Startups and Other Problems

I cringe a little bit when I hear the word “startup”. This word has several different meanings in modern newspeak. In Silicon Alley (this is what New York’s startup scene was called in 2000) it appears in several typical phrases such as: “well, we can’t afford that – we are a startup” and “we are a startup, but we are very well funded”. This word is basically used either as an excuse for wanting below-market labour or an excuse to flaunt investor-supplied riches. In the first phrase it means that the company has been burning dumb money for at least a few years, in the second – it’s just starting. One “startup” that I worked for (and have fond memories of) began in 1997 and gave up ghost in 2012. UGO was truly the Dick Clark of companies (except not as successful).

Recently I was researching an engineer who designed the Wright 2600 keypunch. An article about him on Tripod (another blast from the past) has a very interesting quote: “After retiring from US Gov., he volunteered for SCORE, the retired executives helping businesses with start up and other problems.” Startup is not a type of a business! It’s a problem that businesses have!

The term “serial entrepreneur” has also acquired a thick patina of sleaze. The thing is, entrepreneurs are not really like flying aces (I think I read somewhere that most military pilots are either aces who shoot down 5 or more planes or the ones who are shot down). No. You only need to take a look at Jerry Kaplan, who wrote “Startup: A Silicon Valley Adventure” and probably set some kind of a record in running companies that don’t make it. A large percentage of startup money is made through sales to larger, lumbering companies. Was broadcast.com a great deal? Nobody remembers it when watching its founder wearing relaxed fit shoes. There certainly a lot of money out there chasing some not very viable ideas. Unfortunately the startups of yesterday and today are either huge failures or huge successes. Or both (but not for everybody).

Luckily these days startup costs are at all time lows. To create a huge failure of a company you need a lot of money. On the other hand, to barely succeed all you need is some pocket change. Forget about Y Combinator. The Pinboard Investment Co-Prosperity Cloud will “barely invest” and try to help you to “barely succeed” – in other words to encourage you to build a business that realistically aims to be profitable. Forget “go big or go home”. Just try to honestly to build a business. Screw freemium. Forget about “incubators”. All you need is $37. And The Pinboard Investment Co-Prosperity Cloud will maybe give it to you. If you’ll get a rejection – dig deep.

On Facebook Advertising

Two things happened recently: Facebook’s IPO fizzled and there was a slew of articles and blog posts about how Facebook ads are ineffective. The majority of the articles follow the same song and dance: we spent $250, got some likes from random people and nothing changed. The one standout it GM dropping Facebook ads. GM’s budget was 10 million dollars, and the way I understand it, this is their equivalent of $250 for a small business.

While I personally dislike Facebook tremendously and want it to fail, I think that the FB ad-bashing articles are off base. Facebook ads are a great deal. I am not an advertising professional, but I drank with a lot of them and I think picked up a reasonable amount of knowledge about the industry. I also stayed at … hmm, can’t remember the name of the hotel, but this is a reference to the TV ads where people say “well, I’m not a [professional that has to be very smart and skilled] but I stayed at [name of the hotel]”.

There are many, many bad deals in advertising. There are big-name websites that have “respectability” plus a huge saleseforce. These guys can charge $15, $20, $30, sometimes even $50 per 1000 banner impressions. cost for 1000 impressions is called CPM: cost per M where M is the Roman numeral 100. At the higher price you get gigantic custom ads known by a variety of names: browser crashers, godzillas, superskyscrapers, page fuckers, etc. There are also “sponsorships” where dumb companies buy little badges on new sites with next to no traffic.

How do these things get sold? Well, the agency people who control how the ad budget is spent are often young and get a lot of free drinks. Also, ad sales people are very good at what they do.

Then there are cut rate ad networks that have 5-20 cents CPM. The traffic for these comes from all kind of low quality sites: lyrics websites, guitar tab sites, all kinds of web farms, dating sites, porn and near-porn sites and the like. Big sites sometimes buy traffic from these sources when they don’t have enough “inventory”, but they’ve already sold a lot of high CPM ads. These are a pretty bad deal, and I suspect much of the traffic is simulated by bots. It is cheap and there’s a lot of it though. Targeting options are pretty weak with the exception of plentyoffish.com: POF allows for very detailed targeting. If you want to target only Canadian redheads between the ages of 18-22 – you can.

Google ads are a better deal: you are targeting people that are searching for something. Google has pretty sophisticated algorithms for detecting fraud, but I suspect click fraud is still rampant. Google’s predominant model is charging per click instead of per 1K impressions, and you have to compete with other people for hot search keywords. For instance, ambulance chasers pay ridiculous money for “mesothelioma” keyword. Mesothelioma is a type of cancer caused by asbestos, and layers apparently can make crazy money suing on behalf of people who have it. A click on an ad can fetch as much as $10 or more. There are many other expensive keywords where even a single click is worth paying actual humans to click on them from time to time. There are also pity clicks and punitive clicks: sometimes people click ads to support sites that they like and to punish ones advertisers they don’t like.

Facebook ads by my estimation cost about 1/10th of Google’s, almost in the low quality network territory. The targeting is amazing though: Facebook knows a lot about what people are interested in and lets you have a sniper-like precision of putting your ad in front of them. Do you want New Yorkers who are into planted aquariums, fishing and knife sharpening? If there are 10 people like that you can reach them on Facebook for a few bucks. Unlike Google users who are searching for something, Facebookers are there for ogling hot people and playing Farmville. They tend to ignore the ads, but you can get an even better deal by buying CPC ads. Massive click fraud is difficult on Facebook, most of these clicks are real.

There are many things about advertising in general that are mysterious: starting with the “if I almost never click on ads then who does” to “do tv and magazine ads actually make me buy anything”. Are funny ads where you remember the joke but not what was advertised worth the money? Are people swayed by car commercials? How about those Coca Cola billboards? How about those ads in New York taxi cabs and ads that annoy in general – are they effective? QR codes ( http://wtfqrcodes.com/ ) – are they the advertising equivalent of “free public wifi” zombies? I have a hunch, but I don’t really know.

What I do know is that compared to other options FB advertising is a pretty good deal at current pricing.

eBay and The Michigan Deposit Scam

eBay is such a horrible hassle these days. I tried selling a few things recently, and between the horrible UI, all the hassles with payments, answering questions and shipping it turned out to be a huge waste of time.

I am sitting on a small fortune of items I would like to get rid of, but I don’t want to deal with strangers on Craigslist or going through the eBay rigomarole. An ideal solution would have been an eBay drop-off shop, but it seems that these went the way of the Dodo.

eBay drop-off store is an idea that many have tried, but it turned out mostly like Seinfeld’s Michigan deposit scam.

In one episode Newman keeps trying to find a way to make a scheme that would bring New York cans and bottles to Michigan, which has a 10 cent deposit instead of New York’s 5 cent one. Kramer keeps telling him that it would not work due to the transportation overhead, but finally Newman figures out a way to get a postal truck for free.

It seems that the time overhead is so high on running an eBay store is so high, that most of the bigger ones that tried it went out of business.

In reality the Michigan deposit scam is against the law, but it actully costs the state 14 million a year in lost revenues. It’s doable.

eBay is showing Twitter-like incompetence in serving its customers. While Google gives its customers huge amounts of storage, email, and software for free, eBay can’t seem to provide free image galleries and other useful services, selling out its customers to an unsavory bunch of third party providers. Image storage is not a very difficult technical problem, and neither is url shortening, but eBay and Twitter are still in the dark about it.

Instead of making selling on eBay easy, developing drop off stores, and making its service better eBay seems to be focused on buying and selling unrelated busenesses for billions of dollars (and losing money on it).

Leading By Design: The Ikea Story

Based on exclusive interviews with the legendary founder of IKEA, Ingvar Kamprad, Leading by Design tells the inside story of Kamprad’s humble roots and of the visionary concepts and innovative strategies that turned a small, Swedish mail-order company into a worldwide commercial giant.

When in 1943 at age seventeen Ingvar Kamprad founded IKEA, he had no way of knowing that IKEA would come to represent dedication to quality, a distinct design style, and convenience to the harried modern consumer. Today, more than 195 million people worldwide frequent his 150 stores in thirty countries, and almost 100 million catalogs are printed each year.

As the grandson of German immigrants who went to Sweden in search of a better life, Ingvar Kamprad grew up on a farm in a rural village. But he was no farmer. Early in his life, he discovered his natural affinity for business. From cigarette lighters and fish to Christmas cards and pens, young Ingvar devoted himself to importing and selling anything he thought he could make a profit on. Furniture was just one item in a long and fairly undistinguished list’until, in an effort to best his main competitor, he took a chance on an armless nursing chair he called Ruth. It quickly sold out. Adding a coffee table and then a sofa bed and then a chandelier, Kamprad was astonished by how quickly the merchandise moved.

The rest is business history. In Leading by Design, Bertil Torekull, a well-known Swedish journalist, reveals the genius and the secrets behind IKEA’s extraordinary success. With candor and detail, he offers insights into Kamprad’s cutting-edge management strategies, his enthusiasm to embrace innovative methods (such as producing ready-to-assemble merchandise and using a car door factory to produce affordable products with universal appeal), and the tools he used to grow the IKEA brand into a veritable industry unto itself.

More than a standard business history Leading by Design captures the essence of Kamprad himself. It is a testament to the inspiration, the ideas, and the innovations that make a good business great.

Old Books

I have 8 big Ikea Billy bookshelves (and one small one in the bathroom) all full. Since I don’t do Microsoft stuff any longer, I freed up a sweet chunk of shelf space by throwing these out (well, actually putting into the recycle pile):

I’d give them away, but they are absolutely useless.

301 Inkjet Tips and Techniques: An Essential Printing Resource for Photographers (Digital Process and Print)

The tools and techniques necessary for great digital output are now readily available and more affordable than ever. “301 Inkjet Tips and Techniques: An Essential Printing Resource for Photographers” shows photographers of all levels how to make high-quality prints through step-by-step instructions and hundreds of full-color examples from more than 20 professional photographers and other artists. You’ll discover how to choose the right inkjet printer for your output needs, how to save time and select the proper materials when prepping files and prints, how to manage your digital images, how to create captivating portfolios and framed art, and much more. Whether you are a professional photographer or a serious hobbyist this book will help you learn how to enhance and perfect your digital output skills and use your computer and inkjet printer to better express your vision and creativity. You can read the book cover to cover, or only the chapters that feature the specific tips and techniques that interest you. A comprehensive index and a searchable companion web site will ensure that you find the information you are looking for. Additional content for this book, including hundreds of clickable links to many of the resources covered throughout the book can be accessed at: www.inkjettips.com

Business @ the Speed of Stupid: How to Avoid Technology Disasters in Business

Business @ the Speed of Stupid brings to light many of the myths that stymie unwary investors, entrepreneurs, and managers who are seeking to turn a profit in the digital economy. It highlights why smart entrepreneurs buy into dim-witted business beliefs and exposes the “big lies” that have crippled so many companies. With ultimate know-how, verve, and humor, Dan Burke and Alan Morrison reveal why brilliant engineers don’t always make brilliant business leaders, how innovation is far less important than customers and quality, and that, yes, you do need to be profitable to survive on the Web. Bringing realism and experience to the table to counteract the lingering technology industry hype, Business @ the Speed of Stupid explains how to survive and profit in the next phase of our technology-driven economy.

Nautical Nonsense

The ship named after the patron saint of bug fixing (her portrait hangs in my cubicle) is in the news for being buzzed by Iranian Revolutionary Guard boats. She could have of course harpooned their ass,  but those things are like $700K.

Since the last time I compiled the list of megayachts, Larry Ellison’s very pretty 452 foot yacht  slipped to 5th place according to Wikipedia’s list. My advice to the various oligarchs: private nucular submarine is the way to go.  Man, do I wish I could afford a 27 foot fishing boat…

Cats and the Home Office

My home office is located in the living room these days, across from my wife’s harpsichord and organ. It consists of a sprawling Ikea GALANT desk with office supplies, computer equipment and cats covering most of its surface.

In particular, I have a Sharp AM-900 Digital Office Laser Copier/Printer/Fax/Scanner that I bought on Amazon for two hundred-something dollars. Basically it’s a decent standalone copier, an ok fax (I am not sure if it can actually print out confirmations). As far as printer and scanner functions go, the drivers are rather crunchy – I have to frequently unplug/reinstall them which is a major bummer. Also, Sharp does not have the drivers available online, so I have to keep the installation cd on my hard drive. But the copier and fax functions alone are worth that money, so I am glad I got it.

What I am not glad about is that Tilde the Cat figured out how to press the copy button. She was always fascinated by the printer noise, but now she learned how to produce it. Here’s her self-portrait. She pressed the button and looked at the pretty moving light. Now I’ll have to make an anti-cat button cover, like those on most of my power strips (I make them out of duct tape and steel corners).

Gary the Cat, on the other hand likes to use the keyboard as his pillow. He knows that sooner or later he’ll be able to rest his face on my left hand.

Trump Brand – Down The Toilet

Donald Trump really takes care of the details. The man and the brand – they are inseparable. Here’s what he’s writing in his blog:

“If I were to put “Trump” on everything that came my way – from potato chips to paper clips – the power of my name would be diluted. I’m very demanding and selective about where that name goes. And I always try to make sure the letters are in gold.

I was at the Trump Tower recently – I came in to use the bathroom, as he keeps one of the cleanest public bathrooms in the city (I wrote about it in Crouching Tourist, Hidden Bathroom). I felt kind of guilty about mooching of the Donald, so I decided to buy one of the mugs (sold in a little stand near the bathrooms).

Upon examining it at home, I realized that my dreams of drinking latte out of a snazzy mug with Trump’s “family crest” were shattered. Here’s what I found at the bottom:

By the way, if I were Trump, I would kick out Starbucks out of the Tower and invite Joe The Art of Coffee.