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Have you ever found yourself ignoring the directions of your car’s GPS in order to get somewhere faster or more efficiently than it can calculate? Me too. Chances are when leaving point A, you plugged in the address of point B, and a route was calculated on how to get from one to the other. The problem is, things come up on the route from point A to point B that may cause you to divert from your path such as construction, road closures, traffic, side trips you need to make or neighborhoods you may choose to avoid driving straight through. Sponsor Startups make similar diversions, but the directions they are straying from are those of a product roadmap. Roadmaps are projected out for months, if not years, to give a company a strategy to most effectively grow their product. But just as there are reasons we ignore our GPS, there are reasons for startups to alter their roadmap. Spark Capital partner Bijan Sabet has worked with dozens of startups on project roadmaps, and recently he wrote about the importance of driving off course when necessary. Sabet recalls and example of this from his experience working with Boxee’s Avner Ronen . “I remember our first board [meeting], Avner shared a product plan for the next twelve months. Then, before the very next board meeting he shipped a bunch of new things that weren’t on the roadmap,” writes Sabet. “He would see opportunities in the market, listen to his users and then create and launch. And that approach paid off and continues to pay off.” If startups come up with a product roadmap and proceed to put their heads in the sand while they follow it unwaveringly, they will more than likely fail. So much is learned from testing products and receiving feedback that being unwilling to change the plan is a death sentence. This quality is so important for entrepreneurs that Sabet says he looks for it specifically when investigating possible investments. “I’m more interested in learning if the founders have the talent and desire to move, innovate and create quickly,” he says. The lesson here seems obvious, but there have been cases where startups are devoted to their roadmaps and revenue projects to a point where it affects the success of the company. Like some driving directions, there is no most optimal route for every startup to succeed, so the willingness to turn left when your GPS says right is an important decision to know how to make as an entreprneur. Photos by Flickr users Marcin Wichary and sporst . Discuss
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Why Startups Need to Know When to Ignore Their GPS
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A new study published by professors at the Harvard Business School shows that angel-backed companies are more likely to succeed and show more growth than those funded by venture firms alone. Researched and written by William Kerr and Josh Lerner, the report found that companies with angel funding see between 30% and 50% higher growth figures in terms of website traffic, are more likely to survive for four years, and are also in a better position to receive further rounds of funding. Sponsor Angel investing itself has seen large growth over the last several months with the creation of various organizations, events, firms and legislation to spur it on. We’ve discussed the Open Angel Forum series of events, the creation of “Super Angel” firms , the curated Venture Hacks AngelList , as well as current legislation both helping and hurting angel investments. Angel investing has become more common, and as this report shows, this is largely due to the value and success it tends to breed. But why are angel investments the secret sauce for some companies? As the report points out, its the intangibles that angels bring to the table that could be playing a large role in company success. “Access to capital per se may not be the most important value-added that angel groups bring. Some of the ‘softer’ features, such as angels’ mentoring or business contacts, may help new ventures the most,” the report says. One of the other reasons that companies could tend to be more successful with angel funding is because of the human face placed on the investments. Angels are usually investing in companies at an early stage, and are investing their own capital in the company. Entrepreneurs may be more likely to work that extra bit harder when they know they are playing with the personal cash of an actual person, not the collected funds of an entire firm without a human name. The reputation of the angel could play a large role as well, both for the attitude of the people running the company, and for the audience they are looking to attract. Most angels tend to be successful entrepreneurs themselves, and thus are likely well known in the startup scene. The chance to sit and talk with these investors, let alone receiving funding from them, is likely a treat for most entrepreneurs, so they may be more likely to be more careful with their money. Additionally, when the public hears of a new startup that may not immediately interest them, the mention of particular angel investors can change their mind. As angel investors mature, they build their own personal portfolio of companies they noticed and provided early funds for, so when company XYZ launches with angel funding from an influential angel investor, that alone can attract people to the product. I know personally that I have looked into startups I otherwise would have largely ignored simply because an important angel investor was certain they’d be a hit. “Some of the ‘softer’ features, such as angels’ mentoring or business contacts, may help new ventures the most.” – Harvard Business School report Since some companies receive early financing rounds from angels, it is also logical to assume that when working with a limited amount of cash, the entrepreneurs may be more focused on doing more with less. A company that bursts out of the gate with large amounts of VC firm funding may spend it slightly more haphazardly, whereas a company running on limited angel funds may adopt leaner practices and take baby steps toward success and future funding. As the report mentioned above, the “softer” features provided by the angels are also a large help to the companies. In his email newsletter yesterday, angel investor Jason Calacanis discussed loyalty and how he goes to bat for the people who are loyal to him and his companies. He mentioned that whenever he invests in a company, he immediately becomes an evangelist for that company and it’s founders, doing all he can to promote it. This may not be the same for all angels, but when influential investors like Jason get behind your company, they do their best to make sure good things happen. I would be interested to see similar data from this report that compares companies with solely angel funding versus those with more traditional VC firm funding mixed in. The influence of angel investors is significant, but I would think the angels alone are not enough to create more successful businesses at a higher rate. But the lesson here is, if your startup has the opportunity to include some angel investors (especially at the early stages), it would seem like a wise decision to go ahead with. Photo by Flickr user Brooke Anderson . Discuss
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Angel-Backed Companies More Likely to Succeed, Says Harvard Study
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After getting the short end of the Twitter stick, Venezuela president, Hugo Chávez, called it ” terrorism ,” ” a battle trench” and a “current of conspiracy. “The Internet cannot be free!” he proclaimed. Since he has taken six television channels he didn’t like off the air and imprisoned reporters , who knew what he would do? Well, it turns out he intends “to open his Twitter account soon to wage the battle online,” according to Diosdado Cabello, Venezuela’s chief telecommunications regulator. Sponsor With Venezuela’s once invincible-seeming oil-economy now in the toilet and his approval rating diving below 50% perhaps El Jefe feels he has no choice. Since mass media in Venezuela is under constant threat from its strongman head of state, his opponents and critics have monopolized the microblogging platform and that platform is becoming popular. Reuters outlined its recent growth. “The microblogging site has seen an explosive rise in usage in Venezuela to more than 200,000 active accounts. With growth of over 1,000 percent in 2009, Venezuela now has one of the highest rates per capita of Twitter users in Latin America.” The moment you shut people up, you no longer speak for them. This has started to dawn on some of Chávez’s once-vocal partisans. It may take longer for those whose solidarity is limited to their Che t-shirts. May I suggest you Sharpie #FreeVenezuela across yours? Top photo from Open Democracy Bottom photo by Corey Harmon Discuss
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Hugo Chávez to Make Terrorist Threats, er, Join Twitter
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Digital platform company Akamai has released its latest State of the Internet Report . The report covers the last quarter of 2009. Among the findings are the persistence of Russia as the top location for attack traffic and of South Korea for speed of web connections.The number of unique ports attacked has increased by almost three times what it was in Q3. Sponsor The single oddest statement in the report is Akamai’s contention that “slightly more than 465 million unique IP addresses, from 234 countries, connected to the Akamai network- 4.7% more than in the third quarter of 2009, and 16% more than in the same quarter a year ago.” Given that most countries in the world recognize between 194 and 196 countries, it is difficult to understand how even the most liberal definition of country could result in Akamai’s total. Here are a list of important and interesting trends that Akamai has identified in Q4. Attacks Akamai observed attack traffic originating from 198 unique countries around the world. Russia remained the top attack traffic source, accounting for 13% of observed attack traffic in total. The United States, China and Brazil took second and third and fourth place for a total of 20%. Akamai observed attack traffic targeted at more than 10,000 unique ports. Users Akamai observed a 4.7% increase (from the third quarter of 2009) globally in the number of unique IP addresses connecting to Akamai’s network. Ending 2009 at 465 million unique IPs. The metric grew 16% from the end of 2008, and nearly 54% from the end of 2007. The United States and China together contribute 40% of unique IP addresses in the world. The Scandinavian countries have the highest number of IPs per person. In the U.S. it was New Jersey that took that honor. There are 32 countries with fewer than 1,000 unique IP addresses. Speed South Korea retained its lead as having the most high broadband (over 5 Mbps) and the highest average speed (12 Mbps). In the U.S., the state of Delaware retained its lead, growing to 72% of connections to Akamai occurring at 5 Mbps or greater. Delaware also maintained the highest average connection speed in the United States, increasing to 7.6 Mbps. Over 40 of the mobile providers surveyed had average speeds of over 1 Mbps. Two out of three U.S. mobile providers lost speed for the second quarter in a row. Discuss
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Akamai’s State of the Internet Report
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For a long time, technology has been touted as a force that can help us connect globally. But the urge to stay connected locally remains. And the same technological innovations that have facilitated global commerce and communication now seem to be turned towards helping us (re)connect to our neighborhoods, communities and local businesses. As buzz around location-based networks and services grows, “the local” is poised to be a place that’s increasingly the emphasis for innovation and entrepreneurship. Sponsor People want to know what’s going on locally. People want to shop locally. People want to network locally. And hyperlocal services make it easier to engage in and market to a local community. Technology need no longer be feared by local businesses as something that would drive their customers elsewhere – namely online. Although location-based social networks such as Foursquare and Gowalla have received significant attention as part of this trend, they are far from the only services. Hyperlocal search and news sites are two other services that have seen recent growth. Last week, Milo.com , a website that enables shoppers to research products online but then make their purchases locally, added products and real-time inventories for over 100 independent, mom-and-pop stores across the country. While Milo.com has served the “big box” stores for some time, this move to incorporate smaller retail outlets marks another way in which the local is starting to take advantage of online opportunities. “Smaller stores that once viewed technology as a threat, now see the benefit it has for reaching potential shoppers and attracting new customers into their actual brick and mortar locations,” says Jack Abraham, Milo.com founder and CEO. Abraham says that Milo.com helps local businesses address the classic problem of how to get new customers in the door, but offers the best of both worlds – that is both an online component for reading reviews and the assurance that if they drive to their local store, they’ll find the item in-stock, ready to “touch, feel, and buy.” The hyperlocal can offer both geographic and content granularity – the ability to focus on a very specific location and subject matter that might otherwise be too small to be served. By merging the local and the online, businesses can respond quickly to meet the needs of their customers. Startups have long used local communities as a testing ground for both marketing and business models before opting to expand. The increasing interest in the hyperlocal might make it more than just a launching point. What do you think of the potential for expansion of more hyperlocal startups? Discuss
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Startups and the Lure of the (Hyper)Local
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