Get On the Bus

Remember the days when you'd call to talk to a business and a real person answered the phone? Remember when you used a credit card and they'd swipe that heavy contraption back and forth making a carbon copy of your card or when your old LP's were traded in for new-fangled tapes? Well, if you can remember it, it's almost certain you've gotten the look from a "Digital Native" when you've talked about it, as if to say, "Oh, my god! How old are you?" In a book summary from John Palfrey and Urs Gasser's Born Digital: Understanding the First Generation of Digital Natives, David Hornik takes you through a comical example of what Palfrey is eluding to.

If you have not yet experienced "Digital Natives" in their natural habitat, come on over to my house on any weekend. When I wander down stairs on a Saturday or Sunday morning, the scene is always pretty much the same. The TV is on and yammering away. But my kids are far more engaged in their respective laptops than they are in the TV making noise in the foreground. My 6 year old is likely buying a new go kart for his Webkinz monkey. My 8 year old is busy shooting balloons on Addicting Games. My 11 year old is blogging about some great new Japanese rock band video he found on YouTube. My 13 year old is reading the latest news about his favorite performers on Broadway.com. And, amazingly, while "watching" TV and voraciously consuming the Web, my children are more than capable of fighting with each at the same time -- digital multitasking at its finest.

Digital Natives today may be a small group of non-voting, non-credit card holding kids. But soon Digital Natives will be the predominant consumers of media, goods, services. And as such, they will expect their experiences to be inherently digital. Analog experiences will be viewed as quaint -- perhaps they'll trigger nostalgia for the good old days of board games and books -- but, in the end, the expectations will be one hundred percent digital. Companies will need to think differently about how they market to Digital Natives. Governments will need to think differently about how they engage Digital Citizens. Doctors will need to think differently about how they treat Digital Patients. It won't be an evolution -- it will need to be a revolution.

I already see this revolution when I'm pitched on businesses whose customers are kids. Businesses focused on children or Millennials (the next big group of consumers being chased by the advertising world) have no interest in the historically analog world. Their products are naturally digital. They acquire customers digitally. They interact digitally. Indeed, any analog byproduct of the digital experience (you know, like meet real humans in person) is just that, a byproduct. Kids want their media consumption, their shopping, their communications to be digital. Webkinz is a great example of this phenomenon -- who would have thought that stuffed animals could prove to be the gateway drug to a digital experience? Yet that is precisely what they have become.

In light of all that, it was great to read the timely new book by John Palfrey and Urs Gasser called "Born Digital: Understanding the First Generation of Digital Natives." John and Urs look into the opportunities and challenges posed by this digital revolution. Those of us with kids are living in and among the Digital Natives and certainly can use all the help we can get to navigate this brave new world both for ourselves and for our kids.

When I was about 6 or 7, my family got our first VCR. Every time the electricity would go out my Dad would have me reset the clock because he could never figure it out himself. When I moved out on my own my Dad gave me that VCR. He said that the blinking light drove him crazy (without me around the clock was never set and just flashed 0:00). Now he has an MP3 player that he loaded with songs, and figured out how to play it through his car stereo. I rode in the car with him the other day and I noticed the dashboard clock was blinking the "0:00." When I asked him about it he said, "I can't figure it out," as he clicked from Carly Simon to The Beatles on his Mp3 Player. Some things don't change, but he is learning the new technology to suit his needs, which I'm sure a lot of you are having to do. As for telling time? Right now, my Dad's content wearing a watch.

"Truths" from a successful Internet entrepreneur

Justin Kitch, founded and grew Homestead Technologies for 11 years before the company was acquired by Intuit in 2007. One of his passions is working with other people starting and growing companies and he has put together a list of "truths" that he says he's "pretty sure anyone starting a business should ignore at their peril." Below is the list, hes going to be expanding on these over the next few weeks at his blog, CEO Unplugged.

1. Think web first.

2. Have a human capital strategy.

3. Find a channel, then build a product—not the other way around.

4. Plan now for success—or it will never come.

5. Raising money is not your biggest problem, being able to spend it appropriately is.

6. You're not thinking big enough!

This list is going to be especially relevant over the next few weeks as the Golden Capital team works with early stage companies to prepare them for the 8th Annual Silver & Gold Venture Capital Conference in Reno. Not all of the "truths" above are going to apply to everyone, but as is often said, "think of the source of the information," in this case, it's a pretty good one.

Royal Pain Relief

A royalty agreement has been reached between the creators of music and the internet radio industry that seems to have remedied the standoff between the two camps.  The recording industry, represented by RIAA and other groups, and the streaming content sites, represented by the Digital Media Association, have agreed in principle to a royalty of 10.5% of revenue for interactive streaming services.  The agreement has been sent to the Copyright Royalty Board for final approval.

This is a huge step forward for internet radio.  New royalty requirements (a 38% increase) for intenet streaming threatened to essentially cripple the fledgling industry.  The proposed royalty rate was higher than satellite radio pays.  Broadcast radio pays nothing at all.  Internet giants such as AOL and Yahoo considered abandoning their Web radio operations.

Tim Westergren, CEO of Pandora, the largest privately held internet broadcaster, was explicit that the new royalty rates would mean going out of business.  "At the new rates we're losing tons of money. If we don't think there's a real answer that's going to happen, it's our fiduciary responsibility to stop.''

And that would be a real shame.  Tim presented his business (then called Savage Beast Technologies) at the GCN 2003 East Bay Venture Capital Conference, and won "best of show".  Since then he's built his broadcasting platform to a $25 million business, although it's still not profitable.  Millions of listeners have become regular listeners of Pandora, which allows users to custom configure their own radion stations based on their musical preferences.

We're glad for Tim, and for Pandora, that cooler heads have prevailed and that the royalty structure will accommodate the infant industry while still making sure the creators of music are compensated.

SNAP Summit^3 - October 28th at the Parc 55 Hotel in San Francisco

SNAP Summit is the premier San Francisco conference on social application business and development.  Past speakers have included Dave Morin of Facebook, Jim Benedetto of MySpace, Seth Goldstein of SocialMedia, Jia Shen of RockYou, Jeremiah Owyang of Forrester, and countless more.  We are expecting another sold out show, with over 350 developers, founders, business exectives, and bloggers attending.  For more information, check out SNAP Summit or email Cassie at cep@rfop.biz.

Golden Capital Network blog readers can attend with a 10% discount by clicking here.

How Not To Pitch Your Startup

It doesn't matter if you have a great product to invest in, if it is something that is in high demand, whether you have a great model or the figures to back it up. If you can't sell your idea to investors, you won't get it off the ground. Our colleague (and occasional poster here) Chris Soderquist pointed us to a post by startup guru Guy Kawasaki, who gives entrepreneurs an entertaining list of "what not to say".

Many entrepreneurs ask me what is the best way to open a pitch to potential investors. I'll answer that question at the end of this posting, but first let me tell you the ten worst opening lines that you can use:

1. You say: "I'm bright and ambitious." Investor thinks: "That's a relief because I usually invest in stupid and lazy people."

2. You say: "I'm a blue sky thinker." Investor thinks: "You have no business model, and you don't know how to ship."

3. You say: "I don't know much about your firm, but I thought I'd contact you anyway." Investor thinks: "You're a lazy idiot--why are you wasting my time?"

4. You say: "I love to think of new ways to solve problems." Investor thinks: "Is this a high-school science fair?"

5. You say: "I have lots of great ideas, but I have trouble figuring out which one to try. Let me tell you about a couple." Investor thinks: "I want to know which idea you're going to kill yourself trying to make successful, not which ideas have crossed your idle mind."

6. You say: "I've always wanted to be an entrepreneur." Investor thinks: "I've always wanted to be a professional golfer. So what if you always wanted to be an entrepreneur?"

7. You say: "I'm sure you are aware of the growing need for security. Web 2.0, Open Source, whatever." Investor thinks: "If you're sure I'm aware, why are you telling me you're sure I'm aware."

8. You say: "If you sign an NDA, I'll tell you my idea." Investor thinks: "You are clueless. How can you not know that venture capitalists don't sign NDAs?"

9. You say: "The last time I contacted you, I..." Investor thinks: "I'm going to fire my secretary for putting this clown on my calendar again."

10. You say: "My goal is to build a world-class company." Investor thinks: "How about you ship and sell the first copy before we talk about world-class anything?"

Now you know what not to say. Here's what you should say:

"This is what my company does..."

It's that simple. What you're trying to do is get potential investors to fantasize about how your product or service will make a boatload of money. They can't fantasize if they don't know what you do. And they don't want to be your friend, mother, or psychiatrist until they understand what you do, so cut the crap and explain what you do.

Omit these all-too-common errors from your presentation when you communicate your "great ideas" to potential investors. Stick with the basics and you might just get your point across in a professional and timely manner and wow the people who are the ones who need to be wowed.

U R Here

Julian Stone, CEO – Project Management Software specialist for ProActiveSoftware.com, ProWorkflow.com, and Julian101.com has created a map of sorts to navigate the rapidly evolving Web 2.0. With this chart mapping out the different social media sites and breaking them down into explanations it helps to figure out where we are, and where we're going, complete with all the trendy lingo and a point of view that makes comprehending it easier. It is a great way for everyone to figure out the Web 2.0 and enjoy its benefits for businesses.

8th Annual Silver & Gold Venture Capital Conference

Every fall for eight consecutive years, intrepid angel investors and venture fund managers have flocked to the Reno/Tahoe area to review the most promising early stage growth companies from the western United States at Golden Capital Network's Silver and Gold Venture Capital Conference series, presented jointly by Golden Capital Venture Events and Nevada's Center for Entrepreneurship and Technology.

The conference features a full day of innovation showcase sessions, as entrepreneurs pitch their business plans to sector-specific panels of active investors who will evaluate their presentations. Forty active angel investors and venture capitalists have already confirmed their participation. In a new twist, presenting companies will be allotted more time during their presentations to focus on their product innovations. The top presenters on each panel will go on to a finalist showcase judged by a panel of investors moderated by Gayle Crowell of Warburg Pincus.

"Golden Capital Network's venture capital conferences offer the best, most promising dealflow across multiple sectors," says Rebecca Lynn, of Morgenthaler Ventures. "The 8th Annual Silver and Gold event is a justly renowned regional showcase." Entrepreneurs wishing to present at the conference should apply now. The cut-off date for acceptance of executive summaries is Monday, September 22, 2008. After screening by a selection committee to ensure quality, qualified entrepreneurs will be selected on a first-come, first-served basis. There is a $695 presenting company fee, which includes complimentary conference registration, a 10-minute presentation to a panel of qualified investors, and one-page summary in the conference binder. A maximum of 40 companies will be selected, so it is important to complete your application as early as possible.

Active angel and venture investors interested in participating as panelists should contact Golden Capital Network CEO Jon Gregory by calling 530-893-8828.

Other Conference Highlights

The conference will also feature the Best of the West Early Stage Expo, which brings together all critical components of the early-stage value chain - entrepreneurs, angel investors, business and technology executives, venture capitalists and a complete range of professional services providers - in a high-energy, high-impact networking setting during the conference reception. During this one-of-a-kind event, exhibitors and attendees will make a year's worth of important contacts in one two-hour setting. Other conference highlights include the opening "Ballroom Blitz" in which all of the presenting companies make one-minute "Power Pitches" to introduce their business to the conference investor panelists, sponsors and attendees. In this fast-paced segment, attendees get a sense of the wide array of sector, geographic and technology plays that will be showcased throughout the day. Finally, the Silver and Gold Conference will be used to launch the inaugural Northern Nevada Technology Awards Program, which will honor companies through the Tech Company of the Year, Tech Start Up of the Year, and the "Green" Company of the Year, and individuals through the Tech Entrepreneur of the Year, CIO/CTO of the Year, and Tech Educator of the Year. The awards program is hosted by NCET and Northern Nevada Business Weekly.

Aspects of Social Media Optimization

Most Web marketers are familiar with Search Engine Optimization (SEO); the practice of structuring web pages to make them "crawler friendly" to Google and other search sites.  But with the proliferation of Web 2.0 capabilities, intrepid marketers are becoming fluent in Social Media Optimization (SMO).  Tom Pick discusses the various aspect of SMO on his blog, including Discussion Forums, Social Bookmarking, Wikis, Video and Social Networks.

(Discussion Forums)…are a place to showcase your expertise in a non-promotional way. For example, in an SEO forum, telling everyone how great your agency is at SEO is suicide; but displaying your knowledge by offering expert tips on title meta tag creation or non-spammy link building is brilliant.

(Social Bookmarking)…sites like Digg, del.icio.us, StumbleUpon, Mixx and Searchles are great places to spread the word about your own thought leadership content as well as, and even more importantly, positive coverage your company gets from other bloggers, journalists or analysts.

A wiki is another place to share your knowledge of a particular topic with a community or the world. You can do this by either writing an encyclopedic article about a topic; adding to or editing an existing article; or adding links to your own thought-leadership content as supporting material.

Business video production is growing exponentially because video is engaging, repurposable (for example, you can use a video on your website, at tradeshows and in presentations; post it on YouTube; use it as an asset for blogger outreach or a channel sales tool; add it to social media press releases; etc.), potentially viral, and increasingly searchable.

At the least, social networking services like LinkedIn, Facebook, and Konnects provide increased exposure for your company (and your "personal brand") while also providing SEO and reputation management benefits. At best, these sites can help you make valuable new business connections.

The end result ultimately would enable you to have the top search page which would be a great way to get the word out about your particular industry and get feedback at the same time.

Starbucks Connects with Customers

Working the inner recesses of the Web 2.0, Starbucks has come up with a novel way to get feedback from it’s consumers. After creating an account one can share ideas or complaints via the site and have other members vote on their observations.

Posted by StuartOnline to Other Involvement Ideas

Today while at the local Starbucks (Tiger Point) in Gulf Breeze, Fl I watched three people within 20 minutes leave because there is a charge for WiFi. They all went to other places within the area that offered FREE INTERNET connection. With your high prices for coffee you would think you would offer this service for FREE. Let me add I do own shares of stock in Starbucks.

Posted by Suz01 to Other Product Ideas

I work at home as a remote employee. There have been many times that I have wanted to treat a co-worker to a Starbucks for helping me out on a project, or just to brighten their day. Wouldn't it be neat if you could purchase a drink for someone via the Starbucks web site? The recipient gets an email stating, for example, "Suzanne bought you a drink!" The recipient prints the email (with a barcode) and takes it to their nearest Starbucks to redeem.

Starbucks is recreating itself in order to connect with the customer on an intimate level. Something that was only done in-store before but now they have a wider foundation for new ideas and opinions first-hand by implementing their online exchange.

Skeptic's Surprise

In an article written by Bruce Ross in The Record Searchlight, dated September 5th, he initially states his skepticism regarding Venture Island. However, after attending the event he said that the event was “entertaining, educational, and an introduction to 20 creative businesspeople.”

“When you think venture capital, you probably think technology, but the entrepreneurs were a mix — insurance and accounting consultants with new ideas, farm products, creative new tools cobbled together by tradesmen, a craft brewery and, yes, some high-tech materials and Web idea.”

Ross is putting his money on Shasta Crystals new idea regarding the manufacturing of the crystals used in mini projectors. According to him, all the businesses represented, “win or lose this event, are worth keeping an eye on.”

Typing Angels

Andrew Muse has posted a useful taxonomy of angel investors on myventurepad.com.  Muse's approach could be illustrated pretty effectively with a quadrant graph, with the axes describing investment experience and objectives.

He makes a pretty compelling case that seeking angels exclusively through an angel group is probably not that effective.  He also confirms what we've long preached, which is that you need more than money; you need smart money.

They are people who have previously made lots of money in and around your space.  They have subject matter expertise around your idea and can often provide a lot more than money.  In many cases they will know the ultimate customer that will ensure your success and insure their investment.

The right investor partners can make all the difference.  In addition to subject matter expertise, they can help connect you to talent, strategic partners, distribution channels, and early adopter customers.

Lawyers, Guns, and Money

A colleague from my former story arc in Silicon Valley posted a very interesting essay today about the uneasy relationship between product management and risk management, and how it showed up in the Google Chrome launch. Some excellent insights for anyone developing software products from Jeffrey McManus.

The product used the standard Google licensing agreement, which gives Google a non-exclusive license to anything you submit to a Google service. Because they used the same license on the browser, people who didn’t read or understand the legalese came away with the impression that Google owns everything you do using the browser. And “non-exclusive” is key here (it means they can use your data — in a search index, for example — but they don’t “own” it). Still, it freaked some people out and for good reason — the one-size-fits-all nature of a license agreement that’s appropriate for a web site isn’t necessarily going to fit well for a browser product.

In a content ecology where trust is paramount for credibility, this sort of oversight costs you more than customers. It costs you your reputation.