A conversation about Chicago web 2.0 start-ups


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Archive for May, 2007

The Interminable Will to Succeed

Roger Bannister was the first man to run a mile under 4 minutes. Records hovered around the 4 minute mark for years, never being broken. Many thought 4 minutes was a physical impossibility for the human body. Some speculated a man’s heart might even explode if he tried. Roger Bannister thought otherwise. Through systematic training and repeated attempts, in 1954 he broke it: 3 minutes, 59.4 seconds. His achievement is amazing, but what’s fascinating is what happened after it. Within a month, John Landy broke his record. In the years following, so did hundreds of others. What prevented all these people from breaking 4 minutes in all the years before Bannister?

Think about it, how much easier is it to persevere when you know others have done what you’re trying to do. Law school, bar exam, medical school, all of these goals are challenging, but hundreds of thousands of people before you have done it. There is no question if it’s possible, you just have to put in the work.

But how often is the barrier to achievement an imagined obstacle? How many people would have argued that Wikipedia was impossible before seeing it done? If Jimmy Wales had presented the idea to you before launching, would you have argued that thousands of people would never contribute their time and energy to write those articles. Most people won’t even run the race if they’re not sure there is a finish line.

Once you’ve seen what’s possible, its much easier to imitate. This pattern is repeated time and time again. Peggy Fleming won the gold in Olympic figure skating with double jumps. Today, it’s expected that top figure skaters will do triples, or even quadruples.

It was inconceivable that a deaf and blind child could be taught language before Hellen Keller. I’m not sure if it’s commonplace now, but wow.

Edison tried thousands of different filaments for his light bulb before finding one that worked. Why didn’t he conclude after the first thousand that the material he was searching for may not exist?

The common thread in all these examples is that people persisted without any good evidence to think that what they were trying to do was even possible. They persisted in the face of perfectly reasonable doubt.

“Throughout the centuries there were men who took first steps down new roads armed with nothing but their own vision.” - From “The Fountainhead” by Ayn Rand

…This thought is half-finished. I’ve been sitting on this post for a week and I’m honestly not sure what to conclude from these examples. But I’m throwing it out there anyway.

Pursue the path of least resistance

The process of starting a new company almost always leads you to a different destination then you intended at the outset. I was just chatting with a friend about an idea for his business and I was reminded of a fantastic discussion around Judy’s Book from last year.

Judy’s Book is a local review site (somewhat like Yelp or Angie’s List). 6 months ago or so they had a slight change in direction and the CEO was very candid about their thought process internally that lead to the changes.

We asked ourselves the following questions: 

  1. What are the hardest problems in our current business approach - the market issues that we keep struggling with over and over?
  2. What’s (surprisingly) easy about our business – the things that are working better than expected?
  3. Where’s the parade?  What major trends are we trying to get in front of with our business?

Read the full post and the follow-ups: what’s been hard, and what’s been easy.

Job Openings at Chicago Web Startups

SitterCity (profile) is hiring a Director of Technology

Sittercity.com, one of TIME’s 50 Coolest Websites, is looking for a Director of Technology to oversee and drive development of our site and management of our internal development team.

LimitNone is hiring a Web Programmer (contract or permanent)

We are looking for a Web programmer (must know HTML, XML, Javascript and any programming language). Should be an energetic guy/gal who is interested in getting involved in some big opportunities around Google Gadgets and Google API’s.

Emmi Solutions (profile) is hiring a Java Web Developer

To develop and maintain Emmi Solutions J2EE-compliant Internet applications utilizing JSPs, Servlets, Design Patterns, …

CleverSafe (profile) is hiring a Senior Software Architect

To provide architectural and big picture oversight for new commercial open source products …

Mediafly is hiring looking for an “exceptional” Senior C#/ASP.NET Developer and “the best UI developer in Chicago

GSB and Braintree Financial both take first

Last Thursday I attended the finals of the University of Chicago GSB New Venture Challenge.  Overall, I was impressed with the quality of the businesses that presented. There were a number of groups who had solid ideas that were extremely well researched and well beyond the idea stage. First place went to Braintree Financial, and it was well deserved.

The GSB is racking up quite a track record: 2005 winner PrepMe, and 2006 winner GrubHub are two of the most promising internet start-ups in Chicago right now. I think Braintree will live up to the bar these two have set.

Two weeks prior I attended the DePaul new venture challenge. Overall, the caliber of business was much higher at the GSB, but it’s great to see that two of the three DePaul finalists were internet businesses: QuadMarket and DANCE NETWORKS (who won first place, no link yet).

Seth Godin in Chicago

Seth Godin has impressed me enough with his ideas that I’m willing to wake up at 6:30am to hear him speak. About 150 other people joined me at Maggiano’s this morning to hear about his new book, The Dip. I’ll recap:

If the goal that you’ve set for yourself is not one that you can be the best in the world at, stop wasting your time. Pick another goal.

Identify all the projects you have on your plate, and cancel all of them that aren’t getting any better. Free up your resources to pursue the one you can be the best at.

That’s my summary, not a quote. He said a lot of things that didn’t tie together coherently, but this point is valuable enough it’s worth highlighting (it’s articulated much better in the book Now, Discover Your Strengths).

The point for entrepreneurs: if your business cannot be #1 in the category you’re competing in, pick a new business OR re-define the category. The first person to fly across the Atlantic Ocean solo: Charles Lindbergh. Who is the second? No one remembers. But the first woman to fly across the Atlantic solo: Amelia Earhart. That is an example from The 22 Immutable Laws of Marketing (cheesy title, but great book!)

The challenge is creating a category that is meaningful to your customers.

Chicago News Ticker

For anyone who feels like nothing is going on in Chicago, here is just a sampling of some tech news from the last couple months:

  • LiquidTalk closed a round of funding “in the millions”
  • GrubHub launched a new version of their site
  • Viewpoints Network has launched their beta site
  • Cappex and a solid team behind the company has launched (Well maybe not “launched”, but the site is up and they started to talk about what they’re doing.)
  • CondoPerks launched their beta service

New companies/services on my radar:

  • rCache - a personal research tool
  • Neighborhood - a service like Google Local
  • Complaints.com - a service for filing complaints against companies, a bit like Better Business Bureau
  • PeerSight - bringing entrepreneurs together
  • PreProSports - fantasy college football leagues
  • 606tech - new Chicago tech focused blog

Traffic is currency

Remember five years ago when start-ups would pay their customers cash to use their product?  I admit, I signed up for PayPal because they paid me $5 and used some advertising-loaded browser bar because I got a check each month. To think I could be bought so cheaply… The technique worked to generate customers, but it was just expensive.

I’ve noticed a new trend which is equally as powerful, and much cheaper to execute: give away your traffic. These days, traffic is currency. Thanks to Google AdSense and all the other ad networks, if you have a website that receives traffic, however small, you can convert this traffic into cash. Sure CPM rates vary based on the type of traffic you get, where you place the ads, etc. But the fact that you can reliably convert traffic to cash makes traffic as good as money. Can you give your customers traffic for using your “product.”

The ultimate examples of this today are Digg and TechCrunch. Start-ups are climbing all over each other to get a mention on these sites, but how can you use this technique without turning your website into a news portal?

Justin Chen recently told me about a creative example of this:

Each time a foodie blog reviews a new restaurant, at the bottom of the blog post they put a widget that links to this restaurant’s homepage on Urban Spoon. Urban Spoon detects this incoming link and automatically adds the blog’s review to the restaurant’s page (scroll down to the section, “Blog Reviews of …”).

Despite the fact that Urban Spoon needs some work as a site, this idea is fantastic. It’s a huge incentive for all these foodie blogs to link in.

One more example. I see the MyBlogLog widget on almost every blog I go to these days. Apparently one of the reasons that bloggers add this, and keep this, on their site is because of the incoming traffic that it generates. If you click one of the faces, you’re taken to that person’s profile page and you see all the other sites they are reading… and you probably click one of the sites.

As soon as bloggers start to notice a lot of referring traffic coming to them from MyBlogLog, Urban Spoon, or your site,  you’ve probably hooked them for life.

Jeff Bezos: The Anti-Trend-Setter

Recently I attended the Web 2.0 Expo out in San Francisco. One of the highlights of the conferences was a Q&A with Jeff Bezos.

I’ve met Jeff a few times, he is one of the entrepreneurs I most admire so I’m always keeping an eye on Amazon to see what they’re up to, and I wasn’t expecting to learn a whole lot new from the Q&A… But, just like re-reading a good book and catching something you missed the first time, there was a real gem.

Jeff was talking about their web services strategy (S3, EC2, etc) and said something to this effect (paraphrasing from memory):

Many people are always trying to figure out what’s new–what is going to be the latest trend. We like to focus on what is not changing–what is going to stay around and be needed regardless of what the latest trend is.

AJAX, social networks, video… even if all of those trends pass and are replaced by new online trends, data storage and computing power are still going to be needed. This is just like the entrepreneurs who sold mining supplies during the San Francisco gold rush, and the shipping companies (UPS, FedEx) who delivered all your purchases regardless of which e-commerce company you buy from; it’s great to be at the foundation.

If you’re interested more in Jeff Bezos, there is a great interview with him at the Academy of Achievement.

Life is like a game of pool

A good friend gave me this piece of advice about choosing your next career move or business to start:

When you’re playing pool, there are always a number of shots you can sink on any given turn. To win, you have to not only pick a shot that you can sink, you have to pick the shot that puts you in the best position to sink the next shot.

Pick a job or a business by thinking about what you can do well and learn something from, but more importantly, think about where it’s going to lead you to.

I heard Jamie Dimon give essentially the same advice in a different context. He said:

Every time I took a new job, the first thing I did was identify who my replacement was going to be. I then proceeded to work myself out of that job and eliminate the need for myself.

Entrepreneurs and Chinese Math

I just heard about a start-up who launched an add-on for SalesForce a couple months ago. They were excited about the prospect because SalesForce has 30,000+ customers, and they need just 1% of those customers purchase the plug-in (or some similar small percentage)! …so far they’ve had a dozen or two download it.

This is a great example of the Chinese Math fallacy. I can’t take any credit for this idea, a friend of mine sent me this article a year ago. But ever since understanding it, I’m amazed how many times I hear versions of this from entrepreneurs.

The fallacy is this:

Just because the percentage of people you need from a larger pool is a very small percentage, that does not necessarily make them easier to acquire. Just because there are a billion people in China and you only need 0.00005% of them to buy your product, that’s still 500 people. In fact, it may actually be easier to acquire 500 customers out of a pool of 1000 than a pool of 1 billion. At least then you can identify exactly the 500 people you are trying to reach. Any way you slice it, 500 people is still 500 people.

It’s worth reading the full article. Don’t make this mistake.

Chicago vs The Bay Area… Swimming downstream

I’ve thought a lot about the tradeoffs of starting an internet company in the Chicago vs the Bay Area. Of course I love living in Chicago, but I want to have a good understanding of what, if anything, I’m missing by not being in SF to know if it could ever justify moving there.

I just heard one of the most interesting answers to date. I was listening to an interview with Scott Rafer, CEO of Feedster and MyBlogLog. Toward the end he touched on what he thinks makes the bay area unique for entrepreneurs.

I’m paraphrasing from memory:

In San Francisco, social pressure is on your side. In other cities, if you are involved with a start-up, you’re a bit of an outcast. People often think your crazy before they even hear the business idea because the very concept of starting a company is out of the norm. In the Bay Area, on the other hand, there is an immense social pressure towards start-ups. Lots of people working for big companies are made to feel that they’re “missing out.” And when it’s the norm rather than the exception, people give you the benefit of the doubt. Nearly everyone has heard some business idea that sounded crazy and ended up making it big.

I think this really gets at the essence of the culture. It’s a great explanation as to why you see a lot of what you see out there. I have experienced this “culture” every time I visit, but I had not identified it and put the words to it. It’s this “benefit of the doubt” that makes it easier to convince others to join you, raise money at early stages, convince your spouse/parents/relatives that it’s okay for you to quite your great job and give this idea a chance, etc. It’s like your swimming downstream.

One caveat, I think this social pressure is a consequence rather than a cause of all the start-up activity over the years. There is something more fundamental about the geography or the culture that originated the phenomonen in the first place.

Paul Graham has a great essay on why Silicon Valley came to be.

Personally, I’m still not sold on SF over Chicago. Notice I’m still here. The jury is still out for me, I love Chicago.

Next Chicago Beta (#6) - Coming up

After taking a month off, Chicago Beta is back with the next meetup: Thu, June 7th at 7pm.

RSVP on the website

We’ll have a special guest, Chuck Templeton. Chuck founded OpenTable.com in 1998. Grew it to over 120 employees and raised over $50 million. Currently he is working on a new start-up.

Chuck will answer questions and share some advice on start-ups.

Chicago Beta #5 Recap

At the lastest Chicago Beta, presentations by:

Chicago Beta #5 Video
Click to Watch Video
(Thanks to Business POV for producing this)

Interactive Mediums provided live text messaging voting so the audience could pick their favorite 60-second pitch. The winner: Tappity.

Results



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