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Posts Tagged ‘internet startups’

Bootstrapped

October 13, 2008 1 comment

Well, last week was one heck of a week. Wall Street saw one of its worst weeks ever – actually the worst since 1933. After 8 consecutive days of decline the Dow lost 2,400 points, a 22.1% decrease in just 8 days.   Both the Dow 30 and the S&P 500 reached their all time high on October 9, 2007 closing at 14,164.53 and 1,565.15, respectively. The Dow is down 40% to 8451.19 and the S&P 500 is down 42.5 to 899.22, since October 9, 2007.  (Numbers as of October 10, 2008 close.)

Back in 2000 it was technology that drove the market down and this time around it’s the financials.  It will be interesting to see how much technology will be affected by this massive decline. The internet boom of the late 1990s and early 2000s was spurred by massive internet IPOs that saw stock prices skyrocket for companies with shaky foundations. Over the last 5 years there has been some massive internet valuations but most of them never went public – this could work to the internet’s advantage this time around. During the Web 2.0 era many of these startups were acquired or financed by established companies.  Of course some of these valuations were exorbitant, YouTube bought at $1.65 billion & Facebook valued at $15 billion, but they never IPOed.  Facebook has been flirting with an IPO over the last couple of years but given the current market they’re definitely not thinking about it now. One benefit of remaining in private hands is the ability to steer your company the way you see fit – not the way stockholders see fit which is often influenced by emotion.

One benefit of downturns is a startups ability (or need) to bootstrap operations, be creative and run a more efficient business model. Based on Bizak’s startup statistics over 40% of websites rely on advertising to generate revenues. Today is a good day in the markets but it will likely take years to get back to the levels we saw just weeks ago. The first department to feel this pinch will no doubt be the marketing department. Advertising across the web will decline affecting not only startups but also Google. For startups this will hopefully result in new & creative business models – hopefully more startups will generate product sales, services and subscription models. If a website can’t monetize their free content (advertising, Google Adsense) then they might be forced to charge (micro-payments maybe) for it. Adsense was already becoming worthless and these recent events will likely make it worse. 

Other startups will need to lower their burn rate to weather the uncertainty. I don’t think VC money will dry up as much as it did during the first half of the 2000s but it will probably take pause to access the trickle down effect. Right now the markets are running on a lot of emotion so we need time to pass before accessing the situation. Tough times tend to generate some of the most creative ideas – ideas that capitalize on the situation. Think of all the major web apps that you use today – Google, Myspace, YouTube, Facebook, LinkedIn.  All of these apps were post “internet bubble” products that were launched during a time when many thought the web was dead. They helped bring the tech sector back in force. This time around it’s the financials struggling and maybe it will be tech that pulls them out? 

All in all it’s a time to conserve and take the necessary steps to ensure the longevity of your application. According to Ron Conway, startups should heed the same advice he gave in 2000 which includes: 

  • If you are in a funding cycle, you should raise your funding as soon as possible and raise as much as possible.
  • You must aggressively examine and pursue M&A opportunities (unless you have over 12 months of cash reserves!) ro insure you have critical mass (including funding, customers, rolodex power, market
    share, cash, synergy, etc.).
  • Be realistic on valuations – they will fall so be ready and willing to co-operate.
  • Look for corporate partners to invest so you can raise more money. You should also consider a sale of your company to your corporate partners.
  • While it’s safe to say entrepreneurs have had negotiating leverage with the “down draft” in the market, the VC community will start exercising their leverage.

For me I have two startups and three more on the way. None of these applications are funded and all of my “salary” is in equity which will require me to wait another 1-3 years. During this time I’ll continue to launch new and exciting applications but I also need to prepare for the unexpected. To accomplish this I’ll likely join/partner with a well funded startup/company where we can equally benefit during this exciting time. Interested?  My resume and my bio.

It’s an exciting time because social and economic events create a snow ball of technological innovation. Innovation that can grow quickly and adapt efficiently. Whether this is the end of Web 2.0 or not doesn’t matter since no matter how you define it the next wave of innovation has just begun.

Comparing the Financial Performance of Startups

September 13, 2008 Leave a comment

Slide 7 from the Bizak presentation discussing our market and the need to make an apples to apples comparison of internet startups.

For the high quality version please click here

Getting An Idea Off the Ground

August 13, 2008 2 comments

I had two meetings yesterday both with two very interesting, intelligent and entrepreneurial guys.  The first meeting was with an individual who runs a search fund and is pursuing a leveraged buyout of an “offline” company with approximately $5 million in revenues.  Additionally he helps “brick and mortar” companies get off the ground.  Other than he works offline and I online we have very similar job functions in that we both nurture early stage startups.

The second meeting was with an individual who is a fountain of ideas for improving our web experiences as they relate to online content.  Even though both meetings were separate they actually could have fit together very nicely.  In the first meeting we discussed the need for a firm like TOKiBiz who can do a lot of the grunt work for venture capital and investment firms – that is weed through a lot of great local talent and ideas.  

To explain further, I meet with a steady flow of entrepreneurs who have energetic and creative ideas for making the web a better (and more profitable) place.  My role with these entrepreneurs is to help them get their idea off the ground and onto the web. Most of the work I do is before the seed financing stage of a business – that is we craft the business for them to present to investors.  

In some cases the amount of financing needed to launch an application is very low so we’re easily able to finance, develop and launch a successful application on our own. With others this is definitely not the case and sizable funding is needed to execute the idea – sizable for us.  This is unfortunate since many of these ideas are brilliant.  All of them are from individuals with considerable work experience but this is their first venture into entrepreneurship – which often means they lack the financial connections an established entrepreneur has.    

In the case of the second meeting yesterday the amount of funding needed is more than any of us can gather on our own.  This is unfortunate because his idea is exceptional and could change the way we monetize content, but there is a synapse between the idea and those who can finance that idea.  The gap occurs in not knowing which investor or corporation would jump on this idea once they discover its existence.  It’s this divide that TOKiBiz is looking to bridge by connecting the best ideas with the best resource to fund the application.  This pre-development stage is normally to early for VCs, angels don’t have the resources (time) to weed through the ideas, attend the meetings, develop the business model and brainstorm the possibilities, and corporations never thought to look at the problem from this perspective.  We do! 

What I do with TOKiBiz is meet with as many entrepreneurs as possible and help guide their idea into a business.  We have the technical and business contacts (and experience) to assist on this front but we desire the investment and/or corporate contact(s) for whom we can present the best of the best to.  For example, we have a retail application that most retailers would drool over if they only knew it existed.  With TOKiBiz they have the opportunity to get in at a fraction of the cost that they would incur if built on their own.   

Like a VC firm I weed through a lot of ideas and proposals that come to me – many don’t get past the email stage.  If the idea intrigues me enough then I’ll schedule a face to face meeting to learn more.  Generally these first meetings are meant to get a better understanding of what the entrepreneur is trying to create – most of it entails listening and asking questions.  From here I usually take the time to let the idea soak in to see if it sticks.  If yes then we generally meet again to brainstorm and start thinking about execution.  It is the process up to this stage where we at TOKiBiz can provide the most benefit to VCs, angels and corporations looking to capture the next great thinker, idea and application.  The beauty of this stage is the capital needed is less for a larger percentage of ownership.  In most cases we can build the application much more efficiently than a corporation would do if built internally.  Own a fraction of more for a fraction of the cost. 

I use to think that at some point ideas would eventually run dry.  Now I know this is definitely not the case for there are millions of ways to make our lives better.  Ways that we never thought of before and ways that couldn’t exist without the idea launched previous to ours.  For ideas keep building on the ideas of those who came before us.

Investment Firms & Online Startups

Phase 3 of Bizak is set to launch soon.  Phase 2 consisted of the industry benchmarks (see video) and phase 3 opens up Bizak to investors who want to invest in internet startups.  In addition to the average benchmarks (that startups can view) investors will be able to view and compare the analytics for specific startups.  With Bizak, investors can now evaluate the earnings and valuation of startups in comparison to their competitors and industry leaders.  

Before we launch the investor side of Bizak we’re evaluating a few ideas that will benefit both investors and startups.  One of those is partnering with a large corporation, VC or investment firm who will have exclusive access to Bizak and the stream of web startups.  At this moment we’re discussing this exclusivity and invite any investment or venture capital firm to contact us (617-947-8071, email) if interested.

Financing Boston Startups

In addition to creating our own startups (Bizak) we at TOKiBiz also work with entrepreneurs to help them create a profitable internet business.  TOKiBiz helps entrepreneurs create ideas into business.  This includes developing the business model, the revenue model, building the application, creating a design, building a brand and designing the logo.  

Then when all of these steps are completed we’re ready to launch the application. Unlike most firms, TOKiBiz then helps the entrepreneur run their internet company. This can be anything from just an advisory role to being the people running the show – as is the case with infoMedMD.  With infoMedMD we helped the founder create the idea into a brand, then a website and then into a business.

With our recent launches we at TOKiBiz are looking to expand our services to other entrepreneurs, continue development of in house applications and offer new services such as internet & video marketing.  Right now we at TOKiBiz are looking for investors to help us help entrepreneurs, in return giving you an equity stake in every project that we work on.  An equity stake in not just one company, but all of the great ideas coming out of Boston and the country.  

If you’re interested in investing in TOKiBiz, Inc. please email Tom (via Bizak email form) or call Tom O’Keefe at 617-947-8071.  Tom O’Keefe and TOKiBiz, Inc. are located in Boston, Massachusetts.

Types of Internet Startups & Websites

The current breakdown of the types of internet startups listed on Bizak.com.

Types of Internet Startups & Websites

Video Post – Features & Benefits of Bizak

Many thanks go out to Nwokedi Idika for his terrific video post highlighting many of the features and benefits of Bizak.  Nwokedi is the founder of eSposure.com, a place where you can upload your video demonstrations, products and services.

Visit eSposure at:  http://esposure.com

Nwokedi’s Bizak Video