The Surprised Entrepreneur-Diary of new venture (Entry #4): A tale of two VC meetings.

For the last 3 months I have been very focused on sales of our Interaction Engine system and we are doing well on that score. As a result, though, I have not really shaped the business plan and the structure of our company for the inevitable VC round to come. Getting funding has not been an urgent requirement and it seemed far better to generate real revenue and then go for funding.

So as we are chugging along, our work has gotten the attention of two VCs who reached out for a meeting. This was my first introduction to the world of VCs and I confess, the meetings were startling and sobering; leaving me strangely ambivalent about the journey ahead on this front.

VC meeting number 1.

It was a rainy, NY winter day and we decided to meet at a coffee shop. I knew that this fund was more an incubator type which offered me the potential of being part of a startup community. It seemed like a good idea that I perhaps become part of the NY “Tech/ CEO club” since now, I am an outlier. I don’t hang out in Meetup sessions and I am not trekking across the country chasing the cool tech conferences (OK – I confess I am going to SXSW but only because they asked me to speak).

I enter the coffee shop with only the vaguest sense of what the VC looked like (his Twitter pix was decidedly not very useful). It took me a solid 8 minutes to spot him. As I approach I see this 30ish guy with a quirky winter cone hat that was just 2 degrees “off” – IMO wandering into “silly land.” It was hard not to laugh out loud at the effect – but I held my composure.

I sit down and we start chatting.  I was curious to understand his investing philosophy. His focus decidedly was on individual technologies – why Foursquare will be huge or how this new app model will revolutionize some trend or other. When I wondered with him about the lack of a clear business model which limits their practical use for marketers, he dismissed that concern with a wave of the hand. “Well, that’s won’t be a problem for long – once the old guard is gone.”

Wow. Clearly that meant me. I took his comment to mean that only the “newer” generation have the depth to understand new marketing technologies. I was dumbfounded and I was shaken. The gap between us was, technologically speaking, generational – perhaps never to be bridged. But mostly I was stunned at how immature his thinking was about how the business of marketing really works. I was shaken knowing his company was helping drive the evolution of marketing without a clue about what marketers really need.

The rest of the conversation was a haze TBH. I left traumatized and angry at how dismissive he was of the impracticality of his vision of marketing technology evolution.

VC meeting number 2

This CEO leads a well-respected large VC shop that does $2- 5MM deals. I had been introduced to this VC through a mutual colleague and we met at his office one snowy day.  He sat down in comfortable business casual attire that was in keeping with his experienced CEO role.

We started by talking about his company which was relocating to the East Coast from the West Coast. Interesting move and I asked him why. “Increasingly the smart money is coming to NY as this where many of the major new media and marketing operating business trends are evolving,” he said.

This was my dream VC – he understood the space and the problem my company was trying to solve – how to practically create the “many to many” marketing model. We compared notes on how the technology in this space was similar to CRM in the 1990s – full of possibility but lacking in coordinated systems to activate the technology. I suggested that we are a bit like what Siebel who, at the time, integrated all the telemarketing technologies into the system we now know as CRM. I feel that is what we are doing for the emerging “many to many” marketing model. We met for a solid 90 minutes at which point he asked me “What next?” Shockingly, I had no “ask.” I had been so traumatized by the first VC, that I had not really expected a question like that. I stumbled around and just admitted – “I don’t know.”

But then I turned it around and asked him: “How would you categorize my company? We are part system integrator, part content and media company. We are a “creative shop” in that we create customer interactions with technology. Are we a tech company, a services company?”

I could see he was sensitive to the dilemma of my question. Finally, he said, “I would put you in the digital media space.” I was shocked until he hastened to add: “You need to be defined somehow so people know to work with you and help you.” But in his gentle smile I could see his answer left him unsatisfied as well.

We parted agreeing to keeping up the dialogue. As I walked out of his office, I felt cautiously optimistic that the work we are doing is needed in the market.

One thing I learned from both meetings – the journey of starting a company will continue to be a journey of surprise. I never expected to have so dramatically divergent experiences as I tentatively start down the path of funding my company – even if I don’t know exactly what type of company I am creating.

All I know is that the “smart investment money is going towards the business operating companies” and that’s me. Cool – right?

Judy Shapiro

The Marketing Measurement Maze: measuring marketing is a mess.

Forgive the illustrative nature of the headline  – but I had to laugh out loud about this whole thing or else I would cry.

This post is a follow up to my previous post about how fragile measuring marketing technology really is based on a real time experience I was having with Technorati regarding the authority ranking of this blog.    Unhappily, my initial concerns about marketing measurement were realized so it is worth recapping.

About a week ago, by accident, I learn that according to Technorati this blog, getting a mere 1,000 visitors a month, vaulted 4x in authority rankings to about 400 when previously I ranked about 100. For about a week, I jumped up and down a few times going between 400 and then 600 (see pictures in my previous post).I contacted Technorati and told them I think there is a glitch. I got a very polite answer to tell me they are updating their rankings system and some blogs are radically shifting in position as a result.  Sounded rather fuzzy to me, but hey – what do I know?

After that response, over the course of the next 3 days, my blog bounced around some more in the 400 to 600 range and then yesterday I seem to have settled back into my original humble ranking of about 100. OK – I think – that sounds more reasonable – except now I am not even listed in the directory at all!

I went from a blogger superstar to a non entity in just three days and it is still not “unglitched”.

To put this into perspective, I get that when you are making improvement to a site, things go weird for a bit. But since Technorati is largely viewed as the authority on blogging ranking (and thus ad value), this whole episode is ample proof of the sorry state of measuring marketing efficacy. You often can’t trust the measurement data because of innocent technology glitches and then you have no way to verify the accuracy of the measurement reporting data you’re getting.

While it’s tempting to brush this aside as some little blimp in the world of marketing measurement – you can’t because the financial consequences can be significant. Imagine if my blog was a commerce oriented site or if I am advertiser trying to assess what’s the audience reach of all these blogs. Such variations in rankings can mean a lot of money gets spent or not depending on which side of the glitch you happen to fall on.  And this type of glitch is just the tip of the iceberg. I have seen measurement issues across the marketing landscape from traffic reporting to ad buys to data you get from PPD or CPL marketing programs.

Bottom line. It’s time to get serious about measuring marketing efficacy. Now it is a mess!

Judy Shapiro

Top 5 social media marketing mistakes clients most often make (but can be avoided)

Companies are quickly ramping up to integrate social and digital media effectively into their marketing plans. Unfortunately that has been a tricky proposition given the already complex and fluid landscape of the technology behind digital media. And a recent Forrester study confirms how tough it really is; “The complexity of the interactive landscape is creating a fragmentation of interactive agencies, which in turn is creating a whole new set of challenges to marketers,” said Forrester analyst and the report’s author Sean Corcoran. “Interactive marketers should prepare their organization for even more agency partners…” http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=118779.  

This reality makes the already steep learning curve even steeper with lots of perils for marketers. In my experience, here are the top five typical mistakes marketers make (present company included) that absolutely can be avoided.    

1) Assume that great content alone will create buzz and go viral. This is such a typical mistake and yet it is probably one of the easiest to avoid. First, no agency should promise that content alone can go viral, it happens so rarely that I bet the odds are better at winning the LOTTO. So don’t fall for the “your content will go viral” promise. You are setting yourself up for disappointment.  

2) Put all your buzz eggs in one social media basket. The expectation that people have about social media is way out of proportion to what it can deliver. No self respecting marketer would put all their media weight in just one vehicle for one day (unless maybe we are talking Super Bowl – but even then). Yet, so often I hear that an entire digital marketing plan just includes a Facebook promo. Digital and traditional media work similarly in one important way – you need a diversity of outlets to achieve critical mass in reach and frequency to break through. Diversification is the hallmark of well developed digital plan.    

3) Diving into social media without a clear monetization plan. When I talk to business colleagues who are starting social media programs, I ask them, “What are your goals for the campaign?”  The typical answer is “Oh I want buzz…” Then, when I poke at that and ask, “Well what does that do for your business”, the answers get quite fuzzy quite fast. I wonder why it seems acceptable for social media to be held to a different set of performance standards than traditional tactics. Any seasoned marketing pro understands that marketing programs need clear performance benchmarks whether it be an email campaign or a new site. Why is it that marketers do not demand similar performance objectives for their social/ digital efforts?  Don’t fall for the buzz hyperbole. Instead be clear about what you want the campaign to do.   

4) Expect immediate results. Here too social media seems to live in a parallel universe where the rules of common sense marketing principles are suspended. No one expects traditional media plans to work overnight, yet people hope, even expect, social media to magically launch a brand overnight from a cold start because it can go viral. It does not work in any marketing program and social media programs are no exception.  

5) Be sure your agency walks the walk and does not just talk the talk. Here’s a true story that just happened to me a few weeks ago. The CEO of a large IT company was telling me how his social media agency included him as their case study right there on the agency’s blog which was featured on their home page. Way cool I thought. So I decided to comment on the case study on their site. Ya’ know what – I submitted the comment on the agency blog only yo see that it was posted a full month after being submitted. It left me scratching my head. I don’t expect an agency to spend all day long managing their blog – but I do expect that if they bother to have a blog then it should be managed as a reflection of their philosophy to walk the walk and not just talk the talk.    

It’s all too easy for companies to be convinced that social media is some magical marketing mystery. It’s not. In fact, much of what applies in traditional applies in social media too. Keep that in mind the next time you are seduced by some “sick” social or digital marketing tactic; feel free to fall in love – just don’t lose your business head in the process.   

Judy Shapiro

Digital’s dirty little secret.

Digital and social marketing erupted on the scene with such a splash as to rock virtually every marketing boat on the seas. Its deeply disruptive nature was cloaked within the seductive promise of lower costs marketing programs to get the message out. The social media’s no/ low cost myth was bolstered by a wave of technology plug ‘n play platform companies offering low cost ways to create communities, syndicate distribution of content, automate social network interaction and track all this activity. Then the myth was popularized into cultist status by charismatic young CEOs, like the energetic Alexis Ohanian of Reddit who give clever presentations at places like TED about how “low cost” social media helped save the whales via a social media campaign called Mr. Splashy Pants.

The promise of a marketing holy grail seems closer than ever for marketers.

But that’s where the dirty little secret comes into play. While self serve platforms offer the promise of “self serve” – they rarely are. Almost always, the platform has to integrate with existing systems and that needs expertise. Most technology companies who offer these platforms know that. Most markers do not until they go through it themselves. Then, somewhere along the way the brand sees that the final TCO is higher than the self serve budget allows.

I must give as an example a particularly egregious platform example. There is an affiliate marketing platform that lets you build an entire affiliate site sell through their platform. They provide keyword assistance, a wysiwyg interface and hosting. The sales pitch is compelling; “the only barrier is you and if you go through the process, it will work”. And so forth. They make up acronyms that make it sound easy but isn’t. Now I looked at this platform carefully because a colleague was working with it. He told me it took him over a year to make his affiliate site work on this platform. I was curious. This guy was smart – why should a “self serve” platform take so long to get functional.

That’s when I realized in actually working with the platform that while it does have some great technology in it –  it is only useful if you are an expert with 10+ years experience – maybe. The promise of “easy, anyone can do it” are simply false. They make it so hard that, when inevitably you submit a question which I did, you receive a very nice though decidedly unhelpful response ending with pitch for services.

That’s what irks me. These platforms are being pitched as easy, low cost, no cost, self serve, plug n play, automated wonders of technology when the truth is they can not really deliver as promised. It is the rare company that can use any of these tech platforms as is. That’s the real world. And it is in many cases, there is a shameless bait and switch game being perpetrated on companies.

Is too much to ask for a little truth in advertising please? I fear in the new techno self serve world it may be.

Judy Shapiro

The real lesson to be learned from Mister Splashy Pants

Like many of us – I use Twitter as a good filter for all the stuff that I should read about but would never, ever find on my own.

Anyway, one little bit caught my eye; “How to make a splash in social media”. It was one of those hyper fast – 4 minutes presentations presented at TED/ India, featuring Alexis Ohanian of Reddit with a clever bit about how Greenpeace used social media to halt whaling. Good cause. Great message.  http://www.ted.com/talks/alexis_ohanian_how_to_make_a_splash_in_social_media.html

His opening, “Lots of consultants make a lot of money talking about this stuff.. I’m going to try and save you all the time and money and explain it 3 minutes” was the beginning of a clever and catchy presentation on the power of social media.

I was hooked, that is until he revealed the story’s main theme. Somewhat stunned I heard him conclude that social media was largely free. I was disappointed to hear yet another digi-rati so in love with technology that he failed to be objective. I was surprised that Reddit’s CEO, Alexis, clearly a thoughtful man, fell into the trap so easily.

It seems, therefore, left to us real world practitioners to set the record straight. My message is very simple. Social media is not free – but the myth is perpetuated because capturing its costs is harder than traditional media.

So let me repeat – social media is NOT free and I will use Alexis’ case study of Mr. Splashy Pants to introduce reality to his ever sunny and youthful telling of the story.

The presentation itself condenses the uplifting real world experience of a Greenpeace program that wanted to stop whaling. They introduced a grass roots promotion to name this initiative to garner attention. One quirky name, Mr. Splashy Pants created a groundswell, among the community; including the Reddit team which helped Greenpeace achieve its noble goals. The whales win, Greenpeace wins, social media wins and Reddit too.

His quotable quotes reinforce the “social media is free” theme and included a wealth of digital “truisms” such as:

  1. “It costs nothing to get your content out there”
  2. “The content distribution platforms are free so it only takes a few minutes of your time to distribute…
  3. “All links are equal …”
  4. “And the cost of iteration is so cheap…”
  5. “We {at Reddit} got behind it ourselves,.. we changed the logo …

Now all these “ism’s” sound great until you actually think about each one critically. So let’s do just that and you’ll see why Alexis, earnest though he was, succumbed to the myth like so many before him.

“It costs nothing to get your content out there” .  Who does he think is writing all this content that;  ”costs nothing to distribute”- content fairies with some pixie dust?

“The content distribution platforms are free so it only takes a few minutes of your time to distribute…” And since when is time, even “a little time”, free? And what if you are not as tech savvy as Alexis? Would it in fact be “just a few minutes” for most people?

“All links are equal …” How can he say this with a straight face unless he means all links are, quite literally, created equal? But anyone in the real world knows that even a 1,000 links with little traffic has very little value versus one site with lots of traffic. Getting quality links is the point and that is not really free to get.

“And the cost of iteration is so cheap…” This principle has caused more money to be wasted than perhaps any other ill conceived corporate mantra. Take it from real world experience – iteration borne of a lack of preparation (e.g. research) is rarely profitable. The ideal is to get it roughly right … but that takes upfront planning time which is definitely not free.

“We {at Reddit} got behind it ourselves,.. we changed the logo …” This little point sounds innocent enough and it is. They felt it was a worthwhile cause to get behind by creating a logo and giving it support. Well done. But tell me how many companies can count on that type of support which surely helped? Would that cost nothing too?

Time is money – even in the social media world. Maybe the reason this myth is a hard one to beat is because no single social media activity takes a lot of time. But when you add all the pieces together, you have a “content campaign” which is a time investment that most definitely is not free – but it does seem invisible.

That’s why Alexis fell victim to the “social media is free” trap. Don’t you fall for it too.

Judy Shapiro

My top 10 New Year’s “un-resolutions” for 2010

We all know about our New Year’s resolutions. We make them with all good intentions to keep them. But we also know that what usually happens is that, inevitably, one by one our resolutions go by the way side. So I stopped making those New Year’s resolutions years ago because it seems to be a recipe for failure.

Instead, this year for a change, I have started to make “un-resolutions” – things I am determined NOT to do. Here’s my top 10 un-resolutions. Take care – this may become a new tradition.

1) I will not get seduced by any new digital marketing toy just because some industry pundit thinks it’s the coolest thing to hit the street. Nor will I believe every promise made by every new marketing technology company.

2) I will not abandon common sense in digital marketing and be blinded by digital agencies promises that their “new” campaigns will go viral and get the attention of millions of people. I will continue to listen to my gut and if it sounds to good to be true, I will let skepticism drive my decision.

3) I will not abandon newspaper, magazines, radio and other forms of traditional media if it is the right vehicle. No matter how sexy digital media may seem because of the perceived lower cost, I will continue to create integrated programs that weave together the best of both the traditional and digital worlds.

4) I will not give up my attachment to email marketing. Sorry folks – but email marketing, well done, drives real business results. If your email campaign did not work – either you had a bad list or an inadequate call-to-action or maybe your agency did not know what they were doing.

5)  I will not be fooled into thinking that the ad market is going to rebound in 2010. Nope. The ad market will continue to be buffeted by the tides of an evolving economic landscape and by consumers’ ever fickle attraction to new tech toys like mobile devices.  These trends will continue to dampen ad revenue for publishers for some time to come.

6) I will not get excited about cloud computing – at least not yet. I do see how it is going to dominate in the next 5 years – but there are real security problems to solve before everyone can get into the clouds. Conversely, I do get excited by all types of ASP offers as that is a steady business model that offers real value to consumers.

7) I will not blindly follow Google as they chow down every tech industry from telecom to digital publishing. Ever one loves to love Google. Me too. But that does not mean that I have to support every initiative as Google relentlessly marches toward digital dominance. In the process, they stifle competition and kill real innovation by companies who deserve to succeed. Now here’s my one New Year’s prediction (for 2012) – I predict that Google will have to break themselves up to avoid the growing recognition that Google is really a monopoly, albeit a new kind.

8 ) I will not diminish my slavish devotion to data driven marketing no matter what new platforms come out that can behaviorally target any audience any way I wish. I know I know – the BT folks can slice and dice an audience so many ways that it makes a marketer salivate. But unless I can see, touch and feel the data – I will pass for now.

9)  I will not start following every Tom, Dick and Jane to gain more Twitter followers. OK, so I only have about 175 folks following me but at least I know they read what I tweet. Quality – not quantity is what drives social media.

10) And my final un-resolution. I will not try appear to be “30 something” just because I love digital marketing. I know that the average age of people in digital marketing tends to be 27 – but my depth in this space has yielded real world, hard won recognition. And while I am at it, will not submit to peer pressure to use more “hair product” than one can find in a Duane Reade store so I can appear suitably young as a digital marketer. What you see (grey hair and all) is what you get :)

There you have it. My top 10 un-resolutions for 2010. If you have your list – feel free to share it here.

Judy Shapiro

Community Casting

I am just back from DigitalHollywood show. There was one question I heard more loudly than any other no matter which session I attended; “How do we monetize content?” The question now takes on an urgent tone as more and more traditional media struggle to answer that question before it’s too late.

And coincidentally, the dialogue at DigitalHollywood seemed a real world extension of the Ad Age article I had written that just was just published; Why Charging for Online Content (Mostly) Won’t Work. The article outlined why trying to monetize content is really hard and the better approach is to create unique user experiences, like a robust community, that then lets you create upsell opportunities. By the kinds of responses I got on the article, I seem to have hit a note. Many people wrote extensively about how current models don’t work.

And as in my article, the conference betrayed a gnawing sense of angst since no one anymore doubted that the old model was broken, but no one was clear about what will replace it.

We all knew we were on the precipice of something big, new, unknown and undefined. We were excited, inspired, and cautious.

We also knew we were all making it up as we go.

Yet even from within the doubts, one could see innovation all around. There are a lot of great tech companies offering lots of versions of video streaming platforms … from PPV to satellite to distributed networks. There were other great companies who had really interesting audience engagement models from the citizen journalists of AllVoices to MomTV who look to create meaningful interactions with Moms. Despite the cool technology we all saw at the conference, the chase for the content monetization answer trumped most others.

The Ad Age article seemed prescient to the conference’s theme because I actually answered that question directly by drawing on the experience of Paltalk, a profitable web 2.0 company. Paltalk’s monetization engine uses content to attract audiences but then creates end user value in offering real time, interactive video visitor engagement within our communities. Once the user is committed to a community, then there are interesting upsell opportunities possible.

This is what “community casting” is about. It is about creating and nurturing a community with real time community interaction with video and chat.  This is what will emerge as the new content monetization engine.

It is, in fact, already working now. Watch this space.

Judy Shapiro

http://twitter.com/judyshapiro

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