From the Economist. “For most people the term “entrepreneur” simply means anybody who starts a business, be it a corner shop or a high-tech start up.”

The Economist provides these 5 myths for entrepreneurship in general:

1. The first is that entrepreneurs are “orphans and outcasts”, to borrow the phrase of George Gilder, an American intellectual: lonely Atlases battling a hostile world or anti-social geeks inventing world-changing gizmos in their garrets.

2. The second myth is that most entrepreneurs are just out of short trousers.

3. The third myth is that entrepreneurship is driven mainly by venture capital.

4. The fourth myth is that to succeed, entrepreneurs must produce some world-changing new product.

5. The fifth myth is that entrepreneurship cannot flourish in big companies.

I wanted to be specific to software entrepreneurship, which I have observed over 3 successful startups so far and 2 unsuccessful ones:

Myth #1: The most important “first person” in your software start up is your technical “guru”, a developer, or the sales person. The first person you actually need is a product manager. Someone that owns the product and is able to manage conflicting priorities and still keep customers happy. This person can be technical or a sales person, but most importantly needs to be able to “look at the forest from the trees”. Most developers and sales folks cannot do that. Not all, most.

Myth #2: After your version 1 things get easier. Version 1 in fact is the easiest. Also the most buggy, feature “light” and holds lots of “promise”. Customers can do just about enough to get frustrated. Your only hope is they dont give up on it.

Myth #3: Lack of funding kills 90% of software startups. It is lack of a compelling enough problem to solve. Not funding. Most startups I have encountered are not solving a problem that’s critical enough or big enough in terms of market to make them successful.

Myth #4: Your product should be so intuitive, and useful to your customer that they spread the word and generate business so you dont need marketing or sales people. While I wont agree its 100% about marketing, but if marketing were making sure you identified the problem your customer had, then provided a solution to it, described it in simple terms and solved that problem, then its 100% marketing.

Myth #5: To prove that you are unique and different you have to “patent” your algorithm or process. While patents are useful, they are not going to be the reason you’ll get rich with your software startup. Second the return on time invested to get your patent to its value both short and medium term is questionable.

If you are in a software startup what other myths exist that you are aware of?

As a participant in the Social media monitoring or Social Media analysis market I took some time to check out the competitors and get a lay of the land. There are many social media monitoring companies. In fact we track about 42 companies ranging from those that have raised over $40+ Million to a single developer providing some free solutions.

Here are some high level observations:

1. Over the last year data collection and reporting have become table stakes or “commodity”. Everyone does a simple listen dashboard or a total number of mentions and basic sentiment analysis. Since the data is all available freely (or at very little cost) over the net, its value is appropriately priced – free.

2. There are 3 basic areas of differentiation for vendors – Text analysis, Signal to Noise intelligence and CRM integration. All thes products have a basic “tag cloud” and keywords. Everyone also has some form of authority or ranking which is proprietary and in most cases rudimentary. Finally the CRM integration is only being done by a few vendors. These are areas that lend themselves to differentiation. From our customers we have heard that Radian 6 is doing a great job at the CRM integration and Collective Intellect has done a good job in the text analysis.

3. Finally dashboards and representation. As you can imagine every vendor has their view of the perfect dashboard needed by the client. This is another area where it can easily become commodity so putting effort here while “table stakes” is not going to result in a huge differentiation. Of the lot we have heard both BuzzLogic and Visible Technologies are doing a good job here.

Lastly business metrics that matter such as # customers, revenues, profitability etc. are still important. The grand total of # of customers of all vendors (paying customers that is) is still about 100-200 per vendor. We are at little over 1000+ customers paying so we are among the largest in terms of # of customers, but working our way towards profitability and certainly not the largest in terms of revenue.

See related post by Max Kalehoff and an older Forrester report.

Social Media New Year Resolution

If you are like 43% of Americans who decided that “losing weight” was one of your New Year’s resolutions, then you’re probably also like 31% of them who have already given up on it. Yes its only the 12th January, but most people’s resolve drops after 1-2 weeks.

Several magazines and Web sites ran polls, but most rated the top three resolutions as “resolving debt,” “losing weight” or “managing money better.” Cosmopolitan did a guide on resolutions a person should never make. These ranged from “changing your man” to “tripling the number of friends one has on Facebook.”

The simple equation to reducing weight is eat less and work out more. Lets assume you are in a startup and really dont have time to work out “more”. You can afford the 15-20 min of cardio but that’s it.

The only remaining option is to reduce your eating (eat more healthy, reduce portion sizes, etc).

The amazing part that I personally found out is that if you so busy and overworked, you’ll probably not feel all that hungry anyway.  In simple terms the more occupied you are with something the less likely you are to put on weight.

That’s step #1. Do more work towards the goal which dramatically cuts down on “free” hence unproductive time.

So what does this have to do with social media?

The chances of doing something are 55% higher if you have someone egging you along or helping you do it. For some reason if you have someone to celebrate the “end goal”, you are more motivated to do it. That’s where social media helps. Using your twitter or facebook friends to help you along the goal dramatically improves the chances of keeping that resolution.

That’s step #2: Let your friends help you towards that goal.

The #1 reason people dont keep resolutions is because they set themselves up for failure by attempting something in 1 step. The gradual “small steps” towards a goal is a much better and preferred way to get to your goal is what’s been scientifically proven. There are many “cold turkey” examples, but they are exceptions not the rule.

Step #3: Use reminders, setup smaller objectives and goal posts to your resolution.

What are your resolutions? Are you keeping them? Remember Santa’s going to be back in a blink and before you know it its December.

The 2nd most vexing topic after “How do I measure social media ROI” is “How much do I pay for social media?“.

Friend and social media consultant, Chris has started a new company. His website display’s their pricing. B L Ochman has had a similar practice for years, displaying her pricing upfront. Its a pretty open and upfront policy which I think is very different from the many consultants who will answer the question with a standard “It depends”. Regardless of whether you think the pricing is too high, or its just right, its a starting point.

I know many consultants are loathe to price by the hour, since it means you have to work “that many hours” regardless of if you are efficient or not. Also pricing by the hour opens you up to competitive pricing – because clients want to compare prices between service providers. This is the vexing problem for most. If a consultant is highly efficient, they get more work done in quicker time, they expect to charge more. But since differentiation is so difficult for most consultants in social media, they have to bid “competitively” – thereby reducing their “rates”.

I have contracted with 3 different agencies for Social Media services before and paid very different rates for their services.

Here’s the myth of social media consultant pricing:

You get what you pay for.

Not at all.

The reality is

You get what you set the objectives for.

If you are clear about what you need to get done, great! You’ll get exactly what you asked for. The objective could be to come up with a strategy, execute some campaign or just get your folks trained and ready. Any of these comes at a price. So how about some examples:

Granted these projects were all different, but to give you a quick sense of pricing:

1. Introduction of blogging hands on class: We did this in 2006 to 15 people at our company. Most knew about blogs, but were not sure how to go about getting started with blogging. The trainer was a social media practitioner and was a pretty good blogger in his own right. We paid  $4800 for two days of training. This included a “get to know the team dinner (the previous night of the training). We also reimbursed expenses (airfare, 3 days of hotel and dinner). The objective was to get people comfortable with blogging and get them to actually start to post.

2. Blogger relations: This was included as a part of our PR agency’s monthly retainer. Our monthly retainer was $9600 and they added another $3500 per month for this project. The objective was to engage with the top 15 influencers in our space. This project included identification of the blogger, engaging with them and building a relationship between them and our product teams . We identified this to be a 3 month effort at the minimum.

3. SEO optimizing our blog content. One of our objectives for the blog was to provide content that would appear higher up in the organic search rankings. Now there are folks that wont call this social media, but our objectives were to drive traffic to our site by all means and our own blog was one of them. Our SEO consultant charged us $50 per post to a maximum of 20 posts per month or about $1000 per month. This was just for SEO and cleanup NOT writing the posts in the first place.

I’ll explore which of these gave us the biggest bang for the buck in a later post, but this should give you some ball park estimates.

What have you paid for social media consultants? Did you get what you paid for? What would you do better / differently?

Image credit: David DMuir