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New Site Is Up!
New Site!
Hello World,
I just wanted to let you know that I have just released my new blog at http://www.darrenherman.com (DNS should be propogating shortly) and welcome everyone over to it! I welcome any comments and criticsms as well... I love the new style and look of the blog.
Looking forward to seeing everyone over at the new site (http://darrenherman.com or http://s4688.gridserver.com)
Best,
Darren Herman
Second Life's $1.6mm Spent Today...
I was reading my RSS feeds this morning and saw a very interesting posting from the Second Life Herald about the total amount of dollars spent in Second Life during the last 24 hours. The number seems extremely high to me as the virtual world has about 1mm residents and has been around for a few years... but it's doing $1.6mm USA Dollars in transactions.
Apparently, if you pass around money with a zero sum total, it registers those transactions and adds them into the total money spent. Knowledgeable users of Second Life can write scripts that pass money back and forth all day and increase the total amount of money spent in the virtual world... with having a pure zero sum transaction.
Makes me wonder... original article is here.
Hipster Marketing 101
Do you want your brand to be #1? Well, that all depends on who you are talking to at that particular time but most people would tell you...YES. In certain areas of business, you probably want to aim a bit lower for the long-run and let me explain why...
In today's Wall Street Journal, Gina Chon has a lead article on page B1 of the Marketplace section about Toyota's Scion sales strategy. In 2006, the Scion (hip, trendy car from Toyota) is going to surpass its goal of 150,000 units sold by 25,000 additional vehicles. This means that there is obviously more demand for the Scion than expected. Knowing their target audience well (hipster, urban, laid back, young, etc), Scion realizes that if they increase the production of the automobiles and make them readily available for everyone to purchase, they will flood the market and dilute the Scion brand.
When you drive around on the street, do you notice how many Toyota Camry's and Honda Civic's there are? Probably... they are everywhere. For hipsters and the audience of the Scion, this is opposite to what they want. It's about unique identity, not mass market. With that said, Scion will earmark production for next year at the same level - 150,000 Scions... to keep the brand valued by hipsters.
One case I use when giving speeches is about the NYC club scene. You do not want to be the absolute hottest club for a summer even though the monetary rewards may be fantastic for that period of time. The next summer, there will be another club that is hotter than you because influencer's and hipsters always need to find something new and not do what has happened in the past. The club who did well the previous summer will have a tough time surviving the next year and will certainly see lower overall revenues (if the business remains exactly the same).
Lets take this case online... we've got a lot of buzz around Facebook, YouTube, MySpace, Friendster, etc. An acquisition of any of these sites are risky as they were built around buzz - and the crowds who are a large part of the recurring audience is always looking for the latest and hottest fad AND/OR trend. Once these sites get too much media attention and the mainstream mass come to use them, you'll see an eventual decline in usage from the hipsters and trend-setters which will then take mainstream traffic away when something else gets hotter.
Would love to hear thoughts on the above....
Funding Strategy
The NY Times sparked a great posting by ValleyWag which focused on the ways to raise funds for your startup. While these strategies have a lot of subjectivity to them, they tend to hold true for the most part. Take them with a grain of salt.
Venture capitalists
- A VC firm raises funds from investors, then invests it in startups, usually at upwards of $1 million per company (and sometimes as high as $12 million or more).
- A VC firm is buying a share of the company -- anywhere from a tenth to a third (or more!), depending on how much the firm decides the company is worth before the investment.
- If the company needs more money a few months later, the firm may invest again, or a different firm might invest. Companies often raise funds from multiple firms in one round.
- VCs want at least three times their money back, though they expect most deals to fall through
- Many companies only take VC funding after they've used up the funding from their...
Angel investors
- These are often the first investors in a company, most always used before venture capitalists.
- Angels invest a few thousand dollars. As with VCs, several angels may invest in a startup at once, for a total round of anywhere up to about $1 million.
- They have less of a business interest but more emotional involvement.
- Angels can be friends and family of the investee, but some startups raise a preliminary friends-and-family round.
- Or they may go even smaller and rely on...
Personal credit
- When is it healthy to run up a 20%-interest-rate debt on plastic? When it's cheaper than running up a 200%-interest-rate debt on VCs.
- Of course, you could also rely on your own cash reserves, as many startuppers do with their second companies -- Evan Williams, for example, who used his windfall from selling Blogger to Google to buy out the investors in his new company, Odeo.
- Ironically, credit card funding is a far cry from other way to borrow from banks...
Hedge funds
- The 90s bubble was partly blown up by VCs, but the big money came from hedge funds -- an adventurous form of private investment fund.
- They're not as involved this time -- the money's too small, at least for now -- but they powered many a startup in the 90s, when more tech-savvy VC firms hadn't dominated the Silicon Valley funding industry.
... of Note
A few links and articles that I've enjoyed reading over the past couple of days:
BusinessWeek - Dell's Executive Search
BusinessWeek - Bubble 2.0
Rollingstone - Baby Billionaires of Silicon Valley
Fortune - Yahoo's Dilemma (Deal or No Deal)
News: Some new things are in-store for DarrenHerman.com. I've had numerous feedback (and I feel the same way) that the three column approach to the design of this site is limiting as the content column is too narrow. As early as next week (but probably within the next 2 weeks) there will be a whole new template and will potentially be moving services. Thanks for your reader input!
Justin Townsend, CEO of IGA Worldwide gave a fantastic speech at the BMO Capital Markets conference yesterday here in NYC. A link to the audio page of the speakers can be found here. Justin spoke in between Reginald Fils-Aime, President, Nintendo of America Inc. and Peter Moore, Microsoft, Corporate VP, IE Business, Entertainment & Devices Division.
