Don't Rely On Bad Vendors

So a long time ago at a place about a mile away I worked at this little startup called MindSpring. MindSpring was kinda like Zappo's before Zappo's was just a gleam in Tony Hsieh's eye. The company was completely core values based. To cite one of them, we were customer driven. We also had something we called the 14 deadly sins. Number 2, rely on outside vendors who let us down.

What held true then holds true now. 

At Half Off Depot we had a vendor named Digital Doorstep, or DDS as they are known in the industry. DDS was good for revenue but bad for business. Since October they have been consistently the number one source of customer service calls. Boatloads of refunds. No communication. And despite what they claim in their public Chapter 7 bankruptcy notice, they left a lot of number of online deal companies holding the bag. 

If a vendor disappoints you early cut them quick. Don't rely on outside vendors who let you down.

Talk To The Devs

So one of the things that I am doing these days is having at least one breakfast/lunch/drink a week with an advisor/business partner/friend/mentor to catch up and talk about what is going on in our day to day worlds. It's just so easy to get too heads down and overly involved in a startup. I am sure that I am not alone in my tendency to do that. Startups can be all consuming. So it's good to get out and hear some fresh perspective.

I was recently having such a lunch. Part of the conversation went like this.

Me: "So I went and talked to the devs..."

She (interrupting): "Always talk to the devs, they know everything that is going on."

True. The geeky guys (and much more often than not they are guys) somehow or the other seem to know everything that is going on in the company. Kinda surprising from a bunch of staring at screens and not talking much dudes, but I have seen it in startup after startup.

Talk to the devs, they know what is going on.

Flashpoint: Winning

Earlier this week Flashpoint, Georgia Tech's new startup accelerator, held it first ever demo day. While really a bit more of a pitch day, I only saw one demo, the teams did a great job. Locally David Cummings has a nice summary of the companies that pitched and TechCrunch even covered the event.

While in many respects it is to soon to tell, the capstone of the program begs the question "is Flashpoint a success?" The early answer is yes.

This answer is based on my involvement in the formative stages of Flashpoint back in the second quarter of 2011. Call me a bit player but I was a member of Flashpoint's formative team. I was there when we hashed out the concept of "startup engineering", an idea of Merrick Furst's that I thought was brilliant when he first pitched it. I there when we defined winning (we actually used the word) as creating two or more fundable companies after four months. It is a real metric. So how is Flashpoint doing against it?

Flashpoint is winning. Pindrop Security recently received an investment from Sand Hill road based Andreessen Horowitz (a little cherry picking perhaps from Flashpoint's valley demo day event host). And word is, while a bit odd to be jumping from accelerator to accelerator, that two Flashpoint companies will be joining the next Y Combinator class where they are assured to get $150k in funding from Yuri Milner's and Ron Conway's Start Fund.  Add in Social Fortress' executed term sheet to raise $2 million (they still have to fill out the round and that is often quite difficult), and you have between three or four companies that have become fundable. In terms of the goals of Flashpoint, that is winning.

And it is still early. The Flashpoint companies have come a long way in four months. It is going to be most interesting to see how they are received next week when they enter the land of Fred Wilson for demo day at Union Square Ventures in NYC and they week after at Andreessen Horowitz in Menlo Park.

Hire Closers

Interesting article over on the 37signals blog on why they don't hire programmers based on puzzles or math riddles got me to thinking about how I hire sales people. I have been a little hesitant to write about this as it could potentially change the entire game for anyone bright enough to do a little research and read this blog.

But the gist of it is that I hire sales people that can close me on their ability to close. People that can take me down the sales process. Ask probing questions to determine needs, take control of the meeting, talk about how their skills and experience will meet the needs they uncovered, throw in some trial closes, and ask for the order (in this case the job). Over the past seven months or so I have interviewed hundreds of sales people. Less than a 20 have asked for the order. Half that amount actually led me through the sales process on their ability to do the job.

If sales people can't sell and close you on their ability to do the job there is no way they can actually do it. Don't hire them. Hire closers. And if appropriate ask for their previous years W2s. They are sales people, not everything they say will be 100% true. 

2012 Is Different

A long time ago I stated that I don't do new year's resolutions. 2012 is different. Maybe it's the leap year thing. Here are four resolutions.

I will be more decisive.

I will be more patient.

I will take more pictures. I want to take and share a picture every day. Become a little less technical of a photog lugging around big equipment. Just look for the shot all the time. Open my eyes a bit. With open eyes comes an open mind. Looking for a rockin high end point and shoot.

I will be more technical. I have signed up for Code Year.

Three or Four Words

The other day when Paul Freet popped out a tweet.

Paul was referring to my long held belief that any startup should be able to describe what they do in three words (I actually think many can do it in two). This was part of my presentation at CapVenture last year "Honing Your Elevator Pitch." It is embedded below.

Regardless Paul was pointing to an infographic put together by Steven Matt to promote his new book Four Words for Success. It's a list of successful brands whose slogans are four words.

Most impressive. Find your four words.

Small Business Expense Breakdown

Nice infographic on where small businesses spend money from American Express OPEN Forum. It's the people. You want to make money you have to manage your salary expense. No two ways about it.

http://www.openforum.com/articles/infographic-how-small-businesses-spend-their-money

Startup Escape Path

Excellent article on how to stop working at a big company and start being an entrepreneur by Daniel Tenner. The cliff notes version.

1. Register a business.
2. Connect to the local startup community.
3. Read Hacker News.
4. Build something someone uses (one someone is enough).
5. Build something that you will personally continue to use.
6. Start a blog.
7. Write something that Hacker News will vote to the top 5 of the front page.
8. Sell something online.
9. Sell something intangible in person.
10. Come up with 10 ideas.
11. Invalidate the 3 best of the 10 ideas.
12. Rinse and repeat steps 10 and 11 until you get something that works.

At the end of his post Daniel states that he hopes it helps someone. Well he helped me with these words:

Post something to your blog every day, no matter how short. Don't worry about people thinking you're stupid: no one will read your blog anyway.

Local Business Guide To Daily Deals

One of the things we try to do at Half Off Depot is make our deals work for local businesses so that they will come back and do deals with us again and again. Sometimes this concept is a bit hard to explain. The folks over at The Dealmix put together a nice infographic on the subject. 

Hat tip to Scott Rocher.

Fab

VentureBeat reported today that Fab just closed a $40 million round led by Andreessen Horowitz. Fab is an oft talked about company in the halls of Half Off Depot. Before today I do not know about the company's pivot from a social network for gay men. Interesting.

In Fab's announcement they attributed their success to three things.

(1)    A laser-like focus on design. From the design aesthetic of Fab.com’s website and mobile applications, to the products that are featured for sale, to the end-to-end customer experience, Fab.com is all about good design. 
(2)    Social commerce. More than 50% of Fab.com’s 1.2 million members have come from social sharing. 
(3)    Innovation. Fab.com builds all of its own technology and is the world’s pioneer in integrating social and commerce features to enhance the product discovery process.

Focus, social, and innovation.

Perhaps a road map for success.

Handling Me

So one of my coworkers walked up to me the other day, evidently after perusing my social stream. 

He: "Man you need a handler."

Me: "I think I can handle myself pretty well."

Which lead to a nice long discussion about the role of social and my role at Half Off Depot. The reality is, at the moment I am very much the voice of Half Off Depot. If I could only get DeShong to write something it would change things a little bit. Get the team to tweet and book more. We actually have some plans to extend our social activities and executive exposure beyond me to Patrick Best one of our cofounders and Brian Conley our CEO.

But somebody to handle me? I don't think so. I know enough about this stuff to stay between the guardrails.

Groupon IPO

I get the question every week, perhaps at least once a day. "What do you think of the Groupon IPO? That's good for you guys, right?"

To which I reply a hearty "maybe."

For those of you that have no idea what I am talking about Groupon, the biggest competitor to Half Off Depot where I currently work, went public on November 4. Groupon raised $700 million at a $12 billion valuation. That sandwiches it right between Google and Webvan as the largest IPOs in term of valuation. Interesting company to keep. I considered the Groupon IPO pricing to be a little expensive. Unlike Amazon, a much lower initial value company where I made a nice penny, I wouldn't touch it.

What do I know. The stock was priced at $20, and rose 31% on it's first day. Since then it's been in a slow drift downward. I expect that trend to continue for some time until it gets below the offer price. None of that will stop a bunch of 20 somethings celebrating the end of the lockup period at Kincade's, Sheffield's or wherever 20 somethings go to party in Chicago these days.

But back to the question is it good for Half Off Depot.

One of the things about running through the IPO process is that it generates a lot of general mass media attention. Most of the attention about Groupon was negative. Merchants don't like deals, there is no way Groupon makes money, management is blundering the IPO process. This created a generally negative sentiment around the deal space, one that is going to take a little time to overcome. We have time. And money. A lot of companies do not. They are going to go away soon. Less competition is good for Half Off Depot.

The Groupon IPO also demonstrated that investors see value in the deal space. The mishandling of the IPO process is a little problematic. Groupon got through it, they got out. But along the way questions were asked by investors that have yet to be answered. Until those questions are answered it is going to be difficult for other companies in the space to raise additional capital. Those that do are going to have to be able to clearly articulate why they are different and have a demonstrable money making model with some leverage. If Half Off Depot can do the former and show the latter, and I think we can, the Groupon IPO validated a market where we can play. Having a validated market to participate is good for Half Off Depot.

So the short answer is the Groupon IPO is good for Half Off Depot as it will make it harder for smaller underfunded companies to remain viable and they validated the market in which we participate.

All we have to do is execute on that different money making part. That will keep us busy for awhile.

Atlanta Startup Scene On A Business Card

Courtesy of Alexis Madrigal. 

Reached That Goal

When I joined Half Off Depot back in May I started looking around for a competitive target. Not the 800 pound gorilla Groupon LivingSocial type of competitive target. A smaller yet significant company that we could set our sights on. That company was BuyWithMe.

As best as I could tell BuyWithMe was the number three player at the time. Founded in Boston, based out of NYC, BuyWithMe was actviely operating in a dozen or so major markets. They had raised $21.5 million from Matrix Capital and Bain Capital. The kind of number that makes our $7 million seem small.

And BuyWithMe was on a tear. The online deal market is going to consolidate and BuyWithMe was playing the role of consolidator, something that I would like to do. In 2011 they acquired six competitors, the most recent being in September. Then the wheels fell off.

Just six weeks after its last acquistion BuyWithMe choked on them. BuyWithMe laid off half its workforce after reportedly failing to close a new round at a $500 million valuation. It was reported to be looking for a buyer.

That buyer was Gilt Groupe, who purchased the assets of BuyWithMe. Asset purchases are rarely good for the selling entity. Gilt did not hire many of the BuyWithMe staff. The purchase price was about $5 million in cash and stock. Somebody pulled the plug.

Bang.