Marketing Mistakes Start Ups Make

Published: 3/29/2007 12:22:51 PM, comments: 0

As the second installment of a series on marketing mistakes that start up companies make, one of the biggest is refusing to focus on a well-defined market entry customer segment.

Every start up has to choose which market segment it will attack first.  Regardless of how many markets it will ultimately go after, sincere there are finite resources in both money and people, it is imperative that a start up focus on a particular segment and begin to get traction there.

Why?  Several reasons:  Because early referenceable customers are extremely important in signaling to the rest of the market your company's value proposition(s).  Also, early customers provide valuable feedback on your feature set.

If you're getting conflicting feedback from customers in different market segments, you'll still have to decide which improvements to make.  So you will still end up having to choose between which market segments you are going to satisfy first, given limited resources.  Why not focus your laser beam on one entry point and become an expert there?

Don Jones

Venture Vitality Report - San Jose

Published: 3/26/2007 7:10:50 AM, comments: 0

VentureDeal is pleased to announce the release of the first Venture Vitality(TM) report, in cooperation with the Business Performance Management Forum.  Highlighting the comeback of the City of San Jose in 2006 after the tech downturn of recent years, the report provides in-depth analysis and comparative statistics on the resurgence of venture-backed technology companies located in the largest city in Silicon Valley.

This Venture Vitality report is the first in a continuous series focusing on the performance of major US cities in attracting and fostering innovation-centric companies.  With the insights from these reports, investors, technology companies and city planners will be armed with deeper knowledge about the relative strengths and weaknesses of major technology-oriented cities and regions.

The report may be found here:

Don Jones

Corporate VCs - Working With Them

Published: 3/21/2007 1:47:58 PM, comments: 0

Here's a great article on the topic of corporate venture capital. 

Written by an industry veteran, it highlights some of the pros, cons and differences in dealing with the corporate side of venture capital.

In my experience with corporate VCs, which has been limited, they've tended to be tough to reconcile with typical venture capital in the same deal.  In other words, a corporate VC may have other goals than a VC or private investor has.  The corporate VC may want to develop the investee company product as part of a long-standing research program, with no hurry or rush to go to market.  A VC investment will typically want to hurry to a profitable exit.

Add to that the risk that a start up's corporate sponsor may leave the department, the company may change its priorities or other circumstances outside the control of the start up, and you have a number of additional uncertainties involved with a corporate VC investment.

Don Jones

Marketing Mistakes Start Ups Make

Published: 3/19/2007 9:31:57 AM, comments: 2

I recently came across a list of marketing mistakes that start up companies make.  Thanks to Rosemary Remacle of Market Focus for her insights.  I thought I would use that list as the basis for a series on marketing for start ups.

The first mistake in the series is waiting to staff the marketing function until the product is far along in development.  This is a classic situation where the founders, who are frequently techie-types,  have determined to build a product to satisfy a demand they perceive to exist in the marketplace.  Maybe they even know some people or companies that have indicated a desire to purchase or pilot test their product or service.

They continue in product development, secure financing and then hire the marketing person.  That's usually when the wheels fall off the vehicle.  The lack of early marketing input results in a number of assumptions that were built into the product that later marketing discovers are not desired by the wider marketplace, or even the new target market.

The result is a company and product set that has to be re-engineered just as it is getting off the ground.  Not a pretty picture.  The first marketing hire should be a product marketing specialist, who is capable of working with the engineering team and reconciling the market research with the product benefits.  Waiting until the product is far along in development before getting marketing input is a risky way to go.

Don Jones

Angel Investment Gone Bad - A "Successful Failure"

Published: 3/15/2007 10:54:34 AM, comments: 0

A while back I wrote about a company that I made an angel investment in that imploded when the founder clashed with the new CEO and Board.  The founder went to court, dissolved the board and fired the CEO.  The convertible note holders - us - called the notes and the company was on a terminal dive.  I promised to share the final outcome of the saga. 

Since the founder passionately believed that his original approach was the correct one, and since there was only about 20% of our original investment still in the company's bank account, we negotiated a 20% payoff in return for a warrant to purchase the difference at a second follow-on financing if the company succeeded in securing it.  We also obtained a payback of up to 200% of our remaining balance if the company was sold at a profit.

The rationale was that since the company had used 80% of our money for further development of their system, it was only fair that we receive some of the upside if it ever came about.  With this founder, we're not holding our breath, but at least we received some money back and have the "hope" of an upside.  Stranger things have happened.

Don Jones

RingCube - Changing The Way We Compute On The Go

Published: 3/9/2007 3:32:06 PM, comments: 0

I came across an interesting funding announcement recently - RingCube received $12 million in expansion funding from NEA and MDV.  The company intends to use the funding to expand its services worldwide.

What's interesting about the company is it's MojoPac technology.  It allows a user to take all of his/her files, applications and settings onto a portable USB storage device (stick) and simply plug it into any Windows XP computer anywhere and immediately have access to their customized and private computing environment.

While I haven't personally tried the system, it sounds like a great tool for business travel.  If you don't need your laptop for a presentation and you have access to a company or other computer at your destination, you don't have to lug your laptop through the airport security check anymore.

It's an interesting twist on the mobile market.  In this case, the mobile application is your entire computing environment.

Don Jones

The Walt Disney Way - Experiment!

Published: 3/7/2007 12:12:55 PM, comments: 0

Walt Disney loved to experiment.  Throughout the many animated films he created, he was known for re-working material dozens of times in novel directions until he got what he wanted.  Part of that mentality came from being a perfectionist and part from wanting to see where he could take his latest project.

He even experimented with new entertainment ideas after his interest in animation had waned.  Before he embarked on the Disneyland and EPCOT theme parks, he built a large gauge railroad around his residence.  He created a train that was big enough for him to ride on and laid track surrounding his house.  It turned out to be the basic idea for the train ride that runs around Disneyland to this day.

Also during this period, he created miniature western town scenes for a traveling display across the country.  Set up as oversized doll houses, these scenes were his celebration of some of the basic themes of American life, the midwest, cowboys and Indians, farmstead life. 

When he created these exhibits, it wasn't apparent that he had anything else in mind.  Yet his desire to experiment, to follow his passions, resulted in these ideas ultimately coming together a few years later in the various "lands" and rides that make up Disneyland today.

Don Jones

The Walt Disney Way - Reinvest In Your Business

Published: 3/5/2007 12:25:21 PM, comments: 0

Walt Disney was known for reinvesting most of the profits he made back into the company he created.  Not just for a few years, but for 25+ years, he and his co-owner brother Roy lived modestly in their choice of personal living habits.  Certainly the depression and the following second World War affected them greatly - the depression forcing them to be as frugal as possible, and the company prospered during the war by making films for the military services.  Once the war was over, they were itching to return to making the films they were famous for.

Roy Disney, who was charged with the financial aspects of the company, kept tight rein on the operational costs of the company to the extent that he could.  The extent was determined mostly by Walt, who had the mentality of sparing no expense to invest in the company's capabilities.

Why do it?  Because Walt wanted to separate his company from all the rest.  He believed that by creating a product that was so obviously superior, his company would receive the benefits of that increased investment many times over.  Other companies at the time minimized their re-investment, and the resulting products were inferior in most every respect.

Mostly, Walt was right in his belief in reinvesting in the company and its employees.  American and international audiences flocked to his animations and later to the Disney theme parks.  His single-minded investment mentality paid off.  Not everyone's company is made for the long term sacrifices of high reinvestment.  But if you're in it for the long haul, it may be worth serious thought - what might you be able  to create with greater reinvestment in your company?

Don Jones

Don Jones
CEO, VentureDeal

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