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  • Michael Krakovskiy 7:40 am on December 15, 2012 Permalink | Reply
    Tags: , , , , , New York, Private equity, serial entrepreneur, Silicon Alley, , , Y Combinator   

    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.

     
  • Michael Krakovskiy 8:25 pm on November 2, 2012 Permalink | Reply
    Tags: , , , New York, , Sheepshead Bay bridge, Thanksgiving, ,   

    Sandy Aftermath 

    It’s calm. A good time for some meditation.

    The building windows still have the useless tape crosses, some probably still from Irene.

    Tons of sand are removed from the streets

    Beach is where it was not before

    Most of the messed up cars have been towed, but some streets are still full of sand

    Garbage imbedded in fences

    The iconic Shore Hotel sign twisted in the wind

    Nathans is full of water and sand

    Brighton’s old ladies are back on the benches though

    This limo probably spent some time under water

    Dirt marks the high water line

    Brighton beach streets are never particularly tidy, but now businesses have basements full of water

    This cab has seen better days for sure

    The swans are back. I wonder where they went for the storm. The Sheepshead Bay bridge is all jacked up though.

    Getting into Manhattan is a pain in the ass.

    Buses think that they are trains

    Downtown Manhattan is eery – it’s dark and there’s no cell reception. Cops set up flares by the bus route

    Getting back into Brooklyn is even more of a pain. Cops have no idea where the shuttle buses stop saying that they are not MTA, and MTA employees send you in the wrong direction. Streets by the bus routes are lit by road flares. Only the Empire State Building is lit. It’s red – orange – yellow in honor of Thanksgiving.

     
  • Michael Krakovskiy 6:01 pm on May 21, 2012 Permalink | Reply
    Tags: , , advertising equivalent, Advertising network, advertising professional, , car commercials, , , , , Consumer fraud, cut rate ad networks, , , , FDA Phase, , hot search keywords, , , , IPO, New York, pretty sophisticated algorithms, , , web farms   

    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.

     
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