Aaron Brazell

With the Holidays Comes Reason to Have Confidence

If you listened to the talking heads last week, you knew that everyone was holding their breath waiting to find out just how bad black friday sales were going to be. If you listen to the so-called experts, there was no reason for hope and the holiday shopping season would only be the nail in the proverbial coffin.

I suspected that people were not listening to the experts and saw a reason to hope in this economy. As touchy feely as “hope” can be in an area that is defined tightly by the ink of black and white P&L reports, hope, faith and confidence is the driving force behind an economy. We win big because we feel like nothing can go wrong and so we buy, buy, buy and invest, invest, invest. We lose big because the air of an entire way of life is deflated beneath us taking our will and drive to win away.

It’s all about the feeling.

So when economists said that this holiday shopping season would be the worst on record, and that people just weren’t buying like they used to, we could take the prophets at their word, or change the future.

According to Reuters, online sales spiked from a year ago. Some reports used the word “dwarfed” to describe the upsurge and this morning, economists were trying to explain away how they were wrong by saying there was “pent up demand”.

Yes, there was. And the economists missed it. The prophets prophesied doom and were wrong! Mind you, these are the same folks who willingly peddled the economic concepts that buried the mortgage market in the past year.

Folks, I am not an economist. I am not a financial adviser. I know what I hear on a day to day basis talking to people like you and I. I know people are buying. Yes, they are being cautious. But they are buying.

In fact, I may buy a new car before the end of the year when the dealers are dying to make any deal they can. I’ll save some money, and still buy, buy, buy. Don’t buy the hype. This is not the end of the world and the longer we go, the closer we are to the end.

Venture Files

Bubble, bubble, bubble – In Private Equity not Web 2.0 (Classic)

This is the first in an ongoing “Venture Files Classics” written by former Venture Files Editor Steven Fisher. The selections are chosen for historical reference as well as a notorious ability to be right. The original post from January 12 of 2007 can be found here

Being a serial entrepreneur I have been through many business cycles, but the Internet boom of the late 1990’s was an extremely heady time. People were so enamored with what the Internet could do, every one really believed that the old rules didn’t apply.

The reality was that those rules applied more than ever and with the crash in the early part of the century we have tried to learn our lesson.

With these new companies deemed Web 2.0, everyone is expecting another bubble. So many of the same types of companies have been funded so there are bound to be consolidation and just plain failure.

According to Michael Arrington, his entry “Bubble, Bubble, Bubble“, the despite the fact that some companies are failing, the sky is not falling.

In fact I would call this time around the ol’ startup track “saner, saner, saner”.

Despite many of these companies basing their success on being an aftermarket for Google, the smart ones I think many people know that you have to be in this to create a real enterprise and one that makes money. It is not so much about the VC’s but about the ability to use the low cost and barrier of entry to innovate.

But the Dead Pool is not cool

I think that the blog A VC gets it right his counter points on “Building It Up and Then Knocking It Down” are right. He says “over hyping young companies where people are working their butts off and then throwing them overboard quickly into a “dead pool” when they fail is not healthy.

I believe it is dead wrong to put this up there. It just feeds the fire for the chicken little’s of the world. Mike Arrington has known successes when he co-founded helped flip Achex and sold it to First data. I don’t know if he has experienced building a company from scratch and having it fail, many times from circumstances out of your control.

But there is a bubble developing and not where you think…..

The bubble is not with companies it is in the private equity market itself. The model of funding and the way people are evaluating companies is changing. The way investors look at companies is not based on a fast IPO but aligning it to be a sweet acquisition target.

This is helped in no small part since most VC’s invest like they are teenage girls. “Oooo, you invested in a video sharing site, I want one too! You put $5 million into social networking for eco-friendly baby boomers? Find me one so I can get one too!!

Here is how I got there:

  1. The amount of money chasing deals have lightening strike twice to find that repeat of unrepeatable past returns is growing rapidly
  2. The number of opportunities are declining and there are too many copycats plus the cheap money is pouring out to fund them.
  3. Not enough VC’s to serve on boards effectively and make the existing investments get to a proper exit
  4. IPO market is still not there and there is and there are only so many acquisition partners
  5. Higher prices of entry and lower returns

What I don’t know:

  1. When the IPO market might be friendly to tech stocks
  2. If investors will broaden their portfolio choices to get their money working in unique ways
  3. If funds might start giving their money back

Only time will tell if this comes to pass. If you have a good idea, the money is out there but might not be for very much longer.

Crystal Ball? 2-3 years or mid-2008 this is gonna come to a head. Only time will prove me right or wrong.

Editors Note: At the end of 2008, we do now know that the economy has imploded, not simply from web valuations. In fact, web valuations hardly played any part like they did in 1999-2000.

In fact, the web sector has seen much less damage, than the rest of the economy. In fact, there are still investments taking place, if devalued. A series investments for web companies typically range in the $1-2M range which in the larger picture is fairly small. Biotech companies, for instance, typically pull in around $20M for a Series A round.

That does not make the web sector immune, and in fact, Steve is correct in recognizing that there would be a bubble coming, and that it has arrived.

Aaron Brazell

WordPress Consulting Extravaganza: One Day Only

Forgive the marketing speak, but I’ve decided to do something that really is a special deal. I get inquiries everyday asking me questions about WordPress from “How to setup a category based structure for my blog?” to “What are the most essential plugins I need for my blog?”

If I could cut and paste answers and spend no time, I would, but really every situation is different. Most times I can’t answer these questions because of limits on my time, but I’ve decided to create a day-event where people could book my time for a bit and get any or all of their WordPress questions, recommendation requests and “how-to’s” answered.

Mark December 18th on your calendar. On this day, I am taking reservations for 30 minute exclusive time slots on a first come, first serve basis. I will give you 30 minutes of my time to get on the phone and offer my insight and assistance on your WordPress related problems and questions. The cost is $100 per time slot. Even your grandma can do that!

If you’re a business looking for some strategy guides, or individual looking for recommendations on themes or plugins or other assistance, your time is now.

One person (or group of people, if you choose) per call. One day only. Book your slot now. All times are US/Eastern.

10-10:30 am
Book this appointment and pay online using Monetime.

10:45-11:15 am
Book this appointment and pay online using Monetime.

11:30 am – Noon
Book this appointment and pay online using Monetime.

12:15-12:45 pm
Book this appointment and pay online using Monetime.

1:15-1:45 pm
Book this appointment and pay online using Monetime.

2-2:30 pm
Book this appointment and pay online using Monetime.

2:45-3:15 pm
Book this appointment and pay online using Monetime.

3:30-4 pm
Book this appointment and pay online using Monetime.

Aaron Brazell

MobilePress Allows Readers to Read On the Go

As a fan of all things mobile, I have been continually frustrated by websites that do not render a mobile friendly version of their sites. Let’s be honest, I’ve been frustrated by me not rendering a mobile friendly version. As a Blackberry user, I’ve been tormented by the inadequacy of the mobile browser that has been supplied on handsets for a long time. Each new iteration of the Blackberry OS improves the browser, but nothing has been breakout. (That said, I hear the new OS 4.6 which is shipping with Blackberry Bolds and Blackberry Storms is quite nice, but I have not been able to independently confirm).

Captured with Safari 3 Simulating the iPhone

Captured with Safari 3 Simulating the iPhone

Fortunately, now you can read this site on most mobile web browsers including the iPhone (with iPhone bling!), Opera Mini, Internet Explorer for Windows Mobile as well as Blackberry and generic mobile browsers. This thanks to a WordPress plugin called MobilePress. I highly recommend it as a must have for every blogger who wants or needs their blog accessible to mobile users (they are becoming fairly common place).

The only hitch seems to be on the Blackberry browser (<=OS 4.5). You must disable javascript support in your Blackberry Browser configuration. Failing to do this will cause most sites that load javascript/AJAX libraries to spin unendingly and eat up your device memory. The only way to solve this is to pop the battery.

Aaron Brazell

Consumer Confidence Building Exercise for Black Friday

In the comments below, please itemize what you bought today for Christmas. Comments will remain open until Monday and, although I’d like you to identify yourself, I also don’t want to give Christmas or other Holiday gifts away… so feel free to be anonymous. Just be honest and open. Tell us what you bought, and how much it cost.
Photo by jpockele

Aaron Brazell

Indecency in Common Areas (or how Twitter advertising schemes will get you canned)

The National Mall in DC is a fantastic place for everyone. It is often bustling with tourists from around the United States and around the world. The draw of taxpayer-supported Smithsonian museums, wide open space for people to walk, or eat, or socialize and beautiful scenery of the center of American government keeps the area bustling all the time.

The National Mall, much like the Roman forum where people came to freely exchange ideas and thoughts without pretense, is a public space that is open to anyone doing just about anything. However, there are certain things that are certainly not welcome on the mall. Without a license, you’re generally not allowed to sell things. You’re not allowed to, without license, setup your own sound system and hold a concert of some sort. You’re not allowed to have sex, or perform other activity considered “indecent”.

Twitter is that forum, that National Mall. It is a beautiful thing that allows for the free exchange of ideas and views. People converse and challenge each other. They unite behind causes, events and people. It’s great. However, recently, several “indecent” examples have cropped up. Specifically, with monetization of Twitter. Monetization of Twitter, depending on how it’s done, is polluting the common area. It is an obscene money grab, and I’m tired of it.

For instance, there is Magpie that will automatically insert a tweet into your tweet stream every 5 messages. The only disclosure is a #magpie hashtag. Josh Catone calls it a “terrible idea” saying:

You could find yourself shilling for something you’d rather not be. Unlike Google AdSense or other forms of display advertising, tweets that go out to your followers coming with your name attached and your implicit endorsement.

Right, no.

Twittad is less intrusive, and has less potential of affecting the Twitter community. With this model, advertisers “buy the background” of a Twitter users page. The only time it is offensive is if I am visiting a Twitter page that has such an ad.

Chitika has jumped on board by extending their advertising options to Twitter as well. In an email sent out this morning to their publishers, the company suggests its publisher tweet their referral link and provides the copy to do so:

If you are on Twitter, you can easily tweet your Chitika referral link to earn some extra revenue. For any user who signs up via this link, we will pay you 10% of their total earnings for a full 15 months. (Don’t worry – this money doesn’t get taken out of their checks. We pay this as a bonus to you!)

Post to Twitter: I’m earning good revenue from Chitika – you can check them out here: [link removed]

Very invasive. According to Chitika.com, the advertiser boasts 34,000 websites. If each one of those website owners tweeted their referral link, that is 34,000 tweets. By my best guess, that is an entire week of tweets that come across my tweetstream. Uh, no.

There is at least one other company that is getting ready to launch an advertising for Twitter option. In fairness to them, and because I don’t know what it’s going to look like yet, I won’t out them. However, I think it’s important to note that there will be more of these is Twitter users naively buy into the “easy money” routine. There is no such thing as easy money, and you will ruin your reputation if you engage in cheap money grabs on Twitter. I, for one, will immediately unfollow anyone engaging and I’m sure I will not be the only one.

Tread carefully.

Update: It’s been brought to my attention that the #magpie hashtag is no longer required, making it an even sleazier and subversive service.

Aaron Brazell

Doing the Most Good Means Smart Economics

There’s an old saying that goes something along the lines of, “When life gets good, throw a party” and that seems to be a mentality that translates to business today. Mainly the web business, if we’re talking about literal parties. No good web conference, un-conference or social-media laden city goes without parties of some sort. Here in DC, we have TechCocktail, the Twin Tech parties, etc. Anything to get people together and drink a little bit over business cards.

In the more figurative sense, we have people like Geoff Livingston, who suggest that social causes is a great place to drop your money. And to a degree, he is right. Whenever there is a crossover between means and opportunity, then action is mandated.

The lack of means, at this time when companies are trying to pipeline enough business and extend runway to survive 18 months, and employees are losing their job because the company can’t pipeline those funds, creates a situation where business owners need to take stock of options.

While social causes are always good, the return on investment is a giant question mark. Social causes can create huge bang, attract all kinds of positive publicity, vibe and reputations as Geoff suggests. Or it could simply have no effect at all, and thousands of dollars could be squandered on social cause.

Unless of course, social cause is the ultimate goal, smart operatives are looking at their economic scenario and becoming as efficient as possible. That means, investing in developers, or marketers. That means, hiring a high priced VP to replace 3 low-level managers to save salary cap. That means, pounding the pavement for more business even if it means having to travel a little more. These are optimizations companies go through to secure their future, when times are uncertain.

Certainly, if you have plenty of cash in hand and you’re looking for long-term investment opportunities, social causes gets you there. However, survival of the fittest dictates that sometimes you have to make the short term 3-yard scramble, over the longer 20-yard slot pass because the chance of success is greater. It’s a numbers game.

Aaron Brazell

The Xbox Experience: A Great Improvement That Still Lacks

Microsoft is clearly getting hipper with their offerings. The company that has been notoriously committed to offline products, like their Windows operating System and productivity suite, Microsoft Office, to the detriment of their online offerings seems to definitely be moving into the internet space more. They are, in fact, trying to own the online space now which is a significant internal company departure from the past.

As recently as yesterday, speculation was that the ill-branded Live! Search could be rebranded in a much more internet friendly way. Kumo.com anyone? Their IM client… well, no one uses it.

xbox-360-logoOf course, they have jumped headfirst into the incubation industry by launching BizSpark, which seeks to provide promising young companies with technical resources, such as their server offerings, and human and business resources to help these investment companies, mostly web based startups, become viable.

Naturally, one of the odd players in the Microsoft ecosystem has been the Xbox 360 platform. It is a killer gaming platform (I am an avid Xbox Gamer) and their online gameplay over Xbox Live is second to none. It has always lacked any kind of cohesion for an online service though. Especially in 2008, where Facebook and Twitter rule the day and it is rare to find someone who is not on some kind of social networking platform.

So a few months ago, when word leaked out about a complete overhaul to the Xbox Live experience, there were many of us who were excited about a modernization with significant incorporation of social networking elements. With the launch the other day, some of that has been delivered.

The Xbox Experience, as it’s called, is a significantly streamlined dashboard making it extremely easy to access common items, such as the Xbox Marketplace. Incorporation of online video giant, also dabbling in the social networking space, Netflix makes the Experience worlds better. It is possible to watch Netflix “Instant Play” queue items directly via your Xbox Dashboard. Sweet, if the video quality was better. Putting this aside, the mashup is a great step in making the Xbox an entertainment hub.

However, significant issues remain. A “big bling” element to the new Xbox Experience, is the new avatars. Going through a wizard the first time I logged in, reminded me a bit of creating your Tiger Woods 2008 character. Though this is fine in creating a personalized environment, I find no purpose for an avatar except to snap a proverbial photo and making that photo your “avatar photo”. I would much rather designate an actual graphic or picture as my avatar, in much of the same way most social networks allow you to.

The storyline falls apart more when you login to manage your Xbox Live account from the web and discover they have not incorporated any further way of getting at your data. Microsoft would do well to develop robust APIs that would allow players to get an XML or JSON feed of achievements, gamerscores, last/currently played games as well as other social network elements.

Why not provide a much more efficient “friends” method that would allow players to have wish lists, friend challenges, friend groups, as well as a unique element I call “tip sharing”. Tip sharing would be a forum element where a friend could share intel about a game (say Fallout 3) and I could “download” that tip into my Xbox Live user account. When I reach the Farrugut West Metro station in Fallout 3 and my friend has discovered something, the game could feed me that intel from a friend.

Another social element would be the concept of a “lifeline” where, if I’m stuck during a game, I could get immediate assistance (in-game or otherwise) from my friends through screen sharing, instant message (kill Live! Messenger and use OpenAIM, please) or other “helper” element.

Let’s make it really social and make it possible for gamers to find other gamers in their area and schedule times together (if you have to, use a modified, online, lite version of Sharepoint or Exchange Server to make this happen).

Of course, a natural tie together, via OpenSocial, with other social networks, possible use of OAuth for data access and login, status messaging and comment, and other “social elements” would really flesh the Xbox Experience as useful in 2008.

What are your thoughts on the Xbox Experience?

Aaron Brazell

Verizon Wireless Bombs on the Blackberry Storm Launch, And I Need to Talk to Them

Quick post here to make a request for contact inside Verizon Wireless. The reasons are simple.

Yesterday, they along with Blackberry manufacturer Research in Motion (RIM) bombed the much-hyped Blackberry Storm launch. Speculations by Boy Genius Report seem legitimate – that Verizon implemented a downgrade on the phone operating system just before rollout causing a significant shortage in supplies. This is a failed launch and there is no legitimate excuse, I’m sorry.

Realistically, I should have received a pre-release Blackberry, but I did not. The reason is two fold. One, I do almost $200 a month in business with Verizon and was quite clear that I have thought about moving to the iPhone on the rival AT&T network.

Secondly, though this blog is certainly not a mobile or mobile-focused blog, it certainly carries plenty of weight in the technology community. At minimum, 50% of the Technorati Top 100 bloggers read Technosailor.com. At minimum. Confirmed. All that Jazz.

I cannot wait for a December 15 back order date, quite literally. I currently am at the end of my 2 year contract with the Blackberry 8830 and am on my 5th replacement unit of that phone. And that phone… is also dying.

So I need your help. I need you to put me in contact with the social media public relations people inside of Verizon Wireless. I need to get a call or an email ASAP – information can be seen by clicking on my name in the byline of this post. I need Verizon Wireless to get me a unit because, let’s be honest, they are available for corporate sales or internal priority designation.

Quite simply, I need to get one or I’ll be heading over to AT&T and purchasing an iPhone. Really.

Aaron Brazell, Hall of Fame

5 Things I Learned from Nuclear Winter

Nuclear Winter. It’s the time period after a holocaust that can last for hundreds of years, making the surrounding landscape around ground zero uninhabitable due to radiation.

It is the death of life and the birth of a new holocaustic life. We’ve never actually had an actual nuclear winter on a global scale, though the threat is there as more and more nuclear weapons proliferate the globe. Many science fiction stories have been built around the concept of a nuclear holocaust and life after.

Although it’s a dark time, sometimes proverbial nuclear winters are necessary. They are the times when you throw away everything you know and begin from scratch. A chance at a new life. A rebirth. It’s a time to correct all that is wrong and hopefully get on the right path over the long haul. Economists call it “corrections”. Historians call it the “end of an era” or the “decline of an Empire” – depending on the context.

As someone who is not experienced in an actual nuclear winter, let me describe a few things that I’ve learned from proverbial “nuclear winter”

Photo by nogoodreason

1. All Assumptions are False

In a nuclear winter, life is not as you expect. Landmarks are gone. People you know are no longer in your world. You can no longer go to the grocery store and instead have to live off the land.

If you’re in a business that is facing massive layoffs, you cannot assume that the way things always have been will still exist in the world post-layoffs. You cannot assume that, even if you retain your job, your “new” job will remain as it was. You will likely end up giving up responsibilities due to business strategy objective shifts and maybe doing some new work due to the need to backfill for laid off colleagues.

You cannot assume that, because we’ve lived in a world of thriving internet startups, that you the lay of that land will remain the same in an economic holocaust. You can’t. It’s just not a safe assumption. Ask Seesmic.

2. Live Off the Land

In a nuclear winter, as described earlier, you simply can’t go to your Whole Foods and buy your hipster organic food. The reality is is that even if you could go buy organic food, it’s likely tainted from the fallout in the water, ground and air. No, you live off the land. You find the bugs and plants that carry an innate immunity to radioactivity or that have evolved enough to live and thrive in a nuclear landscape. Because you have to survive, and that’s more important than getting your Venti Soy Chai at Starbucks (that don’t exist).

More and more companies that continue to emerge these days are bootstrapping. Companies like AwayFind, who launched the other day, are bootstrapping and not taking angel investing or venture capital to stay alive. They are not taking a devaluation just for the infusion of cash. They are succeeding the old-fashioned way – a method that might take a lot more runway, but that ensures that 100% of the value of the company is retained by the principals. If you can live off the land, do it. It might be awhile before you find yourself a Starbucks in the nuclear wasteland.

3. There is Always a Remnant

During any nuclear winter in any story, you’ll always find a remnant. It might just be a small village of survivors that are doing their best to build a community and survive. They may have built a wall of scrap metal around their community to keep raiders away, but they are surviving.

At critical times where the status quo is challenged, the companies that are the hardiest and most cost-efficient are the ones that survive. While companies like AIG require an infusion of cash (or, as I call it, a crutch) to stay afloat they continue to splurge on non-necessities. Companies like this are doomed to failure.

While the auto-industry, built around an inefficient union mentality that, at one end, limits innovation because it de-incentivizes that innovation, and at the other hand overpays under-qualified individuals to do jobs that are worth half of their paychecks, struggles to figure themselves out, they will eventually have to declare bankruptcy. During that bankruptcy, they will be forced to cut, by some estimates, 50% of their workforce while updating their approach to union labor to ensure survival. There will be a remnant, and that remnant will figure out what needs to happen to survive the wasteland.

4. That Bridge Used to be the 14th Street Bridge

Picture 11.png
I’ve been playing Fallout 3 recently, which is set 200 years after a nuclear war between the United States and China. The setting is a region called “The Capital Wasteland” and is, in essence, the Washington, D.C. metropolitan region.

Throughout the game, you can find indications of what used to be. I recognized, in my wandering around the Capital Wasteland, a landmark that could only be the 14th Street Bridge. I would not have recognized it from anything other than geographical position. There were no distinguishing features and it was largely destroyed and falling into the isotope-filled Potomac River, but I knew it was the bridge.

Practices will change throughout life, but principles and patterns remain the same. It is the essence of the Chaos Theory which states that though the universe appears to be full of chaos and disorganization, it is entirely made up of fractals and patterns at an atomic and sub-atomic level. More simply, there are patterns and principles that remain true, though practice, execution and manifestation of those principles change.

In the communications, newspaper, and television industries, as well as many large businesses, people are wrestling with how to do business in a world that is dominated by the internet and then, only recently. They see chaos, where they should see patterns. The principles of public relations is to communicate effectively with the public. The practices of public relations, however, are shifting and the ones that adjust are the ones that will survive that nuclear winter.

5. Know Your Immune System

In a nuclear winter, there’s no one looking out for survivors except the survivors themselves. If there are doctors, they are few and far between. If there is a support community, you have to look hard and not trust anyone. It’s the nature of the new dog eat dog world that such a holocaust causes.

Companies right now are scrambling to figure out “what’s up”. They are looking at their profit margins, cash in hand and extending their runways as far as they can extend them. Investors are reassuring their portfolio companies that there should be a way to survive if they are smart and proactive, but the reality is that in a nuclear winter, no one really knows.

Even if a portfolio company manages to get that C-round and the $15M investment they need, it will be on a down valuation. In layman speak, that means it becomes, in essence, a high-interest loan where the company gets the cash they need but give up a larger stake in the company to make it happen.

The big banks are getting bailout money, but giving up controlling stakes in their companies in some cases. Rollups are likely with smaller companies needing an infusion of cash. People are being reassured that they will retain their jobs, and being laid off the week after. You can trust no one in a winter except yourself. I reiterate my recommendation from a few weeks ago, though. If you have a stable job, stay in it. If you are an entrepreneur, don’t seek shelter in a stable job. Survive, survive, survive…. then rebuild.