Why the “cha ching” of the $1B Instagram sale might actually bankrupt Boomer parents.

By now, most of you have heard of Facebook’s $1Billion sale of Instagram, an app developed by a bunch of young 20 somethings that lets users post photos. Today, Instagram has about 50 million users which works out to about $20/ person. “Cha ching” for anyone involved …

Punditry aside about whether it is a shrewd deal for Facebook – instead of “cha ching” – all I hear is hissing as the air escapes from Boomers’ retirement funds.

It is alarming and here’s what I mean.

You see, I have worked with tech ventures for over a dozen years, starting at Bell Labs New Ventures and continuing to this very day. In that time, I have worked with many startups, often gratis, because it’s so rewarding when my expertise can really make a difference in the early days of a venture. CEOs have the product vision but they rarely have marketing know-how to get the product to market.  That’s where I step in. I help startups assess their market potential so they can monetize.

And in the dozen years or so I have been doing this, I see an alarming new twist to the never ending parade of venture dreams that haunts me. I liken it to the disturbing “Gold Rush” era where many more prospecting failures bankrupted folks versus the rare, outlier successes.

In today’s day and age – here is how it goes down.

Johnny or Jane are in college and – wham – they hatch an idea for a company often inspired by the innovation incubators on every campus. The idea grabs their passionate attention because at least they can try and make it happen versus trying to get a job which is tough and depressing.

Mr. and Mrs. SupportiveParents are happy their kids have found something that inspires them, so they cover more of their kids’ living expenses so the kids can commit themselves to their “passion.”

After about three or four months, their idea has some substance and the kids realize they need some money to create a “demo”. Of course, there is no cogent business plan (if a business plan even exists) but Mr. and Mrs. SupportiveParents kick in the $10,000 or $20,000 to create said demo –  on top of the extra expenses they are already incurring to keep their kids in school. (This is when you can start to hear the air escaping from Mr. and Mrs. SupportiveParents 401K accounts!)

A couple of months later said demo is “almost done” but not quite because the kids did not really do a business plan and as they worked, the idea kept changing (translation = more cost). “But I only need another $20,000 to finish it off. Then it will take off because it is so cool. Please …” Again, as we would expect, Mr. and Mrs. SupportiveParents step in and shell out what their kids need.

Slowly but surely, over time, as their kids refine their idea; there is steady attrition of the parents’ savings plans because startups need constant funds. This tableau is playing out again and again and I know it because I have met too many Mr. and Mrs. SupportiveParents in the last few months who have depleted their savings by $150,000 or more to help their kids live their passion.

It is frightening to see since most new ventures are “high risk” in the best of circumstances, making them wholly unsuitable investments for most any Boomer given their proximity to retirement.  And if that’s not bad enough, it’s even worse once you understand that kids’ ventures, proportionately, have a higher mortality rate because they are borne of 90% enthusiasm and 10% practicality despite their parents’ 100% support 100% of the time.

This is a dangerous combination – especially in frothy times like ours where opportunities for kids are limited yet perversely, the potential for untold wealth is tantalizingly possible.

And this brings me back my point. The Instagram sale was an aberration – a fluke – an outlier event – possible because of a unique set of circumstances. Yet it infused a new level of Gold Rush fervor into the passionate hearts of ambitious young entrepreneurs despite the reality that the chances of striking it rich today are about equal to striking it rich in the Gold Rush of 1848.  And just as sadly, their loving parents are funding these ventures despite the improbable odds.

So while many people hear the “cha ching” of $1B, all I hear is the air escaping from parent’s retirement funds. It is not a happy sound. Not at all.

Judy Shapiro

P.S. – I am posting this as my personal Mother’s Day present to Mrs. SupportiveParent. Be careful – please!

The essence of business complexity expressed in pictures

This is the MOST accurate, intelligent, comprehensive explanation of why big companies manage to mess up great ideas time and time again. Pure genius.

The Surprised Entrepreneur – Why Me?

These posts about my journey with this new venture are often characterized as a surprise. In fact, it’s a surprise on so many levels that the unlikeliness of this enterprise is, in itself, a pretty big surprise.

So in this sea of surprises – the biggest surprise rests in the unlikeliness of me as the one to coalesce this vision; only useful to ponder so that we know what makes us different from many other marketing tech companies out there today.

Clearly I am an outlier given my age, gender, training and temperament causing even the casual observer to wonder: “Why me?”

On the surface, one could point to my diversity of experience spanning B2B and B2C marketing. I’ve been fortunate to have worked in a diversity of industries spanning advertising (NWAyer), technology (Bell Labs, CloudLinux), software (CA, Comodo) and telecommunications (AT&T, Lucent, and Paltalk). The combination means I have a quirky understanding of how to look at a marketing situation from the brand point of view as well as the end-user perspective at the same time.

O.K. – That begins to answer the question but doesn’t wholly get at it since many of my colleagues are tech savvy too. While they express curiosity about the new marketing technology, they aren’t going off and creating new businesses.  Instead, most of my friends leading marketing agencies or marketing departments (like I was) are banging their heads against the marketing brick wall trying to figure out how to incorporate the “new” technologies into the “old” system profitably. In the chaos of “creative destruction” (a term coined by economist Joseph Schumpeter), my peers can’t see the marketing forest for the financial trees.

So again I ask; Why me?

In digging deeper, I then realize that my experience with communications networks gave me a unique understanding about social networks. Both types of networks serve a similar purpose – the efficient transport of a call or a marketing message from the network edge (the initiation point) through the switching stations along its way to its ultimate destination.

Side by Side Comparison: Telecom vs Social Media Network

It also became clear to me that as social networks evolved into a powerful marketing network – it urgently needed system architects. But I saw no hint of any serious understanding of the issue or how to address it – not at the agencies or the social network companies or even the armies of consultants who offer insights but few tactical road maps.

When at first I noted this architecture gap back in 2010, I wondered out loud in Ad Age about the impracticality of integrating new technologies into existing marketing systems in posts like “Five Trends That Marked TechCrunch Disrupt Conference 2010.”  Then, my wonderment continued unabated at the lack of system attention when I wrote: “Has Facebook jumped the Shark”. Actually, I was writing mostly in the hopes of uncovering the technology companies that were focused on solving this system gap. I knew someone had to it…

But all I heard was deafening silence. I seemed rather alone in recognizing the utter futility of trying to retro-fit the older marketing system with the newer technologies. The sheer tonnage of all these new marketing “platforms;” so defined because they incorporated some combination of the mighty  local, social, mobile triad; were built by technologists (usually under 30) and not marketers. This meant they were long on cool but pathetically short on practicality. Yet as slim as many of these businesses seemed, they were getting valuations disproportionate to their real world usefulness (think Groupon), further highlighting the underlying weakening of the business of marketing.  It was an ominous echo from a decade ago.

This explains “Why me.” It takes depth of experience to see beyond the buzz to the potent marketing model evolving. I wanted a role in that evolution largely because it seemed few of us with any real world marketing experience were doing the heavy lifting of operationalizing the brilliance of all this new technology.

The journey to understand “Why me” is useful in that it defines the business we are in – creating the system upon which the rich marketing innovation engine can flourish.  It’s a surprise that it is me – but perhaps, this is the sweetest surprise of all.

Judy Shapiro

The surprised entrepreneur (entry #5):

The great talent hunt yields an unexpected gift that keeps giving. 

Hiring is tough on all companies.

Hiring is brutal for new companies.

One bad hire could spell irrevocable disaster.  You have to pick people who can get the job done today, have a passion for the work we are doing, be a mensche, be creative and be just quirky enough to add to the color of our community. But I also know enough though to know, practically speaking, there’s a thin line between a “quirky” and a high maintenance team member.

No wonder it scares me to death.  No wonder I put if off. I’d rather have oral surgery. Honest.

But in the past few weeks, I could avoid the truth no longer. I needed to balance out our team and I needed to find the perfect tech architect. In my view, every tech venture needs three architects – the vision architect,  the business architect and the tech/ product architect. Sometimes this is all one person, but not in our case.

So with a deep breath  – I began what I thought would be a painful process.  I was wrong.  In fact, I’ve learned much to my surprise, that the hiring process was the best gift I could give my business because I got to learn about the very essence of my venture itself.

I began the process hesitantly knowing that the type of talent I wanted can be highly selective about where they go. Quickly, I was lucky enough to get the chance to chat with the head product guy at a large, very cool social media company. He was thinking of leaving and he graciously agreed to hear my story. Then a few days later through another contact, I was put in touch with an “ex-Microsoft guy who was looking for his next project.”   I talked my heart out to convince him to see the vision.

Both of them gave generously of their time and advice. Both reminded me how much I love to talk to developers. I love how their individual creativity is reflected in their choice of languages. I love the quirky, binary-colored way they see the world.

But in talking to them during this process, I also realized I could not really express my vision with the technological crispness to satisfy these folks. I was horrified and I knew from experience, any hint of uncertainty would send the best talented developers running from the virtual room.

It was a surprisingly painful lesson I needed to learn. I thought I had created the elevator pitch suitable to satisfy any audience. I was wrong. I thought long about how they reacted and it was then I had a breakthrough. All of a sudden I could see where I had gone wrong in how I described the platform, and thus the venture. Through my openly sharing with talented people during this process, I vastly improved our architectural vision.

I confess. I would never achieved this revelation on my own or even with the team I have now.  My aversion to hiring could have deprived the company of this precious gift of clarity of technological vision.

I’ll end with a note of gratitude. To any candidate we are talking to now – my deepest thanks. To all future candidates – I can’t wait to meet :).

Judy Shapiro

P.S. – Wanna help architect the next big gig – (hey – optimism is part of job req’s :). We are working on creating The Trust Web. Interested? Drop me a line.

 

The Surprised Entrepreneur – Diary of new venture – Entry #3:

“Mama never told me there’d be weeks like this…”

It has been a while since my last entry and I am relieved to say it is mostly for good reasons. Over the last few months, this little venture has begun to take hold – to wit:

  • I have been on the speaking tour about The Interaction Engine capping it off with a spiel at ad:tech this month.
  • We have closed two new clients – one in the consumer electronics space and one in the mobile app space.
  • I am getting better at presenting our system in meetings – now I can kinda explain it in about 30 minutes. It still falls far short of the 2 minute elevator pitch – but hey – we are getting better.
  • A number of marketing and technology companies have contacted us to “partner” – not sure what that means though
  • We have done a few presentations to media buying agencies as they are challenged to “buy” social media. They are interested in working with us (again – no idea what that means)
  • Most important – revenue is beginning to accrue

Yet, despite the clear progress and momentum – I recognize the utter fragility of this venture. Of the dozen or so folks that are part of this company – most (but not all) are getting paid some compensation. No one is getting what they deserve – yet.

But my biggest challenge is that as we get more noticed, there are far more opportunities that need to be assessed and prioritized. Fundamentally, these opportunities run along three basic lines:

  • Technology Partnerships – there are 4 companies that we are talking to now in the marketing technology space. These companies are anxious to partner with someone like us because often these tech companies have no easy distribution channel. A cool recommendation engine is nice – but it’s hard selling a “stand-alone” technology to a big brand or agency. As a quasi “system integrator” of social media technologies – they see our Interaction Engine as solving this major channel issue for them.  thsi is not a pr 
  • Funding Options – my initial plan was to sell the Engine we have now (does not require any development) to generate about $500K in revenue. While that plan is still in play – I realize that getting to that sales threshold might take longer than I can wait to begin the second phase of this company – to develop/ sell “self-serve” integrated social media programs to SMB via web hosts. I am encouraged by experienced colleagues who tell me I can go get funding now with what we have. TBH, I am still unclear whether any VC would consider this investable. My colleagues are so confident that this can get funded that they are willing to spend their own time over the next few months to work on this. On the one hand, that’s a funding gift that I would be crazy to reject. But on the other hand, it will still require my time for an exercise that I’m not convinced will have a successful outcome. Getting VC funding is a huge time hog – not matter who helps you. I keep wanting to put it off or get a traditional loan to ease the short term cash crunch. this is since this is not any way understand how to make this spaceing this work. it is frustating to say the least but this need
  • Media Alliances – Unlike most other marketing technology companies, I focused on the technology platform but I built it within a holistic system that includes an organized set of content assets from a diversity of publishers. To me, content is not king – but rather the juicy bait to start the engagement process which is why I had to collect relevant content assets. So while I spend a considerable amount of time building these alliances – there are many more people looking to partner with us because so many content producers and writers have been caught in the tumult of “freep” (free and/ or cheap) digital content distribution. In our system, these folks have a voice and a stake, so we solve a problem for them too. The problem is deciding who we can take on.

Most interestingly (and yes – it is a surprise), it seems that our Interaction Engine System (a coordinated, tech mashup of a monetizable “community of interest”) is an approach that can integrate disparate marketing activities into an operational program. In essence, instead of pitching an individual program to a client where I have to plug into their operations – we are being seen as our own ecosystem and other marketing programs and/ or technologies have to plug into us. I won’t say I planned it that way – but I am loving how this is playing out.

Now on to my biggest “what’s keeping me up list?” for this entry:

  • Knowing which contacts are worth pursuing on the tech front, on the funding front and on the editorial front. The response to my presentations has been great – but overwhelming actually.
  • Keeping the pressure up on the sales front –  our issue now is too many great leads and not enough time to follow them all up.
  • Keeping the team motivated and monetized – always a struggle whether you are a new company or an old one

The next four weeks tend to be intense because marketing budgets are being finalized so we need to keep the pressure up – yet people’s mind are on the holidays. This requires an elegant and thoughtful approach to sales (I hope we are up to it).

Day after day, it seems the ride I am on gets more thrilling, more scary and more substantial. As the stakes keep going up, Mama never told me there would be weeks like this where too much is happening too fast. But I guess that beats the other option: too little happening too slow; by a mile.

“So dear Mama – I am grateful you taught me to appreciate a good ride when I see one which is exactly what I am doing  – even though it feels like I caught a tiger by the tail.”

I don’t intend to let go now.

Judy Shapiro

The surprised entrepreneur. A diary of a new tech venture.

“But isn’t that everyone’s goal” exclaimed a business friend who learned I had started a company. My friend, a clever software developer, expressed the reality for most of his kind – smart, talented and ambitious to have their own company.

It was never a goal for me actually. I had the best marketing career working at an amazing mix of large and small technology companies. I was fortunate to have learned from the best about digital and social media at an intimate, practical and hands-on level beyond the experience of most of my peers. But starting my own company had not been a high priority for me – at least not until about 12 months ago.

You see, I was working at a profitable social networking company and I wanted to create a marketing program to gain more subscribers. I had a very healthy digital budget ($ millions) and so I did a few agency RFPs. I struggled to assign the projects because the agencies pitching were often very narrowly focused. Sure, many of them had a cool technology or creative concept – but in isolation it had very little value. I found I needed to put together a few of these new technologies to create programs that seemed worthwhile.

But becoming a “system integrator” was not really practical so in the end, I usually did not award the business to any agency. While I nursed my frustration publically in AdAge.com, one day in September 2009 I simply snapped. I had enough after a particularly tedious 2 hour presentation with a large digital agency who, towards the end, insisted that social media could not be branded. That was it. I was done. I kept thinking to myself; “I can do better than these agencies” and I left my employer at the end of 2009.

This was the seminal moment where I made the leap to business creator. I knew the agency business well since I spent 11 years at an agency before going client-side. I knew many of my friends at companies could not find agencies that “got it” either.  Consistently they told me their agencies seemed stuck in a model that was becoming less effective and they (brands) were the poorer for it. There seemed to be a place for the type of agency I could imagine and I was determined to create it.

But how to begin? I began by I listening carefully to what my marketing peers were telling me; “My agency does not get it”, “I know I should be doing more in social media but I have no idea what.”; “We don’t do Twitter because we don’t see the value”.  In hearing the litany of complaints, I quickly realized that agencies were “stuck” because they were furiously trying to adapt their “one to many” business model of the last 30 years to the emerging “many to many” marketing world of the next 30 years. I could see that was not going to work. I could see that the agency model I had known for 25+ years was giving way… I was on my own.

I took a deep breath as I became amazed that this was my chance to start creating an agency fresh – with no assumptions or sacred cows. This was my chance to do a “green field” build as one might see in the tech space. This was to be an agency built entirely from the perspective of a “many to many” marketing model.

With clarity of purpose, therefore, I set about to the task of creating this “many to many” marketing agency. And in doing so – it seemed I had rethink everything.

My first 60 days (March and April 2010):

I was interested in offering a new type of marketing platform using this new technology so brands could efficiently execute social media and direct response within a sustainable engine. But it became very clear very fast that I had to build this type of engine for myself since all the attention was on individual technologies that VCs were pouring their money into. No one, it seemed, worried about how any of this technology was supposed to operate together at a practical level within a marketing system.

This realization meant, like it or not, I had taken (hesitatingly) my first steps to becoming a technology company. Once I took that first tentative step, I sensed there was no going back and the “Failure is not an option” mantra of a previous boss, Comodo CEO, Melih Abdulhayoglu rang in my ears. My friend, the brilliant writer Gay Walley encouraged me onward. As daunting as it felt, I knew I had to create the right technological platform that could execute the type of marketing campaigns I had seen work in my real world experiences. The agency in the “many to many” world is as much, maybe even more, about robust technology as it is about the creative (again many thanks to Melih for teaching me this vital lesson). There’s just no getting around that point.

The next 60 days (May & June 2010):

Using my training in direct response, I created the engine to functionally curate users (not content) within a “community of interest” paradigm. I designed a three part marketing platform that uses promotional video, live internet programming and custom content within a highly architected “hub” to curate users. I had worked with video innovators like David Hoffman and Stephanie Piche, who were doing amazing things using video to drive audience engagement. I asked them to join me and they did.

Next, I had to create my own custom content network so I could get messaging out there efficiently thus driving traffic to the hub. I realized ads were not designed to engage in a “many to many” architecture but content had become the “new advertising platform”. While the logic of creating a custom content network was sound, the task seemed beyond daunting. Then, right on cue came two wonderful people, Donnetta Campbell and Joy DiBenedetto (CEO of HUMNews), who had deep roots in the content/ media world. Soon they had organized all their media assets and outlets into a content network we could use to push our messages through. I asked them to come play with us too.

Then there’s the “hub” (note to self – need new name for this part ASAP!!!). It’s a different type of web experience that is a mashup of live communications, content, community, video and commerce designed on the “community of interest” concept. My previous experience in monetizing communities gave me a blueprint for which techniques, overlooked by many, I needed to include to drive results. The secret sauce to the hub was to build it as a real time community with a lot of real time connectivity and video engagement baked in (emphasis on “real time”).

All the pieces were coming together … but there some real technological challenges to deal with. The platform was clear in my mind – but it was in no condition to be useful to brands – at least not yet.

And the 60 days of summer (July and August 2010):

To make this vision a reality, I needed to round out my dream team. I found out about a cool company doing real-world work in measuring social media which we needed to match this system. The CEO, Dag Holmboe, whose background in engineering was invited to join and came on board too.  I managed to snag an ex technology leader from NBC, Louis Libin; a CBS network pro, Lester Spellman and Jerry Cahn, an IR pro with PhD in psychology (always useful). As the dream team came together, I laughed to myself when I realized the days where a creative guy, a copywriter and a biz dev guy can just; “put up an agency shingle” are long gone.

I spent hours and hours seeing what the leading tech companies were doing. I was writing for Ad Age DigitalNext as a way to learn about how marketing technologies were evolving in this “many to many” world. I wrote about the all the amazing technologies at the TechCrunch Disrupt conference in Ad Age (and yes I did lament the lack of women at the decidedly he-geek con-fest). And every time I got stuck on how to do something – I wrote about it and asked for advice. I got plenty.

Then, I began to outline my business plan. The task was made easier by the fact that I had other tech friends who were generous in guiding my progress. My thanks to Igor Seletskiy, CEO of a new company called Cloud Linux who was an invaluable technology sounding board. With his patient coaching, I had crystallized in my mind the outline of a product roadmap largely so I could understand exactly how any agency could financially thrive in this “low billing, social media, many to many” world. As I started creating the revenue model, all I knew for sure was that the old agency revenue models were falling apart.

After more thinking and talking, the product roadmap came into view. Importantly, it does not solely rely on “client” fees. In this roadmap, our agency offers real products (not just services) that can be used by a variety of companies – large and small. It also includes healthy, alternative revenue streams from a wide variety of sources. I lay my “product roadmap cards” on the table even though some of you may gasp at my seeming lack of concern about competitors because TBH — I am far more worried that too few agencies are even thinking along these lines. The agency business needs outliers – agencies who are willing to go where few agencies have gone before…

Here we go (and if this inspires others out there to do something similar – have at it :)

  • Near-term product/ service roadmap (through 2010):
  • Goal – Create integrated marketing platform for social media/ direct response campaigns.
  • Revenue model:   1) Service fees from brands to create content assets for marketing programs    2) Licensing/ Media fees from Brands to run program through the Interactive Engine. IE can be sold as a whole program or in 2 modular “mini campaigns”;3) Partner revenue from affiliate partner technologies that are being integrated into the platform
  • Development status: This is a three part “platform” – 1) Custom Content Network, 2) Specialized Promotional program and 3) Hub web experience. Items 1 and 2 are live. Prototype hub under construction.
  • Sales readiness: Key elements of the Interactive Engine platform are live today (yes – I know – I need to update the damn website :(
  • Funding needed: None – this is self funded through sales
  • Mid-term product/ service roadmap (through 2011):
  • Goal – Create self-serve platform of integrated social media technology campaigns so companies (small/ medium businesses) can launch integrated programs without the need for a serviced based agency. (This concept is following the “control panel” model used today by web hosts to provision lots of services to their customers.)
  • Revenue model = 1) Service fees from brands to content create assets for marketing programs 2) Product fees: a) Brand use of IE with existing client content assets; b)License fees paid by SMB for “self serve” campaigns executed 3) Partner revenue: Expand affiliate fees from partner technologies since many more options can be integrated into offering.
  • Development status: Lead developer identified and overall architecture being mapped.
  • Sales readiness: 9 months to working prototype/ 14 months to sale-able solutions
  • Funding round = $2MM
  • Long-term product/ service roadmap (starting Q3 2011 through 2012)
  • Goal – Create the first “trust agency” for “Judy Consumer” so she can pull trusted information, software/ services and advertising for herself.  At this stage, we reverse the revenue model. Instead of brands paying to get to “Judy and Joe Consumer”, consumers hire “trust agencies” to curate their digitally connected experiences (see my article in Ad Age about “The Six Screens” – Aug 23, 2010).
  • Revenue model = 1) Service fees: – a) from brands to create assets for marketing programs; b) direct subscriptions from consumers 2) Product fees: a)use of IE with existing client content assets; b)License fees paid by SMB for campaigns executed 3) Partner revenue: a) affiliate fees from partner technologies; b) As a perfect “opt-in” ad platform, charge brands premium ad CPM rates; c) content producers via affiliate revenue (they pay us for new subscribers)
  • Development status:  not initiated
  • Sales readiness: 18 months to prototype/ 24 months to launch
  • Funding needed: $1.8MM

Which brings us pretty much up-to-date.

When I step back, I can see our progress after six months:

  • We created the tech platform, called Interaction Engine (IE), that integrates direct response techniques within a social media ROI program.  Today, companies are using elements of the engine effectively.
  • We have coalesced into a solid team of 8 people who all had “hands on” experience in this “many to many” paradigm. Rare folks indeed because they had (often painfully) walked the walk.
  • We are in serious discussions with 2 media agencies, 2 F100 companies and had “tentatively” closed one new direct response account (I say tentatively because as if this date – no contract has been signed yet).

These days are spent getting everyone on the team coordinated, getting some basics housekeeping done (e.g. web site is totally out of date!), pushing forward in the sale process and writing the biz plan. It is very intimating but amazingly exciting.

I will end this and each future entry in this digital blog (expect a once a week post), with my “What keeps me up at night” list. I expect this list to change over time.

  • While we are doing well at getting meetings, the close process is slow because prospects want to see a fully working engine in action. The classic chicken/ egg problem. We have some great clients who have used parts of the engine – but none is currently using all of IE in a singular campaign. Pressing ahead.
  • I don’t wan to be the Edsel of my industry – too far ahead of my time. My team keeps coaching me to keep my presentations simple and they are correct. The trouble is that this platform is simple in concept but not in execution to understand.  So the presentations swing wildly between being too complicated or too simplistic. *Sigh*. My biz dev head and CTO are on the case though. I hope they can come up with a solution – I have hit a wall.
  • I now have 7 senior, wonderful people who have joined this venture – this is in addition to the 8 or so junior workers that are also part of the company. Keeping them all motivated and engaged as we build our sales pipe will be hard especially since many of us are virtual. I have no good model in my head for this yet.
  • Knowing the difference between networking and over networking. There are many people who want to connect with me now especially since I also write for HuffingtonPost in addition to Ad Age. I have to make choices about which contacts I can commit to. I find this very very frustrating and difficult since I never know which contact can lead to the break we need. URGGHH! Anyone with advice on this point?
  • Figuring out what’s the best use of my time as I try to lead both the sales process and the business plan development process. Most people in the company have a role here, but it still requires lots of “hands on” management from me since too much in still in my head and not on paper. I wish I were 3 people (would I get 3 salaries – hmm).

Now, finally my milestones for the next 60 days (not necessarily in this order):

  • 3 page executive summary of engageSimply with financial outlook
  • 1 signed client using the entire new Interaction Engine platform
  • Initiate discussions with at least 2 possible funding partners
  • Get website up to date
  • Expand sales funnel to having 20 active leads in pipe
  • to write in this diary a minimum of once a week or 8 entries (hey – I need some wiggle room J)

So much of this journey is a surprise. I am surprised that as a woman, I am starting a tech business. I am surprised that I am woman of a “certain age” starting a new company. I am surprised at the generosity of people who have agreed to throw their hat into the ring with me – they are a very faithful and brave group of people.  I am surprised at the graciousness of our partners who give of their time and contacts unreservedly.

But mostly I am surprised at how utterly confident I am that one way or another this is going to work. My confidence (perhaps even overconfidence) is the biggest surprise of all because with my long experience with tech venturing, I know my chances of success are not, rationally speaking, in my favor.

I remain undeterred. I remain unabashedly optimistic which is why I decided to document my journey in this blog. When I first started this blog (about 3 years ago), I did it because I sensed that fighting the marketing wars happening “in the trenches”. That remains truer today as I start this new venture. So as the Jewish New Year begins later this week (Year 5771), it seems particularly propitious to begin this digital diary. I may be “in the trenches” in starting this business but my view is firmly focused on how we reach the stars.

Judy Shapiro, CEO/ Founder, engageSimply

P.S. – Have advice, an idea or wanna do business with us. Just drop us a line. We’re ready.

Is it possible for agencies to embrace marketing “complexity”?

The ad business is going through a change not seen in 3 decades.

For 3 decades there were three chairs at the marketing table — agencies, brands and the media. All 3 parts technologically evolved in a symbiotic “one:many” model to grow the business. Agencies “produced once and ran many times”; brands (one) had a message to get out to many and each media property created its media content for many people.

But Internet was a fourth chair that came to the table. It started to dominate the other three chairs utterly disrupting the “one:many” efficient, profitable marketing model in favor of a “many:many” model brought on by social media and mobile technologies.

As technology continued to evolve much faster than the other chairs at the table, the result of this disequilibrium was first felt by the media which suffered a near fatal blow. Agencies, now are feeling the full brunt of this dynamic largely because the “complexity” of social media is taking more and more of the traditional ad budgets.

So while the business has gotten more complex, agencies are trapped in an old “one:many” business model and have no clear way to evolve. Clients do not pay often for agency’s’ technological learning curves (how many agency folks were at TechCrunch Disrupt for instance???). And agencies can not charge $10,000 for a bunch of twitter updates (if you want to sleep peacefully at night).

That’s why in this new scenario even agencies that want to embrace complexity — can not because the profitable “one:many” marketing business model does not support the “many:many” business model. Case in point. Digital media buying agencies are paid as a percentage of billings, but since there are few billings in social media — they do not create those types of programs for their clients. There is no incentive for a digital agency to develop a program with no/ low billings and high complexity – now is there?

So before agencies can embrace marketing complexity – we have to figure out how to make money at it. Talk about complex.

Judy Shapiro

Symantec and VeriSign; a new online trust powerhouse or some techno-Frankenstein built from mis-matched parts.

This little, nerdy, techie nichy type of article would normally go right over my head, but given my background in security (Computer Associates and Comodo), the recent news about Symantec acquiring VeriSign got me thinking. The deal, in a nutshell, means that Symantec, known for its security suite is looking to expand into the authentication business by buying VeriSign, a certification authority, whose core product, SSL certificates, is BTW shrinking.

Here’s the official Symantec spin:

The combination of VeriSign’s security products, services and recognition as the most trusted brand online and Symantec’s leading security solutions and widespread distribution will enable Symantec to deliver on its vision of a world where people have simple and secure access to their information from anywhere.”

Symantec and VeriSign actually have a lot in common. They both grew by acquiring technology (as an aside I think Symantec is good at integrating new companies into its line-up). Both are in a commodity business with real challenges in managing partners and pricing:

“With this acquisition, we extend our strategy to create the most trusted brand…The VeriSign check mark is the most recognized symbol of trust online… Symantec’s security solutions and the company’s Norton-branded suites protect more than one billion systems and users around the world. By bringing these security assets together, Symantec will become the leading source of trust online.”

But one is left scratching their head when you continue to read the Symantec explanation of why they are acquiring VeriSign. Here is clincher:

“Symantec plans to incorporate the VeriSign check mark into a new logo to convey that it is safe to communicate, transact commerce and exchange information online.”

You read right. While the clearly appreciate the power of the VeriSign icon – they intend to ditch it. Something does not compute.

What do I think is going on here? For my money, both companies needed each other as a defensive stance rather than as growth measure. Let’s start with VeriSign. Their product line has come under significant pressure from a wide variety of sources given the wide net of their largely unsuccessful acquisition efforts. Worse, in their core SSL business, there was no way to maintain a premium pricing structure given the success of value based alternatives such as GlobalSign or Comodo.

As for Symantec, they are frantically acquiring companies and the VeriSign deal was the third encryption-related purchase for Symantec in three weeks! Their land grab in the authentication space is necessary because; a) there little home grown technology to build from and b) as security solutions become utterly commoditized, the higher margin opportunities are left in authentication services.

I can only speculate on the net gain or loss for the shareholders of both companies, but Symantec’s sudden fondness for becoming “…the leading source of trust online” seems rather “Johnny come lately” especially given their current “confidence in a connected world” focus.

Becoming a “leading source of online trust” is not something you wake up to one morning and decide to do. It is has to be the central “why” to a company. It has to drive how you innovate, what you acquire and how you build your offerings. Have I ever seen that kind of intense commitment to online trust from Symantec? Nope. Can you say that the VeriSign is a brand that means some notion of online trust? Yup. Are either company known as a technology innovator? No and not in this lifetime.

That’s why when you add this acquisition to the other companies Symantec acquired, you start getting this vague techno-Frankenstein quality to its brand as though some “mad board of techno-scientists” tried to create a viable company from the parts other companies. Paying $1.3B for a company with about $400MM in sales seems a lot to pay so possibly some “trust” dust will cling to the Symantec brand. IMHO though – the math doesn’t add up.

But hey – don’t trust my opinion – I’m just a curious bystander.

Judy Shapiro

“Look up in the sky – it’s a bird, it’s a plane. No it’s an iPad.”

I was listening to my 14 year old son discuss the relative merits of an iPad versus his iTouch with a buddy of his. Now my kid is Apple’d out – MAC, iPod, iTouch. No wonder he was intrigued by the iPad as all things Apple is inherently good in his world view.

“It makes no sense”, I hear my son saying”, “why would Apple want people to think of iPad as a computer – it would kill their other business”. He then declared; “To me, this is a bigger and better iTouch that I would use at home.”

His friend thought for a minute and replied simply; “Yeah, but Steve Jobs thinks this is the new way people will use computers. Maybe, Apple wants to be the Microsoft, Dell, AT&T and Google all wrapped up in one.”

At first I was surprised at the thoughtful way these kids were getting right to the business heart of the matter. What is an iPad anyway? More interestingly though, as a marketer, I was eager to ponder what implications the iPad’s “position” might have on its astonishing 1MM sell through.

Clearly, the physical sleekness of the device drove a big part of the sell through. Surprisingly though, the huge gap in how “Junior Consumer”  was interpreting iPad’s main function, a.k.a. hyper cool entertainment device versus Jobs’ declaration that this is “the most important thing he has ever worked on” usually spells D-I-S-A-S-T-E-R, but that seemed not to matter in this case.

This disconnect is amplified when one realizes that the iPad may well be the computing version of a wolf in sheep’s clothing because it becomes the gate/ portal and police of what services or apps or content comes out of that portal. I kinda hope my son’s friend was wrong and Apple is not interested in displacing other devices and services providers from Judy Consumer’s world. Uh – no – that’s not likely. So it seems to me that the shiny iPad Apple carries a time delayed poison within that will, ultimately, bind Judy Consumer to the Apple franchise with little hope of escape.

OK – I admit – I am playing drama queen here. But it seems in maybe 5 years, our digital world will be defined by a few major players – maybe a handful – who will deliver all information, content, communications and commerce to us.

The “so what” of all this mega aggregation of services is that Judy Consumer will have fewer choices and higher prices. In the future world of information services wars, over time, Judy Consumer will lose out just like she ultimately did in the telecom wars of the past (I am battle hardened veteran of those wars). The final result being that, in fact, when choices go down, pricing goes up.

If iPad is meant to be the point of entry for a new way of computing that inextricably ties hardware to services – I worry (yes – I am a Jewish Mother and we worry.) I worry that it will be harder for competition to evolve and over time we know without competition, Judy Consumer pays more for less.

So I wonder – do you think the iPad is a merely step up from an iTouch as a hyper cool content consumption device or is the iPad Steve Jobs’ attempt at creating a new computing paradigm (hence explaining his sentiment that this is the most important thing he has ever done)?

I fear my son’s opinion on this matter is borne of youthful naïveté. I think I’ll go read Snow White again … at least that has a happy ending.

Judy Shapiro

Is Chris Brogan worth $22,000 a day? You bet… BUT.

This was too tempting a subject to pass because of the reaction to the revelation that Chris Brogan (celebrity blogger and author of book; Trust Agents”) gets a consulting fee of $22,000 a day.

My initial reaction to the news was a simple “A bi gazhunt” to Chris which is Yiddish for “be well”, but really means “My hats off to you”. Why shouldn’t a company pay him $22,000 if it will save them 10x that if they try and learn about this stuff blind.

But this revelation from Chris launched a vibrant conversation with a diverse range of opinions from indignation to envy to those who shared my personal reaction; “well done”.

The topic was quickly losing interest for me except Chris himself came out to declare this was the; “smartest post yet about my pricing post:http://bit.ly/aP4l9w (anchoring. Neat term!)”. I was curious so I went to check it out and in this post, the author believes that Chris now set the “anchor point” – a water mark for what “this stuff goes for”.

Whoa Nellie – this is when this conversation went silly for me.

I don’t buy for a second that Chris’ rate establishes anything, and certainly not an anchor point unless of course you want to be totally self serving. Chris is able to garner these fees TODAY because expertise in this area is still at a premium and there are few credible sources. In about a year, when there will be more “supply”, the rates will adjust accordingly.

And oh BTW – here’s another reality. Chris has to charge so much for a day of consulting because there’s not a lot of repeat business consulting on social marketing. This stuff is not hard and after you’ve told them the basics they are usually good to go. He has to extract as much as he can from them because it’s probably a 1x only appearance.

If you doubt this truth of this conclusion – think about it for a moment.  Would Chris have to create the “The Third Tribe” service or his New Marketing Labs or all his other self promotion stuff if he could regularly snag “two or three” gigs like that a month? I don’t know about you, but if I could reliably do $500K/ year by working 24 days – I wouldn’t be doing all the other stuff or maybe I wouldn’t be charging anything at all to most, (and I cheerfully congratulate Chris on how much of his smarts is freely available).

Chris was clever to have cultivated credibility in a space that became very important very quickly. This is a quintessential case of right place at the right time and he is milking it for every thing it is worth. I congratulate him on his skill and luck. But let’s not see his fee success as anything more than a temporarily aberrant blimp in time and it is certainly no anchor point. Hey, if tomorrow someone figures out that they can substantially grow their business learning the secrets of Hasidic philosophical spirituality – then I’ll be worth $42,000 a day! But only for a while. I know I’ll milk it as long as I can.

Judy Shapiro

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