Why the Apple Tablet is not going to save the electric sheep

I’m pretty sure it’s a scene in Blade Runner where Rick Deckard picks up a newspaper with motion video images on an otherwise textual page. That’s the sort of sci-fi that old school media executives have been raised on for the last nearly thirty years. And as the sales of their newspapers and magazines have fallen into a neo-noir landscape of their own, it’s likely their dreams of Jetsons tablets and throwaway electronic papers have become more and more fevered.

Blade Runner is set less than a decade away in 2019. E-ink and tablet technologies are coming along pretty nicely, and ebook readers like the Kindle are finding some real traction.

Now, this month Apple is set to announce its own Tablet scheduled for release in March. It’s the big brother to the iPhone rather than little brother to a laptop. It looks like being the first great tablet. According to the WSJ, it’s likely to have a 10 to 11 inch screen with full color and be bundled with decent wireless Internet rather than just 3G, and it’s likely to be priced between the Macbook at $999 and an iPhone. I’d guess $499 with a 24 month wireless Internet contract.

At the same time, Apple’s App Store has just reached three billion downloads, according to TechCrunch, (which sadly failed with its own attempt at a Tablet device, the CrunchPad). Three Billion. That’s just for apps for the iPod Touch and iPhone with a tiny screen on a device from a single manufacturer. The market for applications for a larger screen Tablet with a fast wireless connection is likely to be massive in the next 3-4 years assuming Apple gets similar cult product status with its Tablet.

I think it could. The device size looks right to me. Small enough to be portable, but large enough for usable web browsing, video and games. If it’s got that gently ruggedized feel of the iphone and you can throw it around a bit, and if it has a day’s battery life, it will be compelling.

It’s clear that media executives see tablet computers and e-readers as a panacea for people ditching their dead tree products. They’ve formed their own consortium to provide an “itunes for content” and produce physical e-readers for magazines and newspapers. Clearly they don’t want an Apple to dominate magazine and newspaper electronic sales like Apple does Music with itunes, and lose out on the opportunity to control the electronic distribution themselves.

But, as a recent Slate piece pointed out, they’re missing the point and assuming there will be a large market for both dedicated e-reader tablets, and for content sales for them, and they’ll be able to count the sales like electric sheep.

Most people aren’t going to buy a purpose-built device to read magazines, newspapers, or even in most cases books. Some very decicated customers and early adopters might and are as the Kindle shows. But most customers won’t.

Most consumers will want a general purpose device that can play games, browse the web, read ebooks, play music and video and run Apps. A big iPhone. Something like the Apple Tablet.

The driving use for these tablets is definitely NOT going to be reading books, magazines and newspapers. That’s a fantasy. It is one activity of many that people will perform, and I think one of the lesser ones, except maybe with older users.

The biggest uses for an 11in tablet with fast wireless are going to be live gaming, video applications, and web browsing.

And consumers won’t use a dedicated “itunes for content”. They just want to get content from the web, or maybe download publisher apps along with all the other games, apps and content from a general App Store, and videos and music from iTunes. That’s how I use the WSJ iPhone App today. (As an aside, it’s a great little App, but I think it’s a scam for the WSJ to charge a separate subscription to customers already subscribing to the online Journal. That’s the kind of fleecing your best customer behaviour that holds back paid content everywhere.)

Whether Apple can maintain its proprietary dominance over Apps on these devices remains to be seen. Apple has been incredibly sucessful at using proprietary control to establish premium pricing and provide good customer experience, and as a result established entirely new product categories very quickly. But over time with the Android, ChromeOS and other portable and mobile alternatives like the Nexus One covered by TechCrunch today, and developer dissatisfaction at lock-in and unfair policies with the App Store, you’d figure the mainstream market will open up.

In the meantime, I suspect media executives will be left dreaming about androids and electric sheep, while the rest of the world wakes up to Steve Jobs bringing down Tablets from the mountain.

 

Secrets of the TechStars Method for winning the pitch and getting the girl

“I’m not trying to change the world. I’m not looking for a new England. I’m just looking for another girl. – Billy Bragg”

If I had to find a song to sum up TechStars investor day, this is it.

The companies graduating from TechStars aren’t trying to be the next Google. They’re focused on smaller targets. They’re solving practical problems and have achievable goals. Like Nate and Natty from everlater in David Cohen‘s techstars.tv prank, they’re hoping to get the girl. And, perhaps, the investor.

I went along to TechStars’ demo day last week. I’m in a competitive accellerator / incubator from TheFunded called The Founder Institute, and know people in both TechStars and YCombinator. So I thought it would be useful to call out some observations about the TechStars companies and their approach to pitching, and what I would call “The TechStars Method” for accelerating startups… and getting the girl.

Yeah this needs a disclaimer

TechStars is a seed-stage startup incubator/accelerator program based in Boulder CO in its third year, and now also running in Boston. It invests up to $18k in 10 teams and mentors them over 3 months. The Boulder teams presented yesterday. It was a fascinating experience to watch them (thanks to TechStars for having community invites).

I have a natural competitive bias because our startup (code name scribetribe) is in the first year of TheFunded’s Founder Institute, an incubator based in Silicon Valley started by Adeo Ressi – terror of VCs and champion of founder rights (I’m only half joking). It has around 75 founders and companies, about 2/3 from the Valley, and is taking a radically different approach to incubating and accelerating startups and founders. But we’re going through a similar process of learning to pitch better and explain what we do clearly, and getting “a new one ripped in us” weekly as we go.

At the same time, I know founders in the TechStars program and in both the current and last intake of Paul Graham‘s YCombinator, which was clearly an inspiration for it. So I’ve had a good opportunity to “swap notes” with other founders about how the programs work, and what’s good and bad about them.

We also made the short list of finalists for TechStars this year, and I know some of the team there. So although I carry some natural competitive bias, I was genuinely interested to see the end results, and cheer on the teams.

Why “The TechStars Method”?

One of the recurrent themes in mentor presentations at TheFunded has been the similarity between pitching startups and “getting the girl”. There have been plenty of references to the “Mystery Method“, which is a systematic method used by pickup artists to seduce their targets.

Trip Adler from Scribd (a YCombinator launchee that is going gangbusters) presented “The Trip Method” for ideation and concept creation. James Hong from HotOrNot taught us Peacocking and brand differentiation. Peter Pham from Photobucket and Billshrink coached us on the psychology of influence.

James Hong put it best: “In a world full of 6 billion people, how does a female know that you’re the one. ‘No other dude is wearing this hat’ = this dude is getting laid. That’s how branding works. You need to differentiate in a way that triggers emotion.”

Seeing all ten TechStars pitches, it’s clear to me there is a systematic method they followed to “differentiate in a way that triggers emotion”. No one in TechStars has told me that this is their method. I don’t know whether they articulate a method or not. But it was a clear pattern. I’m outlining it here in the hope it will be useful for other startups, particularly those pitching and anyone evaluating seed programs and incubators.

[NB see David’s comment below which he posted on an earlier draft (which must have snuck out onto the interwebs before I was quite done). David makes the point that there is no formula – just feedback from the mentors. In which case there is clearly a very strong pattern in that feedback.]

The “TechStars Method” broken down

The method has six basic principles, and the pitches use a well-defined structure and approach based on those principles:

1. Investor-focused: There is a clear focus on getting investor interest and making the companies as investor-friendly as possible.

2. Pitchable products: It’s focused on pitchable businesses with a good demo and demonstrable customer traction. Not too big and not too small. They tend to be well developed before the program starts, and suitable for acceleration, often with an existing product. I don’t think TechStars likes to risk there being no demo on demo day. (Disclosure: our feedback included that we were too early because we were pre-product compared to other teams. Also please see David’s comment below that many of the companies were not well advanced before starting).

3. Put on a great show: The investor day was held in Boulder Theater. As well as the potential investors attending, there was a packed crowd for atmosphere and to cheer on the teams. It featured humor and presentations on a big stage with a big-screen backdrop. It leveraged Brad Feld’s profile, included a speech from Jared Polis, founder and Congressman, and featured the most entertaining of the recent Ignite Boulder presentations. The lead up was effectively promoted through the “startup reality tv” series on techstars.tv. You could have sold tickets. They sort of did (donations for charity raised over $1000).

4. Engage the community: Andrew Hyde is TechStars’ secret weapon on this front. He’s their community manager. He’s got a rock star profile in Boulder. But the reality is that he works his heart out helping other people in the tech community, with a great supporting network of people from local companies, many of them not anything to do with TechStars. He also started Startup Weekend and VCWear. But community engagement is part of TechStars ethos generally. They support the tech community and the community supports them. TechStars got 500 social media mentions for the pitch day as a result.

5. Investor mentoring: David Cohen told the audience of investors that TechStars is all about the mentoring – “one-on-one experiences working with the mentors.” The most prominent mentoring is from investors themselves. In the videos, high-profile mentoring features investors like Brad Feld from Foundry, Rob Hayes from First Round Capital, Howard Lindzon, Jeff Clavier from SoftTech VC and Dave McClure from Founder’s Fund/fbFund (awesome blog btw!).

6. Work as part of a buzzed up meta-team: Teams appear to have a 2/3 technical skew. Everyone attends the mentoring and group sessions, but most teams had a biz person who focused on the presentation/pitch and mentor relationships, allowing the technical founders to focus on code code code. The TechStars bunker office has a buzz and energy much bigger than any individual team can generate on its own. Mentors drill phrases like “do more faster” that are written on the walls.

The presentation structure

The investor day featured two sets of 5 companies each, broken up by an interlude with a humorous presentation (Googleplex from Ignite Boulder by David Walton) and a more serious talk by Congressman and founder/investor Jared Polis. This broke up the presentations and gave the audience a break. The most interesting companies were in the first five, with a strong final pitch to close. Each pitch was 8 minutes.

Elements of TechStars pitches:

1. Personal stories: Use personal stories to provide background on why you’re solving the problem and why you’re qualified to do it. Use a personal story about the frustrations of a specific example customer to illustrate the problem and solution, and to guide the product demonstration.

2. Visual and engaging: Strong visuals with few bullet points: Very visual slides with lots of transitions within a clear overall structure. Heavy use of images and incremental transitions between slides. Use humor and show a vulnerable side to the audience. A few presentations, like everlater and The Next Big Sound were packed with energy and charisma and stood out as a result.

3. Strong product demo / illustration focus: At least half of each presentation was spent showing the product and using the demo to talk through the key points of the solution. The biggest focus was on the demo and using the demo to illustrate the solution and its benefits.

4. Clear and well-articulated common structure and approach. I’ve outlined this separately below.

The presentation structure applies the principles above to the almost universal deck structure used for the pitches:

1. Crisp opening:
* A succinct one line description of what you do, what problem you solve and who you do it for.
* Short introduction to who you are personally.
* The slide is clean with just the company logo and a tagline.

Examples: Retel “empowers restaurants and retailers using security cameras”. Everlater makes it “easy and fun to share travel experiences”. TimZon is “the easiest way to share visual feedback”. TakeComics “brings comics into the digital age”. The Next Big Sound “measures the popularity of bands across the web”. Vanilla is “open source forum software used to power discussions”. Good, crisp, concise and you know what they do immediately.

2. Personalized problem – Identify and personalize the problem:
* Use the personal story of a specific customer or your own personal story to describe the frustrations in the market and identify the problem.

Examples: TakeComics opened with “I’m Kevin and I’m a huge comic book fan” and used his personal story of trying to get unattainable comics in small town England. Retel told us “Meet a customer. He’s a sad man. The problem – he runs a Dunkin Donuts… workers put food up their nose. He generates 56700 hours of video a month monitoring it.”

3. Illustrated solution – Graphically illustrate the solution in personalized terms:
* Use a demo / walk-through to illustrate the solution you have solving the problem you identified.
* Use the personal story of the customer you identified as the script for the demo.
* Step through the key features and point out how each one contributes to solving the problem for that individual.
* Articulate the benefits and value provided to that customer.

Examples: TimZon walked the a day in the life of Barbara using a customer case study with a support team trying to clarify a product feature by email and the miscommunication that resulted. TakeComics walked through a customer buying a particular comic at the “itunes for comics”. everlater very cleverly used high-profile VC Fred Wilson’s mishmash of recorded travel blogs and photos to show how he could record his travels with their service. He was in the audience and then blogged about it.

4. Opportunity – Prove the market and economic opportunity
* What is the potential market / addressable market
* Show how you plan to monetize and the revenue model for the business
* Explain how the business can scale

Examples: everlater used this to point out that they weren’t relying on travel advertising, as big as that is on the web, but an affiliate model with partnerships such as Tour Operators. TakeComics talked up what looked like a small market by saying comics were a $6b market globally, but that the kicker was that Wolverine makes six times more money for Marvel outside of comics through merchandising, and comics were the hook to get to that.

5. Competitive advantage
* Focus on your advantages over competitors.
* Use competitors as proof of the market opportunity.
* Articulate your differentiators clearly.

Examples: The Next Big Sound used the phrase “people in the music industry haven’t seen this visual data before”. As a new service they used the logos of people in the industry used to paying for analytics and that enterprise customers paid $48k/year. Retel pointed out their competitors were surveillance and mystery shopping and articulated their point of difference as “constant monitoring”, and that they aimed to partner with competitors. Spry used an effective categorized matrix comparing monitoring services / tools.

6. Demonstrate why you’ve got the right team
* Keep the slides visual – personalize the team.
* Highlight direct experience in the space and why you’re uniquely placed to solve the problem.
* Outline why you work well together.
* Talk about why you’d be a worthwhile investment.

Examples: The Next Big Sound used a very smart single slide that looked like a band cover photo – black and white walking down a back alley with the four of them looking cool, which got a big laugh from the audience. The accompanying talk included a background on each, highlighted direct experience in the music industry, and said we “listen, work efficiently and are ‘cheap to keep alive'”. Most of the team slides were visuals with no text, and the presenter reinforced the team’s experience working together well in a relevant industry.

7. Show your progress / traction
* Milestones and achievements
* Slide with numbers of signups, traffic through the system, number of beta users etc
* Logos of customers using the product

Examples: TimZon’s slide was “Where we are today: Live, 800 registered users, company pilots”. Vanilla “300k installations, 450+ plugins, 200+ downloads a day”. Next Big Sound was “6 services, tracking 500k artists” and had the logos of the companies that had already signed up on a second screen transition. SendGrid was “100 paying customers, 100m emails sent, 3m emails sent a day”.

8. Say what you’re asking for
* Ask for a specific amount of money.
* Say what you’re using it for and what the goals for its use are.

Examples: Spry’s slide “We need your help: $350k, 12 month runway, solid sales and marketing, reach $40k/mo revenue”. Next Big Sound was “$300k funding, reach 5m artists, provide metrics on specific goals for companies”. everlater was “self funding but looking for partners that bring value”. TimZon was “seed funding $450k, 12 months, goal of $45k revenue/mo through subscriptions and white labels”.

9. Summary slide
* Sum up why you’re excited
* Include clear contact information
* Very visual slide reinforcing logo and key message

Examples: Retel concluded with “Why we’re excited: great economics, strong team, a pain killer – the customer can finally smile” that tied the conclusion back to the opening. Next Big Sound used a smart concluding slide which had a small number of their key stats updating in real time on the big screen.

Conclusion

The presentations and charisma and energy of the teams was impressive. It’s not a criticism to say this, but TechStars has a skill for picking companies that can benefit from acceleration. And it focuses on making them investor friendly, with investor-focused advice. That makes it different, I think, to The Funded’s Founder Institute and Y Combinator, which themselves are also very different.

There are new seed-stage programs springing up in Canada (bootuplabs), Providence, Austin and all round the US that are inspired by YCombinator but seem to me to be copying the TechStars model and driven by the desire to accellerate investable companies as their primary focus. It’s for this reason that I think the differences developing between TechStars, YCombinator and TheFunded’s Founder Institute are so interesting, and I plan to look at that in more detail in my next post.

Extras

You can check out descriptions and short reviews of the full set of teams in TechCrunch’s wrapup.

 

Doped up on security theater

Every time I pass through the checkpoints at airports in the US, I can’t help but think how apt the term “security theater” is.

It’s clear that the practical security benefit of removing shoes, placing liquids in 100ml vials in small bags, and unpacking cables and laptops, is low to say the least.

And it’s equally clear that there would be thousands of ways for someone with ill intent to circumvent the intent of all that security – from printing your own “departure management card” sheet, to buying the Snack Packs with tuna and their razor sharp tin lid edges on board any United Airlines flight.

I think most people standing in brain-dead queues, turning up two hours early for glorified bus rides, and emptying pockets and taking off their belts in resigned obsequiousness all know deep down that the measures in place are not there to genuinely protect, but merely the trappings and suits of protection.

When I first felt this, I felt guilty. After all, we all want to travel safely. But after reading Jeff Goldgerg’s “The Things He Carried” in the Atlantic Monthly, and Peggy Noonan’s “Where is America?” I realized this wasn’t loony fringe dangerous thinking.

In fact, I think it’s dangerous to not question it.

We pass through these lines delusionally. And delusion is always worse than confronting brutal realities. By placing a charade and theater around security, we fool only ourselves. We lower awareness of the real dangers, wrapped in our comfortable cotton wool layers of pretend protection.

I believe that the security theater makes the risk of disaster higher, not lower. It is there as a morphine dose to calm the public pain over acts of terror, rather than to fix the problem or prevent real acts.

And we pay dearly for the pain killer. The friction on travel is a real and tangible cost. Hours of human productive effort wasted in time in lines, trips that could be done and back in a day that need overnight stays.

Combine the overhead needed to make even the most simple single-legged domestic air trip in America with the insanity of the hub and spoke system, and you end up with a system where it takes a day to get anywhere, and a day to get back.

Take that and add a lack of power outlets, reasonable wifi access, and working spaces at airports, and you end up with a national productivity sink.

It’s friction on business. Friction on life. And it’s bad for everyone.

 

The New York Times serves itself

The normal reaction of newspaper executives to Google’s dominance of web advertising has generally been to complain or cry foul.

Earlier this evening, however, I saw an ad running on the New York Times website that made me say “good on you guys” out loud.

The newspaper has introduced Self-Service Advertising, designed mainly for small businesses. It’s one of the most attractive alternatives to Google AdWords that I’ve seen from a newspaper so far.

Advertisers can upload their own materials, or choose from a library, customizing ad text, appearance, color-schemes etc. And they can choose campaign dates and whether ads should run nationally or locally. Best of all they can choose their financial commitment, and track their ads’ performance.

This is old news for Google AdWords’ customers. But I like the fact that you can target advertising for a premium content brand in context. And I think it adds something appealing to the mix.

I’m not saying it’s perfect, or a panacea to the newspaper industry’s problems, but I do think that this sort of experiment is important. It’s a more effective response to Google’s market dominance than either continuing to do what doesn’t work, or trying to blame Google for the industry’s woes.

And the NYT deserves praise and encouragement for trying new things.