Tag Archives: nytimes.com

Is There a Tech Bubble? We’ll Know If It Pops

Business Financing, Economics, Technology, Venture Capital, , ,

Earlier today I posted disruption vs. revenue and the tech bubble on the gust.com blog. I’m suggesting in that post that some special-case web-based startups have to choose between disruption or revenue, because they can’t have both.

That may or may not be true, but I’ve been guilty of suggesting it is to a couple of startup software companies recently. I think both were special cases. They had a real chance to go really big and generate spontaneous buzz based on the product itself.  But locking their wares behind pay walls might slow their growth and dampen their success. 

That may or may not be true. After the tech crash in 2000, I never thought I’d see that happen again, much less me recommending not covering expenses with revenue. Still, though, there’s Facebook and Twitter and Instagram and, oh my.

Bubble? Las Sunday the NYTimes’ bits blog published Disruptions: With No Revenue, an Illusion of Value. Author Nick Bilton says yes there’s a bubble and tells why he’s sure.

When this next bubble pops — and it will pop — the idea to make no money can finally pop, too. Then investors can start working with companies to build businesses that have long-term financial goals, instead of just building a short-term mystery.

But on the same day Chris Dixon (smart person) asked Is It a Tech Bubble on his blog and answered with some convincing analysis, “no.” And the second comment on that post is Fred Wilson of AVC (another smart person) saying: 

[Zynga price] certainly doesn’t seem like a bubble valuation either. I do think there is more money sloshing around the tech/internet/mobile sector now than there has ever been. and that is impacting valuations across the board. The question is if this is temporary or the “new normal”. I guess we will find out.

So I’d like to answer this tech bubble question here, but as I was writing this, on Sunday, those other interesting and contradictory posts, from smart people, kept rolling onto the web. I ended up tweeting my conclusion to this post last Sunday, with the following tweet. 

The New JOBS Act, Crowdfunding, and Shoes Waiting to Drop

Blogs and blogging, Weblogs, , , , , , , , , , ,

It’s less than three weeks since the new JOBS act opened the door to exciting new crowdfunding initiatives. This could be a sweeping change, an end to antiquated laws requiring startups to get investment mainly from so-called accredited investors. And it could be another deregulation causing a lot more problems than it solves. 

For the curious, here’s a quick reading list I’ve compiled, full of excitement, eager anticipation, fears, contradictions, and contention.  

  1. Gene Marks has a good summary in Drilling Down: What Small Business Should Know About Crowdfunding on the New York Times. This one is positive and optimistic. 
  2. For a scathing indictment of the whole idea, how it’s actually more of the deregulation that caused the great recession, try Why Obama’s JOBS Act Couldn’t Suck Worse, by Matt Taibbi on Rolling Stone. (Don’t you love the title? Nothing ambiguous about that.)
  3. For a more long-term academic/intellectual view, try Yale Professor Robert Shiller’s Democratize Wall Street, for Social Good, also on the New York Times. 
  4. Jason Calacanis, founder of Mahalo.com and a very well-known and vocal successful entrepreneur, raves about the underlying idea of crowdfunding in The Two Most Important Startups in the World, posted a couple of months ago, before the new bill passed. 
  5. Bob Rice, New York venture capitalist, posted Forget Crowdfunding: Why JOBS Matters on the gust.com blog. A couple other posts on the subject on that blog — which is the major platform for angel investment — are Antone Johnson’s train wreck post, in which he fears the worst from crowdfunding before the bill passed;  and then his somewhat-relieved revision in his back on track post a week later. 
  6. Last but not least (since we’re on my blog at the moment) is my What Worries Me About Crowdfunding on the Huffington Post. What worried me then, before the bill passed, still worries me now. 

I could go on with the reading list, but it’s already too long. 

So which is it? All hail the new era of startups let loose from the nasty bureaucratic constraints? Or the opposite, run for the hills because chaos is coming? Obviously somewhere in between the two. Also obviously, a lot will depend on who does what in crowdfunding, and how quickly, and how well. If this new world starts with some very visible unsuccessful but popular deals, for which a lot of people lose money, that’s one scenario. If the regulations manage to control the scams and somebody builds a good crowdfunding site with some reasonable precautions, then that’s another scenario. 

So I’m waiting for that the shoe to drop. 

NYTimes Offers a Welcome Note of Small Business Reality

Entrepreneurship, Starting a Business, , , , ,

I was happy to discover major media dose of reality in Maybe It’s Time For Plan C in yesterday’s NYTimes.com. While it’s so much more popular to talk about entrepreneurship as a matter of passion and persistence and living the dream, I think it’s also important to recognize that failure is common, and failure can be miserable.

The Plan C in the title is a reference to Plan B as people moving out of their corporate jobs to start there own business.  Alex Williams sets the scene with the glamor of the post-recession entrepreneur:

In recent years, a wave of white-collar professionals has seized on a moribund job market, a swelling enthusiasm for all things artisanal and the growing sense that work should have meaning to cut ties with the corporate grind and chase second careers as chocolatiers, bed-and-breakfast proprietors and organic farmers.

Indeed, since the dawn of the Great Recession, more Americans have started businesses 565,000 of them a month in 2010 than at any period in the last decade and a half, according to the Kauffman Foundation, which tracks statistics on entrepreneurship in the United States.

The lures are obvious: freedom, fulfillment. The highs can be high.

And if you pause to reflect, there’s a whole lot of that new entrepreneurship going on. And I’m all in favor. I post a lot about starting your own business in this blog and elsewhere, and I’m a frequent recommender of books like Pamela Slim’s Escape from Cubicle Nation  or Melinda Emerson’s Become Your Own Boss ; not to mention my own book 3 Weeks to Startup . But all of those books temper the optimism with reality and planning. And that’s what Alex adds in the piece yesterday: the other side of the picture.

But career switchers have found that going solo comes with its own pitfalls: a steep learning curve, no security, physical exhaustion and emotional meltdowns. The dream job is a “job” as much as it is a “dream.”

Many are surprised to find the hours and work grueling.

Amen to that. I say yes to those who want to start their own business, but a careful, fully aware yes. Go into it with your eyes open. As this piece in the New York Times concludes:

Plan B, it turns out, is a lot harder than it seems.

5 Good Quick Reads for Small Business Owners

Blogs and blogging, , , , ,

These are some posts I noticed during the week. I keep track of them because I intend to do a post of my own on the same thing, but sometimes it’s better to just highlight them and share. These all seem useful to the small business owner and entrepreneur.

  1. Six Companies That Did Not Survive 2010 on NYTimes.com is a great collection of quick but still very useful summaries of failures.Who they were, what they did, and what happened.
  2. How to turn dating agony into sales success, by Pamela Slim, on Copyblogger. Don’t you love that title? I’m a big fan of Pam’s work, this one is longer than most blog posts but also rich in practical suggestions and thoughtful and well worth the extra length. Good for one-person entrepreneurs and small company owners alike.
  3. How to fire an employee the right way, by Shira Levine, on Amex OPEN. Somebody told me the other day that she was good at firing people, and I was amazed. Can anybody be good at that? Hence, this post.
  4. The 5 things you need to do before approaching investors, by Eileen Gunn on entrepreneur.com.
  5. The Top 50 Blogs for Small Business Owners is a pretty good list, and I’d say that even if it didn’t include this one.

(Image: Kotomiti/Shutterstock)

Why Would You Ever Make a Cold Call Again?

Marketing, Social media, Technology, ,

This interesting exchange comes from a NYTimes interview with Eric Lefkofsky, 40-year-old founder of groupon, serial entrepreneur, who Forbes says is worth about $750 million. The interviewer asks him: Do you think that every business needs to rethink what social media means to its future? He answers:

Today, I think that every business is again in serious flux because of the rise of all these social tools. Take telemarketing sales, for example. Why would your business ever make a cold call again?

When pressed, in follow-up questions, Eric insists that “every business that wants customers” needs to look at social media.

Sure, it turns out, by the bottom of the interview that he’s invested in a tool to help businesses manage social media, so his views are a bit like me insisting that every company needs better business planning. Still, it’s an interesting view, from a very successful Internet entrepreneur. And it makes good sense to me.

For the full interview, here’s the link:

Eric Lefkofsky, Groupon Founder, on Why Social Media Is Hot – NYTimes.com

Is It Hooray for Social Media or Goodbye to Privacy or Both?

Business Ethics, Business Research, Marketing, Weblogs,

Speaking of paradox and contradictions (as I did with my post here last month), how about the good news/bad news mess of mixed-up emotions with the increasing personalization of advertising.

1984The good news (well, sort of) is less of the traditional shouting and interrupting types of advertising we all grew up with. Nobody really likes the ads that interrupt the flow of television and radio shows. We tolerate ads where we can just not click, or turn the page.

I’d like to think that this is happening because of the gradual growth of the business impact of social media and similar phenomena, in which word of mouth multiplies organically, replacing advertising with relationships and authenticity. That seems like a relatively pleasant scenario.

The bad news is more of the personalization that smacks a bit of 1984 and Big Brother and paranoia. This is what the New York Times called Ads Follow Web Users, and Get Deeply Personal:

“The result is a sea change in the way consumers encounter the Web. Not only will people see customized advertising, they will see different versions of Web sites from other consumers and even receive different discount offers while shopping — all based on information from their offline history. Two women in adjoining offices could go to the same cosmetic site, but one might see a $300 Missoni perfume, the other the house-brand lipstick on sale for $2.”

I have mixed feelings about privacy, particularly when it’s “Privacy” as political motivator and campaign slogan. I’ve seen it used as justification for all kinds of crazy ideas, such as somebody ringing my phone in my house being able to block caller ID (if you don’t want to be identified when you intrude, don’t intrude. Seems simple to me). By the way, have you asked yourself the relationship between privacy and authenticity? In social media?

I also have mixed feelings about our national confusion between ideas, speech, and commerce. I don’t think commercial messages (much less corporations, but that’s a different matter) need to be protected by the Constitution. I don’t think the Constitution gives a damn about which perfume the women see on the commercial site.

And this 1984 queasy feeling… does it still hold when it’s not an evil government controlling thought, but a cosmetics vendor optimizing sales?

Which brings us to the simple discussion of business. Is it good business to customize messages, even business offerings, to match very carefully defined and tracked consumer characteristics?

Research Agrees: Time is the Scarcest Resource.

Advice, Reflections, Work Life Balance, ,

I was going to do another strategy piece this morning, in keeping with the time for planning theme I’d thought I was doing for this week. But no. We can do business strategy next year. Instead, for this last work day of this long and less-than-stellar year, let’s please enjoy, now, this excellent new research about the psychology of putting off enjoyment.

I’ve said it several times on this blog, usually in the context of work-life balance: time is the scarcest resource. This research looks into that tendency we all have to save the miles, or the gift certificates, or the vacation days, or the best wine, in “a widespread form of procrastination” that’s about putting off the good times, not the bad. “The strange impulse to put off until tomorrow what could be enjoyed today.”

And here we have this NYTimes.com piece on new research that confirms it. Author John Tierney starts it with this intriguing lead:

For once, social scientists have discovered a flaw in the human psyche that will not be tedious to correct. You may not even need a support group. You could try on your own by starting with this simple New Year’s resolution: Have fun … now!

The core of it is this:

… we’re not accurate in our estimates of “resource slack,” as it is termed by Gal Zauberman and John G. Lynch. These behavioral economists found that when people were asked to anticipate how much extra money and time they would have in the future, they realistically assumed that money would be tight, but they expected free time to magically materialize.

Hence you’re more likely to agree to a commitment next year, like giving a speech, that you would turn down if asked to find time for it in the next month. This produces what researchers call the “Yes … Damn!” effect: when the speech comes due next year, you bitterly discover you’re still as busy as ever.

So enjoy the holiday. Have a Happy New Year.

Apples, Oranges, and Making Startups Pay to Pitch.

Angel investment, Business Plan Contest, Venture Capital, Venture Contests, , , , ,

I hate it when people push issues way too far, diluting their points by overextending them. Stretch your generalization net too far and you catch a lot of innocent fish along with the sharks. Do that and you kill your own argument.

For a great example of that, Jason Calacanis’ rant against startups having to pay to pitch investors. You can click here to read it. He’s very angry at businesses charging startups fees of thousand of dollars to pitch investor groups. I agree with him. I also dislike most (but not all) of the mostly-web-based listing services that charge startups hundreds of dollars to list themselves somewhere were investors will see them.

By the way, for a rant-free and more balanced discussion of the same problem, click here for Lora Kolodny’s summary on NYTimes. com.

But my beef with Jason’s rant is his total lack of distinction between thousands of dollars as a pay-to-pitch fee, charged by for-profit middle-men companies, and the normal fees of tens or hundreds of dollars charged by angel investment groups as part of the pitching process. That’s like apples and oranges. And the oranges are getting smeared with the bad apples.

I read, cringing,  as Jason and his followers (in the comments) seethe with anger at entrepreneurs being forced to pay anything, in any context, to present to investors. And that’s way off base. You simply can’t lump these pitch predators and their big fees with the hundreds of angel investment groups and community organizations that charge tens or hundreds of dollars to cover real costs.  He’s got so much sound and fury, without making some important distinctions. It’s scary.

Let’s take a real-world case, one that I know well. I’m a proud member of a local angel investor group that charges the startups who enter our annual business plan competition $199. We’re not exploiting anybody. Not one of us ever sees a dime of the entry money. It goes to support the costs of the event, including the location, coffee and such, collateral. It’s controlled entirely by the organization itself, a collection of non-profit civic groups trying to contribute to small business development in our local area. Where’s the harm in that?

While a few of Jason’s commenters hint at this kind of distinction, the general feel is about as friendly as an angry mob with torches and pitchforks.

So there’s the problem. Generalize that pay-to-pitch is exploiting startups, and you make the world harder for well-meaning groups of investors that are giving startups a pretty good deal. So why not make the distinction, apply some gray tones instead of all black and white, and make a better point? Oh dear, all those nerdy pointy-headed distinctions are so undramatic.

Just to make sure, I asked a local entrepreneur, Nathan Lillegard, president of Floragenex, who describes himself as “as someone who has paid way too many fees to talk to people about my company.” He said:

“A truly dedicated entrepreneur finds just as much value in the experience of pitching as in the investment payoff. If an event, like the WAC can help startups improve their pitch, enhance their skills, and make at least one useful connection, then it’s worth a small fee to participate. If, on the other hand, all that the entrepreneur gets is a quiet crowd and no feedback nor chance to network, then I wouldn’t pay $1 for the privilege of talking to a room full of people with money.  Caveat Emptor! It’s up to the entrepreneur to know that there is a cost to raising money and these types of events can be a very efficient way to meet lots of potential investors, just one of which can change their world as they know it.”

And if you’re a startup anywhere in Oregon, especially in the southern Willamette Valley, and you have an interesting business with a good chance to grow, and a real exit strategy, then pay no attention to that angry man behind the curtain, and please apply to pitch to the Willamette Angel Conference. And yes, it will cost you $199.

(Image credit: istockphoto.com)

Who Should Decide What News Matters?

Journalism, , , , ,

Back in the old days editors decided what was news. Not advertisers and not readers. There was this concept called “news values.” Full-time professionals laid out the front page. They tried to highlight important political, economic, and social trends, coverage deemed important, rather than celebrities, fashions, nudity, and violence.

This was a long time ago. Back in the 1970s.

Which is not to say that media don’t play to audiences. The original Yellow Journalism was Pulitzer vs. Hearst in the 1890s. And when I was a mainstream journalist, in the 1970s, playing to readers’ baser instincts was already commonplace. Some words in headlines—naked, violent, brutal, for example–produced better results than others.

Still, the idea was that editors protected news values. They were gatekeepers. So the front page had important news, that people should be reading, rather than sensational news. The idea was embattled, but treasured. Image by B.K. Dewey on Flickr

Today, however: not so much. Nicholas Carlson posting on Silicon Valley Insider proclaims NYT.com Front Page Editors Ignore Reader Clicks, and he’s not writing about how the editors are intrepidly holding out for news values. I’d like to imagine the crusty old editor saying no, resisting the temptation to appeal to audiences’ taste for gossip and sensationalism, insisting on highlighting important news and analysis. But no, this is criticism. He quotes a New York Observer story:

“In terms of minute-to-minute news decisions, I think that would pretty much drive me crazy,” NYTimes.com’s digital news editor Jim Roberts told the Observer.

“I don’t want people to call up NYTimes.com and feel like that they’ve just landed in an environment that is alien to them,” he said. “It isn’t necessarily The New York Times in print, but it needs to reflect the same attitudes and standards.”

He thinks they’re sadly out of date, and, in the background, doomed. He cites the Huffington Post as the example of the right way to do it, by following the clicks. He says editors have to watch the clicks for two reasons:

  1. It’s the main way readers can show what kinds of stories they care about.
  2. The New York Times is a deeply-in-debt, for-profit enterprise that needs to grow its traffic online in order to survive. Web editors should not pretend that it doesn’t matter how many ad impressions the Times serves each day.

I can argue with that first point. Call me old fashioned, elitist maybe, but I’m okay with Jim Roberts’ comment above. I don’t want the National Enquirer to replace the New York Times. I’m happy to think that humans are still guarding news values. Somebody has to. Right?

But how do you argue about that second point there, in the quote above: the money? What if doing news right is an obsolete business model? It could happen. Could? No, it is happening.

Irony: I’m glad to see that the New York Times made a profit in the second quarter of the year,   but I read that news on the Huffington Post. And I don’t subscribe to the New York Times, either; I get it free online.

(Image by B.K. Dewey on Flickr)