On Thursday I talked with Andrew Lee, who is a senior advisor for the US Small Business Administration, about some of the programs they have for high growth startups. Andrew previously started and sold an social gaming company so it was super refreshing to talk to someone in government who understands startups and wants to make the government more helpful to startups.
I was really excited about the three programs Andrew is working on so I wanted to share them with you.
- RFP-EZ – Most relevant for startups with a working product they are currently selling.
- Small Business Investment Company (SBIC) – Most relevant for early stage investors, including venture capital funds and angel funds.
- Small Business Innovation Research (SBIR) – Most relevant for pre-product startups, especially in the hard technology and science space.
This is a program to help startups get contract work from the federal government. Government agencies needing work post their projects they need help with, startups can register as a provider, and startups can bid on the projects (screenshots here and here).
Here is also some thoughts Tim O’Reilly had on the new RFP-EZ program.
Right now there are two projects that look promising for a tech startups. One the SBA is looking for a transactional email service provider. Two the SBA is looking for a new website/content management system. (hint hint an opportunity for an influential reference customer?)
Early Stage SBIC
This is a program to help give investors more capital through matching funds raised by venture capital firms with government backed debt. For every $1 raised privately the SBIC will provide $2 of government backed capital up to $150M. (hint hint potential relief for the Series-A crunch?)
This is a program to help give research funds to startups working on hard technology with the potential for commercialization. Research solicitations comes from a wide range of federal agencies throughout the year and startups can apply for grants if they are working on one of these areas of research.
Here is a full presentation on the program with more on how it works. Also here are the open solicitations for startups. (hint hint health/science/biotech startups should take notice, here’s an interesting solicitation I found.)
If you are interested in any of those programs check out the sites to learn more information about them. Also if you want to talk to someone at the SBA directly send me a note (chris.r.mccann at gmail dot com) and I’ll try to help put you in touch with the best person.
Both events were sponsored and organized by Enterprise Lithuania, an organization owned and operated by the Ministry of Economy of the Republic of Lithuania.
I’ll have to admit, being an entrepreneur I have always been skeptical of any government involvement with the entrepreneurial ecosystem. Historically I have always taken the approach that government should leave entrepreneurs alone and let them get back to real work.
However this trip changed my view a bit. It was interesting to see the ecosystem organize themselves around these two big events and bring over 1,500 students and 200 engineers/designers to these two activities combined.
Unlike entrepreneurs, governments have to big opportunity to take the long-term view on the entrepreneurial ecosystem and selectively make a difference across the whole ecosystem.
If you work in government and are reading this, here are a few things I would do & consider if I was in your position (feel free to take these suggestions with a grain of salt):
- The entrepreneurial ecosystem in your country has to form organically from the bottom up, it can’t be created by force.
- One simple thing I would try would be to bring together all of the existing entrepreneurial leaders in your country (founders of startups, investors, community organizers, developers, immigrants starting companies, university leaders, etc) and have everyone sit down over a casual dinner with beer. Let these community leaders tell you what is needed and what’s important to them. Don’t talk just listen.
- Another simple thing I would try would be to bring together all of the existing entrepreneurial leaders in your neighboring countries and do the same as above with your own national entrepreneurial leaders. Again don’t talk, just listen.
- The last simple thing I would try would be to bring together some successful founders of your national decent who have moved outside your country (to silicon valley or elsewhere) and do the same as above. The same with before: don’t talk, just listen.
One of the most important things I feel a government can do is provide long-term connections to the entrepreneurial ecosystem which already exists in your community.
You yourself will never be able to understand what it’s like to start a company (unless you decide to start one) but you can provide the connections of people who do know what that experience is like to your citizens.
Let the community leaders be the star of the show and let them help you decide how to selectively help the entrepreneurial ecosystem in your country.
Back in June 2009 I threw all of my belongings in my car after graduating college and moved up to Silicon Valley, not knowing anyone here, with the intention of joining or starting a company. Because I was new I started going events like meetups, hackathons, and workshops to meet other people like me. I noticed that being an outsider to the startup community, it was hard for me to know which events were worthwhile to attend so I started choosing the best ones for myself and creating my own list.
Some of my new friends I met were also interested in learning about these events to so in November 2009 I emailed 22 of my friends about the good startup events going on in Silicon Valley and the SF Bay Area for the week. This was how StartupDigest began.
Almost three years later StartupDigest has grown up a lot. Now we have 100 publications, spread across 43 countries, with a community of 120 curators, 230,000 email subscribers, and support by the Kauffman Foundation. Throughout all of this growing up, the past 3 months have been some of the most emotional, intense, and interesting months of my entire startup life.
Over the past three months we started exploring two new paths for StartupDigest. The first was taking our pre-existing StartupDigest VIP recruiting product for engineers, designers, and startups and applying it more generally to other groups.
One thing that has always been interesting with our VIP product is while the product was originally intended for only recruiting, a lot of other groups who have seen it have asked if they could use the same product for their groups. Most notably was my friend Danielle Strachman, who runs the Thiel Foundation’s Fellowship program.
When Danielle saw our VIP product she didn’t think of it like a recruiting product, she thought of it like a group management product she could use for the fellowship, with fellows on one side and mentors on the other side. We too this input and threw up a landing page, gave it a name – GroupTie – and talked with 80 other groups were also interested in using the product.
At the same time we also started talking to a few companies who were interested in StartupDigest themselves. Most of the companies we had deeper discussions turned out to be not great personality fits between our teams and community. Going through with this teaches you that many potential deals turn out this way mostly because of the personality & touchy-feely aspects of combining two different organizations together.
However the first person I called up while going through these talks was Marc Nager from Startup Weekend, because our communities had always been well connected. Marc and I have know each other for a long time and became good friends while we were both asking for Kauffman Foundation support at the Global Entrepreneurship Week Congress in Dubai.
After long discussions back and forth we decided that our philosophical beliefs, communities, and teams were so close together that we had to do something together. The end result of these discussions is Startup Weekend has officially acquired StartupDigest.
Here are the results broken down:
- Startup Weekend is acquiring StartupDigest. We absolutely love the Startup Weekend team & community and together we reach a huge portion of the startup & technology world through both physical events and online publications.
- Startup Weekend organizes events in more than 300 cities in 100 countries, has thousands of volunteer organizers and has had over 75,000 alumni go through their events.
- StartupDigest has 230,000 subscribers, 130 curators, and 101 publications spread across 99 cities in 43 countries.
- If you’re interested in reaching our combined audience email joey@ startupweekend.org
- Brendan McManus and Jessica Ford, two of the four StartupDigest core team members, will be joining Startup Weekend to continue to grow the combined communities of both organizations and keep benefiting the world at large.
- Chris Burnor and I will be building GroupTie, a software solution that came out of StartupDigest centered around making the group organization process easier and more effective for organizers, full time from here on out.
- If you are interested in talking about GroupTie at all send me an email anytime firstname.lastname@example.org
I am very thankful for everyone person who helped make StartupDigest what it is today, especially Brendan McManus my co-founder, Jessica Ford and Chris Burnor on the StartupDigest team, every single one of our current and alumni curators, and every person who helped and supported StartupDigest along the way!
I am super excited about the massive future potential of these two incredible organizations combined and the continuation of our fun #startuplife journey
*If you are going through the acquisition process yourself I highly recommend this Warren Buffet quote which helped me out a lot through the twists and turns.
** I will probably get this question so I will answer it directly. Everything with StartupDigest is staying the same and only getting better. All of your account information and newsletters subscriptions will stay intact and you won’t have to any migration at all.
After helping 8 companies with their distribution issues and taking some time to reflect, I started to notice a few patterns. There were definite patterns on what has worked with distribution already and what distribution ideas the companies wanted to try next.
Before I get into these I want to lay out a few pre-cautions. All of the companies I worked with were primarily consumer facing internet companies, they had a product already out in the marketplace, most had a transaction they took place in (booking, subscription, charged directly for product), and all had a base of pre-existing customers.
These methods might not work on enterprise focused companies, straight advertising business models, or companies outside of tech.
That being said here are some of the distribution ideas I saw which worked across all of the companies or distribution ideas that were going to be tried next:
Offer you can not refuse (preferably paid sample) + habit – This is the combination of a couple of strategies and works best with a product you are selling directly to an individual.
First you want to create a sample that makes it impossible for a person to refuse trying it. Next you want to create a habit within the customer of using the product. Then once you have shown value and the product is an ingrained habit you want to charge for the product, preferably on a subscription bases.
The best contemporary example I can think of is a service called SaneBox. They have a product that helps you save time with your email inbox, initially for free without even asking for credit card info (offer you can’t refuse). They show you value and create a strong habit of using the product daily over their 15 day trial. Next after the trial is over they ask if you want to continue on a monthly or yearly subscription.
Personally I tried so hard not to convert to a paid subscription but the value of the product was so apparent and my habit was completely changed to rely on SanBox is was ridiculously hard not to continue using it.
Personal story – It is much easier to make a person famous versus a product famous. People tend to respond to personal stories, emotions, and feelings much more than product features, benefits, and differentiation points.
We tried this ourselves with a new product we launched, GroupTie, and it definitely led to much higher conversions for wanting to try the product out.
You can either tell your own personal story (if you’re solving your own personal problem) or use one of your customers personal story.
For example if you are selling a product to restaurant owners your story should be told from another restaurant owner. It should be centered around the individual restaurant owner and it should be their emotional story on how your product is helping their life. It’s much easier to make a person famous versus a product famous.
Partnership with customer pool – Sometimes it’s much easier to partner with a pre-existing organizing that has a large pool of your ideal customers already in their community.
The best example of this is how PayPal leveraged eBay in its early days. One of PayPal’s strongest customer segments were people who were making peer to peer payments and one of their largest customer pools were people who bought things in online auctions. eBay was the largest online auction company at the time so PayPal made the strategic decision to focus all of its energies on eBay as its sole marketing channel.
This could either be in a direct partnership relationship, acquisition, or off-the-radar marketing tactics to go after the organization with your customer pool.
SEO directory – A simple distribution strategy is taking a network that isn’t currently online and making it freely available for anyone to use.
I can’t publicly talk about the best example of this but a good example is Yelp which took the previously private & commercial directory of local businesses (on Yellowpages) and created a free & accessible directory of local busnisses for anyone to use.
This takes a lot of time and energy but if your directory becomes the de-facto directory for your industry the distribution from that will be enormously valuable.
Special gift or special package for journalists – This is a strategy specifically for getting media attention.
Journalists literally get pitched about new companies 1,000x times a day with the same underlying message: “Please write about me”. Instead of writing the same boring message create a special version of your product specifically for journalists.
For example if you have a product that helps parents find babysitters: find all of the journalists who are current parents, create a high touch service product to specifically help them find a babysitter, then after you have provided service ask them to write their honest opinion on how the service was good or bad.
A word of caution on this one: If you do this it has to be a genuine offer, only contact journalists who fit your demographic, and this could never be a quid-pro-quo deal.
Open contributors but one group is highlighted – This is a strategy if your product depends on contributions from others.
We personally use this extensively for StartupDigest. Anyone can submit events to us but in each city there is curator who the email newsletter is published under and that person gets all of the reputational benefit for doing the newsletter.
If you’re interested in this method also look at programs like the Yelp Elite, Reddit contributors, and Wikipedia editors.
Who else is using this? - A simple but effective tactic to try out. One of the biggest questions anyone has when landing on your product page for the first time is, who else is using this?
Make sure to have a testimonial page or customer reviews page highly visible and use peoples real names.
Who of your friends use X? – This is a variation of the tactic above. A better question is not who else is using this, but which of my friends is using this product?
For example if you were creating a doctor recommendation service a good question to lead with on the home page might be to ask, “See which doctors your friends are using”.
Not only are you creating a compelling indirect way for a new customer to create an account with you but you are bringing all of the implicit trust persons close friends bring with them.
Crazy outrageous stunt – This is also primarily a strategy for getting media attention.
The press loves unusual stories and one good way to get press is to do an outrageous stunt. A good example of this is the company WePay dropped a 600 pound block of ice at the PayPal developers conference, ridiculing that PayPal freezes your money, getting them a ton of national media attention.
Stunts have the potential to completely backfire but if successful can gain you massive amount of attention for very little input.
Conclusion: Above are a few distribution ideas I saw work over 8 separate companies but their are a lot more strategies out there. The strange thing with distribution and marketing in general is its very hard to know what will actually work beforehand.
The only way to really know is through small testing and experimentation of different ideas and measuring the results from it. If you try any of these start small and test distribution ideas at as fast and cheap as possible.
Feel free to comment below on other distribution ideas that worked with you or other experiments you are thinking of running. Would love to learn more about the field and see what worked for you.