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What’s Not Working?
Published 3 years ago, at the start of May under Business
I just wrapped up exams here at Duke with my last final this morning. This semester, in addition to my general courseload of engineering courses, I took a course entitled Introduction to Business in Technology Based Companies. It covered a lot of basics for tech startups and overviewed the process of writing a business plan and starting a company. One of our assignments was to keep a journal over the semester of “what isn’t working” in business and in life. In total, I wrote twenty posts of variable quality, two of which I’ll share now as they’re related to the web.
Personal Notes:
1. I’m a horrible procrastinator, so I wound up churning out a dozen of these entries the night before the assignment was due.
2 .These are journal entries, not New York Times articles. They may come across a bit stream-of-consciousness - consider yourself warned.
Venture Funding for Bad Ideas
Too many small companies are looking for VC money, and too many irresponsible VCs are funding unworthy products that could never give a proper ROI, especially in the web arena. In addition, many companies that have web application out in the wild, already developed, are looking for venture funding. The evidence of this is all over “Web 2.0″ profiling blogs such as TechCrunch. This behavior is complete lunacy, and could create a micro-bubble in itself. I would only seek venture funding to pay for up-front costs of developing a product, or perhaps if I had an already-developed product I wanted to rapidly expand.
I think there are a non-trivial number of web companies that have taken VC funding then allowed their product to stagnate, or felt like they had to spend their new infusion of cash on new hires, advertising, and marketing. Yet, given current trends on the web (i.e. the expansion of the blogosphere and social news networks), spreading the word about an interesting new web application doesn’t require a mammoth marketing budget.
I think there are a non-trivial number of web companies that have taken VC funding then allowed their product to stagnate, or felt like they had to spend their new infusion of cash on new hires, advertising, and marketing. Yet, given current trends on the web (i.e. the expansion of the blogosphere and social news networks), spreading the word about an interesting new web application doesn’t require a mammoth marketing budget.
Sites like Newsvine, Digg, Slashdot, and BoingBoing didn’t spend a dime on marketing to my knowledge, and they’re all highly trafficked. TechCrunch has over 50,000 subscribers and can throw a lot of positive attention and traffic to a site, and it often profiles total junk. Paying for marketing when you can spread the word for free is just dumb.
“Paying for marketing when you can spread the word for free is just dumb.”
These small companies don’t need millions of money behind them to get started - more like 50 grand to hire some developers and a designer. That’s why I think VC firms geared towards small businesses and small investments makes a lot of sense in today’s environment. Focus on giving clients connections within the industry and help them pay their bills rather than betting big on projects that have little chance for success and frankly have no need for the money.
Advertising
Although this journal is focused on “what isn’t working”, I’d like to point out one thing that’s working amazingly well - viral marketing. Companies like Burger King with their Subservient Chicken mini-site campaign and more recently Norelco with a comedic site showcasing a new razor for men in the unmentionables category are approaching advertising from a new and novel perspective. Rather than disruptive advertising that is forced on your audience, such as the current TV market, games, mini sites, internet videos, and other “viralâ€? ads that people enjoy watching and consuming as content rather than advertisement is an amazing idea and will change the face of advertising. These campaigns are wildly successful as people distribute links to their friends to show them a site, which is in actuality an advertisement.
“Old media is changing - it’s time to make that drastic change in advertising too”The current advertising model isn’t working, especially considering technologies such as Tivo, which allow users to skip ads they find uninteresting, or worse yet, skip all ads. If Google Ads taught us anything it’s that people are more receptive to advertising that’s relevant to what they’re interested in. Viral marketing has the potential to take this a step beyond, where ads become loved by an audience, to the point where people take it upon themselves to distribute thier favorite viral vid. Companies need to wake up to this reality: Old media is changing - it’s time to make that drastic change in advertising too.
The two entries above are focused a bit too much on the abstract, but I still think they’re a decent and useful response to the question. Most of my other entries were looking for problems which a product or service could fix.
Some Background
The question “What’s Not Working?” was introduced as an assignment to the class after Dr. Robert Fischell, a developer of numerous biomedical engineering innovations spoke at Duke this January. Dr. Fischell claims he asks himself daily “What’s not working”, and that simple question has been the genesis for all of his inventions.
So what do you find not working?
Out with it!
Rob,
What was the course code? Thanks, David
EGR 165, section 3. It was also cross-listed under BME, but I’m not certain of the course number for that. The professor was Jeff Glass.
Thanks!
Interesting points, but I’d like to note that until you mentioned it right now, I had no idea whatsoever that Subservient Chicken had anything to do with Burger King, and not just a strange man in a chicken-suit and too much free time. Goes to show how far the blending between private entertainment and advertising goes.
As for VCs, I can definitely appreciate the difficulty in selling a modest but workable business plan - it seems to be a highly risk-tolerant market. Of course, if you’re in for theatrics, money usually seems to find its way to you (cough, Dean Kamen, cough), so maybe that just speaks to the level of desensitization investors feel towards the cries for funding - like little baby chicks crying for a worm from mama, it’s the noisy big one that gets the food. Or, if you’re a cuckoo, you push your siblings out of the nest before they hatch, but that’s another story…