Negative Customer Acquisition Costs - Creative Startup Marketing Ideas - Eric David Greenspan

I’ve recently had a chance to reconnect with Eric David Greenspan (LinkedIn, Twitter)  He’s the CEO of Make It Work a high quality, personal, high touch technology service provider for homes and small businesses.  He’s done several startups and is a board member of the Technology Council of Southern California (which is where I met him originally).  A great opportunity for more visible networking.

I roughly know about MakeItWork, but tell me a bit about where you spend your time day-to-day.

A typical day starts with email, Facebook, LinkedIn, Twitter, and Yammer checks/updates. Then I check and manage our Google Adwords campaign and check our analytics/stats. Sometimes I make a blog entry. I have a few meetings with the team, perhaps about the website design, radio show structure, an event we are working on, a sponsorship (perhaps the uniforms for our youth basketball team). I frequently work on networking through the social web and building new relationships that will foster knowledge gathering or business growth. A day might include a discussion with a finance partner, an investor, a customer or a fusion partner. Some days I respond to questions asked by folks like yourself, the press, or an entity doing a case study, i.e. Citrix, RIM, USC. I might also be found working on a presentation for an event or speaking engagement. I like to book my own travel, so I might be on Expedia or on an airplane. In between it all, I'm dropping off/picking up my son, hanging out with my wife and dogs, or perhaps a cigar with my brother or friends.

We need to spend some time discussing what you do with the social web.  It’s something I speak about quite a bit (see Social Media to Build Reputation and Reach Prospects and Social Media for Service Professionals).  It’s something I do a fair bit myself, but I’m always learning.  Look forward to the discussion.

Any aspects of the business you are particularly working on now?

Poogling events/webinar, radio show expansion and social media relationships and events.

It seems like a lot of what you are doing is about providing valuable information that accompanies the work that you do.  Again, an interesting topic to discuss.  I’m more familiar with content marketing in B2B Marketing.  I’ll be curious to drill down a bit around concepts like Browse My Stuff.  However, as I read more about your focus, you are using these things in a slightly different way, i.e., not sure if SEO is as important.

What's keeping you up at night?

Growing faster, increasing cash flow and satisfying my shareholders' desire for an exit.

That all sounds easy. ;)

What are you doing with social media to drive business for MakeItWork?  Anything that's been particularly successful?

Building relationships, partnering with social media experts on events (SBTwestival and 140 Conference Meetup), learning at events, building a following, testing any and all formats/venues, integrating social media into our radio show. So far, its been instrumental in expanding our reach, presence and brand, but I still believe that we must do it, but not sure exactly why yet.

Great stuff! 

I recently posted about SEO for Startups.  Is/was SEO important for MakeItWork? Any thoughts on my post?

Very important, but less than before. We have traditionally been a company heard about through word of mouth, radio advertising (now our own show) and from a Mini sighting. I'd rather invest time investing in social media to drive traffic to our site.

Love the minis!  Really aligns with the brand and are quite easy to recognize.  Plus, I’ve got to imagine your employees love it.

Your take on sources of leads is interesting.  I’ve got to imagine this makes tracking marketing spend challenging.

Anything else you doing from a marketing standpoint that's working well?

Our radio show, Tech News, powered by Make It Work has been a great success. Our new customer acquisition has grown and our costs have plummeted. We are actually getting paid now to obtain customers, so our customer acquisition costs are now negative. We are also building an audience from our Poogling Internet Safety Seminars, soon to be an online Webinar/video for broader reach.

Wow!  A negative customer acquisition cost!  I’m going to be using that as an example for a long time!  Just found the title of my post.

You've been blogging for a while, what are five good posts that I should check out?

Flip flops required, How I got my mortgage company to lower my payments by $10k, Want more Twitter followers?, Santa Barbara: the home of the clicks (and the calls), Do your kids Google poo?

Great posts.  I’ll be curious to hear more about your experience with affiliate marketing.  It seems like a lot of your time is spent finding creative ways to build your customer base.

I’ve personally been hesitant about using things like TweetAdder.  You must be doing more than just using the application to get followers in order to make it effective.  It’s that same discussion around how you are using social media.

What networking events in Los Angeles or Southern California do you go to? What was the best one you've been to recently?

VentureNet, Perfect Pitch

You and I have both been on the board of the technology council. What motivates you to do that? Is it a good use of your time?

My company and I are a perfect case study for the Tech Council affiliation. We won the Industry Awards category of Services Company of the Year that led to meeting the Executive Director of CTM at USC who asked me to become a member which led to many new relationships and speaking opportunities, then led to meeting Verizon where we secured a very unique partnership and they are now our radio show sponsor and we presented at VentureNet which led to a sizable funding from Tech Coast Angels. I've made solid press contacts from it, found quality partners, supporters of events and many other resources. I consider it INVALUABLE!

Who are some of your go to people in Southern California?

CTM and USC, staff of Citrix Online, TCA members, and now you!

Eric – this has been great getting to know you.  Really fantastic insights and I look forward to continued conversation around these things.

Early Stage Marketing and Branding – Farida Fotouhi

I've known Farida for quite a while.  Maybe ten years.  She is a go to person for me when I have questions around technology or early stage marketing and branding.  I hadn't talked to her in a while and then because of a presentation I did around Social Media for Service Professionals she and I reconnected.  It has been fun to get to know her again.  And I'm looking forward to more interaction now that she's blogging.

Remind me about your background.

I've been President of my marketing, branding, creative and advertising firm for, yikes, 30 years. I started out with a handful of dimes making cold calls from a phone booth in Grand Central Station. That's when phone calls were a dime, so you get an idea how long ago that was. I was on the way back to LA from a ski vacation in Switzerland where I decided while sliding down a glacier that if I survived I would start my own advertising agency.

We've been through a number of down business cycles, recessions, tech wrecks, the dotcom crash, and other burst bubbles and are still around to tell the tale. So cheer up everybody, this too will pass.

The firm used to be called Fotouhi Alonso and were one of LA's top mid-sized agencies for 20 years, working with clients like Honda, Epson, the LA DWP, and the FX Network. We downsized from 35 people in 2001 and are now a size that allows us to work directly with clients. Having fun again. Same partner all along: Jorge Alonso, Creative Director.

Our name Reality2 stands for Reality2.0. We help clients deal with new marketing realities like constant change (which often requires
repositioning) and the "online/offline marketing grid" (which lets you extend reach essentially for free using social media). We streamline strategy development using a Reality-Based approach, then execute cross-media programs including websites, brochures, ads, booths. landing pages, etc. We do a lot of B2B and also have an "Early Stage Branding" practice for technology startups.

Personally: I grew up all over the world because my Dad was in the U.S. Foreign Service. My father ran the first American diplomatic mission in Hiroshima after the end of the occupation (seven years after the atomic bomb). I speak Japanese, Portuguese, Hausa, French, some Spanish. I'm married to Mike Freehling, M&A and financial management consultant. We love to ski and do music together (blues, folk) I ride (compete in show jumping) and draw cartoons. 

BLOG: http://reality2.com/reality2go/
LINKEDIN: http://www.linkedin.com/in/faridafotouhi
TWITTER: http://twitter.com/faridafotouhi

What's a phone booth? 

Oh, and I forget to mention in my introduction about B2B.  I need to get you into both the Southern California Tech Central and the B2B Marketing Zone.  I'll connect offline on both of those.

What are you working on now?

Right now we're working on a multi-platform sales support program for Daylight Transport, a mid-sized LTL (Less Than Truckload) carrier and logistics company. We came up with a positioning strategy that helps them sell value-added when recession-pinched customers are squeezing them for low rates. To be in tune with the times we call it the Daylight Transport Strategic Saver program: we give you 8 ways to save using LTL. Not one of these ways is low rates. It's a comprehensive program with national sales training, HTML emails, a very cool interactive Flash landing page about the 8 ways to save, brochure and presentation for the sales people, extending reach via social media, etc. It launches November 16.

I'd be curious what you are doing with social media for a logistics company.  Maybe you can blog about that?

What's keeping you up at night?

I sleep like a rock, but if I had insomnia I would be worrying about the need to continually bring on new clients, because in these times our clients repurpose and re-use everything that we develop in order to trim expenditures. We're very glad our work is effective for them, but this means we do ourselves out of a job for a while once a major campaign is done! Then 6 months later the client comes back for more, but meanwhile...

Gee, if only you knew someone who knew about B2B marketing.  ;)

You've worked with a wide variety of different companies over the past few years, how is what you are doing changing?

I've been doing this for a long time, so I remember the days before desktop publishing and PowerPoint, when clients needed us to do absolutely everything for them. Now, clients are able to do more in-house. What we do more of now is branding and strategic positioning, and the development of the core materials like website, main brochure, and the creative on advertising online and traditional. Clients use our templates for things like sales sheets. We often work with and advise their internal departments.

Interestingly, we find ourselves doing PowerPoint presentations because it turns out that telling a story with graphics and few words is a professional skill after all.

That's a great point.  You are continually swimming upstream.  Like a lot of service professionals.

Is social media having much of an impact on what you do?

Absolutely. We can extend our clients' reach tremendously, and for low cost, by using the internet and social media to distribute and link to the "assets" we create. The website has become the hub of a company's face to the world, so after developing sites from a branding and not just a design perspective, we use social media as well as traditional advertising to bring prospects to a client's site (or special landing page). Just posted a blog about that: http://reality2.com/reality2go/are-your-marketing-programs-on-the-grid/

I've been struggling a little with making the numbers work out for some social media activity.  How do you decide what and how much social media effort/expense makes sense?  Isn't it much harder to predict than traditional expenditure?  Again, maybe a blog post. :)

What do you think of the concepts of visible networking and online business networking in Los Angeles?

The analogy of a lively dinner conversation to describe Visible Networking is perfect. Its about having deep and often provocative discussions about shared interests - learning from each other, building relationships.  I'm with Tony and Cliff about the drawbacks of networking at events. Return on time spent is not that high, usually. The analogy would be the cocktail party versus the dinner party. Occasionally there's a lucky connection, but unless you've done your "pre networking" there's a high incidence of small talk falling into a void.

You know how Twitter became more relevant to business as a result of user contributions (like the # and RT) and third party apps? Same goes for online business networking. There need to be more ways to aggregate meaningful conversations on specific topics, and that's exactly what you are doing with your socalCTO and your http://www.b2bmarketingzone.com. Kudos, I'm in!

Like your idea of the 30-minute phone conversation too. However, let's not relegate face-to-face contact to the pre-digital dust bin. The online networking adds dimension to meeting in the flesh and makes it that much more interesting, true. But it won't replace meeting you halfway down the 405 again at that restaurant off Hughes Drive.

Wow, you have a great memory.  Definitely, the dinner conversation is a great analogy.  And I hear what you are saying about getting together in person.  After going to a recent networking event that was small and great, I'm thinking more of that may be the trick.  But maybe with people who I've already done visible networking with.

I'm also thinking that I'm going to follow-up more with folks like yourself on particular topics.  I think this ongoing conversation is going to be great.

What are some good posts that I should check out on your blog?

In the classic shoemaker's kids without shoes scenario I just started blogging. Your Social Media for Service Professionals presentation pushed me over the top.  I was ready: 140 characters just wasn't doing if for me anymore.

My new blog is "Reality2go". Jorge Alonso will be blogging there occasionally too. A post that I like is: "Tech Companies: Can You Explain Your Product to a Six-Year-Old?"

Farida – I'm enjoying your posts already.  Hopefully, some of my questions above can inspire blog posts.

What networking events in Los Angeles or Southern California do you go to?  What was the best one you've been to recently?

I like to attend events with presenters or panels, and themes that interest me. AlwaysOn has some of the best conferences I've ever been to. Their Summit at Stanford (with "Captains of Innovation" in tech) and Going Green (cleantech) feature top players as speakers and panelists for two days, and the caliber of attendees is very high.  Highly recommend. Of course AO many not count because they're in Northern Cal and not cheap, but return-on-time is high. I also go to the Impact Roundtables at Irell and Manella (see LinkedIn group) and Technology Council when topic appeals, as well as the Digital Coast Roundtable events (full disclosure: I am on the board) but they have been recession-challenged (who hasn't) and are changing direction.

Besides Tony Karrer for technology, who are some of your go to people in Los Angeles? 

Wow, that's an interesting question! Many of my go-to people are experts in sectors my clients are in, so I won't list them here. More general resources are:

• Tracy Williams at Olmstead Williams for PR. Big Mouth Blog and Twitter at http://twitter.com/owcpr
  Robin Frank (LinkedIn, @Robeen) for implementation of social media programs, she has a great one-day workshop to set social networking policy for a corporation's employees.
• On Demand Printing: great prices and quality when you need printed materials which, contrary to popular belief, are alive and well.

Whoops, you didn't mention Michael as a go to person.  I hope he doesn't find out. :)

I've just subscribed to Tracy's blog.

Look forward to future conversations.

Product Manager Entrepreneur Mark Geller

Visible networking is turning into a really great opportunity to get to know people better, get to meet new people, and have some interesting conversations.  This time I'm getting to know Mark Geller (LinkedIn, @markgeller).  He has a really interesting background as a product manager and now an entrepreneur. 

Tell me a bit about your background.

Like many product managers, my background is fairly eclectic. In junior high and high school, I did a bunch of programming, mostly self-taught. When I got to college, I did not see myself as a full-time coder, so I majored in biology, which was my favorite subject at the time. (Graduated with a BS/MS in bio from Stanford.) My first job out of school was at one of the early bioinformatics companies in Silicon Valley, working as the head of technical services. That's where I learned I enjoyed interacting with customers and working with development teams to build and launch products.

From there, I became the first non-founder employee at an e-commerce startup called BITSource, which was the first electronic software distributor delivering electronic volume software licenses to corporations. I was in charge of all product management and marketing for the first year-and-a-half, that was a great learning experience with a very talented team of folks. It was also beneficial because I got some good experience with both B2B and B2C business models. After BITSource was successfully acquired, I moved to L.A. to work on an entertainment-related technology project and have stayed ever since. In L.A. I then worked as a product manager at NetZero/United Online in the VOIP group, and then most recently at Google as a product manager on the Picasa/Photos team based in Santa Monica.

What are you working on now?  I know you are still in stealth, but what can you tell us.

Earlier this year I founded a new startup called KlickFu. We are creating a platform that enables users to play instant games and apps directly on the computer desktop. This is a novel user interaction that embeds casual entertainment directly into the operating system experience, based on some fairly interesting underlying technology.  (Details coming soon!) We have a working alpha version now and are planning to launch a beta in the next 6-8 weeks.

In addition, I do a few consulting projects on the side, in the areas of product strategy, search engine optimization, and intellectual property.

Fascinating that you are going against the trend of trying to make everything a web application.  I'll be interested to see what it turns into.

On the SEO side of things, I'll definitely want to get your feedback on Browse My Stuff.

And what do you think about the controversy about stealth vs. not for startups?

For me, it's a matter of degree. On the one hand, an entrepreneur should not be overly paranoid and should know the ropes that VCs and other professional investors generally will not sign NDAs to see the concept or a prototype--and even if they did, it would not provide much protection. However, on the other hand, some ideas are more sensitive than others especially in the development phase, and an entrepreneur should be careful to disclose the idea only to those in whom he/she has a reasonable level of trust and who are genuinely in a position to help the company. This is not so much because others are going to try to steal the idea, however, there is simply no upside in broadcasting your strategy to any would-be competitors. There is a reason that companies like Google and Apple are notoriously tight-lipped when it comes to communicating their product strategy and roadmap.

What’s keeping you up at night?

Literally it is making the KlickFu user experience as cool and effortless as possible. The main point of KlickFu--i.e., the reason the team and I are passionate about building it--is to create a new user interaction that is more useful or fun that what is available now. So I obsess about ways to iterate and make it better. Also, I consider ways to find and recruit world class team members and strategies for talking with investors--although mainly I focus on the product because ultimately everything starts with that.

Tell me a bit about the Founder's Institute.  It sounds interesting.  How did it help you?

Founder Institute is the brain child of Adeo Ressi, a super passionate and successful serial entrepreneur based in Silicon Valley, probably best known for founding TheFunded.com. In some ways it is similar to early stage incubators such as Y Combinator, although FI is even earlier stage, focusing on developing the founders themselves as entrepreneurs as opposed to actual companies. Also, whereas some incubators are geared for usually younger entrepreneurs leaving their jobs to focus full-time on their startups, FI emphasizes founders keeping their day jobs and developing and even launching their products on nights and weekends. For me, FI was great for networking with Adeo and the other mentors, who are all world class successful entrepreneurs themselves, as well as the other founders in the program. FI and Adeo have already been helpful making introductions to several of the leading early-stage investors for casual gaming companies. Also, the sense of camaraderie and "leave no founder behind" mission of FI is excellent.

The idea of supporting people who have a day job is great!  Sounds like a great group.  I'll be curious about your view over time.  I'm also wondering about the LA vs. SV issue.

Your last two positions Google Photos and United Online were really big companies.  How did you transition to entrepreneur?

Actually, most of my earlier experience was with startups, so the transition was fairly simple. I specifically went to United Online, which was then 1,000 employees, and then Google, which was 15,000 when I joined, to get experience at bigger companies and see the dynamics of how they operate. Google is impressive in that in many ways they operate more like a startup than many smaller companies.

You mention social / viral aspects at both Google Photos and United Online.  What were those and how is that changing now given how things are changing in social media?

Many people have written on this subject more extensively and eloquently than I can here. However, the way I would put it is that many, if not most, experiences--both online and offline--are more engaging when they can be shared socially. Until recently, the technology had not progressed to the point where users could easily share these activities.

Now it is not only important to enable users to share your service socially, it is vital to enable the sharing to happen automatically, preferably in a way that leads to delight and positive surprises for users. For example, with photos, two years ago it was enough to enable users to actively share photos with friends online. Now, with manual friend-tagging, facial recognition and other computer-assisted tagging features, the sharing is automatic and user engagement is increasing exponentially.

Recently, the new trend has been integrating gaming dynamics into otherwise non-gaming social experiences, enabling friends to compete for status and bragging rights within the app. For example, Foursquare has added a points system to its location-tracking service, enabling friends to compete for who visits more and better locations, while at the same time alerting users when their friends are nearby... and also to local advertisements.

Great point about how social around photos has really moved forward over the past few years.  My guess is that will be the case with a lot of different kinds of content and applications.  Having helped create Fantasy World, I'm a big believer in the value of social and games.  What's been a really interesting learning experience though is how important existing relationships are in these situations.  I'm still trying to understand what this is going to mean in practice. 

I'm working quite a bit with startups who are leveraging social media, but I'm finding it hard to predict success and metrics.  I'm sure that you had to think about that at Google and United Online.  How did you do that?  And how can an early stage company think about social media relative to important startup metrics (see http://socalcto.blogspot.com/2009/10/startup.html)?

I am a product guy so my bias is always to focus on building a great product first. If you build a product that is truly engaging for users, they will take care of the social media for you. Of course, you should monitor social media such as Twitter, the social news sites, Facebook, etc. to see how your product is being perceived and respond to user issues. However, in my opinion, a startup should focus most of its resources on building a great product and track total users and user engagement as gauges of success. If users love your product, use it obsessively and tell their friends, you are going to be successful with social media--not necessarily vice versa.

That's a great point, but also one that I think a lot of founders overestimate.  They will tell you how they are going to build the greatest thing ever and so the audience will talk about it.  "Build it and they will come."  That's really hard to do. 

And what I'm talking about here is that it's often a bit disappointing what the real numbers are – often very small.

That said, I'm convinced that as we figure out how existing social relationships can be integrated into products, we are going to have really interesting opportunities.

I'm looking forward to exploring this a bit with you over time.

What networking events in Los Angeles or Southern California do you go to? What was the best one you’ve been to recently?

I often go to Startups Uncensored (hosted by Jason Nazar CEO of Docstoc) and MediaClub LA. I have also attended Thursday Lunch (thursdaylunch.com), Caltech/MIT Enterprise Forum, and Digital LA. The Startonomics conference at UCLA Anderson business school, hosted by DealMaker Media, was a great event for the talks as well as the networking.

Who are some of your go to people in Los Angeles?

In L.A., many of my go-to people are folks I worked with at Google, including both current and former product managers as well as technologists. On the development side, my top go-to person is my KlickFu co-founder and CTO, Rod Morison, as well as the other developers who are contributing to the project. On the entrepreneurial and fund-raising side, because the Founder Institute program I attended was based in Silicon Valley, many of my contacts are there. However, I am looking to expand my network here in L.A. because I would like KlickFu to remain primarily a SoCal company and success story!

For consulting work, I have done several projects with Lou Sokolovskiy of Genero Capital, a boutique private equity firm. Lou is a friend and colleague from UCLA Anderson.

Tell Rod about the LA CTO Forum.  He sounds like he'd be a good member.

Mark – good getting to know you better.  I look forward to future conversations.

SEO for Startups

I recently had a conversation with an pre-launch startup where they discussed how SEO was going to be really important for them.  They went on to describe a fairly common type of site that has some original content, but not much.  They are in a space where there is lots of search traffic, but they didn't have anything particularly interesting to say about how they were going to get ranked.

This isn't the first time I've had this same conversation.  And to me, there seems to be a lot of confusion by founders of startups around search engine optimization (SEO) and how it works for a startup.

I won't say that I'm truly an expert on SEO.  And I believe that there's a lot of randomness in results.  Still having worked with a lot of different startups and especially a lot on SEO and especially long tail seo, I'm going to say that I have a pretty good handle on what works and what doesn't.  And generally, founders overestimate the possibilities associated with SEO.

On Page SEO

Most founders talk about what I call On Page SEO.  That's structuring your pages and your site to optimize it for search.  And let's face facts, we normally are talking Google search.  If you don't know the basics here, go look at Google's Search Engine Optimization Starter Guide (PDF).  It tells you all the basics and the importance of things like:

• Titles
• URLs
• Anchor Tags
• Site Navigation
• Content Quality

Once you've skimmed this, you'll have a pretty good idea of all the things that you should do to get your pages in good shape.

They only very briefly mention how you can effectively promote your site.  Which is also really important: off page SEO.

However, if all you do is follow the on page SEO advice, it is unlikely that you will get much traffic via search.

Off Page SEO

The other aspect of SEO is at its most basic, how many pages with decent Google Page Rank point to you using anchor text that helps you with optimization.  There's a lot more to it, but since startups generally start with zero links to them, they are way behind.  You can build Google Juice over time by getting good in bound links.  You can promote your site all over the place.

By the way – getting links in social media – mentions on twitter, links on Facebook.  They bring traffic, but have little SEO value. 

Definitely engaging with bloggers is a great way to get things going.  I'm a big fan of blogger outreach and using browse my stuff as a basis.  This can help juice your SEO. 

But it's still a hard road to climb.  Let's consider the numbers…

Search Quantity

In the same conversation about SEO for startups, the founder either tells me:

• There's a ton of search in my space
• I'm not sure how much search there is in my space

But most often I find that they really haven't done enough analysis.  And this is not all that hard to do.  You go use Google's Adwords Keyword Tool and you plug in your keyword and see the results.  For example, let's say I'm looking at SEO in farming.  I might get back:

So, great news.  There's a lot of search for "farms" and "farming".  But that's only a small part of the picture.  What we need to do is assess our ability to capture any of that traffic.  So I go to Google and do a search for each of these phrases.  And I do a general assessment of whether I can get into the top ten.  For farming, unless we do something really amazing with off-page SEO.  And you probably aren't.  In fact, I can't quite even imagine what you will do to rank well on these broad terms.

Oh, by the way, the numbers I'm showing you above are actually a bit misleading because I'm using "Broad" matching.  If you want the real numbers, you should go to Exact to see exact numbers put in for different terms.

So, the actual monthly numbers for farming is only 74,000 per month.  And most often specific terms drop off very fast.

Another aspect to this is that click-through rates are actually pretty low for even the top ten results.  Here's a ballpark derived from various research studies on the click through rate for positions 1-10 in Google.

1	25.0%
2	10.0%
3	7.5%
4	3.3%
5	2.7%
6	2.2%
7	1.9%
8	1.6%
9	1.6%
10	1.6%

So, if you miraculously get the number 2 position on Google for the term farming, you will get 7,400 clicks per month.  Ouch!  That's pretty low.  Of course, it will be a lot more than that because if you were able to do it for that term, then you'll get a lot of long tail searches.  Still the numbers turn pretty small fast.

And, you aren't going to rank for farming or farms.  Instead, you may rank for a much more specific set of terms.  So, what you are normally looking at is ranking for something like farm/farming issues.  Looking at the numbers for those (using Broad Match) we see:

And you can see that there might be a few thousand related searches a month.  And if you work really hard at SEO over this subset of farming, you might find yourself getting 10% of that (being very optimistic).  So, you are talking about 10-50 visitors per day.

It would have been cheaper to buy those clicks.

Value of SEO for Startups

I'm being intentionally pretty harsh about the founders who predict better results with SEO than is deserved.  I do believe that there's value in SEO for Startups.

Let's assume that you know and are willing to follow the basics:

• Do a good job on on-page SEO.
• Take time to build up a presence and accumulate Google Juice.
• Blog to build credibility and create original content.  Not to mention learn a lot.
• Look to long tail SEO opportunities, especially early.
• Work with bloggers in your space in a smart way.

Then, the beauty of SEO is as a long-term strategy for building inexpensive traffic.  If you happen to be working in space where there's lots of search, especially lots of long tail search and even better if the SEO competition for that traffic is low, then you've got a chance to build traffic.

Startup Version 1.0

Great post by Mark Geller What Goes in V1.0?  He talks about something that I end up discussing a lot with startups.  What do you put in that first version?  Or more appropriately, the first few versions?  Mark does a good job capturing the essence of the issue:

These days, the role of V1.0 is harder to define. It is certainly not the first version of your product you will put in the hands of non-team-members. This we have done already with a super-early version and will do again at least one more round before launching V1.0. For us, then, V1.0 is really the first version we will send to the media for initial reviews and then also make available as part of a private beta distribution with a limited number of invites, maybe 500 total.

Then, as quickly as possible, hopefully within 4-6 weeks after launch, based on the feedback from the private beta, we will address any major usability issues, fix some bugs and add at least one major new feature to go to V1.1 and so on.

Then he provides his high-level requirements for v1.0:

• Must be super easy to install and start using
• Must convey the core user experience in a way that is simple and fun, preferably with a single “cool” feature
• Must give the user a sense of what else is possible with future versions
• Must be self-updating–for the next version!
• Must not cause users any undue headaches
• Must be the absolute minimum feature set to accomplish the above

This is a great list.  I want to add one really, really important thing to this list. 

It needs to include what's required to hit the early proof points for the company.  I talked about this in Startup Metrics:

Often, what we are trying to do initially is show exactly how these numbers play out. You only build what you need to prove that model. If these numbers work out, then often scaling is more a question of capital. In fact, this often becomes the mantra that we live by.

Quite often the first version is defined as much by what is required to prove some aspect, derive some metric, show viral nature, conversion rate, renewal rate, etc.  In many cases, this is defined by the business model and the investors.

Attorney and Startup Business Advisor – Aaron Shechet

I recently got together with Aaron Shechet and an early stage startup to discuss the direction the company might want to take.  It was a great conversation and I thought it would be a good idea to do some visible networking with Aaron to get to know him better.

Tell me a bit about your background.

I grew up in Los Angeles and went to undergrad at UC Santa Barbara, graduating in 2003 with Honors in Economics. I then went to Pepperdine University School of Law and graduated in 2006 with a Certificate from the Geoffrey H. Palmer Center for Entrepreneurship and the Law, of which I served as an Executive Board Member and am currently a Fellow.

I have always been entrepreneurial and business focused. While at UC Santa Barbara, I started a café which served over 1100 dorm residents.  At Pepperdine, I co-founded the Journal of Business, Entrepreneurship & the Law -- only the fourth scholarly journal in the history of the Pepperdine School of Law.

Both of those undertakings were done despite being told repeatedly that they could not be done. Actually, being told repeatedly that they couldn’t be done was part of the motivation. I feel too many people are discouraging, and as a result, too many entrepreneurs are discouraged and give up.

While in law school, my partner, Leigh, and I had a concept for a law firm that did more than just “law.” We both have experience in business and thinking outside the box. So, we both turned down job offers to create a new kind of practice – we are true “advocates.” Not only do our business clients turn to us for lawsuits, but they also ask us to create efficient processes and develop their brands.

On more than one occasion we have been told that we’re crazy (especially at the beginning when we turned down good job offers). But as we continue to grow, there are fewer people coming after us in white suits.

I can be found on LinkedIn, have a blog Holocognics and my firm’s website is www.SolutionsLLP.com.

I'm impressed that you got a journal created at the law school.  I spent five years getting the multimedia minor at Loyola Marymount to happen.  It was definitely challenging to make something like that happen in an academic environment.

What are you working on now?

We have a number of startups (or pre-startups) that we are helping get launched. We also represent a few larger companies with international issues.

Right now we have a lot of Intellectual Property and Cyberlaw work that crosses over between the two facets of our firm.

You are writing about the essentials of business.  Any thoughts on my recent post Startup Metrics?  And how it relates to what you are talking about in http://holocognics.blogspot.com/2009/10/defining-business.html?

The Startup Metrics post is a good example of what I call “holocognics.” That is, breaking things down to their fundamentals to thoroughly understand how something works, and being able to apply that understanding. In my case, I am breaking down “business” to its fundamentals, which begins with a definition of what, exactly, is a “business.”

Startup Metrics discusses what a Startup needs to consider before “going live.” That is, understanding your business model and the different variables that go into it. Holocognics would break it down even further and discuss why, for instance, SEO works in one industry and not another – both in the sense of why a certain business has a higher chance of succeeding in showing up higher in a search, but also why SEO in a certain business has a higher “acquisition” rate (to use the Startup Metrics term).

In other words, instead of accepting that “SEO is good,” let's explore what the point of SEO is and when it is actually “good” (that is, promoting a goal).

That's great.  I am planning right not to write a post about how startups often get SEO wrong.  I'll have to engage with you around it.

You and I were talking about a startup recently and where they might go for seed stage funding, what is your impression on that aspect here in Los Angeles?  Are you doing much of that?

Los Angeles is a great place for startups. We occasionally get involved with very early stage startups. We are not “finders” and usually serve the role of advisor and attorney. Sometimes we draft business plans and coach the entrepreneurs on their pitch, and sometimes we even help develop a business model. Many entrepreneurs have an idea but don’t know how to monetize it. A few years ago “venture capital” was a revenue model. Today, there is still seed capital to be found, but you have to show the investors (especially very early stage investors) that you have a viable business. In other words, you have to show that there is a market out there and that the revenues that come from tapping into that market will be greater than the expenses paid for tapping into that market. It also helps if there is a reason that other people can’t compete with you, either because of some trade secret or patent.

What do you think of the concepts of visible networking?  and online business networking?

I think visible networking and online business networking are both great ideas. The way I see it is: there are millions of people out there that I want to meet, either because they’re interesting people or because they need my service, or ideally both! Networking is about meeting people and getting to know them. It’s not about meeting someone and handing them a business card. I keep every business card I receive in a folder. Yes, a physical folder. That way when I meet someone who says “I need X,” I can say “I know exactly the person you should talk to,” and I flip through the folder and give the contact information.

I don’t expect to get any business directly through networking. That’s not the purpose and that shouldn’t be a goal (although I have gotten clients by meeting them at “networking events”). More often what happens is that someone I meet will know someone who has a legal or business (or both) problem and then refer that person to us because they know what we do.

Bringing this thought full circle: as I mentioned, there are millions of people out that I want to meet. A lot of those people I want to meet because they have interesting thoughts and perspectives. I find that other people’s thoughts on issues are invaluable.

Visible Networking and Online Business Networking represent the following concept: organize a convenient forum for people to discuss issues. By doing that online, people can get to know each other and discuss different topics at their leisure and not in a “forced” networking setting.

It provides a more active opportunity for people to get to know each other, and in more detail. Instead of a handshake and “so what do you do” the conversation evolves over time and each person's unique strengths come through.

Wow, I'm impressed that you can remember folks who hand you business cards.  I tell everyone to link to me on LinkedIn because that gives me a much better chance of "remembering" them.  I'm looking forward to continued conversation online.

What are some good posts that I should check out on your blog?

My blog is relatively young, so there aren’t many choices, and there’s no reason you shouldn’t read them all!

But if I had to pick (ie. answer the question) I would pick the first one defining holocognics (http://holocognics.blogspot.com/2009/10/what-is-holocognics.html) and my post from October 23 exploring the concepts of value and money (http://holocognics.blogspot.com/2009/10/value-and-money.html).

I pick the holocognics post because that’s what the blog is about, and the value and money post because I think it’s very interesting and I will have more blog posts on those subjects.

I really like the focus of your blog.  I'm sure we are going to have some good conversations.

What networking events in Los Angeles or Southern California do you go to?  What was the best one you’ve been to recently?

I don’t go to too many official “networking” events. I would say the most useful networking event in general is just going out to the grocery store or getting coffee and talking to the people I meet.

Thanks Aaron – great getting to know you.  Look forward to connecting around the SEO topic.

Matching Algorithm

Because I was the Acting CTO for eHarmony at it's start, I quite often get introduced to people who have an idea for a startup company that is based on some kind of matching algorithm.  They describe the company as the eHarmony of careers, clothes, jobs, college, tutoring services, doctors, service companies, investments, etc.  In fact, you can get a good idea of these various things by just searching on Google for "eHarmony of" startup.

Each of these startup ideas has at it's core a matching algorithm that reduces the friction between a consumer and some need.  In eHarmony's case, it was the friction of finding a compatible marriage partner.  In the case of college matching, it's the complexity of what college matches best with the person's needs.

As I've had more than a hundred conversations with entrepreneurs who are planning to build a company around a matching algorithm, I thought it would be worth capturing a few thoughts that commonly come up.

Margin in Mystery

An Angel investor that used to be on a startup CEO roundtable with me, always had a lot of great phrases that would help startups.  One of my favorites was, "There's margin in mystery."  What he meant by this is that anything that's too obvious to the consumer can be easily evaluated for it's value and often then suffers from low margins.  The flip side is that if you can offer something that's not at all clear how you are doing it, then people perceive greater value.

An example that relates directly to creating a matching algorithm, is the classic Myers-Briggs Type Inventory.  The experience is often that after you've answered a whole bunch of questions, it comes back with a description of you that seems eerily accurate.  For example, after taking a similar personality test, the person who came to give me feedback walked into the room with "Tony, you like going to bookstores don't you."  And I certainly do, but the test never asked me anything about bookstores.  The feedback had lots of other items that somewhat "nailed me."

Certainly eHarmony relies on this.  They come back with their free personality profile that nails you.  It gives you confidence that they understand you and what would make a good potential marriage partner.  And what they tell you about how you will be in a relationship do not directly come from any questions they asked you.  That feels powerful.  It's a bit mysterious.

Now, if the assessment that I took had asked me – "Do you like to go to bookstores?"  and the assessment echoed what I had answered to that question, then the algorithm is obvious.  There's no mystery.  And I will perceive lower value.

This is really important when it comes to a matching algorithm, because I'm often presented a matching algorithm that really isn't a matching algorithm at all.  It's really just a simple filtered search.  For example, if you are going to be building the best matching algorithm for high school students looking to find the right college, but it is based on criteria that are a search (geographical location, majors offered), no one is going to ascribe greater value.  You may have a perfectly fine business, but it's not going to be differentiated based on that simple algorithm.

Instead, what you need to have is something like leveraging personality characteristics of students who have been successful at that college, or maybe common life ambitions of students who say they are happy there, or ???

Requires Data

You will notice that the suggestions I made on how to increase the mystery in a matching algorithm also just created a need for data.  In order to successfully match students to colleges where they will like it and be successful, you probably should have a lot of data from students who have already attended that college, whether they liked it and were successful, and their personality profile, or life ambition or whatever you plan to use to match people.

A lot of people I talk to about their matching algorithm don't know that eHarmony (more specifically Neil Clark Warren) had years of scientific research that were the basis of his dimensions of compatibility.  These dimensions related to personality, values, likes/dislikes, etc.  And related to each of these dimensions they had been doing years of research to determine what combinations produced happy/unhappy marriages as well as how long the marriages lasted.  It was a lot of data that they was distilled down into a fairly complex matching algorithm.

Many of the startups that I talk to don't have any of that kind of data.  You can maybe find a researcher or something to use as a proxy.  You can make educated guesses.  You can start to collect the data as part of the system.  But without the foundation, you are likely going to have trouble creating something that will truly have mystery.

That said, I will admit that there have been a few ingenious entrepreneurs who had a matching algorithm that had mystery and no data yet appeared to be fairly valid and valuable.

Broad Value and Appeal

My guess is that if I discussed this with fellow computer scientists, they would argue that many of the ideas I'm calling a matching algorithm really are not strictly a matching algorithm.  While strictly speaking that's true, I think it's misses the broad value and appeal that this kind of algorithm provides.  Whether or not it's truly a matching algorithm, they have broad value and appeal because they apply anywhere that there's a fairly large sets of options, complexity to those options, and friction in reducing the set and dealing with the complexity.

This is why there are so many "eHarmony of" companies. 

And I actually think this is going to grow significantly!

If you think about what's going on with the web, we've reached a point where everyone and everything is connected, it's represented online, it's creating content.  The numbers are growing rapidly.  The amount of data we have about it is growing rapidly.  Our choices are growing.

Yet most of us are much happier with fewer choices.  Actually, that's not strictly accurate.  We are happier with a smaller list of well vetted, reasonable choices.

A matching algorithm is at the heart of how you deal with scale and complexity.

It comes up all the time. 

• Who should I meet here in Los Angeles professionally that will be an interesting conversation and a potentially valuable contact?
• What entrepreneurs / startup companies would benefit from talking to me?
• Who should read my blog?  Who's blog should I read?

And, again, while the line is fuzzy, this also all relates to issues like social filtering and Curator Editor Research Opportunities on eLearning Learning.  The challenge is how you can help a consumer make sense of a large complex space.  This is only going to get more interesting.

And, because of the web, there are all kinds of new sources of the data that a matching algorithm can use.