Sourcerer Makes it into Wharton VIP!

The venture that I've been developing with my partner Atish was recently admitted into the Wharton Venture Initiation Program. We're extremely grateful for the opportunity and are looking forward to joining this entrepreneurial community.

Could Facebook Charge Money?

I've been pondering our venture's pricing strategy lately, and it's sparked all kinds of thoughts about the free web 2.0 world. At a time when companies that serve free web apps, like Facebook, are having trouble monetizing (and having their valuations lowered as a result), one of the questions that they are surely asking themselves is whether they could move to some kind of subscription model to create new revenue streams and increased profitability. Before discounting this idea completely with arguments of Koppelman's 'penny-gap' theory and low switching costs between social networking services, let us consider the fundamental idea behind pricing and ask ourselves what price facebook could charge in exchange for their services, if anything.

Price is a direct reflection of value. The more something adds value to a customer's life, the more he is willing to pay for it. Therefore the first question is what value does Facebook add to my daily life?

The ComScore results in march suggested that on average people spend a total of 20 minutes EACH DAY on the service. It is a tool for organizing our social lives, networking, chatting, organizing photos and, increasingly, a platform for sharing information; a center for all things Web 2.0 that has driven internet use through the roof. Then we should have no doubt that Facebook adds considerable value to our lives. The question then is how does that translate to a price?

Though it may be a gross oversimplification, the price point would be the one we'd be willing to pay just before switching to a rival service. While some might argue that switching costs are negligible, Facebook has a number of competitive advantages that make these costs substantial. These include the network effect, unwillingness to manage multiple profiles, loyalty, inability to transfer all photos and profile, etc. So then let's imagine that Facebook were to implement a policy that either forced us to pay 1 cent per month or to watch an additional advertisement to receive 12 cents in revenue over the course of the year per customer. That means that with 100+ million users, they increase revenue by over a million dollars each month!

Now let's ask ourselves, is that 'charge' that facebook imposes on its customer in exchange for a very useful service likely to drive people away? Probably not. What the ideal price point would be will require a lot of research but it does leave us wondering why they wouldn't consider implementing a comparable policy to boost their revenues and valuation. What amazes me even more is the fact that they haven't created less invasive premium-service based revenue stream, such as bringing SmugMug type functionality to the photo app, which would certainly generate even more substantial revenues than charging subscription fees.

All signs are now pointing to targeted advertisements not being an optimal revenue source for web 2.0 tech. With companies like Facebook issuing equity valued at hundreds of millions of dollars, investors should really be pushing to develop the business in order to maximize shareholder value. Whether they would is another story, but from the logic described above I believe that they could make a strong case to do so.

Follow-Up to Yesterday's "Solve Your Own Problems..." Post

I got an email this morning from a close friend of mine, Anthony Orlando, who made the following comment in relation to yesterday's post, where I argued the importance of solving problems that you've experienced in your own life when starting a business:

"...what if you're not an expert on anything, i.e. you don't have a problem of
your own to solve?"

The question goes to the the heart of the point I was trying to make, since this is what so many young entrepreneurs with limited professional experience ask themeselves. While it's true that you might not have the professional experience to cater to enterprises, you have plenty of experience as a consumer to cater towards consumers like yourself.

Everyone is a consumer, so there's no excuse to say that you don't have expertise in anything. For example, if you spend 3 nights a week going to restaurants and night clubs, you start to get some idea of what makes a good menu or entertainment venue. If you go to coffee shops a few times a week, you begin to develop some expertise in what people are looking for in terms of atmosphere, music, service quality and product offering. If you like to explore new bands, but have trouble locating these emerging groups in your local Virgin Megastore, you start to gain some idea of a need that exists for people looking to explore new music based on their current preferences. The list goes on and on. As a consumer there's a pretty big chance that you have some sort of consumption pattern that makes you knowledgable in some areas, and it's these areas you want to focus on (if you'll notice by the way, I'm positive you can think of someone who has made money off each of the ideas I've listed above in the last 12 months.)

Of course the difficulty of innovating towards consumers like yourself is that consumers are innovating all the time. Our lives in the new millenium are so comfortable thanks to technology and e-commerce that we don't even have to get off our lazy backsides to purchase bread and milk (it's all delivered to your house! and if you don't like it, free return shipping!) But that does not change the fact that there's always room for improvement, and that there's always a pain point somewhere (it's human nature to never be satisfied!)

I find it highly unlikely that anyone 'doesn't have any problems' anywhere in their lives (if this is the case, my recommendation is not to bother reading this blog and starting a business, but rather taking it easy on a beach somewhere.) The trick is being persistent and always keeping your eyes open for a potential need. This means that you don't get much time to just shut down and lie down in the sun without analyzing the hell out of everything, but hey, that's the life you choose as an entrepreneur.

And if you really are living a life where you can't find a single need as a consumer... start changing your lifestyle to open you up to some new experiences; you're bound to find something somewhere out there. Just make sure you live it before you act on it.

Solve Your Own Problems, Not Someone Else's

Creating value is all about solving a problem. Solving a problem means understanding the problem itself in every dimension (missing even one dimension can render the product/service that you develop utterly useless). The only true way to understand a problem fully is to experience it. That pretty much explains why some of the most successful businesses in the world stem from the entrepreneurs solving a pain point that they experienced and knew inside out. Bankers identified opportunities in banking services/software, people having trouble working remotely developed collaboration software and college kids having trouble organizing their social lives built social networking.

One of the biggest issues I've faced over the past 6-7 months has been coming up with a great idea. Ordinary people find this difficult enough but it's infinitely harder for a young person who has such limited work and life experience and whose problems really are between the three realms of social life, student life and and consumer life. The result is often that young entrepreneurs try to learn about others' problems in the hope of solving them for a premium. Yet my recent experiences have shown that this is extremely difficult, since you keep learning some new information down the road which forces you to reevaluate everything. Uncertainty is always higher than you'd like and there's a part of the story that you know you're always missing.

So what's my takeaway here? Stick to solving your own problems. Don't try to build a business catering to outdoor sports enthusiasts if you've never been camping once, just because you see some untapped niche. If you think the opportunity is that huge, get a partner who IS an outdoor enthusiast so that you at least have some way of understanding what clients are telling you. In other words, stick to what you (or someone on your team) know. It'll take longer to find a great idea but pay off in the long run.

Angry Employees (Updated)

“A happy worker is a productive worker”; every company with a half decent HR department knows that’s true. An unhappy employee can be dangerous, not only because his productivity stalls but also because he can diffuse his dissatisfaction into the work environment and turn others against the company as well. Yet there is another area of your business in which an unhappy employee is even more dangerous; word of mouth marketing. People tend to put twice as much trust in the word-of-mouth of an employee that trashes the business than a peer who recounts a bad experience. This is because of two reasons; firstly, we always consider the possibility that our peers’ bad experience is a one in a hundred occurrence, whereas the employee gives us a survey of the history of the company’s service quality. Secondly, we assume that a company has to be pretty bad if its employees are putting their livelihood at risk by scaring away potential clients.

I was reminded of this fact last week when I was on a boat trip on the Aegean. The anchor broke and our captain, unable to get the proper guy to fix it since the owner of the business told him to go cheap, made us stay in the same spot for an entire day. The cook took the opportunity to trash the captain and the owner of the business, telling us about ‘the great boat’s he’s worked on before’. Suffice it to say, this really gave us a strong bias throughout the rest of our trip to everything that went wrong, and we were already talking about using one of the boats the cook was talking about next year. If this happens to every tour group that gets on board, I can’t imagine the business prospering. So what’s the bottom line: keep your employees happy, there’s more at stake than productivity!

UPDATE: A friend of mine who was on the boat with me shared some interesting information ysterday; apparently the cook did not stop at trashing the tour company but went so far as to give the contact numbers to other tour companies later that evening (I, of course, was asleep when this happened). FYI

3 Grievances on the VC Industry

The VC conference that I attended earlier this week gave me a very different view of venture capital. I was expecting to hear a lot more from the fund managers regarding their investing strategies. There were a few things that really got to me, and made me wonder whether some of the people in the room actually knew what they were talking about. Here is a list of grievance that I have regarding the VC industry:

1. No Real Investment Strategy. Quite a few VCs in the room were asked the question "What kind of companies do you normally fund?" The answer that a lot of them gave was that they were looking for 'anything and everything', as long as they were 'disruptive technologies.' Now, there are A LOT of VC-backed companies out there that do not even mildly look disruptive. Flash video technology was disruptive- it affected the movie and music industries and created a revolution in personal expression in the internet sphere. The IPhone is being disruptive- Apple single-handedly changed the idea of what a phone should be and is on the way to beating RIM and other competitors into the ground. A social network twist that allows you to share musical ideas is NOT going to disrupt anything! Yet VCs keep putting money into these start-ups, which in turn fuels more non-disruptive start-ups to emerge (no wonder there is too much money chasing too few good deals!) This shows that either a) they don't have an investment strategy or b) they are not following their investment strategy. This conclusion got me thinking and I arrived at my second grievance.
2. They are essentially gambling. If you set out at the start to get a success rate of 10-20% something is seriously wrong. If your investment strategy is to make picks and get that low a rate I equate it to gambling (even a random toss of the die gives you a 16% chance of success.) Now, I understand that the model has been proven to work, people have made money, etc. etc. Yet I can't help but wonder how anyone could possibly think that this current model is the right one to use going forward. Just because this has been the typical result historically doesn't justify it being a future goal. This thought led me to yet another realization and, indeed, another grievance.
3. Misalignment of interests. The objective of the fund is to make money in x years (typically 6). This time constraint and the large funds that are raised forces VCs to make investments no matter what to make sure they get a large return for their investors (even if they haven't come across the next disruptive wonder) I believe that this is a misalignment of interests, as VCs are pushed to use their money unwisely, resulting in the ridiculous 1/10 success rate. Again, this system just doesn't seem right.
   

Now let's get back to the infamous complaint of there being 'too much money chasing too few good deals'. The first reaction that I had to this statement was that not enough innovation must be happening- after all, given the billions of dollars out thee one would expect innovation to increase. Yet in retrospect I wonder whether this excess money is playing some role in stifling innovation by encouraging people to create moderate innovations in an effort to make a quick buck. If this is true, it suggests that VCs are actually doing damage to themselves because of the aforementioned grievances. Then what are some possible solutions to these problems?

1. Give VCs less money. If they have less cash they will have to make every dollar count. No more of this 1/10 success rate business. Investment strategies will have to be clearly defined and followed to the letter. With this much scrutiny, entrepreneurs will be pushed to create true breakthroughs
2. Make VCs set higher targets... if VCs attain higher success rates because they are no longer swimming in cash then losses should go down and expected returns should go up. This means that LPs should demand higher returns on their capital and push the VC partners to invest their money better.
   

No VC at the conference really addressed these questions completely (admittedly, I only confronted 2 people on the topic) so I'd be interested in hearing peoples' thoughts on this.

My Two Favorite Web Generators

Over the past couple weeks of looking around the blogosphere, watching videos and talking to entrepreneurs I came across two great website that I wanted to share:

1. The Dot-o-mator: I published a post a while back about the importance of naming your company early on. After not having followed my own advice for the past two weeks (and after suffering one of the pitfalls I'd predicted at a VC conference) I decided to get it over with. Enter the Dot-o-mator. This is a fantastic web-app that helps you generate a list of names and then automatically check for domain name availability. The programmer let's you specify the prefix/suffix and then lets you merge this with prefixes/suffixes from selected categories. So for example, if you are creating a sports website an want a 'Tech' name, you get results like soccercast, soccerfeed, soccerwire, etc. etc. etc. The author did a great job in thinking up all of the popular suffixes that are out there and then categorizing them. A lot of fun, very easy, give it a shot.
2. Dilbert Mission Statement Generator: I get the feeling that I'm one of the few people in the world who hadn't seen this before, but in case there are more of me out there this is a must-see web app. Guy Kawasaki referred to this as a way to 'save $25,000', making fun of how inane corporate mission statements are. I think it's really clever and amusing. Enjoy.
   

What Country is it Easiest to do Business In?

It's not the United States- at least, according to the International Finance Corporation's Doing Business Report.

The report breaks down the process of 'doing business' into several categories, including starting a business, registering property, getting credit, protecting investors, employing workers, trading across borders, etc. What's really interesting is that it also gives the breakdown of each category (for example, for the 'starting a business' category you can see that the metrics are how many procedures it takes to start-up, the average number of days, cost and minimum paid in capital)

It's interesting to see how high China is ranked, both in relation to the developed economies and the emerging markets. Though it ranks quite low in starting a business, acquiring licenses and registering property, it is ranked 3 or higher for getting credit, protecting investors, conducting trade and paying taxes. I commend the IFC for making this information public, as it is a valuable resource for businessmen and policy makers alike.

Venture Capital in the Emerging Markets

I attended a conference called Venture Capital in the Emerging Markets today in Istanbul, hosted by a local VC named Golden Horn Ventures. I was really looking forward to hearing what everyone had to say about the state of VC/innovation in emerging markets outside the BRIC countries. The panels were arranged such that they addressed three viewpoints- Funds of VC Funds, VC funds and entrepreneurs. These were my key takeaways:

• Plenty of opportunity to grow/capture the market for goods and services as emerging economies develop and household incomes rise.
• Legal barriers are still a pressing concern for investors and entrepreneurs. I had no idea how long the list of grievances was before today. VCs were concerned with matters like enforceability of contracts (the IFC rep noted that they had a whole portfolio in Russia because of this) and the infrastructure in place to facilitate investing/exiting. Entrepreneurs complained about the inability to create different classes of stock and create stock options within some emerging markets’ legal systems.
• Exits are difficult. The normal exits come through either IPO or M&A, yet these are much more difficult in emerging markets. In fact, a Turkish PE fund manager noted that a preferred exit for their company was to sell the shares back to the entrepreneurs! However, the possibility of exit through M&A is increasing as a result of multinational firms seeking to expand into emerging markets.
• Private Equity will need to become established before Venture Capital. A panelist noted that the lucrative deals being sourced by Private Equity funds have roughly the same IRR as those of VC deals in some emerging markets. Hence PE is a much more preferable option for investors.
• There is a lack of relevant VC/Entrepreneur experience. One of the panelists referred to this as a ‘chicken and egg’ problem. Nobody wants to invest in regions where VCs/entrepreneurs don’t have prior experience, and yet these regions have a lot of first time entrepreneurs who can’t gain experience without acquiring funding.

• It may take time for a new generation of entrepreneurs to out of these markets. Many attendants noted that cultural norms make it very difficult for entrepreneurs to come out of emerging economies. For example, not all cultures are as accepting of failure as much as the Americans and there is a huge amount of social pressure to stay away from high-risk business ventures.

Overall I was very surprised to see how new the concept of early stage investing was to the local VCs. It was very easy to tell who had worked previously in Europe and America and some investors openly admitted that they were unable to fund the kinds of companies that American companies did since they did not know what risks to take… which makes me wonder what the BRIC countries are doing right, that is facilitating so much VC/PE activity. I’ll give an update here when I find the answer.

Update- Morgan Stanley Internet Trends '08!

I was able to find the '08 version to the Morgan Stanley Internet Trends Report (published just in March) and I've embedded it for your viewing pleasure.

| View | Upload your own

Some interesting things that catch the eye:

• A quote from Google's CIO saying that consumer software is now better than enterprise software in terms of reliability, security and speed.
  
• 15% of internet traffic belongs to social networking- a category that did not even exist in the report 3 years ago! (Youtube + Facebook have more page views than Google and Yahoo combined)
• Online ad spending per household is still significantly lower than newspaper spending but has grown 26% Y/Y while Newspaper advertising fell 7%.
• Some interesting insights on how Facebook's interface has made it more successful in growing than myspace (slide 15)
• The mobile platform is a growing opportunity, especially outside the western countries where developing landlines have skipped building landlines in favor of wireless services.
  

Patents...

I came across a great post on Josh Kopelman's blog the other day regarding the value of Patents. It was really enlightening from a first-time entrepreneur's perspective, as I used to think that the 'patent pending' stamp meant a lot.

Kopelman founded Half.com in 1999 and sold it to eBay in 2000. The patent that Half.com applied for in 1999 was issued just recently, 8.5 years later. He goes on to discuss the long waiting time, currently averaging 4+ years, in the patent approval process. Given that even a month is a very long time in the tech industry, you need to make sure that you have other ways to protect your IP and other forms of competitive advantage. Indeed, it is crucial to apply for patents early (if you don't someone else will and then take you to court 8 years later for using 'their' technology) but it is important that you evaluate how important that patent will be in determining your success.

I really liked the analogy that Kopelman uses from Fred Wilson's Blog:

"Patents are like nuclear bombs, you just got to have some". But if you're fighting a war today, it's better to count on weapons you have at hand today -- don't rely on a nuclear program that could take five years to come to fruition.

Volunteer Groups- a Test of Your Management Skill

In this post I will discuss some thoughts on good management (which I think of as the ability of a person to motivate others to work productively to achieve desired outcomes), as well as an exercise to develop strong management skills

In business, problems of motivation can be overcome to a significant extent by monetary compensation; people who get more burdensome tasks with longer hours can be convinced to stay and do the work by way of larger compensation packages. If the boss drops the ball, employees aren't all that concerned about it, as long as they get their paychecks in the foreseeable future. Bonuses, overtime pay and stock options can be used to get people to give it their all and make sure the work is done. While I agree that these compensation schemes have been proven over time to be very effective, I contend that they can become somewhat of a crutch for managers and that they fall outside the realm of good management. This is because these schemes fail to address intrinsic motivations (a person’s internal desires for accomplishing the goal for the sake of it) and fail to make people work to their full potential. With this crutch it is difficult to say that one’s management skills are tested fully in the corporate environment.

Successful Volunteer Groups, however, are unable to rely on financial compensation to motivate people to offer their time and effort. Given the lack of extrinsic motivators in these groups, a very interesting question we must ask is: how do leaders in these organizations leverage intrinsic motivations to achieve organizational success? I believe that answering this question is the key to understanding what good management is. I'll quote my good friend Stu Stein on why I believe that this is so- "if you can motivate people to work for your cause for free, imagine what you could get them to do when you start paying them."

Some close friends in Volunteer Groups and I have spent much time discussing our HR issues and have found that certain practices have stood out as good management practices in volunteer groups, all addressing team members' intrinsic motivations:

1. Hiring/accepting people with strong intrinsic motivations. These motivations may be different for each person but the importance is that they WANT to help achieve something that the organization values because they believe in it.
2. Relate to people on the team on a personal and professional level. A key to understanding intrinsic motivations is to better know the person and how they work/think. This information is critical when the time comes to align interests. Socialization within the organization is a great way to create a culture through which managers can learn about people on their team.
3. Set the Vision, Mission and Values. Though these are overlooked in ordinary businesses (and not taken seriously by anyone who’s taken a management class that makes a mockery of this concept), this is crucial when it comes to intrinsic motivations. Each person has a different desire that they prioritize but if the team agrees to a common set of VMMs, the priorities will set themselves.
4. Make sure each person feels valued. You can’t compensate them with bonuses so you need to reward achievement and effort by recognizing it.
5. Flat structures. Utilize peoples’ intrinsic motivations to allow them to innovate- let them be the drivers of their own projects.

As you can see, the complexities of Volunteer Groups and the issues that their managers face make them an ideal ground to develop practical management experience. It is especially a good experience for aspiring entrepreneurs, who often don't have the resources to use money as a motivator for people to work for them.

Asking the Right Questions

This is a great follow up to the previous post about choice and product design. This video features Malcolm Gladwell, a social psychologist whose work has contributed to a plethora of subjects (teachers in 4 of my classes assigned readings from his works) and who was among Time’s 100 most influential people.


The main subject of his talk is how Howard Moskowitz reinvented product development in the food industry. Moskowitz had been hired to determine what the ideal level of sugar a new Pepsi drink was supposed to have (somewhere between 8-12%). What one would ordinarily do is make a bunch of different batches with different levels of sugar, increasing in small increments, and survey a large sample of people to find the 'ideal' level of sugar. However, this experiment seemed to produce no statistically significant result for Moskowitz. This led him to realize that he was asking the survey participants the wrong question- “He was asking for what was the best Pepsi; what he should have been asking was what are the best Pepsis?” In other words, there was not one ideal Pepsi that people were looking for, but multiple optimal solutions.

This realization led him to make breakthroughs in other food categories. When trying to find a superior spaghetti sauce for Ragu, he changed his approach. Instead of changing a limited set of variables in the batches, he changed every variable the he could think of, including how coarse the sauce was. A third of participants showed preference for a 'chunky' textured sauce; this proved to be revolutionary, as it contradicted the conventional notion of 'fine, authentic Italian sauces' and was not a preference that people would think of mentioning when being surveyed (especially since they have a bias towards the idealized traditional sauce). This opened up a third of the established market to Ragu and made them millions.

My takeaways from Gladwell's story are the following

1. The wording of your questions are crucial. People were giving Moskowitz the right answers to his question- he was just asking the wrong one! When we get a lot of ‘noise’ in our survey results the immediate response should be to analyze the survey and not to pick an average value in the hope of satisfying the middle of the bell curve.
2. How you ask the question matters. When you survey people, they will not always say what they really mean to say. Gladwell compares this to asking someone what their ideal coffee is; they will immediately conjure up the picture of a ‘nice dark hearty roast’ even if they like their coffee ‘milky and cold.’ Some creative experimentation like the spaghetti sauce experiment may be required to get the information that you want from your customers.

The Power of Mobile

This year I was lucky enough to find my way into a presentation given by Andrew Weinrich at the Wharton School, thanks to the guidance of a brilliant VC named Baris Aksoy. Weinrich is one of the pioneers of social networking, having co-founded Six Degrees in the mid-nineties. He was giving a lecture on the power of the mobile phone as an enabling technology and its potential applications by talking about his latest tech venture MeetMoi.

For the longest time I’d been trying to figure out why there was such hype about moving social media to the mobile platform. The presentation proved to be very enlightening in this respect. MeetMoi is a dating service, much like eharmony.com and chemistry.com, but with a twist. The idea is that they can use your mobile phone to determine where you and all of your matches are at any time, and alert you when you are within an X mile radius of each other. It also gives you the freedom to change your service preferences at any time, so you can activate the service on the way home from the office or when you’re out at a bar with friends and deactivate it while at work or asleep.

Now I won’t go into some of the clear issues that are associated with the service itself (people in the room thought of all kinds of situations where this idea could get you into trouble as the user) but it definitely highlights the potential of mobile: the power to not only match your interests with a cataloged set of services but to also match you geographically. Say you’re looking for a new apartment; there’s a good chance that you walk by half a dozen great apartments on the way to work each day without knowing it. Imagine that a service knows of this and sends you a message saying (“Apartment 411, 12 Barclay’s Street, $3500 a month, resident accepting inquiries now) on your way to the red line in downtown New York- now there’s an interesting start up that I would love to be a part of.

Choice and Customization

I'm constantly surprised by the fact that TED isn't receiving more attention. It's a fantastic website that I've spent countless hours on and I'd recommend that everyone check it out at least once (be forewarned, it can get addicting- I spent 2 full reading days during finals distracting myself with these videos). This video is a brilliant TED lecture that I found a while back on Choice by Barry Schwartz.



Schwartz's delivery is just superb and really makes one ask questions about the current trend in design that's moving towards customization. The idea is to cater to individual tastes by allowing consumers to shape their own experiences. This puts users in the driver's seat and saves the designers the trouble of spending endless hours trying to determine what the average customer wants. Yet there is significant scientific evidence that too much choice makes us unhappy, as we struggle to make the right trade-offs and end up focusing on the happiness we could have had with one of the other choices. The result: either we are unhappy with our choice or we don't make a choice at all (a well known study conducted in a supermarket showed that increasing choice decreased sales of a particular item.)

The lesson here is that designers need to be careful in how many customizable features they incorporate into their products. Sure, they should offer some options for various types of people but they still need to do their homework and create products with optimal settings for different cohorts.

An Aside --> for people looking to get some more exposure to TED here's a good sample of the types of lectures you'll find. Enjoy!

http://www.ted.com/index.php/talks/view/id/66 - on rethinking our education systems

http://www.ted.com/index.php/talks/view/id/7 - simplicity sells.

http://www.ted.com/index.php/talks/view/id/93 - ridiculous statistics.

Go To Your Customers

When I was in high school my father had just reached retirement after 35 years in commercial banking and was eager to share the wealth of experiences that he'd accumulated. The one concept that the pounded into my head week after week when discussing business was, "Go to your customers!" Though it's fundamental to the marketing process, many entrepreneurs that I've seen to date think it's inconvenient and ignore it for a number of reasons. Examples are (paraphrased from what I've heard):

1. "I don't have any patents and I don't want to risk making the idea public until I make some headway into developing the product"
2. "Customers don't want to take time to talk to us, and if they do they don't put thought into surveys."
3. "How can you go to your customers if you don't have any yet"?

My time as a consultant at the Wharton Small Business Development Center showed me how important it was to ignore these excuses. Don't get me wrong, they are legitimate concerns that certainly make the process more difficult but they aren't good enough to make it impossible. Most of our clients had strong business plans with graphs/tables/quotes from research reports but were still unable to meet their sales targets because they were lacking enough data points from interviewing potential/existing clients. Indeed, gathering and analyzing this information was probably our biggest value-add activity. Did we sometimes come across difficult (and even rude) people? Yes. Were people often rushed and able to answer only a tenth of our questions? Yes. But the answers to the few questions that we managed to ask were sometimes so insightful that we were able to make small adjustments to our clients' business models and help them grow revenues significantly. This is a lesson that my partner and I are taking forward in the process of developing our business plan.

The Bottom Line: You've done your secondary research and developed some important hypotheses on what the customer should want. It's up to you to prove that this is what the customer does want before investing a single dime into the business. IF you find that the costs to reaching your clients/acquiring this information are too large, you may want to rethink whether you really want to risk being in this business.

Undergoing MyBlogLog Verification

First Post (Introduction)

Hello blogging world! I've been wanting to start this blog for a year now but I kept pushing it back (college becomes pretty time consuming once you switch to the 3 year track 1.5 years into it.) Now that the summer's finally here I'll be updating the site frequently so I hope to offer some interesting insights into the world of tech from a young aspiring entrepreneur's perspective... what? there are already millions of people doing this already? I'll play the 'diversity' card by offering some views/news on tech from back home in Europe and focusing on my personal experiences in the world of entrepreneurship.

So... what is the 'Tech Road Trip'? I've recently started the first stage of a tech venture with my close friend and peer from school (currently in stealth mode- more details to be released over the course of the coming months) and have immersed myself in the world of internet technology. Though I decided to take the summer off after a grueling experience at a couple of banks last summer, I've been spending 5+ hours a day reading on the internet/blogosphere and talking to other entrepreneurs in an effort to learn as much as possible form others' experiences. It's a gift and a curse that there seems to be no shortage of people willing to share knowledge and tips/tricks, but it's rare that we see a chronologically organized guide to understanding the product development process from start to finish. I hope that this will serve as a resource to other aspiring entrepreneurs, both present and future.