A Startup Guy

I’ve been thinking a lot lately about business and product ideas. Probably because I’ve spent a ton of time working on new ones for myself.  I wrote a post recently about how ideas are a dime a dozen. Then a few days ago I heard an episode of a podcast named Entrepreneur Myths in which the podcaster took exception to the concept that ideas aren’t worth anything. He made a valid point that a good idea is definitely worth something. I agree, but try and sell one and you’re probably going to be disappointed. As I said before, it’s the execution of a good idea that pays off.

The hard part isn’t coming up with ideas. I’ve got a friend who keeps all of his ideas in a spreadsheet. He’s literally got hundreds. In the last week, I’ve started filling a page with a good number of ideas myself. But what makes up a good idea? The criteria for a good business idea can be both general and personal. Here are a few.

General:
Your idea should fill a need. There are a lot of product and service ideas that are cool, but they’re a solution in search of a problem. Find a pain point for people and then solve their problem.

The idea must appeal to a sizable audience. There are a few products that you can get rich off of by selling just a handful. But for the rest of us, our products need to appeal to a large group. If I come up with a widget that solves a problem, but only 10 people have this problem, it’s not a good basis for a business.

Your idea must be worth paying (enough) for. Say you’re sick of Twitter’s fail whale and you decide there’s a need for a reliable Twitter-like service. But you decided to actually have a revenue model; you’re going to charge people $5 a month for it. It’s unlikely that you’ll succeed. Most people just aren’t willing to pay for what they can get free, even if it’s a bit more reliable. Or if you develop a new widget that truly solves a problem millions of people have, but the cost of development and production is $45 million and your marketing plan projects you can sell 5 million units, but only if you charge $2.50 each. Bad idea.

Personal:
Your idea should revolve around something you have an interest or passion about. This isn’t a hard-and-fast rule, but it’s a great idea. You’re going to be spending LOTS of time with this idea. Make it something that can hold your attention. I’d have a hard time doing a bank startup. It just doesn’t interest me.

It should be something you have (or can get) the money to start. I think a healthy fast food restaurant is a great business idea. Someone’s going to get rich on this idea some day. However, it won’t be me. The cost of startup is too steep for me to afford and I refuse to borrow the money.

You may have lots of great business ideas. That part is not nearly as hard as getting a few good business ideas that are right for you.

What are your criteria for a good business idea? What are your criteria for a good idea for you?

One of the best pieces of advice I ever got before launching a business was, “Be sure you have something to sell.” Makes sense. And yet so many Internet entrepreneurs ignore this simple advice.

I think part of the problem is that our point-of-view has been distorted. We often see things through the lens of successful companies like Google or, worse yet, Twitter. Google made money from search – LOTS of it. Twitter still has no discernable business model. And yet they’re rolling in cash. So lots of startups take the stance that they’ll just launch and figure out a business model later. Or figure they’ll get rich from selling ads like Google.

Here’s the truth of the matter. Once you launch, you’re going to be insanely busy. If you can’t figure out a business model in the calm of business planning, you’re not likely going to have time to figure one out in the midst of startup chaos. You need to have a plan on how you’re going to separate your users from their cash. That plan may (probably will) change somewhat after you launch. But you need something to start with.

Even Google couldn’t survive on search. They had to institute selling ads to make money. They are now, essentially, an ad company that uses search and information organization to draw in attention for those ads.

For many startups, the “punt” answer is to sell advertising. Take it from someone who learned the hard way. There is lots of money in online advertising, and most of it already goes to just a handful of companies. You must have thousands, if not millions, of visitors to even begin to make this business model worthwhile. Google succeeded at this because they were first and got it right. A handful of others have picked up enough of the leftover scraps to make it worth their while. You’re too late! It’s already a mature business that is not growing much any more. If this is your business model, STOP NOW! Revise your model to actually have something to sell.

Invest the time now to create something people want to buy. It will make your crazy startup life a little easier later.

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• michael arrington: It’s Time To Start Thinking Of Twitter As A Search Engine (via TechCrunch) (techcrunch.com)
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About 3 months ago, my buddy Dave Delaney ran a poll asking if people found Twitter auto-direct messages (DMs) annoying. (Auto-DMs are automatic direct messages sent to someone who follows you – usually through a service like SocialToo.) At the time of the poll, I didn’t get too many of these and answered no. I’m the kind of guy who gives people the benefit of the doubt, if I can. I assumed most of the auto-DMs were from well-meaning folks and tried to take them in the spirit I imagined they were given. What a difference 3 months can make.

Today, I get at least a dozen auto-DMs a day. Many days, I get way more than that. The problem is that more than half aren’t much better than spam. “Thanks for the follow. Check out my website to find great deals on SEO!” Here’s the thing about Twitter, it’s all about relationships. Even when you don’t know the people you’re following, or who follow you, very well, it’s still about developing relationships. Auto-DM spam is no better than e-mail spam or cold call sales pitches you get in the middle of dinner. It’s people trying to make you check out their products that you probably don’t want, weren’t looking for and didn’t ask about.

In moderation, a direct message thanking me for following you could be nice. However, there are just too many now for them to make an impact now anyway.  If you want to get my attention, find something more creative and original. Better yet, engage me on Twitter. Build a relationship. Find out if I even care about your “Make Cash in 2 Minutes a Day” package before shoving it in my face.

And to Dave Delaney, change my vote there to a No please, will ya, bro? Thanks, man!

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"I love Twitter" photo from Lost Art of Blogging blog

OK. In my last post I noted what Twitter has done for me. But how do others use it to effect? One of the fun things to watch as Twitter has grown is how it’s gone from being a platform for marketers and techno-geeks to becoming a real communication tool for people from many walks of life. Early on (a year ago), we had lots of discussions about if people like CEOs would ever adopt Twitter. I had my doubts as there is (at least at this time) no measurable return on investment for using Twitter. Interactions online don’t generally directly yield sales. And CEOs are usually too busy to bother tweeting on a regular basis. Despite that, they’re coming online. And its fascinating to see how they’re adapting Twitter to work for them. Many people still don’t get it. There are a lot of marketers rushing to open Twitter accounts for their clients because they’ve heard that’s where they need to be. “You’ve got to be on Twitter. It’s the new frontier.” But many more ARE getting it. They understand that Twitter is for talking AT people, but for talking to them. And if you’re lucky, starting a conversation with them. Here are some examples:

Politics
Twitter was a breakout this political cycle. We saw congressmen and senators adopt the service. We saw a John McCain campaign staffer get in trouble for using the service to point people to questionable videos. But we also saw Barack Obama use the service as an outreach program. It was a big part of his grassroots organizing system. Obama became so successful at it that his was the first user account to garner more than 100,000 followers.

John McCain, on the other hand, never really got Twitter. His campaign had an account (opened by default by the Twitter folks simply to enforce a fairness policy), but only made 25 tweets and only picked up fewer than 5,000 followers.

Entertainment
Twitter may prove to be marketing gold for some people in the entertainment industry. Not as a push/sell tool so much as a community-building tool. Some accounts are actually set up and used by the entertainment personality. Many are set up by PR, marketing or agency people. In both cases, again, some people get the power of Twitter, many don’t. One case for the “don’t” category is county music star Aaron Tippin. He’s got great music, but his Twitter account proves a bit tone deaf. I’m sure it was set up by a label or PR flunkie, but it’s Grade A fail. Aaron’s account was set up in June 2008, follows no one and has only 28 followers. It also has a paltry 2 entries. One notes that they’re setting up a Twitter account. The other encourages people to go buy Aaron Tippin’s newest CD. No wonder there are only 28 followers.

On the other hand, there are plenty of celebrities using Twitter to build community and communicate with fans. Some follow back, like rapper MC Hammer, others don’t but are still very conversational, such as Heroes stars Greg Grunberg (there’s something fun about Greg posting photos of his chair on the set) and Brea Grant and Christian music artist Jeremy Camp. They don’t follow many people, but they do keep up with conversations about them and often respond to people who address them.

Business
Another fun trend to watch has been businesses getting on Twitter. They were slow to adopt at first, but they’re beginning to carve out strategies on how to effectively use Twitter. You can now contact Comcast (Comcast Cares), Zappos (a phenomenal online shoe seller, this Twitter account is actually manned by their CEO), Virgin America and The Home Depot (manned by one of their corporate communications people, but well run). Dell has become legendary in their use of social media to connect with customers, including their use of Twitter. They have some 23 Twitter accounts, including one that links to Dell employees who are Twitter users, some for work, some not. As always, some of these accounts are used well, some are just more places for PR people to push information.

In my opinion, Twitter works best when used as a communications tool. That means to put out meaningful information and respond to others as well. It also works best when it’s personal. You don’t have to be the CEO of a corporation or an entertainment star to use the “official” Twitter account (though it helps), but the communication needs to be personal. People need to feel a connection with whoever is talking for the Twitter account. Otherwise, it’s just a one-way conversation.

One final word of warning, be careful about fake users. There are plenty of people who have Twitter accounts claiming to be someone they’re not. It’s mostly done for fun, but that doesn’t make it any less painful to be tricked.

Additional info:
Jeremy Peppers’ rules for using Twitter
A list of companies, celebrities, governments and others of note using Twitter
6 Unual Entities That Tweet

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Image via CrunchBase

Do you Twitter? Twitter has blown past the three million users mark. People worldwide are checking out the benefits (and drawbacks) of microblogging 140 characters at a time. Yet, even as we begin to find new uses for the service, many people still have little clue what Twitter is and even less about how it can be useful. To help out, I thought I would write a little bit about what I’ve learn in my year on Twitter.

What is Twitter?
Twitter is a service that lets you communicate with other users online 140 characters at a time. The character limitations are a throwback to the old days of SMS when messaging (such as texting by cell phone) had the same restrictions. The hard part is it’s not always easy to say what you want in 140 characters. The good part is that it forces you to be concise in your communications. It also forces you to post comments that take more than 140 characters in more appropriate places, such as blogs. Or even to say nothing at all.

Twitter is social in that you may choose people to “follow” and people choose to follow you. Sort of like “friending” on Facebook. Then, you can choose to read the “tweets” (posted comments) of you and the people you follow. Originaly based on the simple question, “What are you doing right now?”, Twitter has evolved and now fosters not only comments on what users are doing, but conversations, obervations and helpful information.

What is Twitter Good For?
I have to admit that my first thoughts after joining Twitter were, “This is going to be a huge time sink.” and “Does this really have a productive benefit?” After a year online, I can confirm that the answer to the first item is “Yes, if you let it.” The answer to the second question is an overwhelming “Yes!” In the last year, I’ve used Twitter to help me find new acquaintances, meet the people on the cutting edge of the social media movement and get answers to questions. On several occassions, I’ve found my followers have been able to help me with mySQL and ASP.NET code challenges. When I went to Podcamp Nashville in the fall of 2007, I knew about 2 people there from past jobs and about 3 I had met through Twitter in the month or so I’d been on it. When I attended Barcamp Nashville this summer, I knew about 5 people from school and past jobs. I knew more than two dozen through Twitter or other social networks (or events I had learned about through social networks). Through Twitter, I’ve even made new “real life” (sometimes called IRLs or “in real life”) friends and possible future business partners.

Another cool use of Twitter is to observe “back channel” chatter during major technology events, such as Barcamps, Podcamps, Startup Weekends, and even SXSW. Attendees carry on conversation on Twitter to discuss presentations as they’re occuring. They also disseminate information to people who can’t attend, spreading the knowledge and fostering new discussion.

Oh, and the time sink thing? If you’ll push through the learning curve of how to use Twitter, you’ll develop a use pattern that you can use to keep Twitter from being a time sink.

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Image via Wikipedia

Last week, Matt wrote a good post at SmallBizBee titled “7 Steps to Writing a Killer Mission Statement.” We struck up a conversation via Twitter about how many companies misunderstand the purpose of a mission statement. Matt was kind enough to offer me space on his site to write an article about it. I took him up on it.

Rather than repost here, I refer you over to SmallBizBee to read it. While you’re there, check out some of the other great content and resources he offers.