My Reactions for Startup Reactor

Posted by on April 18, 2008 at 7:40 am.

Steve Spalding from How To Split An Atom and History of Blogging has kicked off an interesting concept called the Startup Reactor. It focuses on very early companies (typically pre-launch), shares their story and kicks off a conversation about their businesses. It’s an easy way to dive into some new ideas and a valuable resource for entrepreneurs who join the conversation. Steve asked if I would provide some thoughts on Startup Reactor’s first batch of elevator pitches and he published my thoughts via the following guest post:

First, I want to thank Steve for inviting me to guest post for the Startup Reactor. I think the Reactor is an interesting concept with value for participating entrepreneurs and those that jump into Reactor conversations. The current conversation is a review of five elevator pitches, from Transpondr, LogoBids, Publicitr, Siphs and Zambino. I should note that I was already aware of Siphs. I felt like I knew of LogoBids (or was it one of the other logo sites?). I have no prior exposure to Transpondr, Publicitr or Zambino.

The 7 Ms

I typically apply Dan’s 7Ms to evaluating venture opportunities: Market, Management, Magic, Model, Money, Momentum & Match. That’s a subject for a whole post series later this year, and too in-depth for this exercise. Therefore, I’ll assume comparable management skills across these opportunities (the #1 factor for funding) and focus on Magic (the idea), Market (size/competition for opportunity) and Model (distribution/revenue). There’s not a lot to go on with elevator pitches, but my thoughts/questions are as follows:

Transpondr

Transpondr: Magic feels too simple. I think that’s probably because you are focused on a specific problem (counting) without highlighting the broader strategic opportunity. Therefore, the market also seems small. The reference to hosting offers a hint of potential, but you need to share more than a hint — don’t make investors “do the math”, do it for them.

The revenue model sounds like freemium (good), but I have no idea how the world will find about you. Most viral businesses don’t go viral by accident, entrepreneurs specifically build in ways that use of the product automatically drives distribution of the product.

Biggest Question: How big is this problem/market?

LogoBids

LogoBids: I like the general Magic — crowdsourcing is an interesting theme across a number of verticals. The attraction of crowdsourcing also means you have or will have tons of competitors. There are graphics design and logo-specific entrants, as well as broader crowdsourcing like Kluster which have logos as a subset. Therefore, I’d ask about overall Market potential, assuming you’ll have to slice it up with 5+ other players.

The barriers to entry are low, unless you can reach scale fast enough to get eBay-like network effects: size makes LogoBay the default marketplace for logos. Revenue model is pretty straightforward (similar to other marketplaces), but like Transpondr the service isn’t inherently viral — so what is your plan to get the word out?

Biggest question: Why you win versus the mass of competitors now/later?

Publicitr

Publicitr: Magic wasn’t clear. Elevator pitch needs refinement with less buzzwords and maybe a specific example. I think the idea of analytics on a piece of content (versus site analytics) is interesting as content gets more portable/syndicated/bookmarked/digg’d, but I can’t tell if that is your secret sauce — or is it some special distribution engine.

Market potential is high, generally speaking — small business continues to look for ways to engage online customers. The model really isn’t clear either. Is this a news submission site with revenue per submission, an email distribution service with revenue per email, or revenue for some broad PR goals?

Biggest question: What problem do you solve and how, specifically?

Siphs

Siphs: I like the overarching premise: email is more comfortable for the masses than whizbang RSS stuff. However, I was left a little short on Magic. I think chicklet businesses/services can be sold small, but I have a hard time seeing the big Market (from a dollars standpoint). I’d try to understand how the button can result in a more substantial business, possibly involving ongoing email newsletters (DISCLOSURE: I’m an investor in RSS-to-email provider Zookoda) or some unique news/social property based upon what articles are being shared.

I’m assuming a freemium revenue model, but again you’ll need to offer more substantial services before people pull out their credit card. This business is inherently viral, so I like the distribution model.

Biggest question: What specific problem are you trying to solve for bloggers? I’m not convinced that an share/email-this button is sufficient enough.

Zambino

Zambino: I like the Magic here: in-video marketing offers unique ROI potential. My investment in IZEA comes from a strong belief that advertising and content will grow more and more intertwined as the world moves to on-demand content consumption (e.g. skipping commercials and/or ignoring display ads). This also suggests a very large market and company potential, if done right. Revver is a close comparable and their difficulties of late are a bit of a puzzle to me.

I would ask, “why will Zambino succeed given some other video marketing stumbles?” This leads directly to your Model. How will you, the publishers and advertisers get ROI that keeps everyone happy? It sounds like you’re already dodging the hosting expense of a Revver model by leveraging YouTube. Like Siphs, the distribution model here (good vids = more publishers/advertisers) is inherently viral.

Biggest question: Do you have the cred or the early unique publisher relationships to get content early? Just as good content can drive viral goodwill, bad content can drive viral bad will.

Now Back To You

So, there you go. As I mentioned above, the entrepreneur plays a huge role in getting funded. A great idea still needs a passionate, visionary founder to sell it to employees, partners, investors and customers. Assuming that exists for all of these, what do you think? Did I miss something or prompt any questions?

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