Mr. Affleck, Movies Are Like Start-Ups

Last night I was lucky enough to be invited to “The Town” premier at Fenway Park.  I was surrounded by celebrities, sitting within 10 feet of Rebecca Hall, Jon Haam, Blake Lively, Jeremy Renner, Matt Damon, and Ben Affleck… pretty cool!  The movie was great, and the presentation at Fenway made the experience even sweeter.   I’ve been fortunate enough to attend two other movie premiers (“Spider-Man 3” and “The Boondock Saints II”), and each time it becomes more evident that creating a movie is fantastically similar to starting a company.

When starting a business an entrepreneur must find the equilibrium between the team, resources, and opportunity, while using the business plan to bring them all together.  Often the sequence is: entrepreneur identifies the opportunity, validates it with a proof of concept, creates a business plan, builds the best team possible and acquires the needed resources to pull it all off.  This is a very basic outline taken from the Timmons Model for Entrepreneurship.  Repeat entrepreneurs tend to have established relationships and reputations that attract stronger team members and easier access to resources (financial and other).  The process for producing a movie is very similar.

Movies always start with an opportunity.  One way to validate an opportunity in the film industry is to examine recent box office numbers for similar types of movies.  Using “The Town” as an example, Boston-based thrillers have been very popular over the past seven years; “Gone Baby Gone” (2007) grossed $35M*, “The Departed” (2006) grossed $290M*, and “Mystic River” (2003) grossed $156M*; being three years removed from the most recent Boston-based thriller the market seems primed for the newest entry.  With an opportunity identified the movie producer (the entrepreneur), must create the script (business plan), to obtain the resources and build a team.  “The Town” had many options for creating a script, but by using a proven concept as an outline, the award-winning novel “Prince of Thieves” by Chuck Hogan (winner of the 2005 Hammett Prize), the risk was lessened.  With an opportunity identified, a script in-hand, and a proof of concept, the producer must build a winning team to acquire the needed resources and make the script into a real live movie (similar to making a business plan into a real working company).  A producer that “attaches” a big Hollywood name to his script will attract other big names (building the team), which attracts resources.  If the producer, or another member of the founding team, is a big name (repeat entrepreneur) then the quality of the team and amount of resources available increases.  Imagine if you used your business plan to attract Bill Gates as a board member of your start-up, think about how easy it would be to build your team and obtain the necessary resources.  The same rings true for “The Town”, with Ben Affleck as a founding member of the team (he wrote the script and directed the film), attracting Blake Lively and Jon Haam (two very popular actors whose names on the billboard will simply attract fans) was not too difficult.  With the all-star talent line-up acquiring the needed resources ($37.5M according to Wikipedia) must have been relatively simple.  Following the sequential path for “The Town”, a seasoned entrepreneur (Ben Affleck), with a tested business plan (script based on an award winning novel), strong team (popular movie stars), and sufficient resources ($37.5M) the business (movie) now exists.

Even though I’ve pled my case that movies are similar to start-ups, bear-in-mind I’ve only examined the most basic elements of the relationship at their earliest stages.  Execution is key.  A business plan outlines the holistic nature of the company, while the script is only one element of the entire film process (which includes marketing, editing, distribution, etc.). I draw the similarities between start-ups and movies by viewing business plans and scripts as entrepreneur and producer’s tools to identify the opportunities, build winning teams, and obtain the necessary resources.  “The Town” was able to build itself in a similar fashion as a business, and like many businesses founded by serial entrepreneurs, I’d bet my money that Ben Affleck hits a homerun with this one!

*Box Office Mojo (http://boxofficemojo.com, 15 September 2010)

Revisiting the Most Memorable Companies of 2008

In December of 2008 I identified 5 start-ups that impressed me during that year (Most Memorable of 2008).  Now, over a year-and-a-half removed from the initial post, I think revisiting these start-ups should be fun.  Using the companies’ website trafficgrowth (from Quantcast), additional financing (from Crunchbase), new customers, and qualitative growth analysis I will create an outlook for each company.  I’ll be using a scale of 1-10 to score each company’s outlook for success, 1 being poor, and 10 being extremely promising. Without further a-do:

Company: Mimoco (Mimobot)
Location: Boston, MA
Website: http://www.mimoco.com
Product: Designer USB Flash Drives
2008 Monthly Website Traffic: ~4.5K Visits
2010 Monthly Website Traffic: ~10K Visits
Financing (After 2008): $N/A, by Cyan & Scott Banister
New Customers: Flight001, Toy Tokyo, Henri Bendel
Growth: Mimoco has added to their product line, including iPhone skins and limited edition figurines.  I’m surprised that their product line of character inspired computer accessories has remained dormant; with USB flash drives remaining as their only functional Mimobot.
Outlook: I believe the real growth opportunities remain in the novelty computer accessory market and development in this space will determine Mimoco’s long-term success.
Outlook Score: 5

Company: Boxee
Location: New York, NY (World Headquarters in Tel Aviv, Israel)
Website: http://www.boxee.tv
Product: Media Center Software
2008 Monthly Website Traffic: ~8K Visits
2010 Monthly Website Traffic: ~10K Visits
Financing (After 2008): Series B (08/2009) $6M, by Spark Capital, Union Square Ventures, & General Catalyst Partners (Total Raised: $10M)
New Partners: NHL, MLB, KoldCast TV, Funny or Die
Growth: Boxee has steadily added new content providers, thus making the service valuable to a wider demographic.  They will be releasing a piece of hardware called the Boxee Box in November that will “play HD videos from the web or a local network in 1080p and use hardware acceleration whenever possible. And provide a TV browser experience that can handle almost everything you throw at it, including Flash 10.1.” (Source)
Outlook: Boxee requires hardware to run on your television, which may hinder its adoption, especially now that televisions may be directly connected to the Internet. I foresee a movement to reduce the clutter around the main television screen in a house, and this may hinder Boxee’s success.  Also, the amount of content cable providers offer customers has dramatically increased, making the need for additional content fade away.
Outlook Score: 3

Company: HubSpot
Location: Cambridge, MA
Website: http://www.hubspot.com
Product: Inbound Marketing System
2008 Monthly Website Traffic: Less than 500K Visits
2010 Monthly Website Traffic: ~3 Million Visits
Financing (After 2008): Series C (10/2009) $16M, by General Catalyst Partners, Matrix Partners, Scale Venture Partners (Total Raised: $33.5M)
New Customers: Schwartz Communications, Visible Measures, New York Parking Ticket
Growth: Holy Hockey Stick! Hub Spot has gone from less than 500K monthly website visits to over 3 Million.  They now offer 3 products, but their toolbox for inbound marketing has grown experientially with its Inbound Marketing University (certification), and family of grader.com websites (to grade content scores for corporate websites, blogs, Facebook, Twitter, and other online presences).
Outlook: Hubspot’s goal is to be a billion dollar company.  A billion dollars seems outlandish for a company playing in the small business market with plans starting at $250/mo.  I see few barriers for Hubspot to break $100 Million in revenue in the next few years. Look for them to go public in 2012.
Outlook Score: 9

Company: Inigral
Location: San Francisco, CA
Website: http://www.inigral.com
Product: Secure Learning Management Facebook Application called “Schools”
New Customers: Arizona State University, University of Texas – Tyler
2008 Monthly Website Traffic: N/A
2010 Monthly Website Traffic: N/A
Financing (After 2008): Series A (06/2009) $2.4M, by Unknown (Total Raised: $3M)
Growth: Inigral has signed-up a few new customers, but failed to make much traction over the past year and a half. The Arizona State Facebook Application has over 13,000 monthly users, which is a glimmer growth.
Outlook: Colleges may not see the need to pay Inigral for a Facebook Application when they feel comfortable managing educational information via their robust Learning Management Systems (LMS) such as Blackboard.  I would watch for Blackboard and other LMSs to build their own social integration tools, making Inigral’s future uncertain.
Outlook Score: 2

Company: Igloo Software
Location: Kitchener, Ontario, Canada
Website: http://www.igloosoftware.com
Product: Social Networking Enterprise Software
New Customers: Blackberry, Deloitte, NetApp, AstraZeneca
2008 Monthly Website Traffic: N/A
2010 Monthly Website Traffic: N/A
Financing (After 2008): No Additional Financing
Growth: Igloo has added an impressive list of names to their customer portfolio and segmented their offerings into 4 industries: Enterprise, Government, Healthcare, and Agencies.  They’ve also built integration with Microsoft SharePoint, Salesforce.com, and Blackberry.
Outlook: Segmenting the target customers should prove to be beneficial for Igloo.  They’ve identified the industries that need social collaboration tools, and are directing relevant messaging to each specific segment.   Also, integrating with other enterprise programs is necessary for success because corporations want streamlined processes.  I foresee Igloo being acquired by a large enterprise software player within the next 3 years.
Outlook Score: 8

Overall, I still feel confident that Hubspot and Igloo Software will be homeruns, the jury is still out on Mimoco, and believe that Boxee and Inigral need to make big strategic moves to stay afloat.  I look forward to looking back in another year-and-a-half to see how they fare.

Why Facebook Apps Suck

Young Passionate Entrepreneur (YPE): “I’ve got this great idea and I’ve done the research to prove that the market is $X,XXX,XXX,XXX big!”

Seasoned Internet Professional (SIP): “Sounds interesting.  What’s the idea?”

YPE: “A website that finally lets people _______________ (fill in the blank).”

SIP: “Pretty cool idea.  How do you plan to scale?”

YPE: “Easy.  Events, SEO, AdWords, and connecting to Facebook through Facebook Connect.”

SIP: “Sounds like you’ve done your homework, but your idea SOUNDS LIKE A FACEBOOK APP.”

I’ve heard “Sounds Like a Facebook App” so many times, but are we really thinking the phrase through before speaking? Why does any new website that connects friends via the web always “sound like a Facebook App”? What if LinkedIn, Twitter, or Foursquare (all naturally sound like Facebook Apps) started as Facebook Apps? Would any of them be where they are today, even if it were just to test the concept?  There are very few success stories for Facebook Apps other than Zynga videogames, which are the rare exceptions, but remember these are videogames, not Web 2.0 sites.  Converting a website concept to a Facebook Application will set it up for failure because people don’t trust Facebook’s sharing of private information with 3^rd party developers and Facebook Apps require users to commit to providing their sensitive Facebook information before allowing users to test the applications.

Facebook has become an information depository; users blindly place all of their personal information and data (no matter how sensitive) in their Facebook accounts, only controlling how others access this information via their Privacy Settings.  Unfortunately, Facebook has demonstrated a pattern of privacy gaffs, creating an almost tangible distrust with its users.  With updated Privacy Settings on an annual basis, and with new settings defaulting to “Public,” Facebook users don’t know how to 100% protect their sensitive information.  Even though, users are presented with a warning of the exact information that will be shared with applications, they often ignore or distrust them.  When connecting to a Facebook Application users often feel like they are rolling the dice, hoping that the information they view as sensitive remains private.  For a user to risk sharing their private information with a random developer by connecting to an application a great degree of social proof must be demonstrated.  According to the social proof hypothesis, Facebook users won’t sign up for an application unless they see their friends signing up.  With all the noise going through newsfeeds, it will probably take more than 1 (probably close to 4-7) friends signing up for an application before you notice.  The obstacles for a Facebook Application to gain the exposure needed to provide social proof for a user to consider providing their private information is immense.  One may argue that the same exposure obstacle exists for off Facebook applications that connect to Facebook via Facebook Connect, which is different because of the ability to sample the application (build trust) before committing to providing sensitive data to the developer.

Facebook Applications require users to provide their personal information before trying them out.  When a user identifies a Facebook App that seems intriguing, he/she may see screenshots of the application via the application’s Facebook Information page, but in order to tryout the application permission must be granted through the Request for Permission pop-up box. The Request for Permission pop-up box is where users usually change their minds, and decide that it is not worth the risk of giving away personal information to a 3^rd party developer for an application that they haven’t even been able to try, and click the “Leave Application” button.  With Web 2.0 sites, users often are only required to enter a username and password to gain access, and may add additional information to their user profiles at their discretion.  Once the Web 2.0 site proves itself useful and trustworthy, the user may select to share their use of the Web 2.0 site by connecting with their accounts through Facebook Connect.  Connecting with Facebook Connect allows the Web 2.0 site to communicate with the users Facebook profile, allowing the user to share information from the Facebook user account with the Web 2.0 site and vice versa.  In many cases, users’ of Web 2.0 sites may share what they do on the Web 2.0 site through their Facebook newsfeed (which may even include a link to the Web 2.0 site) after connecting to Facebook on their terms via Facebook Connect.  People understand that they must be more responsible with their Facebook information, and are becoming more selective with whom they share their information with; thus developers must first build trust with their users before asking for their sensitive information; a process that Facebook applications DO NOT support.

Selecting to go-to-market with a Facebook Application rather than a Web 2.0 site that uses Facebook Connect is not a small decision, and through the proper user behavior analysis it becomes clear that Facebook applications limit adoption because users are not willing to share their Facebook information with 3^rd party developers before trying applications on their own terms. Finding examples of non-videogame Facebook Apps that have a large number of users has proven difficult.  I welcome your comments regarding Facebook applications and what types of web applications are best fit to be tested and introduced as Facebook Apps rather than Web 2.0 sites.

I’m Baaaaaaaack!

Blogging is a never-ending commitment; a commitment that I’ve neglected over the past year and plan to resurrect.  Today I will restart blogging as The Boston Entrepreneur, providing the expertise and insights that achieved such recognition as one of the Top 150 Blogs for Entrepreneurs.  Come back next week for the first full-length post in the return of The Boston Entrepreneur.

Twitter Use?

It’s been a while since I’ve posted.  Since then a lot has changed.  I completed my first full-time year of my MBA, added a puppy to my life and joined Twitter.  The first two changes are profoundly important, but Twitter has changed the way I operate unlike the other two.  I actually joined Twitter about 9 months ago; when I first joined I didn’t understand the craze.  Now I do.  I have three Twitter accounts; one personal (@eshooman), one for the company I work part-time for, and one experimental account (@munchmylunch).  I plan to promote my blog and partake in entrepreneurial chatter with my personal account once I have a better understanding of Twitter’s best uses, I utilize social marketing making announcements of new offerings and promoting other social media such as the company blog for the corporate Twitter account I administrate, and I use my experimental account for exactly that, experimenting.  My experimental account is where I’m really learning about Twitter.  I use best-practices and strategies I’ve learned from other tweeter’s blogs and the book Twitter Power by Joel Comm (@joelcomm).  This account focuses on food, so I follow other foodies, food press, chefs and restaurateurs.  Following others provides me with up-to-the-second information about Boston restaurants’ daily specials, menu additions, openings and closings.  I am currently working on building relationships by participating in conversations and initiating comments to others’ tweets.  My social network is expanding almost exponentially without getting up from my computer… with people I’ve never met before, but have always wanted to meet!!!  I am now holding direct conversations with celebrity chefs and TV personalities; providing helpful input they may never have honored if met randomly on the street.  Twitter is amazing for building relationships.  What else is Twitter useful for?  I like to break the usefulness of Twitter down into the personal, professional, and marketing contexts.  I have my own opinions, but would love feedback to understand how others are using Twitter.

Entrepreneurial Innovation

Wow. I haven’t posted since 2008!!! I will not make excuses, I love blogging, and I am excited to get back into the groove. So much has happened over the past 2 months like the inauguration of President Obama, Sully the Pilot’s heroics, and hitting a 10 year low in the stock market. Over this period I’ve had some epiphanies, one which I would like to present today… that being, innovation is incremental.

Innovation is Incremental – Since August I’ve been working with a team of engineering students to develop a mobile application for a Fortune 500 company. We’ve had our ups and our downs. Recently we had an internal discussion regarding our goal; the question was if we needed to create an innovative interface or an innovative application? The application we began developing was clearly an innovative interface; all the content existed, the basic idea and concept is widely available via other applications, all we were doing was presenting it in a “cooler” manner. I hated this application, and voiced my opposition on the grounds of lack of innovation. Before revealing the idea to the sponsor company, we had an internal review revealing our application to a group of PhD’s. During the review the innovative interface application was bashed by the PhDs also due to lack of innovation. We had a list of 8 other applications we created, 3 of them which I considered innovative. The presented application was dumped. Our new task was to choose 1 of these 8 remaining ideas using innovative application as the main criteria. This is when I realized innovation is incremental.

People used mail before electronic mail (email), listened to Walkmans before iPods, and instant messaged before twittering. These are incremental innovations. While selecting a new mobile application to develop I was unaware of the incremental nature of innovation. I campaigned for the most innovative of the 8 applications, but my team pushed back saying the idea is a new paradigm, which is bad. New paradigms change behaviors, which is a risky endeavor (especially for a conservative Fortune 500 company). I became aware the most innovative application may be ahead of its time, and too far a jump from the current market. Eventually we settled on an application using current content, presenting it not only in a “cool” manner, but also in a different manner by mixing medias to create an interactive experience unlike any other. The mobile application we are moving forward with is an innovative interface and an innovative application, but without creating a new paradigm. The application marries two behaviors together in a manner never done before to create an incremental innovation with great potential. Taking the innovation is incremental approach facilitates us in delivering a great mobile application.

Most Memorable of 2008

Throughout 2008 I’ve attended many conferences, met many people, and become aware of many great start-ups. As the year dies down I’ve been thinking to myself, out of all the impressive companies I’ve become aware of in 2008, which seem headed for further success in 2009? To answer this question I decided to list the 5 most memorable companies from my 2008 experiences: (In no specific order)

Company: Mimobot
Location: Boston, MA
Website: http://www.mimoco.com
Product: Designer USB Flash Drives
Customers: Hot Topic, Newbury Comics, Urban Outfitters, W Hotels
What I Like About the Company: Mimobot makes creative USB flash drives and has licensing agreements with Star Wars and Halo. I spoke with the founders (they just so happen to be Babson MBAs) who hinted to product expansion in 2009; adding USB cords and other hi-tech designer offerings. Keep an eye on Mimobot as they enter an untapped novelty market.

Company: Boxee
Location: New York, NY
Website: http://www.boxee.tv
Product: Media Center Software
Partners: Netflix, Hulu, MTV, flickr
What I Like About the Company: The perfect solution to marrying my addictions to Hulu and Apple TV. Boxee is still in alpha testing, but once their internet based streaming HD television catches on, it will be a run-away hit. One rumored feature is the ability to instant message with friends from your TV while watching the same show or movie. I can’t wait for the beta.

Company: HubSpot
Location: Boston, MA
Website: http://www.hubspot.com
Product: Inbound Marketing System
Customers: TheLogoFactory.com, Kadient, Vocio
What I Like About the Company: I’ve blogged about HubSpot before, they still don’t hesitate to impress. With a poor economy and high unemployment, many more will be forced to start their own businesses in 2009. The most efficient way to create sales for new entrepreneurs is to have customers come to them. HubSpot’s inbound marketing system provides start-ups with nice websites, SEO expertise, and guidance to make the most of a start-up’s shoestring marketing budget.

Company: Inigral
Location: San Francisco, CA
Website: http://www.inigral.com
Product: Secure Learning Management Facebook Application called “Schools”
Customers: Abilene Christian University
What I Like About the Company: BlackBoard is the 800lb. gorilla of the Learning Management System (LMS) world, but Inigral is leveraging the Facebook platform to put up a fight. Inigral does not have the functionality of BlackBoard, but they do have an audience in Facebook. Inigral’s Schools application organizes individual Facebook accounts by grouping coursemates together, creating a one-stop-community for one’s higher learning needs. Visit their website to watch videos to learn more about Inigral’s impressive functionality.

Company: Igloo Software
Location: Kitchener, Ontario, Canada
Website: http://www.igloosoftware.com
Product: Social Networking Enterprise Software
Customers: Motorola, Thomson, Canadian Corporate Council Association (CCCA), McGill University
What I Like About the Company: Major corporations’ needs when moving to online collaborative software differ greatly from the general public; they value security, ease of access, and knowledge management as essential. Igloo Software demonstrates the most functional and sexiest solution for enterprise software and has the clientele to back it up. I blogged about Igloo back in June naming them the Enterprise 2.0 Winner.

Please share the companies you think we should keep an eye out for in 2009.

TBE Makes List of Top 150 Blogs for Entrepreneurs

The Boston Entrepreneur is proud to be included in Open Business’s list of Top 150 Blogs for Entrepreneurs. Being named in a list acknowledging TBE’s contribution to entrepreneurship is an honor.

The Power of Numbers

We’ve all heard it, to assume is to make an “ass” at of “u” and “me.” Making business decisions based on feelings, preferences, and observations are marred by biased assumptions. Strong businesses decisions emerge from fact; and there are no stronger facts than numbers. Quantitative analysis is essential to business decisions; it’s the power of numbers.

Quantitative Analysis – I have a simple process for performing quick quantitative analysis.

Step 1) Identify the Desired Destination – Know where you want the numerical data to take you, why the data will take you there, what the data can tell you, and how the data is working. Without knowing your destination, you may quickly get lost. Know your destination.

Step 2) Collect and Organize the Numbers – Finding the numbers is not easy. Choose whether to manually gather the data through surveys or to collect it from published (or unpublished) sources. If you encounter trouble collecting data, speak to a librarian (they are expert data gatherers and can be your best free resource). Once you have your data, organize it properly and you will get to your destination efficiently. Organizing your data can be as easy to choosing the order of the columns or as difficult as creating tables within Excel.

Step 3) Manipulate the Numbers – Now that the collected data is organized, can you get to your destination with the data in its current state? If not, then figure out what needs to be done, and do it. Make sure you don’t ruin the value of the numbers with your manipulations.

Step 4) Get the Facts – Use your answer to the question, how is the data working to get to your destination?, to apply calculations to the numerical data (collected & manipulated). The results will provide you with facts. These facts will be used to make your decisions.

Step 5) Don’t Take the Results for What They Are – Finding patterns in large outputs is like searching for a needle in a haystack. The output of facts may seem sufficient to make your decision, but pictures tell a thousand words…

Step 6) Graph the Results & Make the Decision – Graph the outputs. Graphical dashboards are valuable components of decision making because they show patterns that one might miss by just looking at the raw numerical facts. More outputs produce more factual support, but also more data and better graphs. Better graphs produce easily interpretable facts, which are used to make strong concrete business decisions. The graphs accurately get you to your destination.

Again, this is a simple process I use to make concrete business decisions. In the context of more time, resources, and risk, I would apply statistical and economical regression and forecasting to make stronger factual business decisions. The importance lies in using numerical data to provide factual insights in making business decisions, demonstrating the power of numbers.

The Toilet Paper Entrepreneur

Today my friend and serial entrepreneur Mike Michalowicz came out with his new book The Toilet Paper Entrepreneur. The book provides insight for cash strapped visionaries with little or no entrepreneurial experience. Mike is an expert entrepreneur as he’s founded, operated, and sold two multi-million dollar companies. Mike also authors a great entrepreneurial blog he updates daily. Join me in congratulating Mike in his first book release.