a seattle startup

Techcrunch & VentureBeat both wrote about a Xobni acquisition rumor today and I decided to dig up my draft Xobni review and finish the post. I got my Xobni invite about 2 weeks ago and installed it right away. After a week of use, I’m feel that existing features are a bit bare but see tremendous potential here to integrate social networks into Outlook. Here’re my initial thoughts on Xobni:

• The product is still in closed beta so it does run a little slow at times but not a huge issue
• During initial install, it goes through this one-time “sync” process and had me a little worried about privacy – “sync” strikes me as a cross device process and I wondered if any of my info/emails were uploaded to a server somewhere. After emailing feedback@Xobni.com, one of their “QA Rockstars” responded pretty quickly to assure me that no usage data or personal info is taken.

Features I like:

• Sidebar is clean and doesn’t take up too much space. I am using a 30″ Dell monitor but I think you’re fine on most widescreen LCDs and there is an option to minimize the sidebar
• The “Files Exchanged” section is by far my favorite – it’s saved me time looking for files when a contact calls to discuss. Our accountant called me the other day to discuss some files I sent him last week and I was quickly able to pull up the files I wanted. Downside is it’s linked to your email attachments, not the actual file stored on your computer so any edits I make requires me to Save As to the appropriate directory.
• “Conversations Panel” is also useful. It gives me a quick view of all emails exchanged with a specific contact in reverse chronological order. Saves me from having to use Outlook’s search function or scroll through my entire inbox.

Less useful features:

• “Contact’s Network” section of the Sidebar shows who you and your contact have both exchanged emails with. Because this info is only derived from emails that have passed through your inbox, I don’t see a huge benefit here because I’m not discovering new relationships that I wasn’t already aware of. That doesn’t mean I’d like to discover new relationships this way, I prefer to keep my emails private.
• “Xobni Analytics” is by far my least favorite. It’s scratching an itch that doesn’t exist. Stats like hourly mail traffic distributions and contacts by email volume are borderline interesting and not useful. Other stats such as Response Time doesn’t even make sense. What does it mean to have a 60day response time for Sunday? I have 2 email accounts in Outlook, one is a Pop mail account and the other is a Gmail IMAP account. For some reason, some stats only reflect the Pop account whereas others reflect both accounts. Might just be a beta bug.

High on potential:

Up to this point, Xobni isn’t a necessity – I’ve tested this by uninstalling Xobni and I don’t miss it. Nonetheless, I see tremendous potential in the product and would like to see greater integration with social media and social networks.

My friend Derek wrote a blog post today on “Get Stuff Done in Facebook“. Not surprisingly, people are spending more time on Facebook and unlikely getting much real work done unless you’re a marketer. After reading Derek’s post I caught the Xobni acquisition feeds in my Google Reader and thought to myself, why not “Get Social in Outlook”? Not many properties on the web are as sticky as Facebook & MySpace where users average 15min and 23min per stay respectively (according to Compete). Many users likely have multiple visits per day so average daily time on site is even higher.

What desktop application is most similar to Facebook & MySpace? Outlook! And Outlook is inherently social with high market penetration. If most people (excluding high school and college kids) are like me, I spend a lot more than 23min/day in Outlook and it’s the only application that I never close. This value of Outlook if huge because I can’t think of any other application or website that I never close and am constantly prompted with new mail notifications to focus on the app. Xobni has the potential to tap this value.

With a data point of one, myself, here’s how I think Xobni can become a necessity. My desktop is cluttered with IM clients, Twhirl and a browser window with tabs for Facebook, FriendFeed, etc. If I can consolidate my IM client, Twitter client, Facebook newsfeeds and FriendFeed updates into a Xobni style sidebar in Outlook, that would be golden!

Update: Xobni to integrate with Yahoo Mail according to this techcrunch post. This is really cool especially with the lack of IMAP support and YahooMail/Outlook integration options. I’m tempted to reinstall Xobni once this feature is live!

It’s been over two months since Adam & I started doing this startup full time and I had sometime this weekend to reflect on some of our initial ups and downs. Our lowest point to date was the first week of work – we lost our first teammate on day one. We knew a lot of people would say no to us but we weren’t prepared for our first teammate/employee to say no to us so quickly. I won’t go into too much detail on why our first developer decided to back out, but I will say that startups are not for everyone. When the reality of the risk kicks in, some people develop an apprehension towards that risk and I completely understand that. Nonetheless, I’m thankful that he was honest and quit on day one before any progress was made.

Not a great way to get started. Adam and I sat here with our work plans and project scopes in hand starring at each other and wondering what to do. So much for the work plans, we set everything aside and made recruiting our #1 priority. We scoped out our recruiting strategy and started executing. On the 3rd day of work, I still vividly remember walking in the rain from college campus to college campus posting flyers on bulletin boards. It was a shitty feeling and the uncertainty of when we will have a complete team made it worse.

Looking back, I’m glad all this happened. Through the recruiting process, we had the opportunity to sharpen our pitch, develop recruiting skills (which we will surely need again) and most importantly, I strongly believe we ended up in a much better position with Hedley as our lead developer.

For those of you who are just here to find recruiting advice for a low budget tech startup, here’s a few things I would recommend from our experience:

1. Develop & test your pitch before you start recruiting
   1. This is a tough one because you get better as you pitch more people and get more feedback & reactions. I think it would be helpful to pitch to some smart close friends you can trust and get some honest feedback and reactions from them first rather than testing the pitch on potential hires.
2. Don’t waste money on a recruiter
   1. You can do whatever the recruiters do. One thing I learned from working at Lake is you can figure out just about everything – if you’re smart, you can figure out most things 80% of the way by being aggressive and creative – sometimes you can even do it better than the “pros”, especially on something like recruiting.
   2. Jason Calacanis has a good article on how to save money, he also believe recruiters are a waste of money.
3. Leverage your personal networks
   1. Dig deep in your Outlook contacts, Facebook & LinkedIn profiles and you’ll likely know someone who is in the field or has connections in the field.
4. Target college campuses
   1. Post job descriptions on bulletin boards in common areas as well as specific departments
   2. Talk to career departments and ask for mailing lists – sometimes they will ask for a job description and email blast departments for you
   3. Look up school directories for students and professors and email them for interest & referrals
5. Look up local developer groups and forums online
   1. We found Hedley through a Ruby on Rails group – there’re plenty of these for all kinds of professionals
6. Use Craigslist cuz it’s cheap – milk the expensive ones creatively
   1. It’s only $25 to post a job on Craigslist, much cheaper than Monster.com and CareerBuilder
   2. Use the free trials on recruiting sites like Monster.com or CareerBuilder – some of them will give you a few free resumes. Others will let you search for resumes but not give you names & contact info – instead of paying for the contact info, you can Google keywords from these resumes and find these people’s personal websites, LinkedIn profiles or other public online presence.
7. Write personal emails whenever you can
   1. If you have the time, read a few blogs and websites and write a personal email to potential recruits. Even if these people aren’t looking for jobs, they’re more likely to respond to your emails and give you referrals if you make the emails personal.
8. Don’t stop recruiting until you have someone on board
   1. It’s easy to feel a sense of relief and get lazy on recruiting when you meet someone good. After all, recruiting isn’t that fun. However, even when you find someone who seems like a great fit and shows an interest in the position, there’s still a high chance they won’t work out for a number of reasons. Keep recruiting until someone gives a full commitment with all the terms worked out.

Adam sent me this picture with the subject line “Your Mecca”… thought it was really funny. $5 for anyone that can name what it is, $5 more if you provide the address…
If your initials are “TJ”, you’re not qualified to enter (and obviously, Adam, you can’t enter either)…

Happy commenting! =D

Fred Wilson wrote a great article recently, “Hitting the Reset Button on Mortgages” with examples that clearly deciphers what’s actually going on. His thoughts on the impact of the Fed’s decision to bail out financial institutions compelled me to give more thought to the subprime mess and motivated me to write this post. I’ll briefly summarize a few key points but encourage you to read Fred’s article instead:

•  Lenders (banks) are trading in their non-performing, subprime backed, loans & bonds for federally insured loans & realizing a loss on the value of the loans
• If the gov’t didn’t insure these loans, then the lenders will be forced to foreclose on the mortgages for liquidity & send homeowners into the rental market
• Gov’t insurance of the non-performing loans allows homeowners to stay in their homes and alleviates some of the banks’ liquidity problems – this is good because the home owners will continue to pay a portion of their mortgages (Fred’s example says home owners will pay $1200 instead of the $1500 they’re supposed to pay)
• This also keeps housing prices from plummeting from an excess of inventory if you start foreclosing – another plus.

This all sounds good if three things are true:

1. the gov’t can accurately set the value of these non-performing loans
2. we are at the bottom of this subprime fallout
3. homeowners will continue to pay a significant portion of their mortgages.

To the 1^st point, I’m not so confident that these loans can be accurately priced because there’s no market for them. But, because there are tangible underlying assets (the land & the house), you can safely assume that once you lower the price enough, people will buy them. To use an extreme example, if you sell a house for $1, the checkout line will be longer than the line for iPhones. Still, how can the gov’t accurately assess the value? The most accurate way to do this is to have the individual homes appraised, but that doesn’t sound reasonable.

Secondly, this article is largely true if you believe we’ve reached the bottom of this crisis, but what if we haven’t? If the government insures these loans at a value of $x, what happens if the value declines another 20-30%? Would the government be forced to foreclose on those mortgages, cut back on other fiscal budgets, or issue more debt and continue to hold onto these garbage loans? Regardless, the impact on the US economy will be catastrophic. Stocks are also getting beaten down and companies look to slash jobs as a way to reduce cost & boost earnings/valuation. Low skill level jobs are usually the first to go so a subset of subprime homeowners will no longer be able to pay any of their mortgages. This creates an excess of inventory on the market as homeowners are forced to foreclose or sell at a loss to downgrade. At that point, would the gov’t have to take a significant loss to liquidate these homes. On top of that, these former homeowners will be collecting unemployment (though that money comes out of state tax money, not federal) – one would still beg the question as to what would happen to the US economy if home values & employment continues to decline. How much debt can the government float before they go belly up too?

Third, it’s great if the gov’t can insure these bad loans, allow the homeowners to stay put and continuing paying a portion of their mortgages. Paying $1200 instead of $1500/month is still better than nothing, but how much are people actually paying? There’s got to be a threshold where it makes more sense to foreclose than to keep holding the debt.

Is the government simply delaying the inevitable? I’ve read a lot of opinions but haven’t seen compelling numbers & comprehensive analysis. This would be a cool modeling project if I was still at Lake…

Earlier this week, Michael Arrington posted an article on TechCrunch complaining about the frustration of dealing with an overflow of emails (2,433 unread in his inbox to be exact). Though I don’t have that problem and am fairly diligent when it comes to responding to emails, I think it would be great to have Outlook auto-prioritize emails by keywords, contact, frequency of email exchanges with contacts, subject line, topics, etc.

Jealous Thankful that I don’t have 2,433 emails in my inbox, I ran into a similar problem in my Google Reader. After falling behind on one day or reading, I ended up with 1,000+ unread feeds the next morning.

Typically when this happens, I just scan through to my favorite feeds, scroll through a few unread articles, then click “Mark all as read” to start with a clean slate. Here’s a few problems with this method:

• I miss out on great articles in feeds outside of my 3-4 favorites
• Even in my favorite feeds, I end up wasting time glancing through entries I don’t particularly care for. I don’t have much interest in a random article on a stranger’s favorite music and I’m sure many people don’t really care about me bowling a 300 on Wii. Some blog entries are meant for close friends and a small niche of the readers.
• High volume feeds (e.g. Engadget, Gizmodo, KillerStartups) with 20-50 daily posts quickly become overwhelming and I quickly retreat to the “Mark all as read” button

So here’s another opportunity for an entrepreneur – make a feed reader that filters & prioritizes feeds based on user defined settings. I would like to see the following features:

• Feed ranking (allow users to rank their feeds)
• Keyword filters (e.g. Engadget.com – show me posts on PS3, Wii, Macs, Phones; I really don’t care about the Pleo, OLPCs or Chinese knock-offs)
• Tag filters (many bloggers have their own set of categories/tags for each post, I care about ‘startup advice’, don’t care about ‘tvshows’)
• Filter articles under a certain length (80% of the article under 200 words are crap, might as well use Twitter for those)
• After applying these user defined ranks & filters, group all these feeds into a single tab

If Google Reader has these functions, I’d almost pay to use it. If you know of a feed reader out there that already have these functions, please tell me (but don’t tell them I’d pay to use it). If you have any other ideas for features, I’d love to hear them in the comments.

Quick 2-step solution on something that’s bothered me for a while…  

Most tech geeks love MacBooks but I can’t let go of my ThinkPad. I love the clean, utilitarian and minimalist look which many hate but that’s not why I’m so attached to my ThinkPad. It’s the “nipple” mouse cursor on the keyboard that’s got me hooked. I’m so much more efficient with the “nipple” than using a touchpad because I don’t have to take my hand off the keyboard to perform simple, low accuracy, clicks & drag.

Anyways, one problem that’s bothered me for the longest time since I got my T61 is the lag when IE7 boots up. Every time I open a new window or a new tab, there’s usually a 2-5 second lag before anything loads. Initially I thought anti-virus software was the culprit so I disabled all the background processes that weren’t mission critical but the problem persisted. After a quick search online, I found the solution. The lag is due to the ThinkVantage Client Security directories and here’s how you disable them:

1. Go to Tools > Manage Add-ons > Enable or Disable Add-ons…

2. Find the CPwmIEBrowserHelper Object and disable it… that’s it, simple as that.

Last month I attended a MIT Venture Forum here in Seattle and the topic was “Ten Steps to Launching an Early Stage Company”. The speakers were Jonathan Roberts of Ignition Partners and Stan Shull of Intelligent Results which was recently acquired by First Data. I’ve been meaning to write about my thoughts & what I learned and finally sat down to do it. Instead of laying out all 10 steps, I will layout the main bullets and integrate my thoughts to make it relevant for consumer applications. Jonathan & Stan both work mostly with enterprise software so the presentation was more enterprise focused but I think the same advice is equally valuable & applicable to consumer internet startups.

Key Takeaways:

• Determine who your customer is and what they want to buy
  • Don’t be disruptive
• Secure first customers – deep is better than broad
  • Focus on engaging first customers rather than aggressive customer acquisition

I strongly believe that understanding who your customers are is the most critical step to building a profitable business. And by customers, I don’t mean the end users that get your product for free – focus on the paying customers too. Whether it be advertisers, subscribers or whoever, it’s important to understand the following at a granular level:

1.      What’s your vision for monetizing your product? (don’t just say “targeted advertising” and be done with it)

2.      What’s the addressable market and how quickly is it growing?

a.      How much of that market is actually your addressable market? (if you’re selling targeted advertising online, don’t include TV & print ad spend in your addressable    market)

b.      What’s the penetration and how quickly is that changing?

c.       Realistically, how much share can you gain and how quickly? (if you tell me you can take 20-30% market share in 1-2 year, I’d have a hard time believing)

3.      Why are you better than your competitors? (in consumer apps, you have to be better at appealing to users & paying customers if they’re not the same people)

a.      Who are your competitors?

b.      How much incremental value are you adding to existing solutions?

4.      What’s most important to your customers? (this better align with your answer to 3)

5.      What’s the sales process / sales cycle? (who’s actually making the final decision)

a.      What’re the barriers to sales? (existing contracts with current vendors, typical replacement/upgrade cycles, etc.)

b.      Jonathan believes you need six customers before you can replicate the cycle

If your only exit strategy is to get acquired and not actually generate any revenue, then figure out who you’d ideally want to be acquired by and treat them as your customer. Understand:

1.      What kind of acquisitions have they been making?

2.      How do you fit into their acquisition strategy?

3.      How much value do you add to the acquirer’s strategic vision?

4.      What are their competitors doing that they haven’t noticed yet?

5.      How do you shape your product so they can leverage it compete?

One of my favorite points is when Jonathan said “don’t be disruptive – don’t try to create something revolutionary”. It’s a bit counter-intuitive at first but quickly made sense. He explains that if you make something revolutionary, then don’t expect customers to buy it like hot cakes because it’s a much tougher sell – most successful companies makes products that are improvements of predecessors. (e.g. Microsoft improved on Lotus products, Facebook on Friendster, Google on search, etc.) Why is it a tougher sell? Because people like products they’re familiar with, products they’re already spending money on. If your product requires your customer to allocate new budget for, you must convince them to slash budget elsewhere. If your product is revolutionary, most customers will view it as a “nice to have”, not a “need to have” – “need to haves” are much easier to sell.

A lot more was talked about which I will follow up in later posts. Let me know if you agree or disagree with these thought or if I’m missing anything…

Hedley, our awesome developer, sent me this and it’s among one of the funniests videos i’ve seen in recent memory. Enjoy! 

[youtube=http://www.youtube.com/watch?v=E3IwiynxE3A]

Original Article

Just walked out of an intro meeting with the producers of the show Startup Junkies which airs on MOJO TV – we’re exploring the possibility of starring in the show next season. How exciting! Initially, we contacted them after reading a post on John Cook’s blog about Screaming Flea Productions recruiting startups for their new season and thought we’d be a good fit.

I first came across the show while channel surfing one night (Comcast channel 664 for those of you in the Seattle area). It’s a good show to see the ups & downs a startup goes through and the atmosphere they work in, especially if you’re new to the industry. The current season features another Seattle based startup, Earth Class Mail, and documents the company’s struggles with product development, deployment & fundraising. Earth Class Mail is a well funded startup with a seasoned management team but the show is looking for some variety next season with a younger & less experienced crew (sounds like us). They have all their episodes on their website so feel free to tune in. We actually saw Ron Wiener (CEO of Earth Class Mail) at a MIT Venture Labs seminar last month but didn’t get a chance to talk to him.

Overall, the meeting went well and I think it’d be cool to get a chance to be on reality TV. As expected, we were asked about our marketing & fundraising plans as well as other potential checkpoints in the business where we can expect to see some drama. After all, this is reality TV and it’s no fun for the producers or the audience to see everyone holding hands and skipping along in a sunny garden with jolly smiles (then we’d be Teletubbies). It’s still early in the selection process so I’m not getting my hopes up too high and not quite sure what to expect out of the experience. On the plus side, we’ll get some great PR from the show and be able to leverage MOJO’s marketing engine – on the flipside, we’ve never had cameras in our lives so it would be “interesting” (for lack of a better word). Either way, I think it would be a fun experience if we end up doing it…