather, lock you into a clique and prevent ideas from spreading and changing the world!

The strength of ties & funding

Some things I learned yesterday, was that networking and its strength has certain implications in areas pertaining to funding and sales. One student did his thesis on the Greek semi-conductor industry and how it was funded. He found that (my phrasing):

strong ties are important for finding early-stage funding, like friends & family. But that weak ties are actually the predominant factor in finding funding from VCs and similar. His opinion is that those investors make their decisions not on emotions, but on business-reasons. A connection certainly helps, but is not the primary decision-maker.

The strength of ties and sales

If you ever worked in sales, you know that it’s often not really a job focussed on relationship-building. Rather it is about maximising turnover, which can best be achieved by selling to as many people as possible in a short period of time.

Another student did his thesis on how the social environment of startups affects their sales strategies. He interviewed three independent ICT startups and three, which were located in incubators, and found that the first group was much more focussed on developing their sales-force, while the latter group depended much more on the ties it had with their respective incubator, often finding their first customers within, one even supplying the incubator with software. Kind of scary, I think, this co-dependency in the latter case.

Strong ties were an important factor in business development, which were more intense relationships between businesses, trying to get a larger project off the ground. Sales, in general however, relied mostly on NO ties, aka cold approaches to customers. So if you want a job in sales, that’s kind of what to expect.

Thoughts and questions

While I dig theses a lot for their practical research alone—it sometimes reads like a section of a business-plan, and I have used it before to research an industry—we are obviously dealing with theories that are generalised across whole populations. But it seems like strong ties are actually not a very important factor in either getting funded or making a sale.

So some questions to you…

• How do you feel about networking after hearing this?
• Can you provide counter-argument, where a strong tie to a person actually improved your career? Ok, wives, girlfriends, boyfriends, and husbands should definitely be left out of this
• Are there other areas, apart from funding and sales, where either strong or weak ties are better?
• How often do you use contacts-of-contacts on LinkedIN or otherwise for professional reasons?
• Can you provide some Best Practices in regards to “Weak-tie management”?

I look forward to your answers!

Vincent

P.S. I asked a friend to send me the names of these students. I’ll try to fill them in later.

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My framework is somewhat inspired by the “Strategic Framework” on the right, which I got from an excellent, but fat book, called “Valuation – Maximizing Corporate Value.” Along with explaining valuation very well, including what all the financial inputs mean and where (!) they can be found, it’s really meant to be a tool for building sound business-strategies. A good book for consultants, if you’re interested in a simple book on finance, and a concrete book on strategy (hard to find in that combo)!

Let’s do it!

Step 1 – the idea

This can really be sub-devided into three separate parts: the vision, the mission, and the plan. The vision is like the cloud in the sky which you spot while taking a walk. You don’t know if and how it will work yet. The mission is a long-lasting platform for you to run your company on; it’s a set of parameters, which come from both your values, your strengths, and your objectives, e.g. “I want my business to be fast, honest, and affordable.,” or Google’s: “…to organize the world’s information and make it universally accessible and useful.”

The plan is not the business-plan per se, but the action plan that is something like this post here. It’s meant to be a set of steps that brings you from the idea to the business, and includes developing your business-idea, writing the business-plan, selecting the team, approaching investors & partners, where to locate, what technologies to use, etc.

Good knowledge to have at this stage: technical about your product, development, the industry; creative techniques; planning techniques.

Step 2 – a short market-research

Just to get an overview of the market and to what extent the problem you’re trying to solve is already being solved. I think step 1 needs to be quite far-developed before proceeding to step 2, because being confronted with a market filled with giants isn’t exactly a great motivator to develop your yet vapourous idea. The same applies to talking to other people (step 4), as those can be quite reality-distorting also.

So a short market-research, using mediums relevant to your industry. Google is always a good start, but sometimes you need to do a patent-search or a scholar-search for high-tech; at other times you need to look at Crunchbase for Web X.0; and sometimes a phone-book or the chamber of commerce databases for local stuff. And sometimes there’s no material out there (a very tricky situation!), in which case you need to look at substitutes for your product/service as well as new entrants from related industries. While that’s already substantial in terms of work, it helps with step 3: the pitch.

Good knowledge to have at this stage: marketing, both in terms of what to focus on, where to search for stuff, and how to write it up so that it makes sense.

Step 3: Pitch v. 1 – convincing your peers

The most important quality an entrepreneur must have is the ability to sell. And there’s a phrase in selling, which goes something like: you can’t sell what you don’t believe in… and vice versa. The more your idea is worked out, the more you know about the market, the more confident you can defend your ideas from the many, many sceptics that are out there.

A pitch v.1 needs to be a mini-business-plan of one to a few pages and include as much information as possible about the product, about how (you think) you will produce it, who you will (need to) hire, where you will be located, what need you are meeting, how you will market your product, how you will make money, how you will defend yourself from the competition. The more specific, the better!

And then that needs to be summarised into a pitch of ca. 2 mins, summarising all the vital data + a touch of personality & charisma!

Good knowledge to have at this stage: apart from the data from steps 1 & 2 (technical, marketing, your industry, your customers), you need some business-planning skills, which includes some (not much) financial techniques; as well as presentation skills & passion.

Step 4: find your team

There’s different philosophies about idea-generation (step 1), with many, I’m sure, arguing that you should be brainstorming with your friends on the idea from the start, that more heads have more/better ideas than one, etc. etc. I completely agree with this. But my philosophy is that without a clear direction, a team can quickly lose focus and follow political objectives, rather than pragmatic ones. While, I’ve been blessed with a few groups of people, where the chemistry was excellent and everyone was intelligent enough to be willing to listen & learn from others, many other groups have been a complete failure, because politics & brains definitely don’t always come hand in hand. So, I’m of the opinion, that an idea needs to be very well-developed & thought out before presenting it, after which it can be refined and adapted, and even rejected, according to the more specialised knowledge of group-members.

About finding team-members; for myself I have to say, after spending a long-long time on my thesis—a solitary activity—it’s not that easy. Again, networking, LinkedIN/Facebook, blogging, university (very important!), family, highschool-friends, former employers/co-workers, etc. , all good choices. Luckily for me, my thesis also brought me into contact with a large number of incubators, which are also good places to run into smart people; I worked for a venture-capital-tracking firm, ditto on the smart people; and there’s Tech IT Easy, Ditto 3x! So, really, never a shortage of smart people, when you look for them!

Good knowledge to have at this stage: material from steps 1-3; people-skills, in terms of choosing the right group of people; leadership & sales-skills; and the ability to form rational arguments & present your ideas well.

Step 5: write a business-plan

Read Jeremy’s post here.

Step 6: pitch v.2 – approaching early-stage investors

Somewhat different from later-stage investors, these are people you talk to, usually before launching your company (except maybe in web-world), and for which you don’t have that much tangible evidence to convince them with yet. So your pitch needs to be somewhat like pitch v.1 (step 3), but will include more data that you collected for your business-plan, but presented concisely and clearly showing how you will meet a need, how you plan to make your investors their money back + some more, how you will reduce the risk for them (very important!), and what you see their role to be in your business, apart from cash-cow—this only applies to active investors, such as business angels, not banks or subsidies, though not all business angels are able to be active (though they should always be able to help with contacts), and some bankers may surprise you.

Good knowledge to have at this stage: all the material from the previous steps, and similar skills as for pitch v.1. You need to speak a language that early-stage (!) investors understand!

Step 7: approaching early-stage investors

Banks & subsidies are easy to find, though sometimes you still need a little help and/or an intro; generally, banks want a lot of securities, sometimes already having a subsidy agreement and working with other, more experienced investors helps a great deal. Subsidies are a b*tch, as they make you do a lot of paper-work and impose some rules, and they generally work best for innovative, sustainable, or export-related ideas.

Business angels are a little harder. Usually, it helps going through trustworthy (& older) people that have built a network themselves. I can’t say more about that, except that entrepreneurs should avoid acting predatory and avoid predatory investors (both happen way too frequently), and you can mostly control the first (yourself), not so much the latter (though it helps going through someone you know).

Good knowledge to have at this stage: know your business-plan inside out; know how to present it and the financial data concisely; people-skills, in terms of evaluating the people you meet and selling yourself; having a network helps; having a good team in place helps a lot; having collateral helps with banks; having a tolerance for bureaucracy helps with subsidies, as does an association with a public research-institute (e.g. an incubator or your university).

Step 8: preparing an action-plan

Technically, this should’ve been part of your business-plan (step 5), but the point is that you now have money, you’ve made certain agreements based on it, and your objective is to use that money wisely to get your business off the ground. So now you need to decide what spending needs to be done, preferably as little as possible, and how to quickly get to the next stage. If you’re in web/software, you should already have a prototype, and focus on developing it, and build an early customer-base. In which case, you need someone to do the developing and someone to do the marketing/selling; usually technical staff outweighs the marketing staff at this stage, the latter often being the role of the entrepreneur himself. If you’re into high-tech, a prototype still needs to be built, which means technical work. This stage is really too specific to generalise; it depends on the type of product, business, and industry. Something in bio- or meditech, for instance, can take a decade to complete.

You also need to decide on whether your basement/garage will be enough, and on what type of legal protection your product needs, as well as the legal structure of your business. Which includes talking to lawyers, like this one.

Good knowledge to have at this stage: an understanding of what the new stakeholders in your business require; the ability to focus on what matters most for your business; a holistic understanding of a wide variety of business-matters, including hiring-practices, location-choice, development, legal & accounting tasks.

Step 9: spend (wisely)

Hire the people that you need, try to find smart ways to get smart people for cheap, either through internships, summer-programmes, or stock-options. And some smart people obviously need to be paid more or less what they are worth.

Locate cheaply while developing. For software, I’d suggest Eastern Europe, close to software-universities, but a basement in Paris/Berlin/London/Amsterdam also works of course, though both the location and the people will come at a premium. Important is to consider that many investors prefer you to be geographically accessible, as do customers.

Find viral ways to market, if you’re at that stage already. Thank you, internet, for existing, but free press also helps. Find smart ways to acquire customers, e.g. involve them in product-development, use them for word of mouth and case studies, partner up with good companies, etc. This is again very product-, company-, and industry-specific.

Build synergies between partnerships & investors; again really a step 7 problem, but it helps when your lawyer or your US/Asia-based marketeers are also investors. I’m also a fan of synergies in the HR-department; giving employees stock-options is not only cheaper, but also serves as a motivator. Of course always be careful who you choose to give part of your company to!

Good knowledge to have at this stage: everything from the steps until now; people-, negotiation- & management-skills, guts to market & sell; the dedication to work as many hours as it takes; etc.

Step 10: pitch v.3 – approaching round 2 (series A round) investors

While building your business, you should also build your business-plan and have a much better idea of the inputs for your valuation and the (projected) revenue-potential. And you should have surrounded yourself with a nice set of advisors and “network-nodes” that get your business-plan to be placed on top of a pile somewhere. You’ll still need a pitch of course, but that shouldn’t be a problem anymore at this stage.

Good knowledge to have at this stage: everything from before, especially how to pitch and what to pitch; and a network helps tremendously.

Step 11: round 2 (series A) investors

Bearing in mind that over 80% of businesses don’t make it this far, in theory, a business goes through a number of stages, before ultimately going public or being acquired. Web-businesses have distorted that process somewhat, as has the Enron-aftermath. But many early-stage investors may wish to be bought out at this point, an exit for them, and you may even want to do the same. VCs like replacing entrepreneurs with experienced CEOs, especially if the entrepreneur is a technical person, who will then likely be “promoted” to something like CTO or CIO. Investors do this because they have to account for the money they invest in you, and hence have to show their “bosses” that they do everything possible to mimimise people-risk.

While there are cultural & VC-specific differences, the risks that you need to have already covered here are usually both technology- and market-risk, translating into a workable product and one that preferably already has customers (lined up).

Good knowledge to have at this stage: either the ability to grow with the business; i.e. become more of a manager, less of an entrepreneur; or the ability to step back.

Step 12: launching the rocket-ship

A good VC will take your business far, and that’s where I’ll end it.

Some further reading

If you haven’t read enough already…

• “Valuation – Maximizing Corporate Value.”
• “Crossing the chasm” – on tech-marketing, -sales, and -strategy.
• Venture Hacks’ Term Sheet Hacks – on investors, mostly
• Ask the Wizard – on lot’s of interesting entrepreneurship problems
• TechITEasy.org – on lots of interesting tech & business-subjects, if you dig deep, i.e. use the search.

This may qualify as the longest post on Tech IT Easy, I don’t know. I think I covered the main topics on a global level and obviously there are plenty of feedback loops and some short-cuts, but please let me know if there’s things I missed!

Vincent

P.S. I’m always interested in building great companies, as well as discussing this topic. So if you’re a smart (tech-)person, looking for a biz dev. guy, or you just want to discuss you idea in confidence, feel free to give me a shout.

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The opinions expressed within this blog are those of the authors alone. ©2011 Tech IT Easy. All Rights Reserved.

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In direct connection with Vince’s article, Mike Linksvayer, VP of Creative Commons defended the idea that there are plenty of ways to make a living while giving one’s art for free. But I had the same issue as Vince’s about the status of the artist in our society: what does this reveal if people are not willing to pay for art anymore? I personally believe that the Internet and the culture of gratuity and open access is an opportunity for unknown artists because giving their art away for free allows them to get some market traction and then, be able to sell some “derivatives” of their art, and make money that they wouldn’t have made without this strategy. So for this specific kind of people, I would say that it shouldn’t be an ethical problem to make money on things that are not the product of their art itself, because the product of their art itself wouldn’t have generated any money otherwise. But of course there is the other portion, which can have an opportunity of making money from its art directly, but which will start feeling a certain pressure to give this art for free. I was kind of shocked during this conference to hear artists in the audience speaking about offering their art on the Internet as a fatality, a trend they were obliged to follow, as if the “Myspace success story” was the only hope left. But as Emily A. Berger mentioned during the conference, referring to Chris Anderson’s article “Free”, you will always have free to compete with you: so either you try to make it better than what is offered for free, or you try to tackle the niche of people having more money than time (the iTunes niche, which, with the right pricing, is actually not a niche anymore), or you make it free and find ways to make money otherwise.  An excellent article from Kevin Kelly called “1000 True Fans” argues that an artist only needs 1000 True Fans to make a decent living, since a True Fan, that you can “recruit” via the free offering, will after that be ready to pay for anything related to you. And he also mentions that the Internet allows you to reach this number more easily than traditional channels and therefore find a middle way between the long tail and the superstar.

But while all this talk is perfectly understandable in the case of the music industry which is a market based on volume, it is a totally different story when it comes to visual arts. Which is why I have trouble understanding a copyright law which seems to tackle all the artists as if they were a unified world facing the same challenges. And this is also why I welcome initiatives like Creative Commons which allows people to give away some of their rights when they feel that the copyright law doesn’t answer their needs and that these new licenses can benefit them, as long as (and this is a major risk) it doesn’t put any pressure on other people in the industry to do the same. But how do you adapt these notions of derivatives in the case of visual arts? It is way harder for a painter to get True Fans, and even if he manages to get some, I am not convinced at all that a person falling in love with the image of a painting will be ready to buy a T-shirt with this same image: it is just not the same feeling. The visual art market has somewhat been already confronted to the same kind of problem outside the Internet, like how to monetize a happening or short-lived works of art. When Christo decided to wrap the Reichstag in Berlin and the Pont Neuf bridge in Paris, he had to find ways of monetizing a work of art that was offered for free to the inhabitants of these cities, and therefore he sold some pictures of the different stages of the experiment. But, to go back to Vince’s point, this is Christo, and a lot of people are interested in those pictures, whereas an unknown visual artist doesn’t have the traction.

Actually, the major paradox is that only artists who would manage to sell their art directly are able to sell derivatives in a significant amount, whereas the starving artists who would be ready to give their art for free and make a living by selling derivatives don’t have the market traction to generate enough interest around their derivatives, especially in visual arts. And after all, even if Emily A. Gerber said “get your art out there by any means, get market traction and after that you’ll see”, a thousand fans is a pretty large number don’t you think?

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Hello, Fidji here. I remember that, for one of my first articles on Tech It Easy, I spoke about it with Jeremy and he told me “that’s interesting, but there is no way you are going to make your point if you don’t draw something to show it”. And I didn’t, because I couldn’t find a way of summarizing it all in a simple picture. I thought it was better with words only, but truly it wasn’t. That’s the point that Dan Roam is trying to make in his book “The back of the napkin”.

Dan was today’s speaker at the eBay Speaker Series conference, so I had the chance to enjoy hearing him explain his theory. He is convinced that any business problem can be solved by a simple picture, that anybody has the ability to draw. But we often believe that we are not able to draw anything because the current educational system doesn’t give us many opportunities to use our visual thinking – even if it is an innate form of thinking as a child.

He shared a funny anecdote with us: he was advising Microsoft on a UI type of problem, and to foster the discussion, he showed them some handmade drawings. The people in the room were enthusiastic about this new support for their discussion, and at the end of the meeting some exec went to see Dan and asked him: “what software did you use to make the UI seem as if it is handmade?”.

And I definitely agree with Dan when he says that some software help and stimulate our thinking whereas others (and a lot of them) just block us: as a strategic analyst, I personally thinks about a problem only in terms of “what is it possible to show about it in a PowerPoint?”. I know it sounds kind of pathetic, but it is clear that my brain is now used to think about solutions in terms of slides.

So Dan’s solution (which can of course be summarized in a picture drawn on a napkin as you can see in this article) is to use the swiss knife of visual thinking:

• Use our built-in tools: eyes, mind, hands.
• Use the “look, see, imagine, show” process when approaching a problem, like we would do in poker game (we look at the cards, we see the patterns, we imagine what we could have, whe show our cards).
• When you arrive at the “show” step, use the SQVID framework: try to understand wether you need, for your audience to understand, to make you picture Simple or elaborate, Qualitative or quantitative, to focus on the Vision or the execution, to adopt an Individual or a comparative view, and finally to show your problem as a Delta (change) or as a status quo.
• Match your picture with one of the way we see the world: to answer a What? question, draw a portrait; to answer a How many? question, draw a chart; to answer a Where? question, draw a map, to answer a When? question, draw a timeline, to answer a How? question, draw a flow chart, and finally to answer the Why? question, draw a multidimensional picture, often a combination of the previous questions.

What I also find interesting is his classification of people into 3 categories regarding visual thinking: the black pen guys, who are the ones that can’t help jumping from their chair during a meeting and drawing things everywhere on the white board; the yellow pen guys, who are the ones good at highlighting the important areas in a picture and improving what’s be drawn; and the red pen guys, who hate drawing but who usually think that what the black pen guys are writing is bullshit and feel so exasperated that they end up amending the whole thing. I took Dan’s test and it happens that I fall into the second bucket; and I’m really curious to know where you think you fit the most to see if it confirms the repartition that we had within the eBay audience!

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1. Sheirin Iravantchi, Aymeril Hoang & Paul Degueuse, three people who have been instrumental in the success of the study trip to Silicon Valley (full quality debriefing in French by Olivier Ezratty here)I organized back in November 2007, are organizing what they call a (French)TechTour between May 19th & May 23rd 2008. The concept is pretty clear and very appealing: a sample of 10 startups will be selected to go to Silicon Valley & meet with corporate development departments of major large corps. Here’s a list of planned meetings (note the diversity of industries considered):
   1. Google David Lawee, VP corporate development
   2. Ebay Erik Stuart, Director, Corporate Strategy
   3. Cisco Didier Moretti, VP Business Incubation, Emerging Technologies Group
   4. Microsoft Beti Cung, Director, Emerging Business Team - I met Beti before, and an hour with her is worth the return trip: super smart girl, if all meetings are planned to be of such quality then becoming a TechTour participant is what you should be desperate working on
   5. HP Damien Henault, Director, Strategy & Corporate Development
   6. AT&T Rupert C. Young, Director, Strategic Business Development
   7. Intel Capital Eghosa Omoigui, Director, Strategic Investments
   8. Symantec Hans van Rietschote, Senior Director, Office of the Chief Technology Officer

Assuming that the agenda speaks for itself, impressive uh?, my bet is that you should take a look at the following links and apply:

(French)TechTour, the blog here; details on the tour here; application file here; the launch post here. Enjoy!

2. Thomas Faivre-Duboz, a former classmate of mine & Raphaël Fétique are 2 very active entrepreneurs in Paris. They run a consultancy aimed at helping website owners with a conversion rate enhancement methodology. The name of their company? Converteo. The good news is that Converto recently launched an Error404 competition: design the most appealing Error 404 page and you’ll win a one week conversion rate optimization audit worth 4000 euros HT (1 million US dollars – just kiddin’, around 6000 USD). I believe this is a great initiative: some Error 404 pages can be such a shame that they might never make you feel like coming back on a site; on the other hand, some display a message like ‘our teams are now aware of the malfunction, thank you for helping us improve our service and sorry for the inconvenience’, a sort of message that may improve user stickiness at the end of the day. Here’s the link to the Error 404 Converteo competition.

Wanna jump on one or the other, or both competitions? Please be their guest. Feel free to keep me posted on the outcome of your applications.

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The rumour was spreading fast and it is now official: Tech IT Easy’s just been acquired by California-based web startup news media TechCrunch for an undisclosed amount (7 figures is all I can say)!

The trigger was double-legged: First, Om Malik announced last week that the next TV show would occur only in Summer 2008, which leaves TechCrunch enough time to bite into GigaOm’s readership by upgrading its content; second, ValleyWag is (undeservely?) taking over TechCrunch, in a rather scary way…It was time for TechCrunch to look for a prey and counter-attack. This is where Tech IT Easy joins the game. A few minutes after the deal was signed, Michael Arrington, founder of TechCrunch, said (will be quoted tomorrow in San Diego Mercury News): “From a quality stand point, TechCrunch has always been severely outperformed by Tech IT Easy. We needed to either kill them or eat them. Lucky them, we eventually went for a French kiss rather than a French trafalgar. TechCrunch + Tech IT Easy is a very unique combination in the tech media industry, a winning combination“.

Want the full story? This is how it all happened.

Following a post by my humble self on TechCrunch France on Thursday last week (the original here in French; Google English translation here), where I was invited by Ouriel Ohayon from TechCrunch France, I got a call from Michael Arrington this last Friday saying he would be in Paris the next day to “discuss synergies”, which, in Silicon Valley-maverick code, means “gonna acquire you, bitch”. Upon this call, the Tech IT Easy scrambled (you bet!): Kari, our lead negotiator, came right away from Helsinki, Vincent drove down from Rotterdam to Paris, & Matthias from Munich. Alex, back in his London bank, couldn’t make it because of FT acquisition of CreditCrunch.com. Same for Raphael in Singapore, who insisted on taking part of meetings through our conference call system. Raj, Fidji & Remi held a first meeting on Friday afternoon with Michael: Michael asked tough questions regarding our editorial policy & guidelines, the underlying technology and whether is you it was interoperable or not (thank you WordPress, it is), went through the résumés of us all, checked references and sources on a number of articles, etc. Price became an issue when Fidji revealed none but Leonard & Emmanuel were full time on the job. It was almost a deal breaker, and Michael said “2 people to run a blog that posts 2 posts per week is like having 1 post office in the entire New York State: a rather dumb thing to do“. Fortunately, when Michael realized our monetization potential (no job board, no Google ads, etc.) could find itself in the hands of ValleyWag, he decided on going further in the negotiation.

The next day in Paris, things went very smoothly. Ouriel had arrived early in the morning from Tel Aviv to check our red tape in the data room – severely guarded by Lucien & Cecil – and save time. Georgia, Steve and Kari handled the negotiations with Michael, who came right away with the right price & the right approach. We wish there were more people like him (to those who call him a diva: he is NOT! a tough-minded but yet human and tech-passionnate entrepreneur who respects entrepreneurs).

We are delighted to have seen this happen. Starting from tomorrow, the team will integrate TechCrunch directly and this site redirected to TechCrunch.

Thanks to all the parties that allowed for the deal to happen; especially to our lawyers who arranged all the contracts, the Deli’s downstairs for being Mike’s official provider with ham & pickle sandwiches all along, and to our readership. Without you, no such thing could’ve happened. It’s been a delight and an honour to have you as readers. Please now follow us on TechCrunch.com. We are all committed to one post per day. Stay tuned!

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You sure don’t know me. I’m one of your anonymous 7,000 Twitter followers (my feed here), your whatever number of blog readers, and I’ve watched a serious number of podcasts featuring you. I think you do a fantastic job at sharing your passion for entrepreneurial adventures & your obvious will to change the world. I think Mahalo is a brilliant Wikipedia-style idea, and I have a lot of respect for your public speech & communication skills.

Same with your recent post on startup cost-killing rather modestly entitled 17 Really Good Tips to Save Money. Most of it was compelling, and I had all the office read it – I’m an entrepreneur too, I should’ve added before. We’ve decided on applying a number of them, starting with #3 ‘use lunchtime for meetings’, #2 on second monitors (especially to software developers), & most of the rest was already implemented but #4 & #12 which I fiercly disagree with.

• Your tip #4 says that startups should spend about 600$ on chairs & 100$ on desks. To me, this looks extravagant. Take a look at the picture right here. The leather-style chair costs 59 USD, and the table in front of it another 59USD. That is about 120 USD per work station at my company Emerald Vision (don’t worry, we’re no competition: we do exciting enterprise software. And sorry, website still in French & workin’ on an English version) vs. 700USD at Mahalo. Are you guys extravagant on the West Coast or what? I should add that my chair is by far the most comfortable chair I’ve ever bought. FYI, & I’m not getting any rebate or commission, it’s all from Ikea.

•  Second and last (because, as I said, I loved your post – but a couple little things), tip #12 says startups should buy a 3K-5K USD coffee machine. Come on Jason, no one is making 5K / month in my company as a stipend, and you want me to spend 3 – 5K in a coffee machine? Makes no sense. Here’s our ‘Help Yourself’ space at Emerald Vision. We purchased a 25 bucks American-style coffee machine that’s up and running day & night; a 20USD kettle to drink tea or instant coffee; Xuoan (photo blog here), a web graphic designer & SEO specialist who rents office space from us (see, we had already applied tip #6), brought his good old 130$ espresso-machine that does pretty good coffee, thanks. That’s less than 200 USD overall, & less than 500 USD if you add the fridge & the microwave. 500 USD for a fully equipped ‘Help Yourself’ corner at Emerald Vision vs. 5000 USD for a coffee machine at Mahalo. I think you investors would love working with us.

Before I finish this post, I just wanted to state clearly that there’s nothing either sarcastic or personal in these remarks. These are just 2 plain, sincere feedbacks on your tips (15 of them were just great). For 600$ a chair & 5000$ a coffee machine, I would’ve either tried to quit the digital & Clean Tech business to enter the furniture market in Silicon Valley, or at least tried to buy second-hand Philip Stark design chairs & coffee machine on eBay or so, or most probably provision it for when times get worse on the Web to show how we value cash, or give it out to top performers in the team as a way to show how we care about people working on building the next big thing with us.

I still and more than ever enjoy looking at what you do on an hourly basis on Twitter, reading great startup fish on your blog (like larger monitor = better productivity; or these very interesting thoughts on work-life balance in startups - I needed it bad). I hope you don’t take this post personally, & that we’ll have the chance to meet you some day here or there. Maybe you’re okay for the two of us to sit at a table, discuss treasury management & compare burn rates – all things being equal (we’re a very early startup compared to you). At Le Web 3 (or 4?) in Paris next winter? You may even come to our office at the very center of Paris & try on our wonderful chairs. Keep me posted.

Cheers,

Jeremy Fain

PS1: On #17, come on, do you really need a PR firm? A 15K USD / months one? or even 3 times 15K USD / year one? You, Jason Calacanis? You do more PR than all European startups together (I’m based in Paris, France). Save on this too, or be tough-as-nails bargaining every 6 months or so (tip #15) because they’re definitely not using so much bandwidth with you.

PS2: another French blogger, Hervé Kabla, wrote pretty interesting complementary remarks on his blog here - however it’s in French only, sorry about that.

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I’m turning 25 today, a good enough window of opportunity to provide you with 10 good enough reasons you should start a startup before turning 25. There you go. Before turning 25..

1. You have no fancy habits: I’ve never, or hardly, ever been spoiled by perks like a corporate car, four-star hotels on business trips, & unlimited long distance phone calls. My lifestyle is still the one of the student I used to be until June 07: in many ways very inexpensive. And I don’t mind spending 100 hours working-sleeping-living in a room with a bunch of brilliant minds eating pizzas. If you’ve recognized yourself in this pattern, then this is the first reason you should consider starting a company.
2. It is easier to raise business angel money: as a young entrepreneur, especially in Europe, raising VC money can prove extremely time-consuming and challenging. The venture capital crowd is an elitist herd that needs to show its limited partners (institutional investors providing them with the funds later invested in startups) a serious track record for the entrepreneurs they’ve bet on, just in case things turn wrong with their investees. Turning to business angels, whose decisions rely on a simpler governance since they invest their own money, is therefore the most viable option on the condition that you treat business angels like a VC – that is to say like a tough-minded, selective investor. By & large, there are two kinds of business angels: successful entrepreneurs, & successful executives who never found the time or will to start their own company. I regard being young when trying to raise angel money as a huge asset: angels want to have an impact, and the chance they’ll make the difference with a younger, more flexible mind is larger than with a seasoned former large-corp executive. Business angel are more likely to patronage youngsters than grey hairs.
3. You most of the time have no family to take care of: before turning 25, you should still have at least a couple years to go before having babies and all that jazz. So, from a personal risk standpoint, taking professional risks is not risky. On top of this, you don’t have too tight a deadline to start getting a decent salary. Last, at the end of the day, hunger seriously makes you bootstrap your butt off.
4. You face less social pressure: few of your former classmates but the entrepreneurs already make millions so you don’t feel like the tramp in the room at alumni reunions & events; today, you all eat pasta & rice, but when the time comes some of them will be reasonably wealthy (most probably those working in investment banking, market & risk finance & real estate), you’ll be the one with two exits on the tally.
5. You haven’t been corrupted by ill corporate habits taken from procedural organization: politics, unethical struggles for promotion, pyramidal hierarchies, etc. I don’t know anything (almost; for instance in my last corporate experience, I was told ‘white’ on the one day, and ‘black’ on the other: it’s okay except when it’s about your career. So I started wondering whether people really cared, and I want no one except myself to take care about my career anymore) about it and feel good about being certain not to reproduce such wrong behavioral patterns in my startup.
6. Ignorance is bliss…No fear, can-do attitude. That’s you. Same for us: we’re running for the next big thing: high risk, high return. We’re not there to play pussies & since the opportunity is huge, the chance that we have an impact on the world is significant. We deeply want to make of the world a better place. We’re embedding meaning in our quest. That may sound naive, but as Mahatma Gandhi once said: “Almost everything you do will seem insignificant, but it is important that you do it”.
7. You have no regret for a job as an apparatchik in a large corp, since you don’t know how comfortable it can be & how hard it can be to find the guts to say “good bye” to.
8. You have plenty of time to do it again: being an entrepreneur isn’t a job. It is a state of mind. Once you become an entrepreneur, you’re an entrepreneur for an entire lifetime. I can picture so many first time entrepreneurs who, in their fifties or even forties, know they’ll have time to build only one success story on their own – if not zero. This is a very frustrating situation because those who succeed most, financially speaking, are repeat entrepreneurs. Because repeat entrepreneurs learn not to repeat their mistakes and hence do things everyday better. As far as I’m concerned, I see starting young as a huge asset because I’ll have time to build a number of companies (say 5) over time.
9. Your cost of failure is zero, not to say negative; say you fail and don’t want to do it again (which is unlikely) then you’re off to the job market at a premium because everybody’s looking for entrepreneur-minded people. An experience, be it a failure or a success, as an entrepreneur is worth every MBA-trained strategy consultants altogether. Your cost of failure may, depending on your cost of opportunity & the necessarily small amount of money you invested in your own venture, actually even be negative: failed entrepreneurs are a scarce resource on the job market. Those with large corp experiences are largely commiditized against those with startup ones.
10. You will get rich faster than if you had worn dark suits because you’re working and hence creating value for yourself rather than for someone else.

Convincing enough?

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Consider a software vendor, a good one, and its technical headcount. It is no secret that R&D teams aren’t made of software developers only. In order to be deployed successfully, architectures and code need to be tested by a QA department (QA = quality assurance) where professional testers run through thousands of automatized-or-not scenarii; documentation; technical support staff help the install base with potential regressions occuring during updates and coping with changing information system environments; localization project managers monitor translations of the software: and last but not least, application engineers actually parameterize the software at clients.

Now my question, how many technical staff should you account for every software development engineer? I figured out an average ratio of 1 to 4, that is to say, for every technical team of 100 there should be around 25 software developers actually hacking code.

I know there exists extremes but by and large, from what I’ve seen, I don’t think I’m too far from the reality with a 1:4 developer / all-categories-technical-staff ratio.

What do you think? Feel free to describe what the company does when sharing your experience, because, since there are very large discrepancies between, say, an SAP that manufactures ‘heavy’ enterprise software and any web application designer that may not necessarily run industrialized testing and that has no professional service department, we might not get nuances at first sight.

PS: the ratio will also depend on the maturity stage of the company: at Microsoft, [# of develops]/[develops + Microsoft Consulting Services staff + developer evangelists + localization engineers + testers (1 for each develop) + architects] approximately equals 1/4 (1 to probably 5 ot 6 adding documentation specialists; & 1 to much more if you consider the system integrator ecosystem that actually does the application engineering). But the company is rather mature and therefore can afford to focus on quality of execution rather than productivity in execution. Which probably wouldn’t be the case for an enterprise software startup for obvious resource reasons. Anything to share? Best and worse practices, per specific industry (Web 2 / UGC, Video Games, enterprise, affordable consumer traditional applications, etc.) most welcome. I need to test my own budgeting assumptions

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[slideshare id=58242&doc=nextweb2007-saul-1518&w=425]

The slideshow speaks for itself, doesn’t it? And even if you don’t chose to become an entrepreneur yourself at this very moment, in Europe or elsewhere, my take is that you should join an early-stage startup. Let me tell you a quick story about this.

The first time I thought of leaving MS to start a startup (a thought that never occurred again, believe it or not, before I actually walked out to either join another company or take the big plunge), I hadn’t even joined Microsoft. I was at Capital IT, a major VC forum in Paris, as a Microsoftee although I was due to join the company a few days later. There I met, for the first and last time so far, Pascal Mercier, a French fundraiser whose firm Aelios Finance is pretty successful at matching the best entrepreneurs and smart money (to my knowledge both angels & VCs). I was introduced as a recent graduate and the second we met, Pascal Mercier asked: “Why didn’t you choose to join a startup rather?”. The best answer I found was: “but I do work for startups!” Which I thought was true since 1) MS is just a damn successful startup (you would be surprised to see the easy-going startup atmosphere within the company); 2) I was part of the team that took care of emerging ISVs in France. Acknowledging reason #2 only I guess, Pascal nodded and we parted ways. I later realized though that working for startups, and working in a startup, are clearly two different things. When you represent Microsoft, you may call whoever you want and the door will be opened the next day. Your brand power is so strong that at the end of the day, you never know whether you achieved great things because you’re damn so good, or because your company is so powerful in its industry. As an entrepreneur, and I’ve been facing this issue already, you need to fight like a pitbull to get passed through the right person on the phone, and fight again to get an appointment. I should also mention that you’ll need to deliver the best pitch of your life, after waiting for an hour in the lobby without even being served a cup of coffee, to actually get to the point where you may pretend to try and sell your solution. This struggle for survival is real life and that makes entrepreneurs fully accountable for their success or failure.

The same rationale goes for early-stage startups, without a brand name yet: life will be tougher for sure than if you worked for a big name, but the impact you can have on such companies is huge (eg double revenues in 6 months, etc. something unachievable in an 85K-strong corporation like Microsoft – or even at Google, a 20K-strong company & definitely not a startup anymore). Whether you want to be an entrepreneur or join a larger group later in your career (or both), an unknown and yet ambitious startup is where you should start your career to acquire the right survival toolkit. By the way, did I mention the stock option plan?

My two cents…

Addendum 11am: check out comment #3 to discover how to spot startups that will pay you better than large corporations and resign from consulting, banking and Fortune 500 companies to join them!

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But a call for advertising is not really funny: In my opinion the short message like style of Twitter would suffer a lot from advertising. Twitter simply is not made for it, besides the fact that in a commercial consisting of one sentence there is not much to tell. So Twitter needs something very different. Why doesn’t a company like IBM buy Twitter? They could continue the service without any changes. In financial terms this idea looks quite stupid. Why to buy a business where there is no revenue stream at all? Well, first of all, Twitter is a brand. And a very well reputated one, too. A company buying Twitter would invest into branding and image.

But that’s not all: My german blogger friend Marcel Weiss reminded me of the fact, that Twitter is an open plattform offering an API for developers. And that’s where things start to get very interesting: Twitter as a market leader in its segment can be seen as an exchange place and not all services made along the API would have to be free.

One example: Imagine the “twittersphere” would be scanned by semantic software in order to obtain or extract clue words, ideas and trends from it. Who is talking on Twitter? It is a global elite that is far ahead concerning technology, social media and general information. So following Twitter is market research 2.0. The data mining could be used for trend reports or aggregated publishing on websites which would not be free of advertising. All this would not hurt or disturb the twittersphere. And my opinion, that services like Twitter never will be a sort of mass media, fits very will in our example. Twitter as a tool of a relativly small but focused user group creates a homogenous market segment worth watching. The value would be exactly the opposite of what it is for Facebook or MySpace.

Finally there is the question of prize and worth of Twitter. If we take the level of Facebook as a sort of benchmark we would end up with a prize of aproximately 300 million $ (calculated on the number of users). Ok, that’s a lot of money but it would not be expensive for one of the market leading companies in IT.

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In 2004, Intel realized that faster and more powerful processors will not be the most important customers’ need anymore and that it had to shoulder more of the burden of innovation. But Intel’s historical approach to R&D didn’t allow the company to spot the technologies that can impact the core business dramatically, or create new businesses. Indeed, Intel has based his R&D strategy on the idea of connecting closely research with manufacturing, by allocating R&D resources to each business units. This structure, even if really efficient in sustaining Moore’s law, was only focused on incremental innovations in the silicon roadmap, making it inefficient to identify some disruptive technologies.

These technologies could only be developed through “exploratory” research. However, Intel’s aversion for a centralized lab, which is definitely the standard model for this kind of research, pushed the company to look for another model. The search for a “happy medium” led to the creation of the “Lablets”, which are some small labs located close to universities well known for their collaboration with the industry and for their expertise in some sectors of interest for Intel. They selected Berkeley, Pittsburg and Seattle. Some characteristics of these lablets are differentiating them from some firms’ previous attempts to build labs close to universities and are particularly conceived to foster innovation:

• Thanks to an Open Collaborative Agreement, much of the research can be published and shared widely, with Intel hoping to acquire proprietary advantage in the downstream stages of the projects;
• Lablets are staffed with 40 researchers and are co-directed by an Intel research employee and a university faculty member changing every two years;
• Projects in lablets are funded on a milestones basis and were reviewed quarterly.

But this clever approach raises a certain number of issues.

How can the scope of activities of an “exploratory innovation program” be defined?

If the lablets’ role is to sense the environment to understand potentially disruptive technologies, then the scope is really wide. So it has to be reduced to some large sectors likely to have an impact on Intel businesses or ecosystem, as the final objective is to end up by passing projects to business units. The model thus represents a tricky balancing act: giving researchers enough freedom to be creative and to think broadly in terms of sectors in which to spot disruptive technologies, while confining their efforts to predefined aspects. There is a happy medium to find between the systematic search for opportunities congruent with core capabilities and “adhocracy”. Intel’s answer to this problem is to have Intel specify the problems it wants researchers to solve, but not the idea it wants them to work on, which sounds like a really fine distinction.

What type of structure is the most appropriate for this kind of exploratory research?

When I heard about the lablets, I couldn’t help thinking: is it really the right structure to be in charge of the strategic responsibility of understanding what will be disruptive in the market? Having only 40 researchers in each of the 3 lablets is a good way to limit costs and therefore limit the impact of the high level of risk involved, which is what companies try to do most of the time with their innovation team, but it also can appear difficult to reach the critical mass, often mentioned as crucial to create a fertile environment. Moreover, even if being a small group can limit the internal resistance (as this kind of exploratory research is absolutely not part of Intel’s culture) by not attracting too much attention, it doesn’t allow stand on your own in a large organization. Intel lablets would require a heavyweight team (see matrix) to push projects into business units without having to fight to convince the business units of the viability of a project. In addition, the frequent turnover of people due to the university involvement can be a threat in the case of long term projects. Besides, if some lablets’ projects make it downstream into the main R&D fold, then some great researchers will probably leave to ensure the follow-up. But it seems that this is the price to pay to always bring new blood into an innovation program, which is crucial to generate more ideas and more expertise.

How to assess the performance of such structures?

What I find interesting here is that the lablets’ case reflects the basic problem of any innovation process: how can you set up performance metrics in a domain that flourishes only when there is a tolerance to failure? Finding metrics to measure the success of exploratory research is difficult as the process of sensing the environment can lead to many useless results, but is still necessary to have chance of producing breakthrough products or predicting disruptive changes in the market. It is clearly the case of R&D as a Real Options: you pay a certain amount of money to have the right to exercise an option when the market changes. Which is why funding the projects on a milestones basis is so important in this context, as this sequential investment creates the option to abandon the project in midstream if it is too early to market or doesn’t fit the company’s strategy. Each stage can be viewed as an option on the value of subsequent stages, and valued as a compound option.

The point of this post was not to speak about Intel’s initiative in particular but more to discuss about the issues that any innovation process will generate. So just for information, since their creation Intel’s lablets have been working more and more closely with business units to facilitate the downstream transmission of projects, and have generated some cross-industry collaborative projects, like PlanetLab. If you have been part of an innovation program or have any thoughts about these basic issues, do not hesitate to use the comments part!

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[youtube=http://youtube.com/watch?v=pr7lDlUfw9w]

Video not available anymore, find it here.

What do you guys think?

via LittleGirl

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By the way, who said you can only have real fun working in a startup in Silicon Valley? About a year ago, I went to a lecture on entrepreneurship at Ecole Centrale Paris with, amongst others, the founder of Gymglish, Antoine Brenner. The guy – in a red outfit on the tennis court in the video, was really inspiring, a real engineer – entrepreneur, and I’m not surprised the atmosphere at the Gymglish office in Paris looks like this:

[youtube=http://www.youtube.com/watch?v=fL9Gib8l5RY]

Do you know other startups where it’s real fun to work at? What makes a workspace pleasant to spend time at in your opinion? 

PS: Thanks to Saïd for the heads up.

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5. Heading back today from Barcelona to Paris

We’re only half way and here’s our program (below). I’ll make sure I blog extensively as soon as I find some time – although I’ll have to blog on TechEd in Barcelona first. I’m late, I know.

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Getting back to business (we’ll get back to the gambetto later), it is very common to say that the state of an economy is reflected by the strength of its currency when the Euro currency is weak – and hence that the economy of the EU are in poor shape. However, when the Euro gets stronger, companies and officials claim that corporations are constrained in their efforts to export goods and services and that the situation should be reversed or the EU will soon enter an economic turmoil.

I think this is all too easy and bullshit.

God Dollar used to be the only viable currency in international trade, until the Euro came out of nowhere in January 2000 (2001 for actual pocket coins and bills). The European Union is the world’s largest consumer market, and a gateway to the Middle East and Africa for American companies. Although the Dollar still dominates international transactions of goods (slightly) and financial transactions (easily), the Euro has emerged as a tangible alternative considering the political stability of the region.

Consequently, the Euro vs. US Dollar exchange rate has kept growing insanely from 1 EUR = USD 0.85 in mid 2000 (1 EUR = 1.19 USD on January 1st 2000) to 1 EURO = USD 1.47 USD today. Althoug I acknowledge the trickiness of the situation for export businesses, high tech or not, I see very few corporations have implemented hedging strategies or make proper use of forward contracts – which is a shame. Still, instead of lamenting, I believe economic decision makers of both the US and the EU should roll up their sleeves and act in such a way (hell yeah I’m even givin’ lessons now, love blogging…):

For US High Tech companies: go for internationalization. Acquiring hardware, software, telco devices, consumer electronics and services labeled in USD has never been cheaper. So why wait? I’m pretty sure any potential buyer would understand this reasoning. A weak USD is a fantastic opportunity for American exporters to thrive abroad, and win strategic, long-term projects. It doesn’t matter whether the profitability of these projects is low: what matters is to build reputation on new markets, or to highlight your competitive advantage against local players. Remember, the gambetto? Be ready to sacrifice a few cents today (anyways, the dollar rates so low that it’s no big loss whatsoever) to be in the real race when that moment comes.

For European high tech ventures: shop for intellectual property and talents in the US since the Euro has never been so strong against the US Dollar – which will make acquiring quality companies cheap, and build production capability in China and India (or go and get cheap but excellent developers in Eastern Europe, before the Euro comes there, or Israel) to reduce the cost of goods sold, enhance their competitiveness and therefore be ready for a shift during harsher economic times or win back market share on their competitors’ behalf. EU corporations, especially the big ones, find it hard to tear the P&L from the balance sheet and should learn to make better investments. Remember when the VCs said that few large European high tech corporations had a real, sound external growth strategy? Even though making the quarter may seem tough because of a strong Euro, acquiring today technologies that will generate tomorrow’s revenues boils down to ‘sacrificing’ a small slice of the pie to weaken the competition, and build a better product offer for tomorrow. Gambetto again.

Now waiting for the Chinese Yuan to offer a third way…

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One of these sessions was about the PR best practices software startups may, or should, embrace. The lecturer was Colette Ballou, cofounder of Ballou PR, a French – American PR consultancy that focuses on high tech companies, be they software (online or not), telco or biotech. Colette, although she spoke for something like 20 minutes only, gave extremely hands-on, practical advice that every single startup, not necessarily in the business of software, will find interest in. In my day-to-day job, I happen to meet, on average, 2 new startup teams everyday and although I come accross really amazing technical innovation and sales know-how, French (European?) startups suck big time in marketing. Most French startups I meet would find huge value in engaging with Silicon Valley-style PR agencies like Ballou PR. Obviously, PR doesn’t replace marketing, but it’s definitely an affordable way to start building up marketing capabilities if it’s not too late. So I felt I compelled, for the sake of the world economy, to write a wrap up of what Colette Ballou said during the Software Academy. My call is that everybody has something to take away from these 7 little pieces of advice, that you should in my humble opinion read twice everyday until you have applied them all.

1. Define clear quantitative objectives, or there’s no winning strategy (there’s no winning without KPI)
2. Take one or two full days off site to come up with key messages for your 2 or 3 flagship products or services, for your mission statement, and for your overall strategy. That is 5 key messages max. Add to each of these 5 key messages one or two examples or proof points. You’re done.
3. Create a PR corner on your corporate website. Its goal is to simplify access to information on your new venture to journalists. This PR corner should include: a concise description of your business; biographies of key people; information on your flagship products or services; a free of rights media repository with corporate and product logos and management team pictures in both web-friendly and Photoshop (.eps) formats.
4. Write 2 Press Releases every month. Even though they won’t necessarily all hit CIO News or Financial Times headlines, 2 Press Releases every month remind the world of your existence. Press Releases should be both published on the PR corner of your corporate website and sent to a sample of targeted media. If you’re more into blogging than press releases (you can actually do both), then keep in mind that if you start blogging, then you’re stuck and should never stop or slow down, or the signal you would send to your readers is that you’re not as active as you used to be (which may be wrong, looking from an insider stand point, but from the outside, your blog is your shop window).
5. Be visible in the specialized press. Say one of your colleagues is a star in a specific domain, make sure the journalists know this resource is available to help them fill in an article with a third-party testimonial. It is a good way to be visible in articles that aren’t dedicated to your company, and hence build a relationship with these media. Same with vertical press: say you sell software for hospitals, then you should make sure you’re targeting both IT magazines and Public Health magazines.
6. Create an award to reward your best clients. A happy client is a very powerful PR relay, that will be glad to give a positive testimonial to a journalist if necessary.
7. Get involved in your professional community. This isn’t a CEO- or board- only responsibility. Make sure all the members of your team dedicate some non-for-profit time to business groups. It will be good not only to network, but also to establish your company as a key player in its industry at the regional level.

PS: and just in case you don’t know whether you need a PR strategy and partner or not, here are Colette Ballou’s 7 bonus reasons you may think of drawing a PR strategy and getting a good PR agency on board.

1. Do your competitors get good press coverage for their products or management team?
2. Did you ever have to repeat the name of your company because it was the first time the person in front of you was hearing it?
3. When you call the press, did anyone ever refuse to talk to you because they had never heard about you?
4. Do you need some outside appraisal to convince the market that your service/product actually solves a serious issue?
5. Are you in the process of expanding your business to a new vertical segment or geographic region?
6. Do you want to increase your valuation?
7. Are you in the middle of a crisis that is likely to be relayed by the media?

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The opinions expressed within this blog are those of the authors alone. ©2011 Tech IT Easy. All Rights Reserved.

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1. Microsoft IDEAS software startups web 2.0-style
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