October 2010

Alan Pruitt's 10-Digit Marketing Idea

by Tim Berry on October 5, 2010

I was at our booth at the Association of Small Business Development Centers (ASBDC) annual conference a couple of weeks ago when Alan Pruitt came by. I’d met Alan before but lately I see him often in twitter; and I like it when I get a chance to have my twitter friends as real live people. So that was fun by itself.

In this case, though, Alan was suggesting an interesting idea to get instant search engine placement with your telephone number as a domain name. Try it. First, click the link here: http://9283281524.com/ to go to Alan’s blog post on the subject. As you do that, think of that 10-digit number in the domain name as a phone number: (928) 328-1524.

Then google that number. Here’s what you’ll get:

And the interesting advantage there is that you can get instant recognition and instant search placement with your own phone number. Alan explains more in his Posterous post on the subject. Or you can just quickly get the domain name that matches your business’ 10-digit phone number, and start using it.

{ 0 comments }

Partnerships, Sweat Equity, and The Social Network

by sara on October 4, 2010

This is our second post on startup lessons from the movie The Social Network, about the founding of Facebook. The movie did well over its opening weekend, reportedly bringing in $23 million, at the high end of studio estimates. But is it true to life?

Laura Sydell, a correspondent for NPR, saw the movie with half a dozen Silicon Valley entrepreneurs over the weekend. She reports their reactions:

“The movie captured the energy and intensity of an early stage startup,” says Ash Rust, an engineer at Klout, a company that ranks individual influence on Twitter. “People don’t sleep,” he says, “but when they do, they dream of a kingdom.” And the “kingdom” Rush and others dream about is “connecting the entire world” through their products.

“If I could create a revolution, I’m sure there would be casualties along the way,” says Jim Ying, general manager of Six Waves, a social gaming company that uses Facebook as its launch point.

Speaking of casualties, let’s look at our second lesson for anyone starting a new business.

Partnership agreements are really, really important

Aside from the vagueness surrounding their hiring of Zuckerberg, the Winklevoss brothers also apparently misunderstood the importance of getting all ownership and partnership agreements in writing. A subsequent arrangement they made with Wayne Chang, another student, to combine their ConnectU site with his i2hub filesharing program led to another lawsuit, and possibly one of the first official court complaints to include the transcript of an IM exchange as evidence of ownership shares.

But The Social Network is more concerned with another early partner, Eduardo Saverin. In 2004, Saverin was the CFO, and Zuckerberg’s roomate and good friend. He was also the main contributor to the book on which the film is based. A little revenge?

The facts: According to a June 28, 2006 article in The Rolling Stones, in 2004,

“He and Saverin each agreed to invest another $20,000 in the operation. While Zuckerberg was in California, Saverin stayed behind in New York. That decision would prove ill-advised… In July, Zuckerberg and Saverin had a mysterious falling out. Zuckerberg has filed a lawsuit, claiming Saverin jeopardized the company by freezing Facebook’s bank accounts. Saverin countersued, claiming that Zuckerberg never matched his $20,000 in seed money and, further, used that money for personal expenses. That summer, Zuckerberg transferred all intellectual-property rights and membership interests to a new version of the company in Delaware. The value of Saverin’s stock was unhinged from any further growth of Facebook, and Saverin was expunged as an employee.”

Zuckerberg explained his actions in an email to a friend by claiming that Saverin was jeopardizing the growth of the company: “Eduardo is refusing to co-operate at all…We basically now need to sign over our intellectual property to a new company and just take the lawsuit…I’m just going to cut him out and then settle with him. And he’ll get something I’m sure, but he deserves something…He has to sign stuff for investments and he’s lagging and I can’t take the lag.”

This sure makes for good movie drama, but a good partnership agreement could have prevented much in both lawsuits:

Valuing sweat equity vs. money: Any time you have people contributing unlike assets or expertise to a business, you have to agree in writing beforehand on the value of those contributions. In the Winklevoss/Chang case, Wang brought sweat equity, as well as the specific assets of i2hub. In his mind, that was worth at least as much as the $7,500 the Winklevosses later kicked in to keep the joint venture going, but they disagreed. In the Zuckerberg/Saverin case, there’s an argument ostensibly about an agreement for seed funding vs. the work that Zuckerberg put in to developing the site. Tim Berry offers lots of tips for dealing with sweat equity.
A partnership is about decisions, as well as ownership: Many startup founders think that getting a partner is a great idea, because it will bring in more money. They forget that the partnership, unless specifically stated otherwise, also brings in another person for decision-making. If you anticipate the need to move fast on issues where you and a partner may not immediately agree, you need to spell out in your partnership agreement how decisions will be handled in that case. If you can’t figure out a way to solve that, maybe you should go it without a partner.

Saverin was eventually given credit (and shares) for his role in Facebook’s founding. Avoid this kind of media attention yourself by crafting a good solid partnership agreement.

Sara Prentice Manela
Editor

P.S. Speaking of Facebook – Have you joined our fanpage?

{ 0 comments }

Conversion Measured in Hugs and Handshakes

by Tim Berry on October 4, 2010

I hadn’t heard the phrase “O2O” before. I caught it this morning in a John Jantsch post on the American Express OPEN, meaning online activities driving offline business:

For 2011 a new kind of strategy will emerge for the small business, and that is one of using the online space to drive people to the offline space. The in-person experience is the ultimate competitive advantage of the small business and how [it beats] the online and big-box competition.

Get them in the store, get them to a meeting, get them to an event, get them in a community, get them on using an app.

He finishes that with this intriguing conclusion:

Online 2 offline will be a strategic marketing approach employed by the most successful local businesses where conversion will be measured in hugs and handshakes.

That O2O idea, by the way, is one of five in John’s 5 Trends that Will Shape Small Business in 2011. That’s a really interesting post, and I think he’s right on all five.

{ Comments on this entry are closed }

Startup lessons from The Social Network movie

by sara on October 1, 2010

David Fincher’s new film, The Social Network, could be subtitled “The Unauthorized Biography of a Startup.” Based on the book ‘The Accidental Billionaires’ by Ben Mezrich, The Social Network tells the story of Facebook’s founding and rise to fame through the lens of the lawsuits that arose around it almost from the beginning.

While critics contend that the movie is as much fiction as truth, it’s based on an all-too-typical scenario: business founders get started without a clear understanding of the legal implications of partnerships, intellectual property, and non-compete agreements, and are then surprised when complications arise.

Whether or not you’ve seen The Social Network yet, we found some great lessons any startup should take away from the movie.

Business ideas aren’t protected
Central to the storyline of the film is a misunderstanding about what constitutes intellectual property.

The facts: In late 2003, Cameron and Tyler Winklevoss and Divya Narendr asked fellow Harvard student Mark Zuckerberg, already known as a genius programmer, to write some code for a social networking site for students. Their oral agreement with Zuckerberg later created disputes as to whether they hired him, contracted with him for a portion of the profits, or what, but Zuckerberg admits to doing about 6 hours of work for them on the project, and claims he never committed to completing the project, but just that he was “helping out” some fellow students. At some point, he stopped answering their emails and in February 2004 launched his own social networking site, “Thefacebook.”

The basis of the resulting lawsuit was that Zuckerberg had “stolen their idea” and used it for his own profit.

But, as our own Tim Berry points out, “Business ideas aren’t protected. In 30 years of business and consulting, I’ve never heard of any laws to protect business ideas. Laws protect inventions with patents, creative works with copyright, and trade names with trademarks.”

If they had alleged instead that he had stolen their original code, that would be protected by copyright, so long as:

they, and not Zuckerberg, had actually created the code, or
they had an enforceable contract with Zuckerberg as an employee or contractor that gave them rights to anything he created while in their employ.

Alternatively, if they had made Zuckerberg sign a non-compete agreement before beginning work, in which he agreed not to create his own social networking site, or not to do related work for a certain period of time, they would have had a legal basis for the lawsuit.

Spoiler alert:
On Monday, we’ll talk about partnership agreements, and how they could have saved Eduardo Saverin and the Winklevoss twins a lot of time in court.

Sara Prentice Manela
Editor

P.S. Speaking of Facebook – Have you joined our fanpage?

{ 0 comments }

Alphabet Art–Simple Idea Done Well

by Tim Berry on October 1, 2010

It’s a simple idea, really. The e-mail I got from Christopher Dabrowski described it as:

Canadian Entrepreneur Jennifer Blakeley spent three years traveling across North America to collect photographs of objects and scenery that resemble letters of the English alphabet. The idea was inspired by the children’s book “Alphabet City”.

I got curious, clicked, and discovered Letter Art–Alphabet Art | Alphabet Photography, shown here. Pretty cool.

It looks like nice photographs, carefully collected, used to write a word as a collection of photographs. For example, I typed in “Tim” and here (below) is what came back.

The idea is simple, right? Jennifer Blakely took her talent, what she likes to do, and found an angle. It’s not just take pictures and sell them; it’s something different and therefore more valuable.

She’s got the idea, the photos and the website, and now it’s a business.

Is there a problem? Sure, maybe somebody else can do the same thing. Does she have to move very quickly now, get investment, become known the world over as the photos and letters person? Before somebody bigger does it?

I don’t know. I doubt it. What do you think?