Yaniv Nizan's Personal Blog

Don Draper invents Native Advertising

Native Advertising... If you are not familiar with the term that has been trending in the online community recently, here are two interesting articles:

http://www.digiday.com/publishers/why-native-ad-formats-are-the-future/

http://techcrunch.com/2012/05/12/5-ways-native-monetization-is-changing-silicon-valley/

I came across the term in a recent conversation about the future of mobile ad formats with Assaf Henkin, Co-Founder @ Kontera and my mentor for the last 1.5 years.

Interestingly enough, the concept of native advertising have been around for quite some time. TV adversiting is in-fact all about native advertising where the good commercials resemble the actual programming and in fact the superbowl half-time commercials tend to get millions of hits in YouTube as they are funny and amusing.

If you are following Mad Men, you might have also noticed that in season 4 Don wins an award for a commerical called "Billy the Kid" for Glo Coat. The briliance that got Don the prize is coming up with a advertisement that looks like a movie. This is what Native Advertising is all about.

So the recent buzz is mostly since online advertising has shifted away from native advertising to interuption advertising and it's now coming back home.

 

Virtual currency thoughts - how real is our 'real currency' and our 'real goods"

I have been spending a lot of time recently studying about virtual currency and virtual goods. Here is a video I came accross that will open your horizons up a bit:

 

Besides some awkward hand movements - this movie explains how 'real currency' is in fact very virtual and that the differences between that and the currency that is being used in games is in fact not that big.

It's interesting to play around with the concept a bit. It's safe to assume that virtual currency will not have a lot of buying power for products with physical presence any time soon but how about digital products or services that can be shared between both worlds. For example, is possible that a real designer will agree (through his avatar) to design a logo in a virtual world for a virtual company in return to a virtual currency. The logo is virtual as anything else in that virtual world. On the other hand, are 'real logos' real? If that happens it means that  someone can buy a logo and pay in dollars but he can also buy a logo and pay in virtual currency. That day is probably not that far away if it hasn't came already...

Market Sizing - The Billion Dollar Tip

I'm brining up a lesson from my early entreprenuership days. Back in those days we were trying to figure out what VCs want, getting funded was the ultimate dream and Guy's 10-20-30 rule seemed like the ten commendments. At the time, one of the things I was struggling with was market sizing. While it was easy to understand why it's important to potential investors, I was clueless about how to size our market.

Well, there are actually two ways to size the market of your potential business, one is bottom up and the other one is top down. The bottom up means that you are adding up numbers or multiplying things like number of customers times expected revenue from each customer often segmenting to groups of cusotmers. the top down menas you are subtracting and dividing some big number that represent all the money that flows in your market and than doing things like reducing the part that is already controlled by other companies and dividing based on the piece of the action you can get.

Leaving the busienss school material aside, the practice of doing a market sizing is the harder part and there is no way to teach how to go through that exercise in a blog post as it is too specific to your business. If someone wants to send a specific example as a comment or to yaniv [dot] nizan [at] gmail, I'll be happy to analyze and demonstrate it in my next post.

What I really wanted to bring forward in this post is a very useful trick I learned from a fellow co-founder of EyeView. The idea is to look for data for your analysis by using Google image search. The internet contains tons of data, historic numbers, projections, and user behaviour analysis for any significant market. Looking for images rather than text allows you to see the source of the data as it will be included in the image. In addition, looking for images will focus the results and will allow you to find wha tyou are looking for from the search results page. The last benefit is key as you can eveluate hundreds of results in one page without going into each one of the pages.

Here is a step by step recipe:

1. Go to google images and type in your search. You are looking for a chart so try to vizualize what the title of that chart will be. For example - "us online video advertising spending" will work better than "size of video advertising market". Try both to get a feel for it.
2. In the search results page you can't see numbers yet but you can see the layout and the trends. If you are looking for an overall market size - you are looking for a bars or line chart with upward trend (if it's a downward trend you might want to re-think your market). If you are looking for market segmentation that's probably a pie chart and user behaviour data is likely to be bars but with no trend or with declining trend (usage over time, ...)
3. You should open a few of the potential results to find the one you are looking for. I recommend opening multiple charts simultaniously in seperate tabs to save going back and forth.

A few other tips:

1. If your search results are not targeted enough, you can click one of the charts and check his title to learn what chart title will have the data you are looking for
2. Normally you can find data about large markets such as online mobile advertising market size as opposed to cross promotion market size. The size of the large market is where you start your top-down.
3. The starting point of the bottom-up sizing is usually the user behaviour analysis

 

Social Media

A friend asked me recently for some advice about a venture he is starting for better managing social media campaigns. I was never an expert on this topic and the 3 or 4 times we tried it in the early days of social media were not that successful.

After doing some research online, I must report back that I haven't found the recipe for going viral. However, I did find an interesting infographic from WPROMOTE who specialize in social media optimization. What I'm getting out of it is that if you are actually taking social action and trying to do something good, it's much easier to get some social media buzz around you.

Darwin Your Way to a Killer Marketing Message

Let’s imagine the following situation. You or your sales manager were talking to a potential customer or partner and the call was very good. You were able to identify all the pain points and explain why your innovative product will make all the problems go away. The minute you hang up the phone, your customer to be is going to your website and finds out that none of the things you mentioned actually exists in there and losses interest.

The Alignment Paradox

One thing to know about the human mind is that it trusts information that is consistent across multiple sources of information. This is not new, and in fact most marketing campaigns use message repetition through different media channels.

Now, all this is very nice but a startup is a constantly evolving organism that is adapting to its environment in order to survive and succeed. On the sales and marketing front that often requires a fair amount of trial and error type experimentation. It’s likely that your sales pitches are changing as you need to bring the discussion with potential customers to revolve around their relevant pain points and every customer seems to have different problems.

Sales is pencil and Marketing is Ink

Marketing and sales are very different. Sales in all forms and shapes including face to face, phone, chat or email is done by interactive, one to one communication. Marketing on the other hand is done mostly in mass communication methods that are one way and therefore requires a great deal of accuracy and finesse. Think about it that way: sales pitch is written in pencil while marketing is written in ink. This is the reason that it’s much harder to constantly change your marketing messages. It’s expensive to make them and you can never erase them completely.

The Symbiotic Approach

The way to reach a killer marketing message for your startup is by combining the sales and marketing strengths to constantly improve. The sales job is to constantly probe your market using variations on the official marketing message. That is not really something you have to plan for and will be done seamlessly by your sales manager or anyone else who interfaces the customer and trying to feel his pains and answer them. The marketing role is then to check what was working in the sales pitch, understand why it was working and weather it is true to a larger audience than that customer specifically.

Creating such a symbiotic system between sales and marketing will yield better results over time. On one hand the marketing messages will not be created in vacuum. On the other hand, this ensures that the sales will have proper support from your marketing channels to re-enforce the messages that are being communicated in the sales pitch. Next time your customer to be visits your website he will find reinforcement for at least some of the messages if not all of them.  

 

Steve Jobs - "Focus is about saying NO"

I was dealing a lot with the need to focus recently and found Steve Jobs' take on this very inspiring. "focus is about saying NO" he said when he took apple the second time around. He also recognized how hard it is - "You piss people off". That's the story in a nutshell and it really is hard to do that over and over again, letting employees down, passing on business opportunities and killing new initiatives that others invested time and effort in.

 

This video is from a Q&A session in apple developers conference back in 1997 but the same approach lead apple to record breaking acheivements. Apple not only became the most valuable company in the world in terms of market capitalization, it did that by focusing on very few products and probably saying no countless number of times.

Closing Costs - Critical Lesson

This is a post I was putting on the bench for some time but I think enough time has passed for it to go live.

One of the invaluable lessons I learned as one of the founders of EyeView was about closing costs. Simply put, Closing costs is the minimal amount of money you will need to close the company. I'll go into more details about how to calculate it but let me share the lesson first.

After raising a first round of $1M, it almost seemed like EyeView can never run out of money. We were young and inexperienced at that time so that sum of money seemed like it can last for a very long time. Reality was different. Once you move from a garage based operation to actually having employees and offices the money start to vanish quickly from your bank account. Our case was no different. We arrived very quickly to a situaiton where additional funding was needed.

One advantages to having a VC back you up is that you have a pretty good idea where the extra funding can come from. However, that extra level of comfort comes with a price - you don't know if you are getting a fair deal or not. As inexperienced as we were we decided that we should shop around before taking the initial offer from our VCs. In retrospect, this was a bad move especially as we overlooked two critical points. One false assumption that we made is that the offer we received from our existing VCs will be waiting for us after we shop around - this was not true. The other mistake was ignoring our closing costs in our assessment of how much time we have before we will have to default to the original offer.

The end of that story was that we realized our closing costs in the middle of a round and didn't have time to close the external round. We had to come back to our VCs with almost 0 negotiation power and the initial offer that we weren't sure about got a lot worse. The round we raised wasn't a down round but we lost much more equity on that than we needed.

How to calculate closing costs

I'm sure there are more thorough ways of doing the math but the following rough estimations could save you 90% of the trouble. Assuming your notice period for employees is 30 days and the accomulated unused vacation time is 14 days (since it's unlikely that your employees used their vacation balance / PTO balance), you need to calculate 1.5 months worth of salary for any non-founder employee. For 6 developers this would roughly be $100K. To that you want to add the notice period on your office rent contract multiplied by your monthly rent and any other significant commitment you might have such as hosting, freelancers and vendors.

What to do with that number

So after you calculated that, you might have some dollar figure in your hands let's say $150K. This is actual money you need to put aside. Painful as it may be, you don't really have that money as you already comitted to pay it. If you don't put it aside, my advice is to consistantly deduct it from any cash balance calculation you are doing and to make sure every time you calculate how much time you have before you need more funding, you don't relay own that money.

 

Top 10 Challenges of Intrapreneurship

Being an Intrapreneur can be very challanging. Here are the top challanges for taking an idea and turning it into an Intra-startup based on my experience as the Intra-foudner of INTENTclick.

1. Develop and qualifying your idea - there are many ideas out there but the process of taking an idea and making it into something that is going to worth your time and energy requires a lot of effort. Moreover, it requires speaking to a lot of people and getting invaluable feedback that will help you evelove the idea. Doing so inside a company requires a lot of courage.

2. Locking management commitment - unlike with external ventures an Intra-startup doesn't raise capital. However, in order to start executing on your ideas as your full time job inside a company and to be able to get additional resources you will need to get management buy in. The process is very simillar to pitching to a VC, at the end of the day it's all about making the busienss case for your venture.

3. Not giving up - preseverance is a big piece of the puzzle in entrepreneurship but it's actually harder for an Intra-founder to push through endeavors as the alternative of going back to the comfort of the corporate world is relativly easy.

4. Crossing the chasm - once you have reached a few market successes you need to start rolling your product out. Intraprenuers are faced with 2 alternatives - going through the existing sales department or developing it's own sales and marketing.

5. The internal sale - Sales orginzations are success driven and tend to focus efforts where the success is easy and rewarding. New products usually represent the exact opposite as they require more effort and are initially harder to succeed with.

6. Market Cannibalization and Territorial Conflicts - Developing an alternative sales organization can be very challanging as it presents the risk of internal competition between the two organizations. Doing so requires a clear differentiation between the markets that each organization is pursuing.

7. Corporate alignment - Startups usually have to figure this one out only when they are getting acquired but an Intra-startup has to constantly check it's alignment with the overall corporate vision.

8. Hiring employees - Intrapreneurship is very rewarding but at the same time it is very demanding and requires a pesonal sacrifice. This is also true for anyone who will come to work on your venture so you need to make sure they are able to enjoy the rewards by allowing them to identify themselves with the venture.

9. Maintaining focus - keeping an eye on the target is key to succeeding with any venture. An Intra-startup is exposed to a great deal of distractions from various internal sources which makes it all that harder.

10. Aiming High Enough - comparing my role as Intra-founder of INTENTclick to CEO in a VC backed company. The latter one is forced by his investors to aim high while an Intra-founder sets the bar for himself in many of the cases.

 

 

The Bitter the Better

I'm going to go off topic and out of my habbit of writing about business, leadership and tech and dedicate this post to beer and more specifically bitter beer which is my favorite type of beer.

I only recently discovered that I like my beers as bitter as possible. However, Israel is not the best place to come by that discovery as most beers are from the watery kind or the fruity and sweat kinds. I had to identify what is it that makes beers bitter and what would be the acronym or word that I would be looking for when I'm checking a menu.

Ok, so the first thing about bitter beers is that they have lots of hops in them. Now, I'm probably not going to make one myself so why would I care about that? Well, apparently if you go into a restaurent in America and tell the waiteress that you want a beer with lots of hops in it she would ask the barman and assuming the guys knows his stuff he will be able to get you one. I'm assuming that the situation is simillar in the UK but in Israel that might not cut it.

Pale ale is another name you should remember if you are in to bitter beers. At least in scotland and in the U.S. that is true. There is another variation of this kind of beer which is India Pale Ale or IPA for short. There are beers in the UK that is called IPA but they are actually not as bitter as an IPA beer would be in the U.S. Not sure where the 'India' part of the name comes from. I doubt that IPA beer have more to do with India than french fries have to do with France but it's still a good bitter beer.

From some reason English people and American always have hard time agreeing on names. Conviniently enough bitter beer is simply called 'bitter' in the UK. IPA would be less bitter over there but Extra Special Bitter would be the way to go. ESB is used in the US as an acronym for Extra Special Bitter.

Sorry if it came out a bit too informational. Most important thing is to enjoy your beer and drink responsibly.

P.S. - I used this wiki as a resource - http://en.wikipedia.org/wiki/Bitter_(beer) 

Entre and Intra - preneurship by a founder and an Intra-founder

Intrapreneurship is a form of entrepreneurship in which the entrepreneur is innovating within an existing company. Unlike in a startup company where the entrepreneur would raise funding from individuals often called angels or from venture capital firms, intrapreneurs would instead convince the company they are working for to execute on their idea and turn that into an intra-startup.

I had the opportunity to try both types of entrepreneurship, as a co-founder of EyeView I played the entrepreneur role while as the intra-founder of INTENTclick and it's Managing Director I get to play the intrapreneur role as INTENTclick is part of Kontera.

The one challange that people usually associate the most with being an intra-founder is internal politics. There is always a concern that somebody will steal your idea, take credit for it or try to use your success for his benefit. While entrepreneus don't normally have this problem, they do share the same concern that somebody will steal their ideas everytime they try to get feedback or pitch to someone. As explained in one of my former posts - asking to sign NDA - this approach will set you up for a failure. My observation is that there are a lot more good ideas than people who are willing to take the risk and execute on the ideas. The same thing applies to internal entreprenuership. If the idea is big enough to be a stand alone business, the real challange is on the execution. The long road from turning the idea into a reality will require the intra-founder to get as much feedback as he can and convince a lot of stake holders to support him so hiding the idea is not an option. At the same time, the exercise of getting the buy-in of all the stake holders ahead of time will attribute future success to the intrapreneur so no one will be able to steal it from him.

Another big difference I noticed is the organizational culture. With INTENTclick, the culture was partially inherited from Kontera with some influence from founding and management tream while with EyeView, the foudners had a much bigger role in setting the organizational culture. Note that not every corporate or company allows another organization to grow inside of it. As an intra-founder you need to consider what culture you want in your intra-startup and factor that in the decision to innovate from within a given company. 

The other set of challanges with intrapreneurship that is somewhat unique is the constant need for the intra-founder to align it's small boat with the mother ship. Startup companies usually have to do that only after they get acquired by a bigger company and then the merger between the two companies is much sharper and causes the alignment to be quite drastic. In a way the intra-startup is constantly going through the experience of being purchased by the bigger company.

As intrapreneurship is less known, I see it as my mission to get the word out there and make the case for all intra-founders that are building great intra-startups. If you feel you are an intra-founder - you can join the linkedin group.