Boulder Network of Professionals

To Group Coupon Or Not: Small Business Guide to Groupon, Google Offers, LivingSocial and Others

2011-02-13T21:51:00.000-07:00

I enjoy writing my marketing blog. Most, if not all, of the articles are somewhat dense and tackle issues from highly quantitative and analytical perspective. Following that model, I wrote a series of articles on Groupon and whether or not businesses should consider it for acquiring new customers.

The articles used arcane language that is not suited for easy reading.

To make it easy for small businesses to decide whether or not they should run Groupon, LivingSocial, BuyWithMe etc like promotions I recently wrote an eBook.

If you are small business owner and worried about

How to acquire new customers?

Whether or not you should run a promotion deal on Groupon, LivingSocial, BuyWithMe and other sites

Whether or not Group Coupon is indeed risk free advertising

What else you give up and the hidden costs of such promotions

The pitfalls of running a Groupon/LivingSocial/etc promotion

This book is for you.

Read more about the reviews, contents and sample chapter at the book website.

New Qwest Ads breaking through the clutter

2009-05-10T08:41:00.000-06:00

The new Qwest are not only breaking through the clutter but also are effective in repositioning Qwest as the broadband solutions provider. The Ads do not talk about features like speed and GHz but rather talk about customer pain points and Qwest's benefits. Great work by the new marketing chief who brings his experience marketing consumer brands like Sonic.
See the videos here, and here
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Pay What You Can Pricing - Early Results from Sensorielle

2009-04-25T08:53:00.000-06:00

Facing falling customer traffic due to recession, Sensorielle spa in Boulder, CO decided to go for a pay-what-you-can pricing scheme. As previously reported, they had posted fixed prices but asked their patrons to pay for the services what they value/afford. The goal was to reduce pricing as a concern for customers and to encourage their regulars to return to the Spa. Recently the owner of Sensorielle spa, Ms. Jewl Pettaway, a Boulder Net member, posted early results from her pricing experiment. Here is the full text of her posting in the Boulder Net discussion group (posted with permission).

At Sensorielle, we love our new concept, and would like to hear from clients, colleagues, and the general public about how you feel about it. Below I have expressed some of what we are experiencing.

Some clients feel guilty if they don't pay the full price. We certainly don't want that! The idea is to allow everyone to care for themselves regardless of their situation. So, if you come less because you feel like you need to pay 100%, it sort of defeats the purpose. We know this is something very new, and may be hard to swallow at first. We hope that people will get use to it and really come as much as they can and pay all they can truly afford.

Other clients have expressed a concern that we will not make it because people will take advantage. I can tell you, people taking advantage is the tiniest minority of what we are experiencing so far!

Since our launch on February 1, we have found a great balance in people coming weekly but paying a little under the suggested pricing, people coming less frequently and paying full price or more, and those paying a bare minimum. They seem to be the minority, and do not come as often for whatever reason.

Most clients we see give us a full range of "5's" on their feedback cards, and many express how grateful we are to be doing this for our community even (and especially) if they are paying full price or more. It has been really rewarding for us, the entire staff of Sensorielle, to see this idea manifest in the best possible way we could have imagined.

So far, our cash flow the is better than last year with full pricing, and our average service ticket has only gone down by about $15-$20! We estimated it would reduce by about $40. It is amazing what can happen when you launch yourself fully into a passionate idea with no research available!

What are your thoughts?

Namaste,
Jewl

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Longevity of Crocs Brand in Question?

2009-04-19T15:36:00.000-06:00

24/7 Wall Street analyzed 100 brands and makes a prediction that 12 brands will not survive after 2010. The third on in the list? Crocs, the footwear company in Niwot, Colorado.

Two weeks before the credit extension, the company’s auditors gave the firm a “going concern” letter, an indication that there would be reasonable chance that Crocs would make it another year. In the fourth quarter of 2008, Crocs lost $43 million after making $55 million in the same period the year before. Revenue fell from $225 million in the last quarter of 2007 to $126 million. Crocs won’t make it through the year.

The stock did fall from its highs last year of $72 and I wrote about it in the Boulder Net blog. The Wall Street Journal reported that the trend does not favor Crocs. In that article an analyst with Wedbush Morgan Securities was quoted saying,

"Crocs's problems have less to do with the recession than with fading public interest in its signature footwear. Their problems started earlier."

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Analyze this - Who is writing the Boulder Net Blog?

2009-02-27T15:33:00.000-07:00

There is a neat website called Typealyzer, that can take a blog URL and tell the rest of the world something about the person who is writing the blog.
So what does it say about this blog's author? "Scientist".

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Boulder - Paradise or Not Discussion

2009-02-27T10:25:00.002-07:00

I would like to point you to the discussions going on in other, extremely well written, blogs. The discussion started with Megan Soto of LaunchSquad stating in her blog, Boulder, I’m Lookin’ And I’m Likin’,

What is it about the Boulder scene that makes me yearn so to be a part of it? My curiosity-turned-fascination-turned-safe-distance (I swear)-obsession was probably fueled by the fact that I can’t be part of it. My location prevents it and they just don’t seem interested in pursuing me as a remote member of their clan, though, granted, no overt outreach was established from my end.

Her fascination with Boulder is understandable. I am not however fully convinced about the startup scene, especially given the tough economy.

In response to Megan, Boulder Blogger Brian says, Boulder is Nice, but No Paradise:

Rather, my point is to try and paint a more realistic picture of the city. Because frankly, while Boulder is nice, it’s no paradise.

There are dirty people here. There are too many bikes, and they run too many stop signs. There are mountain lions, and they eat humans. There are college students, and they don’t act like humans. There are 12,00 foot peaks, but they’re far away. And fuck, there’s not much water here. Or nice trees.

What do you think?

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The High Cost of News Reporting - Rocky Mountain News

2009-02-27T07:42:00.000-07:00

From tomorrow Denver will have only one newspaper. The Rocky Mountain News said that it will cease publication after tomorrow. They are not talking just about stopping the print edition, they will cease news reporting, print or online.
The story reported in Rocky Mountain News website says why they decided not to go to online only version:

Mark Contreras, vice president of newspapers for Scripps, said the math simply didn't work.
"If you cut both newsrooms in half, fired half the people in each newsroom, you'd be down to where other market newsrooms are today. And they're struggling," he said.
As for online revenues, he said if they were to grow 40 percent a year for the next five years, they still would be equal to the cost of one newsroom today.

It goes to show that news media is a high fixed cost operation. The fact that online version has a marginal cost of $0.00 is immaterial, they still need the news room to report news.
Can they go to a fee version? Not at this juncture. Once you give away a service for free, customers are not going to value it enough to pay for it at a later stage. According to their cost estimates the total revenue (subscription plus Ad ) has to be at least $100 to break even. A tall order.
So can free work for all the other Web2.0 services?

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Crocs Signaling Its Focus On Brand Value With New CEO Pick

2009-02-26T06:59:00.007-07:00

Crocs saw its shareholder value fall by close to 96% from its highs in 2007. Crocs stock has fallen to $1.45, a downfall that is twice as steep as the rest of the market. Crocs announced that Mr.John Duerden will become the new CEO of the Niwot, Colorado based company. Crocs footwear may have few takers these days, as evidenced by the fall in revenues (to $126.1 million, half of previous year number), but its brand still has some equity that quite possibly some "brand elasticity" that can be transferred to other related items.

The economy and its current product line does not bode well for Crox. Mr. Duerden's appointment signals a possible Crocs' plan to leverage this brand equity, possibly with line extensions. The new CEO used to run another big brand in footwear, Reebok. Most recently, Mr.Duerden was with the Chrysallis Group, a brand development and renewal consulting group that he founded in 2006. We should expect him to be more brand focused and rebuild shareholder value through products with higher premium rather than increasing sales with lower priced items. Crox cannot win by going after market share by competing purely on price, profit should be the number focus.

Of course for all those coming to this post from Yahoo Finance Crox message board, this is just my opinion. Mr. Duerden's resume is verifable and it is true. I am not making any recommendation here. You should not make your stock decisions based on this or any other opinions. Look at my previous post on Crox from last year here.

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Valuing Free - What will you pay for something you always received for free?

2009-02-25T14:18:00.003-07:00

Many web based free services, including from market leaders like Google, are shutting down. From Boulder, recently Andrew Hyde called R.I.P magnolia a Boulder based startup. Is there a problem in giving away a service that adds value for free? I believe there is. Most web services focus on building user base with the hope of Ad supported business model. While free is never a good business model, the dependence on Ad is coming under severe threat more now than ever in the past.
Can't these services simply start charging their subscribers for the service? The problem is if your users never paid for it and if alternatives are available their reference price for the service is $0.00 even though they may get great value from the service.

For a related article on increasing reference price from $0.00, see my article in my Unbundled Pricing blog.

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Applying to Job Postings in Craigslist

2009-02-17T14:42:00.003-07:00

Craigslist has no advertisements. It makes its money from job postings by employees. So are all the job postings in Craigslist real and worth applying for? One of the Boulder Net Professional (a LinkedIn based Colorado Networking Group) posed a question to the Boulder Net, whether anyone got a job by applying to one of those Craigslist postings. Another member said that she had applied to several but never got any response and doubted whether or not the postings are real. There is a really nice article in today's Wall Street Journal that asks "Is it a real job behind the job posting".

If you're launching an online job hunt for the first time in a while; take caution. What may look like an ad for employment may lead to something entirely different, like a hard sell for career services or job-training manuals. Or worse, it might be a plan by identity thieves to get you to share sensitive personal information via "phishing" expeditions. Some of the job postings -- sometimes for positions long filled -- also could be from recruiting agencies looking to collect résumés.

Definitely a advice we should all take to heart and follow. It may be a better idea to send a resume that only has an email address rather than the home address. But as the article points out, applying for these online postings may only have zero to low response rates.

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Using LinkedIn Endorsements

2009-02-17T14:32:00.003-07:00

Sometime back I wrote a blog post on LinkedIn Endorsements. The post was discussed within the Boulder Net LinkedIn group (Boulder Colorado Networking Group for Professionals in LinkedIn).
One member pointed out information from Ladders.com tips on job search that stated that recommendations do help. I do agree but claim that LinkedIn endorsements alone cannot be a differentiating factor. Since everyone can get endorsed, it only helps if people are competing against do not have any. It is also very difficult for a reviewer of a profile to see the nuances between the endorsements of two different candidates. It also means that if you ask for LinkedIn endorsements you work with your colleague to get an authentic and nuanced text rather than platitudes.

Do you write recommendations for your colleagues? What do you think?

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Growing Faster Than Most Colorado LinkedIn Groups

2009-02-14T10:03:00.001-07:00

Boulder Net is growing faster than the top five Colorado networking groups. Will you join us?

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Level 3 - Managing in Turbulent Times

2009-02-03T06:41:00.004-07:00

Broomfield, Colorado based Level 3 Communications is profiled in today's Wall Street Journal. The article talks about how the company managed to survive not one but two financial storms. As the playing field in telecommunications and credit market shifted and became too uneven for many of the telecom players, Level 3 managed to fund its operations and save jobs.
How did they do it? The management convinced the original investors to do more and bought back some of their old debts for cents on the dollar.

"These guys pull rabbits out of the hat," says Jefferies & Co. Inc. credit analyst Romeo Reyes. "They've been shrewd about taking advantage of what the market offers."

The company did not report positive earnings since 1999 and saw its market capitalization shrink to $1.6 billion, almost half of its value in from the highs of June 2008. What is the prognosis?

At this point in the crisis, however, survival is victory. And that should offer some inspiration for managers rebuffed by the banks: If Level 3 can stay in the game, there just may be hope yet.

Saving jobs in this economy is indeed truly inspirational act.

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Searching for the right opportunity?

2009-02-02T07:15:00.003-07:00

One of the responses to the recent Boulder Net employment survey was regarding a job with fewer responsibilities, at lower pay, than one was laid off from. The commenter said that it was better to have a decent employment while continuing to search for the right opportunity. I think there is no right or wrong answer here and the approach heavily depends not only personal situation but also on the overall market prospects.

Recently in the Wall Street Journal Career section a similar question was raised regarding taking on part-time or hourly jobs while searching for the right opportunity.

To decide whether to hold out -- and for how long -- your husband needs to look at the overall health of his chosen career path. Is it getting better or worse? Will there be other, better offers down the line? "If employment prospects in his prior industry or occupation are poor, it might be wise for him to go back to work as soon as possible and start building new experience on a job that will result in higher future wages,"

The one key point is the risk of allowing oneself to be overwhelmed by the current job leaving no time for career development. When taking a part-time or other jobs one has to conscientiously allocate time for their networking and career search.

What do you think?
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Boulder Small Business Fighting Effects of Recession

2009-01-31T14:51:00.002-07:00

The Rocky Mountain news featured Colorado small businesses in the front line of recession battle. There are two businesses and their approach particularly stood out. They are, Wheatridge based Vibrant Solar and Boulder based, Boulder Ice Cream. Vibrant stands out for its marketing strategy and Boulder Ice Cream for its operational efficiency.

In times of recession it is all the more important to invest in marketing and develop customers and that is exactly what Vibrant Solar is doing:

"When things are tight, you need to work harder to find customers," said Mark Simmons, Vibrant Solar's vice president of sales and marketing. "This is the time to increase marketing costs, not decrease them."

The company has virtually doubled its marketing budget. It is mailing postcards with personalized messages to potential customers, asking them to contact the company online.

Operational efficiency is no something to achieve just for the recessionary times. It is about keeping the costs down and continuously driving them downwards to keep more of the revenue the business brings in. Boulder Ice Cream has been focused on keeping their fixed costs, costs that are incurred regardless of the sales volume, down. This helps them to manage the low sales volume without making further cuts:

Boulder Ice Cream was careful to not increase its overhead along with its sales. The company doesn't provide health or retirement benefits and uses contract workers to ramp up production during peak selling season, allowing the company to hold steady with six full-time production workers.

What do you think?
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What is your Willingness to Pay?

2009-01-30T07:15:00.003-07:00

I recently wrote about a new pricing scheme, "Pay all you can afford" adopted by a Boulder Spa, Sensorielle. The underlying premise is customers will disclose (willingly) how much they are willing to pay for a service. In the case of Sensorielle spa, they will disclose it after they have had a chance to consume the service. Getting everyone to pay their maximum willingness to pay is every marketer's dream. The hard part is, a rational customer has no incentive to disclose their willingness to pay and would want to pay as low as possible. For a longer discussion on this topic see this article I wrote awhile back.

While the consumer behavior could be acting to maximize their benefit when making a product purchase with no possibility of repeat interaction and with comparatively less human touch, their behavior is bound to be different in a high touch (no pun) service exchange environment like in a Spa. In a spa after a hour or so of interaction with the service provider people will feel less inclined to capture all the value for themselves. When the services they received is effective and useful the customers are also bound to use them again in the future. Paying a token amount for the service makes no sense as they know they may not receive the same value from the service provider in the future.

The main question, will such pricing schemes bring back customers who decided to cut down on spa expenses due to economic downturn? I will talk more on this in future posts.

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Social Networking Within The Organization

2009-01-25T21:13:00.002-07:00

Broomfield Colorado based engineering firm MWH is profiled in The Wall Street Journal on its use of Social networking to map out the relationship between employees.

To boost productivity at engineering firm MWH, executive Victor Gulas asks employees which colleagues they talk to, and whom they turn to for help. Then he draws a "map" of the connections, which reveals dark patches around employees who work closely with others and lighter areas where there's little interaction.

Mr. Gulas says the map shows communication gaps, information bottlenecks and underutilized employees. "It's making the invisible visible," he says.

I wonder if the density of connections alone indicate the state of the social map and the informal network with the organization. The questions I have with these social maps are

Do these maps indicate direction of information flow?
Is the information flow even in both direction?
Are the links graded based on frequencies of interactions?

Boulder Layoffs Near 30% in the past six months

2009-01-23T09:32:00.003-07:00

In our continuing discussion of the recently concluded poll on Boulder Employment, close to 40% reported a change in their status in the past six months. The margin of error is 9%. Even then this is a high number. If we look closely at the reason for the status change

30% of the Boulder professionals reported being laid off in the past six months

This explains to an extent the high number of people , 25%, reporting unemployed. The breakdown of 30% shows that 19% laid off and still looking, 8% found a job already and 3% became self employed.

Another nagging data point is 7% reporting they expect their business to do layoffs in the next six months.

Pricing Experiment by a Boulder Spa Sensorielle

2009-01-22T06:52:00.007-07:00

One of the Boulder Net member, Jewl Petteway owns and operates Sensorielle spa in Boulder. As Jewl describes it,

We have been around for 4 years. We are a natural/organic holistic, wellbeing spa... Our treatments are based in nature. Our spa was built with non-toxic paints, and sustainable materials whenever possible.

What is interesting this time and differentiates this spa from others is their introduction of new pricing. Starting February 1st of 2009 Sensorielle is starting a daring pricing experiment they call, Pay-all-you-can pricing. In the recently conducted Boulder Employment Poll, around 25% reported as being unemployed. As the economic conditions deteriorates people starting to cut back on their spending. Even the de facto necessities like cable and Internet are getting cut, so it is no wonder that people will be cutting back on personal grooming and other spa expenses.

In the recent New York Times article it was stated that more of the tasks that are typically outsourced like coloring your hair and walking your dog are coming back home. While the upshot is people saving money on these tasks, every such service people do it themselves it takes away contribution to economic output.

All of these consumers could praise themselves for their newfound frugality in the midst of an economic downturn. But every step they take toward self-reliance — each shrub they prune themselves, each cupcake they bake from scratch — hurts the people and small businesses that have long provided these services professionally.

Sensorielle's Jewl says she realized that people will cut back on spa and related expenses. So she is trying to entice customers to come back by asking them to pay for the service what they value and what they can instead of the posted prices.
Let us help you feel great by offering our loving sanctuary to you.

We[Sensorielle] offer you professional, quality therapists and estheticians at a price you can afford. We offer a healing sanctuary where you can relax, get stress-relief, upliftment, beauty, happiness, and feel a great sense of overall well being. We ask in return that you pay what you truly can for our services.

It is a tricky pricing scheme but it is better than lowering prices to attract customers, because from what I see and read Sensorielle is a premium service and hence it should be offered at a premium price. Any price reduction now will not only signal inferior quality but also will make it very difficult to return to normal prices when the economy turns around.

We understand that a rational person, as defined by Microeconomics, will pay nothing more than the absolute minimum they have to. But as the field of behavioral economics show, people are not rational, they are Predictably Irrational. If the pricing and promotions brings about customers to the Spa, I bet that most will still pay closer to the list price.

What do you think? What will you pay when you visit their spa?

When 50% in Boulder say they are looking for new job

2009-01-21T16:44:00.002-07:00

In the recently conducted poll of Boulder professionals, more than 50% were reported to be searching for new jobs and 25% reported unemployed. For one thing it indicates that even those with a job are not sitting safely and believe a change is needed. This makes the job search more difficult for those who are unemployed. Not only do they have to compete among themselves but also with those who are trying to switch jobs. Macroeconomics says that those who are already employed stand a better chance of getting jobs because of many reasons including the networking opportunities. This competition is not different from any other time but what makes it difficult is the high numbers of both groups.
What is your take?

How do handle requests from LinkedIn members with 0 connections?

2009-01-21T16:38:00.002-07:00

I see a new class of LinkedIn members who send requests to join the Boulder Net group. Their profile say, their location is Greater Denver area. Most time their profile is empty but other times has few parts filled out. One thing that stand out however is their number of connections. It is 0.
I wonder if some create a different profile with different location.

In any case I do not see a fit for those in the group. I think I have been meticulous in looking at new member requests but if you see any 0 connection members let me know.

High Unemployment Rate Among Boulder LinkedIn Members

2009-01-20T17:34:00.002-07:00

I recently posted the complete results and preliminary analysis of the poll results. One data that stood out is the 25% of the people reporting as unemployed. The US Bureau of Labor Statistics numbers are far below this for Boulder MCA, a about 4.6%. So why one in four in LinkedIn reported unemployed?

There are two possible reasons

People more actively use LinkedIn when they are searching for jobs, especially in between jobs.
Since respondents self selected the poll is over represented by unemployed

So we cannot say that LinkedIn members who work and live and Boulder area have a higher unemployment rate than the rest of the population.

Boulder Metro Employment Status Poll Results

2009-01-19T22:07:00.008-07:00

Please use full screen mode to view the details.

Please rate the poll and results (1 - lowest, 5 highest)(polls)

Lower Unemployment Rate Than The Rest of the Country

2009-01-19T11:44:00.003-07:00

The United States Bureau of Labor Statistics (BLS) reported the November 2008 unemployment numbers for US cities. The overall number stands at 6.2%, but the number for Boulder is significantly lower at 4.8%

Targeting the Right Segment for Boulder Net

2009-01-18T19:33:00.003-07:00

In one of my previous post I analyzed the membership information of Colorado related groups in LinkedIn. I defined the the total addressable market for Boulder Net group as professionals within LinkedIn who work within 50 mile radius of Boulder. The top ranked group has less than 1% of membership. One way to increase Boulder Net's membership could be to target these members of top ranked groups but the most the Boulder Net group can achieve is to be the same as those. Besides what is the unique value add from this group if the people in this group are already in another Colorado group.

The right approach I believe is to target the rest of the market, those who are not in any of the groups, which is about 94% of the market. That is the target segment. If this is the only group that has members who cannot be found in other groups, then that is an attractive value proposition for other members to join this group. In addition this group has a popular blog and significant web search engine presence. But I am looking for more ideas to improve the value add to the members. Please send your ideas to my email or post as comment.

LinkedIn Recommendations - It is not how many you have that counts

2009-01-18T12:33:00.003-07:00

LinkedIn signals us that without recommendations our profiles are incomplete. It tells us to add two more recommendations to make it go from 95% to 100%. There is no obvious math behind this. Why 95%? If having 2 more recommendations will make make us go to 100%, why not keep adding more? Will adding more make our profile more than complete?

Many jobs posted on LinkedIn also state that the poster wants to hear only from applicants who have recommendations. Why would they base their decision to look at applicants based on whether or not they have been recommended? Probably if someone has not convinced anyone to write a glowing recommendation for them the it could be an indication of their influencing skills? Not really.

Do recommendations signal anything at all? Since LinkedIn requires the recommended to approve the recommendation before adding to their profile, any recommendation you see is only going to be positive.

In the movie Wizard of Oz, near the end the wizard would say to Tin Man, "Remember my sentimental friend, your heart is not measured by how much you love but how much you are loved by others".
Flipping that a bit,

" Your professional status and influencing skills are not measured by how many recommendations you have but how many have sought yours"

If you are nobody and your evaluation and opinion of others does not matter and hence no one sought your recommendation, then what does that say about you?

The Boulder Net Growth Chart

2009-01-11T23:21:00.003-07:00

Does this growth chart point to the left tail of the growth curve with big jump waiting to happen? The total addressable market is 350,000 LinkedIn members who are stated to be within 50 mile radius of Boulder, CO.

Tom Peters on Is Your Job Safe

2009-01-11T22:11:00.000-07:00

Here is an article I found through FT.com blog in Tom Peter's blog. The blog post is by author Raj Shetty. I do not agree with this approach of questioning yourself, more on that later. But now here is the link to the article and some of the questions

Is your job core to what the company stands for?
What will the company/department lose by eliminating your job?
What is the assessment of your "value" in the eyes of the stakeholders?
Is your job "offshorable?"
Can you handle office politics well?

Membership Information for Colorado Based Groups In LinkedIn

2009-01-11T13:51:00.002-07:00

The total addressable market size if 350,000 people who are within 50 mile radius of Boulder. Here is the information on membership of top 5 groups and of course the Boulder Net group. You can see that this group has just over 1/10 of 1% of addressable market. But compared to other groups it is 12% of top ranked group. That said, the Boulder Net group is not open enrollment and I still take the time to verify that there is some Colorado connection before accepting members.

Networking Before The Hard Times Hit

2009-01-10T09:13:00.000-07:00

As the official unemployment rate hitting a sixteen year high of 7.2% there is concern in the minds of everyone, even those who have a relatively secure job. The Government numbers on job less count are an understatement of the real unemployment count which the Barrons editorial this week says is around 750,000 as opposed to 560,000. Many businesses have announced layoffs but have not carried them out yet, as the layoffs roll in, typically the week before or after Super Bowl, the numbers will increase.

Naturally people are joining networking sites and groups at a higher rate. But joining these sites and having 300+ connections is not an assured way to get jobs in a short period. Networking should be more about establishing a genuine conversation with the peers in your professional circle or in your locale. You may have to invest more in your network, tending it, helping others before you can make a withdrawal. That means the time to network is not when the layoff rumors float in your office corridors but long time before that. Building your network cannot be done in an on-demand basis but rather as a continuous process.

The members of Boulder Net LinkedIn group are connected by the locale. The group brings together diverse professionals. If you have not considered connecting with people in Boulder Net group for a professional conversation it is time now.

The Next Milestone 400 Members

2009-01-10T09:01:00.003-07:00

The Boulder Net LinkedIn group has now reached 400 members milestone. Join the group to collaborate with professionals who are local to you. If you are thinking of relocating to Boulder, network now with local professionals to ease your move.

Google Trends For Searches on Colorado

2008-12-31T09:45:00.000-07:00

If you should do a Google search for either "Boulder Network" or "Boulder Networking", the links related to the Boulder Professionals Network group will show up in the first two pages of the search results. But does that really matter? How often do people search for these terms?
To do a comparitive analysis I used Google Trends to see the relative search volume of "Boulder Network" and compare it to other relevant searches. To get some perspective I use "Denver Broncos" as the reference (as I expect this search to be more prevalent and more popular). Here is the Google trend:

As you can see from the results, "Colorado Jobs" is the highest ranked search term after the most popular "Denver Broncos", with "Boulder Jobs" ranked distant third with one sixteenth of the search volume of "Denver Broncos". Search volume for "Colorado Network" registered same volume as "Boulder Jobs".

I can safely state that search for Jobs is ranked higher than just "networking" or "social networking" specific to Colorado or Boulder. So coming up first in the Google search results mean very little if the search volume is negligible. If I want to have a bigger impact with the pages, they should come up top for search phrase, "Colorado Jobs".

Interestingly, the search volume for "colorado relocating" is negligible, however, "Colorado Real estate" comes up comparable to "Colorado Jobs" and "Denver Broncos". If I were to use "Paris Hilton" as reference, the previously popular "Denver Broncos" is now just 1/13th of Paris.

Second Best Place to Retire?

2008-10-19T07:29:00.000-06:00

U.S. News writers profile 10 healthy retirement spots around the country, and Boulder is ranked number 2.
Retire? Is that going to be good?

The list of top 10 are

60% growth in the last 1 month

2008-08-03T11:47:00.000-06:00

What a difference one month makes!
The Boulder Net Linked In Group took six months to reach a milestone of 100 members.
But in the month of July it grew 60%, adding 60 members in 30 days.

What changed? LinkedIn finally added search functionality to the Groups. So when you search for Boulder, the Boulder Net shows up in the first page.

The other is the viral effect that is proportional to the number of members. As their LinkedIn status updates show that they joined the group, more people in their network see it and click on the group to join.

It will be interesting to see if this growth is just the initial bump or a sustainable one.

Google Closing Denver Offices

2008-07-07T07:55:00.000-06:00

Blogscoped reports on Google closing its Denver (and Dallas) offices after an operational review. Google may have high cash flow and revenues, it may spend close to $54 million on food expenses to feed its employees, but it is practical in determining the business case for each office. If a location does not have a positive NPV or fit in its long term strategy, it does not to continue with it.

(quote from blogscoped)

Following an operational review, we are consolidating our offices in Dallas and Denver, as we currently have at least two offices in each of these markets. This reorganization is designed to ensure we are serving the needs of our customers, stakeholders and Googlers [Google employees] efficiently. These are the only two cities affected by this review, and all affected Dallas and Denver Googlers will be offered opportunities within the company.

Boulder Net Reaches Its First Milestone - 100 members

2008-07-06T09:43:00.000-06:00

The group on LinkedIn was started in January and it took six months to grow to 100 members. Compared to most groups on LinkedIn this is a small group. The group could have been bigger if I had approved the requests from those "LION"s who join any and every group just to get access to LinkedIn members. I turn away those requests unless they show some Colorado in their past.

The Blog on the other hand gets no readers. It serves only one purpose now, to get Google search presence.

May be things will change in the second of this year.

Hi, I am Normal

2008-06-01T12:50:00.002-06:00

In one of the Sponge Bob episodes, he gives up his quirks to become normal. As his behavior changes so does his contours and becomes perfectly smooth and rounded. Normal without his laugh. Normal, as in having nothing to talk about but "wonderful weather we are having". Normal, without any imperfections and sharp edges. Normal, as in boring.

In his new book How States Got Their Shapes, Mark Stein describes Colorado's borders as "boring" (compared t Maryland that has the shape of a squirt gun).

Why does Colorado have such boring borders? Disappointingly, many of the Western states fell victim to carto-conformity when Congress clipped and hacked aborning states to a rough equality of size.

So Colorado was designed to have 7 degrees of longitude in width and 4 degrees of latitude in width.

Stein says,

"The northern and southern borders of Colorado are artifacts of something remarkable. Or perhaps they are artifacts of something we think is remarkable, but which goes on more than we realize. They are artifacts of foresight and planning by our elected representatives."

Get in! Get out! Get on with your life!

2008-05-26T22:13:00.003-06:00

Web surfers are getting more practical and impatient. A new report that measured user web surf metrics shows that people are not biting the tactics that are designed t keep the user longer or subscribe to a service.

The annual report into web habits by usability guru Jakob Nielsen shows people are becoming much less patient when they go online.
Instead of dawdling on websites many users want simply to reach a site quickly, complete a task and leave.

Most of the time people enter the site in the middle, through a search engine, and not through your home page. So every page should be designed as a landing page to service the viewer else they are off. They are not going to spend time drilling down the pages. The other truth about reaching through search engines is that the domain name does not matter. It does not have to be memorable or catchy, users are going to find the site increasingly through search engines.

Dr. Nielson's next point makes me wonder if I should get rid of widgets like Newreel and slide shows from this blog.

Web users were also getting very frustrated with all the extras, such as widgets and applications, being added to sites to make them more friendly.
Such extras are only serving to make pages take longer to load, said Dr Nielsen.

Conservative Chair at CU

2008-05-26T04:37:00.005-06:00

Does the person who runs the Boulder Net have to be a Boulderite?
Does the person who is running the Conservative chair at CU Boulder have to be a conservative?

Here is The New York Times blog article on the CU conservative chair:

[Chancellor G.P.Peterson] acknowledged that the professor of conservative thought didn’t have to be an actual conservative, and pointed out that many teachers of French “aren’t necessarily French.”

Foreclosure Hotspot

2008-05-22T07:33:00.003-06:00

The Wall Street Journal finds foreclosure hotspot in Colorado along I-25 and I-70 corridor. The thesis attributes the causes to not only the buyer behaviors but also the builder's bet that people would be willing to live far away from where they work if they can afford their independent house.

Many of these homebuyers are underwater not just because they bought more house than their incomes could support, and not just because prices are falling. They were also betting on commute patterns and demographic expectations that are proving invalid.
These were bets on location, location, location – premised on the idea that people would be willing to live hours from anywhere for a chance to own a single-family home they could actually afford.

Do you LinkedIn?

2008-05-15T11:17:00.002-06:00

I do not say this pejoratively, from my experience I have seen a consistent pattern in LinkedIn activities that can be tied to people's planned career moves or their expectation that something is not right at their current company. I did not do controlled experiments nor do I have hard data, but I have seen flurry of activities during layoff times. People update their profile, start making many new connections and seek out endorsements.

One thing I would say is to have your resume, LinkedIn profile and connections updated constantly and not in reaction to external events. The time to start networking is not when you need the job but when you already have one and is really looking to build a network that is not based on quid pro quo. It is very hard to make a withdrawal right away from a network. It takes time to nurture it.

So do not wait to network until you need it. In fact, the macroeconomic studies of unemployment numbers state that people who already have a job are more likely to find other jobs than those who are unemployed. This is attributed to exposure to other professionals the job provides and the stigma associated with being unemployed. When you reach out to others when you already have a job there is a higher probability of cementing a relationship because others are less worried about the give and take of the relationship.

You cannot cram an year worth of profile and network updates in a month, so pace yourself and do it more regularly.

Mutual Endorsements

2008-05-15T11:10:00.002-06:00

If you and your colleague write recommendations to each other in your LinkedIn profiles, do both of these cancel out each other?

Perhaps a little, but mostly it does not matter. For one thing no one is going to dig deep to follow the link to see the list of your recommendations. Secondly, I do not believe the recommendations add any more value than simple signal that you are not making it all up in your profile.

I would like to believe I add some value to others with my recommendations. So I do not display in my profile recommendations from people who I had endorsed. In fact I do not display any of the endorsements I received.

My LinkedIn profile is perennially incomplete.

I wonder if my recommendations of others tell something about me and my people management skills.

LinkedIn Endorsements

2008-05-15T08:57:00.003-06:00

LinkedIn has a feature that allows you to endorse your connections or to receive endorsement from them. LinkedIn encourages people to get recommendations by indicating that your profile is only 80% complete, add four more recommendations and it will be 100% complete. This is a nice marketing message, people usually react to this positively.

Do these endorsements matter?
By definition you only accept positive endorsements and hence all of these are positive. So how can one make any judgment based on all positive endorsements? Even though these are all glowing and positive, the fact that someone has taken time to write you one is a positive sign.

Some recruiters who post on LinkedIn say in their posting, "you need to have endorsements if you want to apply for this job". I bet they are not going to make their decisions on the text in the endorsement as much as the presence of it. Their logic probably is, "if you cannot even get your closest colleagues to endorse you, I do not want to look at your resume".

My conclusion is endorsements add value only as a signal to the reviewer that they can spend more time in your profile/resume. After that initial screening, the endorsements don't matter much.

Looking for a Career Change?

2008-05-15T08:37:00.002-06:00

It has been said in many articles and books on career change and job searches, that the time to start looking for a new job is when you don't need one and not when you are forced into one. It does not help our cause when we have a short time period to find a new job and under stress from the drastic changes in our current work, including layoffs.

Searching for a new job when you are doing very well in your current one, does not come naturally. We all love what we do and feel complacent, sometimes justifiably so, and sometimes we feel that we are too buys to add on this task. But when you search for a long before you need a new job you have time on your side and will be in a better negotiating position with the new offer. You will have less competition from your peers in your current organization than when the market is flooded with freshly laid off workers.

The first lesson in strategy is, companies that shape their future and not react to it stand to win. The same is true for personal growth. When you start early, you shape your future and not react to the unforeseen thrown your way.

I had a VP in my past career who said this when he quit,

"There are three stages to your career in any organization. In the first third you are learning as fast as you can and trying to become valuable, in the middle third you add value and make impact on the organization's performance, finally you get ready to move on, either within or outside the organization, and start handing off your responsibilities to the next in line."

These days the total length of these three stages is getting shorter and shorter, it stands at about three years. The first part is getting much shorter and corporations expect you to add value from day one and the third stage starts at about the same time as the first, with all three running in parallel.

Are you prepared?

Wild Oats Rent Does Not Stop

2008-05-14T11:43:00.002-06:00

Whole Foods announced its fiscal second quarter earnings yesterday. The acquisition and integration costs of Wild Oats are still eating into Whole Foods' earnings. Wild Oats home office at Boulder is still a big part of the expenses, at $4.3 million. Whole Foods has been reducing staff in the Boulder office, it reported 27 employees at the end of second quarter (April 13th) and a current number of 5 employees and expect this to drop to 0 by the end of third quarter.

Even when the labor charges drop, their 8-K says rent payments do not stop yet. The rent payments are $2-$3 million per quarter and they do not indicate how long this would continue.

An interesting calculation is to see how much Whole Foods accounted for the staff . Assuming the higher end of their rent, $3 million, they spent $1.3 million on 27 employees.

Housing Prices

2008-05-14T11:23:00.003-06:00

The National Association of Realtors numbers that came out yesterday point to median prices increasing in only one-third of the 149 metropolitan areas.

The Boulder and Denver-Aurora fell in the other two-third. Home prices fell by 4% and in Denver-Aurora prices fell by 6.6% from the last year prices.

Does this mean it is time to buy in these areas?

Chair of Conservative Studies at CU

2008-05-13T16:50:00.005-06:00

WSJ writes on CU's quest for creating a Conservative Chair:

Boulder is far from the only campus to recognize a leftward tilt to the ivory tower. National surveys have repeatedly shown that liberals dominate faculties at most four-year colleges. And conservative activists have grown more aggressive in demanding balance. A group called the Leadership Institute now sends field workers to scores of campuses each fall to train right-wing students to speak up. College administrators are beginning to respond.

The possible candidates?:

Robert Kagan
William Kristol
Thomas Nechyba
Condy Rice
George Will
Philips Zelikow.

More Homes For Sale than Jobs?

2008-05-12T14:29:00.000-06:00

Google AdWords allows you has a nice feature to determine the cost estimate for a given position in the Ad listing. Higher the position in the listing, higher the cost. Between two different keywords, higher the cost for the same position means higher the demand, that is more people are bidding on the same keywords.

For example, keywords like "boulder homes for sale" cost you $1-2 for a position of 4-6 in the Ad listing. For $2.5 to $3 you get positions 1-3.

The keywords "boulder jobs" cost $1 for position 1-3.

Does this mean there are more homes for sale than jobs?

Are these two data points related?
For a detailed explanation of how auctions set the Ad prices, see this Google blog post.

I Love My Idea. You should too ...

2008-05-12T14:13:00.002-06:00

An important driving force behind every entrepreneur is their passion and their unadulterated love for their idea. Without this passion there won't be a company based on it. But the same passion and falling in love with one's own idea leads to belief that everyone else will see this and will lead to automatic success. Success in the market place depends not on the idea but on the value proposition to the customer segments being targeted and how you execute the strategy better than the competitors.

Let us look at this from the prospects of a low tech business franchise, "meal-assembly". Forbes magazine has a well researched report on this industry. Sean Kelley of FranchisePick.com wrote this on the "Assemble your meals in our kitchen" franchises:

A common new business pitfall is the entrepreneurial tendency to become enamored so with a “solution” that one forgets to make sure it’s preceded by an actual need… and a need great enough to support multiple competitors who are also enamored with said solution.

Let us do some market analysis on this concept and whether it is attractive to invest in:

There are absolutely no barriers to entry. Anyone with a cookbook could enter. This leads to extreme fragmentation.
There is no differentiation among the multiple offerings. The brands did not have solid footing and did not connect with the customers.
The targeted segment is very narrow (if not non-existent): mostly women who are busy to do their own groceries and cleanup after cooking but would like to serve "home cooked" meal to their family.
A typical franchise gets about 50,000 people area franchisees of competing brands do operate in this market, limiting the available share.
The value proposition is not well defined. It saves the women grocery shopping and cleanup but they still have to book a time and drive to these places to cook. But people cannot avoid trips to grocery stores for everything else.
How much are the customers willing to pay for the convenience? The prices these places charge are higher for the value they add, a 2-3 serving of Chicken Lasagna costs $14.
This concept requires behavior change in customers, which is the most difficult thing to achieve. One brand tries to train the customer with messages like " We are not a luxury, we are a necessity". That does not ring true with customers.
Their fixed costs are high and takes about $25000-$30000 sales per month to break even. When supplies costs go up, as they do now, they further eat into the margins.
The customers are very fickle and had no switching costs. While those inspired by Food Network might try these for experience, they will not generate repeat revenue.
There are many substitutions, pre-cooked and pre-prepared meals are now available in stores like Whole Foods and other grocery chains. People can order groceries and some pre-prepared meals online for home delivery.

This idea sounds neat but does not have merit. The same can be said about many high tech ideas that sound extremely cool. Instead of creating value, the ventures based just on the idea end up destroying value for the founders, the investors and the employees.

Love your idea but do some analysis before betting on it.

Simply Hired

2008-05-12T11:17:00.001-06:00

One of my classmates in a Web2.0 class works as a Product Manager for a new job search site SimplyHired.com. This site serves as a job listing aggregator, it gets job listing from all popular sites and make it available in one place.

We search thousands of job sites and companies, just so you don't have to. We eat, sleep and breathe job search, to help you find that dream job.

You still need to sign up with those multiple job sites if you want to apply to these jobs that are listed only on those sites. There is one important value add from SimplyHired, it has a nice feature that lets you search for insiders in these companies from your LinkedIn network.

Other features include:

Lets you subscribe to job search results as an RSS feed. (hotjobs does as well)
Provides you salary information based on posted jobs
Works great for local jobs. (see side bar jobs listing)
Compare locales for job growth.
It is free. They make revenue from the Google Ads serves on the sidebar.

Five Tips from Monster.com CEO for Job Search

2008-05-12T11:04:00.001-06:00

In an interview with The Wall Street Journal, Mr. Sal Iannuzzi, CEO of Monser.com, gives five tips for job search in this difficult labor market:

5 TIPS

From Sal Iannuzzi for Finding a Job in a Tough Market:

• Stay focused on what you want to do and the type of position you are looking for.

• Seek jobs that are relevant and build onto your long-term goals.

• Cast a wide net; your dream job may be hiding in a company or industry you never considered before.

• Be diverse, as jobs with different responsibilities provide valuable experiences.

• Keep building on those experiences. Eventually, you'll be able to apply what you've learned to just about anything and be successful.

Six Tips for Coping with higher Commodity prices

2008-05-11T16:43:00.004-06:00

How a bread maker is coping with higher wheat and gas costs gives useful insights for all small business owners:

Are you doing your pricing right? Make sure you are pricing at what the customers are willing to pay (value based pricing) vs. pricing based on your cost (cost based pricing).
Find more ways to sell your products.
Achieve Operational Efficiency. Whether are not you sell premium products, continuously driving your costs down helps you overcome shocks.
Partner with other small business owners to share costs and to cross-sell to your customers.
Hold on to your trained employees, they are essential to keep your total costs down despite high labor costs.
Be not afraid to improve prices.

Featured: UniqueThink

2008-05-10T20:31:00.003-06:00

Bethany Siegler, a Boulder Net member runs, UniqueThink, her full service marketing firm from Boulder CO. She showcases some really neat web redesigns she has done for her clients. There really is no excuse for mediocre web presence. Bethany says in her website,

“My goal is to continue to work on campaigns that make a constructive difference in people’s lives. Seeing a project or company grow as we build their online presence, is inspiring.”
Her expansive marketing knowledge, combined with her ever-increasing skill set, is here to help your next campaign think unique.

If you are looking to improve your marketing communication, especially through the web channel and want a local firm, you should checkout UniqueThink.

Negotiations

2008-05-09T11:33:00.001-06:00

See my questions and response from Boulder Realty Blogger Osman of The Silver Fern on the topic of Negotiations.

In a typical real estate transaction there are 4 parties. The buyers and sellers have direct interests and emotional investment in the outcome and their agents not as much.

What is the right role in the negotiating process for the agents?

Unlike the buyer and sellers who most likely will never do business with each other in the future, the two agents are bound to meet and the reputation and track record is key since the news about tactics spread quickly.

Should they leave all negotiations to the principals? Do they?

Another Boulder Realtor Blog

2008-05-09T11:31:00.001-06:00

This is another great blog by a Boulder realtor, Neil Kearney. Just like the Silver Fern blog, Neil is trying to add value without selling right away. More than his bar charts of metrics (which I guess are meant to say housing market is still good ...) I like the trail maps and descriptions.

I am glad to see that realtors recognize that bidding for Google ads is not enough or nor even the right thing if they want to build a relationship based business.

Prespiring Virtue

2008-05-09T11:12:00.002-06:00

Florence Williams in The New York Times:

This town practically perspires virtue.
...
Let's get one thing straight: Boulder is not for everybody. Some conservatives hate the place. The New York Times columnist David Brooks has made immense fun of it as a latte town of bourgeois bohemians with their in-your-jowls liberalism and an uncanny ability to accrue wealth while pretending to care only about following their creative visions. According to American City Business Journals, Boulder has a higher percentage of college and postcollege graduates than anywhere else in
the country.

How Crocs made its first Million in sales

2008-05-08T22:43:00.003-06:00

The May issue of Inc magazine talks to CEO Ron Snyder of Crocs, Niwot Colorado, about how they made their first $1 million in sales.

With only one factory, in Canada, Crocs lacked the capacity to ramp up its production from 30,000 to 300,000 pairs of shoes a month. "There was no chance we could fulfill the order," Snyder says. Fortunately, he had a few contacts in Asia and was able to find a contractor in about a month. Soon, Crocs was shipping thousands of pairs of shoes. "Saying no never occurred to us,"

Since this first million they have come a long way and their stocks was hovering around $75 before falling to $10-$12. Crocs made revenues of $194 million just in the first quarter of 2008. Interestingly, the very first factory in Canada they had used to supply their sales is what they are shutting down now. Is there more room for Crocs' earning growth?

Crocs Earnings Report Deserves a Closer Look

2008-05-08T08:12:00.006-06:00

Just a day before Niwot, Colorado based Crocs reported its 2008Q1 earnings (SEC filing) I wrote about its practice of capitalizing software development costs. Yesterday after Crocs (CROX 11.81, +1.85, +18.6%) reported a loss including one time charges for closing down operations in Canada, its shares jumped almost 20%. WSJ blog also predicted a high stock volatility.

For the quarterly earnings we do not have much insight into the components but some of the components do deserve a closer look before predicting a stock turnaround.

The Cost of Sales grew faster than revenues, leading to a significant erosion in gross margin. This leads to questions, whether they increased sales by slashing prices and extending higher commissions. How far can they go to increase sales further?
They use FIFO (First in First out) for inventories. The higher cost of sales is accounted for by the increasing raw material costs. The current cost of sales in the income statement represent the cost of materials when they acquired them, may be an year or two ago. Since then costs have been on the increase due to run up in oil prices. Their gross margin is bound to go down more.
Cash position is weak as they generated no operating cash flow and ate into the cash reserves.
Their SG&A is also on the rise indicating a higher fixed cost that is independent of sales.
They indicate to us that the $12.1 million ($20 million total for the year) after tax charge on closing down Canadian operations is one time charge. In GAAP terms, this is still above the line but most companies tend to signal this to investors who also agree with this one time classification. But we need to find out whether the company is taking a big bath, adding many costs to the restructuring that are usually not one time charges. We do not have data to say either way.
Capitalizing Software development costs. We need to see if some of these costs get written off as part of the one time charges.

Before rushing to buy the stocks at current levels, investors do need to ask these questions.

Boulder Realtor Blog

2008-05-07T10:32:00.003-06:00

Realtors are recognizing the need to market themselves and the need to build credibility and relationship long before the client approaches them. The transactional business model is very tempting, after all no one is going to buy or sell a house that frequently. But the customers can generate more leads if the realtor develops a relationship that involves more than sending simple newsletters. A relationship requires two way conversation and spamming the customer with email newsletters or glossy printouts of listings is not a conversation.

Conversations with customers start long before they are customers and continues whether or not they hired the realtor, made the transaction or not. Conversations are not direct sales pitches or requests like "would you tell your friend about me?". Conversations work when they add value without selling and allow the customers to participate. In the age if social media, a blog as a conversation tool is a no brainer. But how many realtors invest in conversations?

I found one realtor blog , The Silver Fern, a blog with little or no direct sales pitches and tries and succeeds in adding value. A quick review of articles show pointers to article in The Economist on Negotiations, market updates, meth contaminations. Great.

They are aggregating content and producing original content to help people make decisions. That is value added.

They allow comments in all their posts, that is conversation.

This is marketing and relationship building done right.

They give credit to all photos they use (I guess Flickr) in the blog. That is uncommon.

The sales leads will come later.

(I do not know the folks at Silver Fern nor have I done any business with them)

Crocs Capitalizing Software Development Costs

2008-05-06T08:01:00.005-06:00

The Niwot based company's stock is trading at $10, more than 85% below its highs set in November 2007. There is one aspect in their 10-K is nagging. Crocs has invoked the GAAP that allows companies to capitalize software development costs after the feasibility period. In other words instead of expensing all of the development costs and taking a hit in income statement, Crocs capitalized the cost into assets that are amortized over 7 year period.

Capitalized Software—The Company capitalizes certain internal and external software acquisition and development costs that benefit future years in accordance with SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use.

The carrying amount increased from $5.5 million to $24 million from 2006 to 2007. That is close to 10% of the net income reported for 2007.

The SOP 98-1 makes perfect sense for software companies with high fixed cost of software development and low marginal costs and can track the revenues directly to the particular software.

Why is a footwear manufacturer capitalizing software that is used for its operations and has no market value?

Google Boulder Helps Autism Patients

2008-05-05T10:41:00.001-06:00

This is a great example of practical CSR, finding a great non-profit use as part of for profit operation. The Daily Camera reports

Project Spectrum was developed as a way for people on the autism
spectrum to use SketchUp -- 3-D design software utilized by architects
-- as a way for their visual and spatial talents to flourish, says Tom
Wyman, business development manager for Google's SketchUp team.

Startup Exits

2008-05-04T12:45:00.002-06:00

Andrew Hyde of Startup Weekend wrote about three Boulder startups that shutdown last week.

Good people, strong business models, and brilliant marketing, and still, no tomorrow for them. Nau, Organica and Falling Fruit.
A clothing line, coffee shop and audio production company. Seems like startups are bellying up at a rapid pace this week.

It is not fun to see people with so much passion start something only to shut these down to cut losses. It is better to shutdown when the prospects are dim than be hung up on the sunk costs.

Andrew asks what did these do wrong? Let us look a quick look at these three.

Nau: It placed corporate social responsibility above profitability, "We Believe that companies have a broader responsibility than simply generating profit". I disagree. It is not a corporation role to engage in CSR activities. As Robert Reich said in his book Supercapitalism, this rests with the Government. For a startup wanting to attract customers and capital this non-profit motive is not a viable business model. To quote Milton Friedman, "The business of business is business". Their product still has to serve the purpose it is designed for and every unit they sell must contribute to amortize the total cost. It is a case of optimistic predictions of product uptake and sales projections.

Organica: It is a coffee shop. It entered a crowded market that has no barriers to entry, little differentiation, fickle customers and high operational costs. By staying small they limited their volume, an essential component to amortize the high fixed costs. It is indeed hard to see investors lose their money but they should have seen the cash flow problem.

Falling Fruit: Another content creator distributor with Ad based business model. There is limited market, people have limited hours and can only read or listen only a few media sources. They tried to position themselves against TV, that is trying to change people's behavior. Their value proposition is "connect people who understand the importance of making positive changes in their lives and in the world". There are already big competitors in this arena, a big one is Religion. They had no unique offering and a very narrow customer segment. This is once again not a surprise.

Location does not matter in a Flat World Economy

2008-05-04T09:21:00.001-06:00

IBM Boulder executive Larry Longseth writes about the talent pool in Boulder and how Boulder can leverage this to run globally-integrated businesses. In an all connected world, when the same outsourcing options are available to all cities and the supply-chain advantage from global suppliers is no more a strategic advantage, why does Longseth think "Boulder, perhaps more than any other U.S. city, is extremely well
suited to take advantage of the substantial opportunities that
globalization affords savvy businesses."

It is arguable that one city is more suited than the rest, but Longseth has a valid explanation:

While other cities must first face hurdles like improving economic
conditions and quality of life before they can even begin thinking
about competing on a global scale, Boulder is ready today.

Thinking of a Career Change?

2008-05-04T08:18:00.004-06:00

Thinking of a big career change, like starting a venture, going to full time graduate school or take up non-profit work? The book by Herminia Ibarra, Working Identity: Unconventional Strategies for Reinventing Your Career, is an essential read.

Ibarra calls as the biggest mistake, people jumping ships without plan or practice. The best way to make the transition is to to start by doing some of the activities of the new career even when you are in your current job, as Ibarra calls it, "test possible selves without compromising our current jobs"

Straddling is not a good business strategy. Businesses that don't focus their scant resources on specific opportunities and instead spread them across multiple projects show no strategy at all. Career change is one case where temporary straddling works. In our personal lives time is the most important scant resource and to try out our multiple "working identities" simultaneously will strain us to the hilt. But the alternative to jump first and learn to swim later is a recipe for guaranteed failure.

Even if you are not thinking of a big change, start with Ibarra's book.

Entrepreneur's Optimism Does Not Go Home With Them

2008-05-03T15:32:00.001-06:00

Nicole writes in her blog about the need for entrepreneurs to treat their spouse as the most important investor in their venture.

Yet the tendency is to come home and unload on your spouse. “We can’t
make payroll this week”, “We lost the biggest deal, I’m not sure we’re
going to make it now”, “That stupid employee….” the list goes on and
on. What that does essentially paint a very poor picture for your
biggest investor, which will in turn cause significant doubt on his/her
part that you can succeed

It is not surprising in some way. As several studies have shown, entrepreneurs exude unbridled optimism about their prospects and pitch the positive options to their employees, vendors, customers and investors and most importantly to themselves. A study by Wharton professor showed,

"It's been shown in many studies that people are overly optimistic.
Individuals form an inside view forecast by focusing on the specifics
of the case, the details of the plan that exists and obstacles to its
completion, and by constructing scenarios of future progress."

Unfortunately it is hard to keep up when they go home to their most trusted partner.

One thing I recommend is to have an objective advisory group that is not easily awed by your bubbly optimism or rosy projections and hence will protect you from going down the wrong path in the first place.

Events

2008-05-02T13:06:00.002-06:00

Working for a Starup - One more take

2008-04-29T11:10:00.003-06:00

In a previous post I talked about the opportunity costs of quitting what you are doing now and joining startup. If you evaluated the total costs and the possible scenarios and decided that joining the startup gave you the highest expected value over other options including staying in your current job, then consider this.

Would you consider then a new scenario? Here, instead of quitting your current job and joining the startup, you invest an amount equivalent to the total opportunity cost and you continue in your current job. With opportunity costs, it is not an accounting cost and you won't see that as a line item, but now I ask you to take a loan out for that amount and invest that on the startup. This cannot be worse than the one you chose and could be better sine you keep your current job and cash flow.

Pushing this further, if you look at this as an investment decision, what other investment options are available and how does this one compare against the rest? Does the startup still provide the maximum expected value?

Why or why not?

Do you see inconsistency in this argument?

Why are they selling?

2008-04-29T11:06:00.002-06:00

Are you considering buying a franchise or a local business from a previous owner? Are you trying to break from your daily routine job to start a new career as a franchise owner? First consider this:

If this is a profitable business, why are they selling?
What do they know that you don't about the growth trajectory and risks?
Why do you think it is going to be different in your case and you will turn the business around and make profit?

Featured: The Business Catapult

2008-04-29T07:06:00.003-06:00

Newest member in Boulder Net, The Business Catapult.

The Business Catapult is dedicated to improving the early stage investment marketplace by bringing standards and efficiencies to what has historically been a time-consuming and expensive process. We are not an investment group; rather, we provide the tools and infrastructure that allow entrepreneurs and investors to find each other.

The Business Catapult will soon release an online service for connecting entrepreneurs and investors. This service is in final testing, and is available to a limited number of test program participants. When testing is complete, near the end of the first quarter of 2008, we'll release this service.

In the meantime, if you are interested in participating in our test program, or in being one of our initial users, you are invited to log on and try out the application process. If you are interested in participating in our test program, please also drop us a note using this form.

What Angels look for in Startups

2008-04-28T07:55:00.002-06:00

In a previous post I talked about what VCs look for in a startup. Factors like clear understanding of competition and business skills are considered more important than the specific idea that is being funded. Business Week talks about Angel investors and their methods. Angels have become more organized than ever and use the same decision criteria as VCs:

What is the market opportunity, barriers to entry, and business model?
What's the company's competitive edge?
Is there an exit strategy?
What is the entrepreneur's background?
"The biggest fallacy
is that 98% of people think if they have a wonderful technology the
business will take care of itself," says Holdren. "But the character of
the entrepreneur is more important than the technology."

Boulder Salary Data from SimplyHired.com

2008-04-27T17:14:00.006-06:00

The salary data are from SimplyHired.com

Web Developer: 88K
The average salary for web developer jobs in Boulder, CO is $88,000. Average web developer salaries can vary greatly due to company, location, industry, experience and benefits.

Average salary: 49 K
The average salary for jobs in Boulder, CO is $49,000. Average salaries can vary greatly due to company, location, industry, experience and benefits.

Does a President Control the Oil Price? A reply to BCBR

2008-04-27T07:29:00.010-06:00

In Boulder County Business Report blog, David Clucas says

So who do we "thank" for the higher oil prices that ultimately fueled the green movement into fifth gear? I think we should thank Bush.

The president got us into a nasty Middle East war in the heart of world's source for oil. That's spooked the region, but fueled investors who ultimately control the price of the commodity. The President also is politically friendly to the oil industry, helping comfort those investors. As real estate and the financial investments collapse, more investors have flocked toward oil as a "safe" investment, driving the price further up.

It is editorializing, bordering on ad hominem attack, to attribute the results of market forces to one president. David further disagrees with increased demand from China and India and goes on to predict $65 oil per barrel when a Democrat takes over as the president.

If you do not think the current oil shock is due to increased demand from India and China, Krugman (in his NYTimes blog) points us to look for the inventory buildup. He asks where is the inventory due to a speculative run? Any significant drop in oil prices like the one David predicts will increase the demand considerably, driving the prices higher again.

What is the other reason contributing to higher prices in US? The weak dollar. That can be attributed to both lax monetary policy and a bad fiscal policy (tax credit and war spending). The increase in interest rate due to the above leads to weakening dollar which makes the oil imports more expensive. But a weak dollar also helps increase net exports.

I do not think any one President can do so much damage or so much of improvement like $119 to $65 oil. For his claim to be true, not only should all the hoarded supplies be released but also the dollar has to strengthen considerably from its current levels. The latter would increase our imports and hence shrink the national income.

The market forces are driving the oil prices. Higher oil prices are here to stay.

David does have a point on linking Oil prices and Green movement. Professor Mankiw calls this the Pigouvian tax. I will discuss this in another article.

Other article of interest: McCain's Gas Tax Vacation
Economist Nordhaus explains the effect of Oil shocks on the economy, in his paper, "Who's afraid of the Big Bad Oil Shock?"

Boulder County Business Report Website Hacked?

2008-04-27T00:38:00.005-06:00

I get the RSS feed from the BCBR and display it on the right sidebar.
I found a series of entries titled "hacker indonesia rulez". Once I reedited the Google Gadget it came out alright. A Google search for "hacker indonesia rulez" gives the BCBR site as the first two results. I wonder if they already know about this.

This makes it a strong case for organizations and small business to pick a more secure web hosting service.
I captured a screen shot of the Google search result.

Looking for an Idea or a Partner for your Startup?

2008-04-26T09:56:00.002-06:00

Nicole Glaros who blogs her ideas at NearlyNicole has an idea and is ready to join forces with a developer willing to start a venture. Nicole is very practical in recognizing that there is nothing sacred about ideas and readily shares her ideas with others. Compare this to most people who wants you to sign an NDA for even a coffee chat.

Nicole's idea is to create a hosted solution for shared file storage with security, synchronization, collaboration and Tagging.

Problem with Changing the ways of people

2008-04-25T11:28:00.003-06:00

A Boulder based startup PublicEarth is in stealth mode and claims in its website,

"we are changing the way people create and use information about the world around them, using the internet and location-aware devices"

Granted they cannot say much now about what they are doing. I mean no disrspect to the good folks at PublicEarth. But the problem with changing the ways of people is, it is a long and hard process and since there are no barriers to entry for developing solutions like these, many people believe they can change the ways of people as well. What is my change cost? How will this product offset this cost?

Shouldn't there be a product that improves the value we generate by creating and using information rather than change the way we create and use information?

Slice of Pie

2008-04-25T07:17:00.002-06:00

In a previous post I talked about value addition. So how to find what value you add?

On the left is the size of the pie without you.
On the right is the size of the pie with you.
The difference is your value addition.

But the question is how much of this do you get to keep? Is that small slice that is missing is all you get or is it the remaining piece?

Steve Wozniak on his Entrepreneurial Journey

2008-04-25T06:42:00.002-06:00

Steve Wozniak spoke at UC Berkeley this Tuesday. Here is a link to the video recording (Real Media). There are two quotes that sound idealistic but are rooted in reality,

" it seems wrong to charge $6 for something that costs 6 cents. Shouldn't you tell your customers that it cost you only 6 cents". Yes Woz is correct. If you are simply acting as a middleman between a 6 cent supplier and a $6 buyer, you are not adding any value and your customers will soon figure this out. You credibility takes a hit. It is different however when you indeed add value by creating something better from the 6 cent components.
" not every startup can become Google or Apple, but you have to keep trying"

Why join a startup

2008-04-24T10:31:00.003-06:00

I wrote two articles, one on what you need to know about the startup before you join and the other on how the discipline of business thinking matters more than the idea. Here is a simpler advice that I received in a conversation with Professor Rashi Glazer of UC Berkeley, on taking any job i general:

First ask yourself, do I want to want to work for the company that wants me? Why do they want me? What value can I add to the company? If you cannot figure out your value added, ask them how you can add value. If there is no value added, why take that job?
The other thing to keep in mind is, you don't work for the company, you work for your boss. How do you think you will make her/him look when they hire you? If you cannot make your boss look good, what is the point?

The other advice I received is from Lynn Upshaw, another marketing processor at Haas School and a Brand Consultant.

There are things you need to care about joining a startup for your first job or when switching careers. In a small shop you do get to do a variety of things. But you have to ask who is around me who has been down this path and can teach me. If you have no one to learn from within the organization and you are learning from outside as you execute, you are not learning much. For all the bad rap on large organizations, they have lots of people who have been this path a few times. If you reach out to the right people you can learn a lot faster.

Wal-Mart REIT - Addressing the State tax issue

2008-04-23T07:24:00.004-06:00

Boulder representative Claire Levy, a Democrat, wants to stop Wal-Mart and other companies from deducting real-estate expenses they're paying to themselves. The Wall Street Journal explained how this works:

The arrangement takes advantage of a tax loophole that the federal government plugged decades ago, but which many states have been slower to catch. Here's how it works: One Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company.

All legalities aside, I see the root of the problem in the difference in the costing for GAAP accounting and tax purposes and costing for economic decision making. One key economic cost component, Opportunity Cost, does not figure in the GAAP and Tax accounting. Looking at Wal-Mart's plan to pay rent to itself and claim state tax deduction, this seems acceptable from an economic perspective.

It does not matter whether they own the property or not, they have to account for the opportunity cost of investing the capital in the real estate and using that property for its retail purposes vs. other opportunities for the capital or for the property like renting it out to others.

An alternative to the current tax bill by Rep. Levy is to consider a "Carbon Tax". Instead of levying state tax on the corporation's income, the state should tax the former's operations that impact the land and environment. This is equivalent to state recouping the Opportunity cost of the land and the environment being used by a store as opposed to the next best alternative.

What do you think?

Doc, Can you save our business plan?

2008-04-21T07:40:00.002-06:00

I wrote this post on startups and business plans in my school's blog :

Glazer: I just told you what the problem is. Your market description and competitor section do not agree. Any market that is growing at the rate you describe is going to have competitors. Saying there is none convinces the VCs that either you did not do your work or that the market isn't really there. If you think it is indeed a new product with no competitors think about the substitutes. No one is going to believe you when you say there are no competitors. When there are no competitors there are no customers too.

Recession fears

2008-04-18T08:04:00.001-06:00

From The New York Times:

In the suburbs of Denver, Max Garcia was netting as much as $2,000 a month last year as a self-employed computer repairman, he said. As recently as November, he was still receiving three and four calls for help a week. But since early February, calls have dropped to one a week or fewer, he said.

“Everybody’s getting tighter,” he said — himself included. With his income cut in half, Mr. Garcia, a single father, no longer takes his two young daughters out for fast food, he said. For clothing, he now goes to secondhand stores instead of the mall. For amusement, he visits the park instead of the museum.
“We spend more time at home,” Mr. Garcia said. “We don’t drive anywhere we don’t have to.”

Investing in the thinking process not the ideas

2008-04-17T20:15:00.005-06:00

In the last post I asked whether VCs invest in startups based on the pedigree of the founders. That is not the right question. Definitely pedigree reads like a pejorative term. Professor Rashi Glazer of UC Berkeley says,

VCs do not invest in the current idea you have, they know the statistic that 80% of the funded startups ended up doing something different than what they were funded for. They invest in the business process and thought process the founders demonstrated and they know that the right thinking process will allow the founders to adapt when the situation changes.

In a way it is people the VCs invest in, because the thinking process cannot be separated from the people but it is not tied to just one set of people. Your past victory gives you the benefit of doubt.

Startup Strategy

2008-04-16T11:07:00.003-06:00

In the Web2.0 world there are many ideas that are slight variations of the same. This variety creates excessive fragmentation of the very small lead users and the large middle is in no hurry to take sides, they wait around for consolidation and a clear leader with critical mass to emerge.

So what creates the next YouTube? Is that strategy? Network effect? First mover advantage?

Do startups need a strategy?
Or more specifically do they need one to be successful?

In the Web2.0, Social networking, free business model wave, can a startup succeed without a strategy?

Strategy is creating value by unique positioning.

If you take the list of startups that apply to Techstars or participate in Startup Weekend, they all perform similar activities in almost identical ways implying that their positioning is very similar with no discernible unique value. So a winner, if any, among these is determined by the pedigree of the founders and by the operational efficiency of their current startup.

Is this the right approach to select a startup to fund?

Boulder Net In the Long Tail

2008-04-13T14:51:00.006-06:00

(Click on image for bigger picture)
Since the LinkedIn group Boulder Net required a web page I created one using Squidoo. Squidoo was started by Seth Godin, a well known author on viral marketing (and a Stanford GSB MBA). Anyone can create a Squidoo web page on a topic like, Boulder Net, or cooking, hiking etc. It is exactly one page and Squidoo calls this page as Lens.

Lens/Page creation is extremely easy and it allows me to add content through RSS feeds. There are probably 400K or so lenses on Squidoo. When I first created the Boulder Net lens on March 31st, it was ranked at 47K. Today is is about 22K. There are two other links (I added both) coming from outside to this lens, and I visit this lens once a day to add some RSS feed. The visitor statistics show utmost 1 visit/day over the past two weeks. Yet the lens rose in rank. This means there are at least 25K pages that do not even get 1 visit per day, get edited or have external links. For the others that are lower than 47K it is probably much worse.

Talk about the long tail. The tail for lenses seem to start at close to 100-500 with a length of 399500. The Tail to Head ratio is about 790 to 3995!
Boulder Net is proud to be in the tail.

Digital Signage Network in Boulder

2008-04-12T11:25:00.002-06:00

PhotoVu a Boulder, CO Digital frame maker rolled out a Ad network in Boulder, CO. The WiFi enabled Digital frames can display JPG but otherwise limited in their features. The displays, now seen at Wahoo Fish Taco, lets the retail owner display Ads about its own business and other local businesses.

"... we’ve decided to formally enter this market by opening a new Digital Signage division and rolling out our first network in downtown Boulder, CO. This will allow us an unprecedented local test-bed in a tightly confined geography to further refine our technology and service offerings before rolling out into other major metros later this year"

The cost to the retail owners is zero and PhotoVu's equipment costs will continue to drop with expansion of the feature set of these digital frames. The operation can scale really well to any number of displays and networks.

There is also immense possibility to build a Google AdSense like auction framework for the Ad displays. Consider the case where the local and non-local businesses know exactly the type of people who will be watching it at different times of the day at different locations. With this profile they now can fine tune the product being advertised, the Ad format, length etc. For example, for a Wahoo near a University, the Ads could all be for Gen Y products and delivered in format the always on and mobile kids understand and act. With this level of targeting, advertisers would vie with each other to get their products in front of their potential customers. This competition can easily be turned into a profitable bidding structure that is not much different from AdSense.

While the possibilities are amazing and endless, there is nothing technically complex or unique about this. The barriers to entry come from the size of the firm offering such a bidding network and its pedigree. This has to be done one local business at a time or by signing up large franchises like McDonalds to have this display in all their stores. The former leads to fragmentation and slow uptake and the latter requires a big brand name behind such an Ad network.

It should not be a surprise to anyone if Google entered this arena and quickly captured the entire market.

Race and Case Competition: Daniels College of Business

2008-04-11T22:16:00.000-06:00

Once again a few of my classmates (not the same bunch as the Leeds case) to Denver participate in the Race and Case competition conducted by University of Denver, Daniels College of Business. So you race down the ski slopes of Vail and solve a case at the same time (well not quite). Here is a link to a post on their experience in Denver, participating in the competition:

The case question centered around whether a union-oriented pension fund should divest a holding in its portfolio that was exhibiting objectionable labor practices.
...
and the company’s management team – to reap long-term benefits. We took a creative and relatively unique stand, which helped us get selected as one of four teams out of 12 to participate in the final round of the case competition. After the second round, we ended up taking 3rd place, behind Brigham Young and Vanderbilt.

On the Leeds School of Business Case Competition

2008-04-11T22:09:00.000-06:00

A few of my classmates participated in the the Leeds/Net Impact Case Competition at the University of Colorado, Boulder – focused on a leading internet infrastructure firm moving into green business. Here is a link to their experience in Boulder:

Did we win? Well, let’s just say that none of the three Haas teams that qualified for the top 20 semifinalists advanced to the final round. Haas was recently ranked #1 and #2 in CSR, so my guess is that our ideas were just too advanced for the judges to understand.

Patent Protection

2008-04-11T10:05:00.000-06:00

You have a great idea for a product, you believe this will have a big return when developed into a commercial product. The problem is this is a neat but simple idea that anyone else can copy and reproduce. If they have better resources, supply chain management and sales force, they can sell faster and cheaper.

Do you think patenting would protect you?

In its fiscal year 2007, the USPTO received more than 467,000 patent applications and ended the year with a backlog of 760,000 applications. In an effort to catch up, the office hired more than 2,400 new patent examiners in the past two years. [EETimes]

The US patent office just ran a competition for MBA students from top business schools to solve the problem of patent pendency.

Patent pendency is the amount of time it takes from the time a patent application is filed until the USPTO makes a final decision as to whether to grant the patent. The backlog is how many patents are currently waiting to be examined. Currently, the backlog stands at more than 760,000 patent applications, and the average pendency is approximately 32 months. Patent offices around the world are experiencing similar or greater backlogs and wait times, due to the rapid growth of innovation and increasing complexity of technology, among other issues.

Do you think your product has a lifecycle of 20 years? 32 months?

Even if you get the patent approved, would you have the resources to go after every violator?
Irrespective of who develops and sells, does the product have a total net present value (across all manufacturers and markets) that exceeds the litigation costs and the opportunity costs?
In other words, would the damages awarded cover the litigation fee and lost revenue? Would the violators have resources to pay you?

If you have the next best drug for the incurable diseases it helps. But if you have an idea that has a short shelf life and minimal net present value, is patenting the right decision?

Would you spend your scarce resources on patenting or on developing and marketing your product?

Thinking of joining a startup?

2008-04-10T21:43:00.001-06:00

So you are thinking of joining a startup. May be you are fresh from school or have great experience working in a big enterprise and want to take a larger role in a startup. Here are a few questions you want to find answers for, from the founders and/or by yourself. As I wrote last time, entrepreneurs by definition have unbridled optimism and may tend to assign a lower probability to certain risks. It is up to you to build a better model.

These may seem like a lot of questions to answer for a job, but think of yourself as a VC, except you are investing with your time (part of it compensated) and opportunity cost.

Market:

Which market is the company's product and services addressing?
At what stage is the market in? Is it growing? mature?
Are these the only players developing such products?
How big is the market? What percentage does the company say they can capture? Is that realistic? What are the probabilities of different scenarios?
How is the company's market share growing since inception?
Who are the competitors? What is their market share? How is their market share been growing?

Products:

What is the product/service? Can YOU explain than in plain English?
Is the company's products ahead of its time? Is there a network effect?
What is unique about the product/service? If they can do it why not many other people can do the same?
How is the company differentiating their product/service from the competition's? How do the product/services compare to competitor offerings?

Customers:

Who are the customers?
What segments is the company addressing? Is the segment growing? If the startup is offering products for a shrinking segment, you can make a prediction about their growth limit.
How do these segments make purchasing decisions? What drives their decisions? features? quality? price?
Is there a customer? Can you find out from them what they think about the products? Startups usually have early adapters, can you find out from your network?

Business Model:

How is the company making or plan to make money?
Do you think this is sustainable and scalable?

Marketing and Sales:

What is marketing and brand strategy?
Who is selling the product? What are their qualifications?

Finance:

How is it currently funded?
How will it be funded in the future? What are the sources and what is the probability of getting funding from these?
What is its current cost structure? i.e what are the expenses? Is that sustainable?
Is the company leveraged heavily?
Can they generate capital to make big investments?
Are they cash flow positive? Is more cash coming in than that goes out?

After all this is your career decision. When no other information about a privately held startup is available, you have to do the legwork.

It is different in my case ... Self Bias

2008-04-01T10:13:00.000-06:00

Before you make the big decision to quit your job to start your own venture or to move to a different city to start fresh, be aware of the highly biased opinion we have about our abilities. The very trait that defines an entrepreneur, unbridled optimism, works against them preventing them from interpreting the data in an unbiased manner.
Wharton professor Gavin Cassar says,
"It's been shown in many studies that people are overly optimistic. Individuals form an inside view forecast by focusing on the specifics of the case, the details of the plan that exists and obstacles to its completion, and by constructing scenarios of future progress."

Even when the entrepreneurs use metrics and accounting systems to budget and forecast, their self bias make them overestimate the opportunities and diminish the risks. As Cassar says, "it is important to recognize that financial projections of success are merely projections based on beliefs, which are sometimes based on overconfident or optimistic assumptions".

The other aspect that leads one to quit the current job and enter self-employment is due to incorrect estimation of costs, more specifically ignoring the opportunity cost of doing so. Focused on the earning possibilities and the project cost of making those earnings, individuals ignore the income they were leaving behind and whether the new income compares well against what they were letting go. The opportunity cost is not just your pay check, it includes the health insurance,4 01K matching, holidays and vacation pay and other fringe benefits.

The question is, when the startup bug bites you would you recognize the need to do the costing and earnings estimates right?

Featured Startup: LogRhythm

2008-04-01T08:35:00.000-06:00

InformationWeek features Boulder's LogRhythm in its April issue. Founded in 2003 by Chris Petersen and Andy Grolnik, LogRhythm delivers software for interpreting your raw data.

By automating the collection, organization, analysis and archival of all log data, LogRhythm enables enterprises to easily comply with log data retention regulations while simultaneously gaining valuable, timely and actionable insights into security, availability, performance and audit issues within their infrastructure.

The field of of analysis is crowded and there are many open source options. The challenges are in developing the market and educating the customers that they need such a tool. Customers need to see the direct relation to revenue from a log analysis tool. "We show them other ways they can use the product, and the ROI goes up," Petersen says in his InformationWeek interview. The bigger problem is making sure the right type of events are logged so they can be analyzed for decision making.

There is a big opportunity to offer log analysis in Software as a Service (SaaS) model. End users will have less resistance to use the analysis tools on a per use basis instead of investing in one. There is no need for ROI calculations and depreciating the software cost over years and worrying about installations and upgrades. If the platform and APIs can be standardized, individual developers can add value added components that end users can 'rent' on a per use or per month basis. I do not yet know of a log analysis tool offered in SaaS model.

Join Us

2008-03-30T18:13:00.000-06:00

Join the Boulder Network of Professionals. Connect, Collaborate and Create.
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2008-03-01T11:20:00.000-07:00

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