Dec 09

Exactly one month to the day from arriving in the Bay Area, I pulled in an hour ago to my driveway back home in Tempe. What a month! The pictures from the trip say more than I possibly could in a single blog post. I met a ton of wonderful people in the Bay and made some great connections for our company. Here’s some stats from the trip that are interesting:

  • total distance traveled = 2987 mi
  • gas consumed = 166.558 Gal
  • total trip expenses = $2078.32
  • # days on the road = 31
  • business cards collected = 32
  • unique beds/couches = 17 (including a garage floor ;-)
  • total spent on hotels = $124
  • total spent on parking fines = $170
  • # of Executive Summaries sent = 22
  • # of VC funding sources pitched = 7
  • value of the advice, visibility, contacts & goodwill generated for JumpBox = incalculable
  • All told the trip cost a hair over $2k (which was way under budget). I want to personally thank all the people that went out of their way to give me a meal, a pillow, a piece of advice or an introduction to a valuable contact – the trip would obviously not have worked without the generosity and hospitality offered by these people. In chronological order here are some people that get a shout-out:

    Christopher Birdsall – for a pit stop at the halfway point in LA
    Scott & Sarah Yancey – for their repeated hospitality and their spectacular rooftop office
    Ben Flajnik & Corey Marrs and their roommate Justin – for a comfy garage and access to do laundry ;-)
    Francine Hardaway – for a fantastic intro and access to her beautiful house in HMB
    Robert Scoble – for letting me be on his Podtech show as a guest
    Andrew Hyde – for being on our podcast and putting on a killer startup weekend in SF
    Tony Jeffries – for all the key intros and drinks at La Bodeguita
    Josh Margulies and his fiancee Liv – for an aerobed and many connections (congrats on your engagement!)
    Jen Margulies – for 2 critical intros (happy birthday!)
    Mark Fletcher – for meeting with me and sharing entrepreneurial advice and a helpful contact
    Jay Margulies – for critique on our exec summary and letting me partake in two family celebrations
    My brother Connor – for hooking me up with a place and fixing my Quickbooks issues (happy 30th!)
    The Carroll family – for allowing me to join the family on Thanksgiving away from home (RIP Pop Carroll)
    Jen Behan and her family – for round #2 of pumpkin pie and a warm home on a cold Thanksgiving night
    Tom Jackiewicz – for a thermarest and a stellar selection of connoisseur tequila
    Jasmine Antonick – a key intro to an important connector
    Debbia Landa and her crew – 2 intros to solid funding sources and a wonderful meal
    The Hamilton family in Newport Beach – for a crash pad and a family feast at the end of a long trip

    To these people my couch and home are yours anytime. More on some of the many things I learned on this trip in a later post. For now, I’m really looking forward to my own bed. Here’s a cool video I shot yesterday while driving back down the coast on Highway 1:

    And here’s what a month’s worth of receipts and business cards looks like ;-) G’night.

    SFtripgoodies.jpg

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    Dec 01

    What is PPA?

    Pay-per-action advertising is a model where the advertiser gets paid only when the visitor completes a specified action on the advertised site. This model has incredible potential for both parties because it circumvents the problem of click fraud (it can be setup so advertisers are paid only when sales are made). From the advertiser’s perspective, you’ll happily pay commission on sales that are made and it’s like having an outsourced affiliate program that you don’t have to manage yourself. From the publisher’s perspective, you can “rep” products that are relevant to your site’s content and (in theory) earn more than you could via adsense because the payouts are much higher. Google’s move into this space disrupts incumbents Commission Junction and which currently charge significant setup fees to get involved as an advertiser (Google charges no setup fees).

    Our experience with the Google beta

    The unfortunate reality of the current state of the PPA beta on Google is that it appears to be riddled with fraud. “But I thought you said you couldn’t get burned?” – let me explain. We signed up a few months ago and posted a handful of JumpBoxes in their directory offering a generous commission (over 30% for sales generated) to attract affiliates. We saw downloads skyrocket immediately but zero new conversions came from those new downloads. This probably should have been a red flag that the downloads were bogus, but we were still hopeful that it was just a matter of us adapting a landing page for better conversion and continued to run the PPA ads.

    About two weeks into it we had seen not one sale originate from the PPA ads- we weren’t losing money on them since the payout was still tied to a sale, but the spurious downloads were throwing off our conversion numbers and tainting our stats. The participants in the Adsense Referrals network (which is this program from the publisher’s side) have a rating system for advertisers and we were concerned that we’d be blacklisted because we hadn’t yet done any payouts so we changed the rewarded action from a sale to the completion of a lead form upon successful download. We dropped the commission significantly to $.50 and treated it as a pure lead generation program. Fortunately we had set the daily cap in adspend because immediately people took advantage of this change and filled out junk emails repeatedly to earn the $.50 payout. I was surprised with how quickly this abuse came. We promptly shut off the PPA ads and discontinued participation in the program – we only lost something like $30 altogether.

    Advice for Google

    This has got to be a tough problem to combat from Google’s perspective. Juggling both sides of the equation, they have to attract enough quality advertisers with desirable and discreet products that work in the affiliate scenario while at the same time keeping a high quality of publisher in the referral network so as not to alienate the advertisers. Opportunity for fraud abounds – from the advertiser side, there’s no surefire way to enforce that the payout actions are accurately tracked (ie. i could start with the tracking script on our checkout thank you page and then remove it or selectively serve it every fifth purchase to dilute the commissions we pay and nobody would be the wiser). On the side of publisher fraud, it’s easy to participate only in the referral programs where payout doesn’t require a sale and then surf through an anonymizer to emulate people completing those actions via your ads. Google’s system of ratings from publishers is clearly how they are screening advertisers but they don’t seem to have a good way to eliminate the shady publishers. I didn’t see the equivalent ratings system for advertisers to use for this purpose.

    Presumably the advice for now is to simply never pay commission on anything other than a sale- unfortunately that reduces the reach of this program to ecommerce sites only. My advice to Google though would be to disallow payment on actions other than sales to “cleanup the streets” in the near term and make it impossible for scammers to game the system. Once it’s economically unviable for them to make money there, they’ll leave and find another shady neighborhood to haunt. This whole thing oddly makes me wish there was an “Internet-wide Boys and Girls Club” to give fraudsters something positive to do- all that clicking just to earn $.50… you’d think there would be a HIT on the Amazon Mechanical Turk where they could legitimately earn more than that will less work…

    I hope they figure something out because I love the approach in general of yoking reward as directly as possible to performance. Having studied the negative extremes of this principle with the Learned Helplessness paradigm in school, the idea of tethering reward to successful efforts has appealed to me on a very fundamental level and beyond business. I don’t have a silver-bullet suggestion for Google on how to stamp out fraudulent activity. It’s a very knotted messy problem that could easily spiral out of control scaring away advertisers and creating negative press. Fortunately they have some of the brightest minds on it – having just had lunch on their campus earlier this week, I can attest that it felt like there were definitely more brain cells per capita at Google than any place I’ve been on Earth.

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    Nov 21

    Chance Carpenter of Essential Event Technologies just posted the videos from a bunch of the sessions at the Arizona Entrepreneurship Conference that was held on Nov 8th. Here’s the video from the panel I moderated on Innovation as a Process. Chance does this for many local events in AZ and it’s a great way extend the reach of the discussion beyond the walls of the actual event. Contact him through his web site if you want him to do this same type of video archival for your event.

    Nov 19

    Having just completed the 54-hr-whirlwind journey of launching a startup company from scratch in a weekend here in San Francisco, I wanted to share some thoughts about what worked and what didn’t. I was fortunate enough to be able to interview the founder of startup weekend Andrew Hyde and one of his dramatic cohorts, Michael Gruen. It’s a short/sweet 30min conversation and gets at the heart of what they’re trying to do with these weekends.

    Let me just say that in every respect this was an amazing event. It condensed a year long product dev and launch cycle into just 2.5 days and it began on a Friday night with a room full of 132 complete strangers. The fact they were able to keep the wheels on the bus and deliver a working alpha by midnight on Sunday was an impressive feat in itself, but what was even more impressive was to see how leaders emerged and groups solved problems. The company we launched, HelpHookup.com managed last night to make the homepage of Techcrunch (something we still haven’t achieved in our year of lobbying efforts with JumpBox).

    What worked well

    The selection process was well-run. Ideas that had been proposed prior via the web site were pitched by their originators and every fourth idea the room broke into small groups of four to discuss. Someone called it “speed dating for nerds” and I suppose that was an accurate description of that frenzy. The selection was ultimately whittled down to just three ideas. Oddly enough, none of them won and one of the lesser-voted ideas re-emerged to win the selection process. I proposed a mutation of my Feelrz concept based on a genius twist that Josh Knowles had. Unfortunately the idea didn’t make the cut. The room divided into functional groups (development, creative, marketing, bizdev, legal, usability) and I gravitated to the marketing group initially. Being that I wasn’t super-stoked on the idea that got selected, I made the decision about 30min into it to play the weekend a bit differently than most would. Rather than lock into one group and engage vertically, I would bounce around and assume a horizontal role observing the activities across all functional teams. Granted, the weekend wouldn’t work if everyone were to do this but I had the unique opportunity to assume more of a “press” role and observe how the teams worked and communicated with the larger group.

    The majority of comments on the TechCrunch article were positive but there were a handful of haters that derided the weekend pointing to the unlikelihood of anything material benefit for the attendees. This position is understandable if the person attending the event goes in with the expectation that the sole value of the event is in the shares one receives in the startup that emerges. The true value of this weekend as I saw it was:

    1. A firehose of practical knowledge – wandering around the room absorbing all the dialogue and interaction between usability people, developers, marketers, etc. I couldn’t help but think of that scene in the Matrix in which Trinity is asked if she knows how to fly a helicopter and she responds “not yet.” Moments later a lifetime of flight experience is dumped into her brain and she has what she needs. The value of the collective experience from the folks that were interacting in that room was incredible. For anyone who’s entertaining doing a startup, attending a weekend like this would be invaluable in getting a taste for what’s involved.
    2. A connection bonanza – given the nature of the event and who decides to stick around until day 3, it’s no surprise that the solid people filter through and you meet incredible individuals that share the same passion for the industry as you. I met some kick-ass people this weekend (Jeff, Mike, Andrew, Chris and Jeremy).
    3. Lessons in leadership – you get to see first hand how certain people emerge as leaders, how the stew of different personality traits creates pockets of different styles and how natual selection naturally takes care of the wacko’s.

    Suggestions for improvement

    I do have some suggestions what modifications that could make the weekend better:

    1. Allow multiple ideas – I know this is counter to the mission of picking one idea and having everyone rally around it but there was 50% attrition each day and I attribute this to lack of interest in the chosen idea on the part of those that left. I was more interested in the event itself but I probably would have not returned the second day if I was purely there on valuation of the chosen idea itself. I would urge the organizers to experiment with one weekend where the group is permitted to organically self-form around any ideas. There will naturally be one or two that are more popular but I would expect to see great things from a small 4-person team if they were passionate about the concept. Plus, some of the functional groups could work across ideas (creative for instance should necessarily be partitioned and constrained to working in 4 different silos in the event 4 ideas are chosen – dev makes sense to split into teams however). This is the biggest qualm I had. I understand the counter argument to this approach in that it might fragment folks and detract from the community aspect which is the primary goal, but I don’t believe that would happen if it were glued together properly and certain teams worked horizonally across multiple projects.
    2. Phone tree buddy system to reduce attrition – so obviously this is the “stick” as opposed to the “carrot” method above for mitigating the attrition problem but implementing some kind of buddy system in which you got a phone call the next day from someone in your group saying “hey where are you? we need you to do xyz” would keep more people there the same way having a workout partner at the gym is just enough to make you go back to the gym. This is a challenging problem and one we encountered first-hand with Grid7 Labs – when people aren’t on the hook to deliver it’s easy for them to blow it off. I would expect this problem to lessen if suggestion #1 is followed.
    3. Better ad hoc infrastructure – this is a shameless self-plug for our stuff but a would be ideal instead of the hour it took them to get a subversion repository setup. The dev team also would have had access to the ticket system in Trac at that point which would make the accountability and assignment of tasks much more efficient. I showed Andrew the Trac JumpBox and it sounds like they’ll be using it in the future. This is precisely the scenario it was made for. Likewise, the talks I heard about securing a hosting account early in the event could have been avoided by merely serving it from a virtualized instance on someone’s laptop in the room and deferring the hosting issue until it was necessary. If the weekend is mapped time-wise to a year of the life of a startup, deferring the hosting decision translates to month’s of saved hosting fees plus the access to the local machine is much snappier than hitting a remote box over the internet during dev.
    4. Connectivity – this is just an issue of over crowding on a connection that wasn’t intended to have 130 people accessing it simultaneously but connectivity needs to made more reliable. Perhaps getting multiple EVDO cards and having alternative shared connections via that would help? I’m not sure of a silver bullet for this problem but solutions should definitely be explored.

    Anyways, the weekend was fantastic and much props to all the people that labored to put it together. I met some great people and plan to stay in touch.

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    Nov 17

    Ahhh the trials and travails of couch surfing in San Francisco.

    It’s alright though, Scoble dug the demo and I’ve met some awesome people so far.

    And for better or worse I’ve succumbed to peer pressure and taken the plunge today of signing up for a Twitter account. Curse you Ev Williams, I waste enough time as it is ;-)

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    Nov 07

    I’m moderating a panel tomorrow on Innovation at the Arizona Entrepreneurship Conference and then jumping in my truck and driving up to San Francisco. I’ll be staying in the Bay Area for a month couch surfing and hitting various conferences and user groups. Here’s the tenative itinerary:

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    If you’re in the Bay Area, drop me a line and let’s meet for lunch. My whole goal is to get “in the mix” and meet progressive tech people in the area and see what everyone is doing. We’re somewhat isolated from the real action down here in AZ and I’m looking forward to traveling around Silicon Valley to meet folks and spread the word about some of the great things that we’re doing with JumpBox.

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