Startup Addict Musings

I apologize for the lack of postings, I’ve been caught up in memorial day vacation and a delayed beta launch of Startup Addict.

My brother once told me it’s better to be lucky than good. Well I have to say from reading April’s issue of Kiplinger, Brad Duke is both. An awesome story about a 34-year old Idaho gentleman. He won the power ball and took his $220 million winnings in one $125 Million sum (85M after taxes). Unlike, the usual “blow-it, cause you got it” stories, Brad hires on 3 full-time financial advisors and reinvests his spoils. He has 15 million in interest a year later and is diversifying his portfolio by investing in real estate (man after my own heart). I find the story so compelling because he plans on turning his 85 Mill into 2 Billion by the time he is 55.

You have to hand it to him, he wins at the most unlikely odds and lets his earnings be an extension of his entrepreneurial spirit by adding more funding to two existing companies Synergy fitness Group (health consulting biz) and Duke Speed Academy (helping kid athletes). He did splurge on 2 more cycling bikes. Brad Duke gets the ultimate “atta-boy” for being lucky and good…oh ya and best of luck with the 2 billion.

Rooftop Media is a great idea, concept and business model. Besides the fact that I love corvids (a family of crows, ravens, magpies etc.) that is embedded in their logo, it actually is a successful continuation of a yet another niche youtube. Rooftop Offers viral clip sharing and searching specialized channels (sound familiar?).

The premise is “middle tail” as Venture Beat dubs it. Comedians that are ripe for the limelight but fall short of the rare and unique success of Comedy Central and Saturday Night live.

Internet, software and media should be no surprise based on the feeding frenzy of M&A in those related sectors for content. California, Massachusetts and New York among the top three states respectively. Startup Addict has an interesting feature on the home page called “Top Startup Industries” which depicts which industries are getting the most attention, funding and requests across the entire startup social network. It will be interesting to see how some of the smaller investments and angel funding match up with the larger VC industry statistics above. Throwing out a wild guess, I suspect Internet, software and media would be the Top 3 with the bootstrapping and seed crowd in the current startup climate.

The world of “type-in traffic” domains flirted with 8 digit figures this week. Cybernet is reporting a 9.5 million dollar sale for the domain second to sex.com for an estimated 12.5M and with Business.com trailing with a reported 7.5 million at the peak of the 1999 hayday.

For those of you unfamiliar with “type-in traffic”, entrepreneurs and “domainers” use this strategy to capitalize on users typing generic names directly into a browser. Since domains have become a finite resource on the Internet, search and type in traffic are the general ways of finding information about a particular topic or subject. It’s not hard to imagine why someone would want webhosting.com, I was guilty of typing that in myself to find web hosting services in the late 90s rather than using search engines at the time.

Richard Rosenblatt (former Myspace chairman) of newly formed Demand Media raised $120 million in 2006 to take advantage of highly trafficked domain names in various content verticals from A-Z, whether it be real estate or weight loss. If my memory serves me correctly there was a piece in Business 2.0 regarding Mr. Rosenblatt’s new venture. It’s easy to see why so much funding is needed for highly trafficked sites when domains bring in million dollar price tags. Siliconbeat points out a great example of a site like flashgames.com that is bringing in 150K+ in ad revenue by being nothing more than a glorified link farm to other game sites. Clearly Richard Rosenblatt and his army of VCs think they’re on to something. In the meantime, atta-boy to MXN for buying porn.com (if it wasn’t in the XXX industry, I would have thought they overpaid).

Every morning I wake up and have less hair because my programmers continue to mull over bug revisions and a feature called Marketplace. The most difficult pill to swallow beside being two-weeks over due on official launch is watching Facebook reveal a feature we’ve been developing in private beta. Marketplace for Facebook acts like a classified ad section with a few bucket categories users can post. The time to market for a bootstrapper like myself verse a well funded machine like Facebook is evident between this David and Goliath scenario.

Luckily Startup Addict is a social network targeted at a vertical for entrepreneurs, investors and anyone in the startup value chain allowing Marketplace to be specifically geared to buying and selling startups, blogs, web 2.0 properties and brick & mortar businesses.

Now that I’ve clarified the differences let me step off my soap-box and finish disclosing the implications of Facebook’s move into classifieds. When you look at the success of Craigslist, it’s hard to imagine how it could be more successful. Beside leaving advertising money on the table to stay loyal to the free user base, one must look at the missing social connection. At the end of the day Craigslist is a best-of-breed online classified website nothing more, nothing less. Facebook on the other hand has the ability to offer all the features of Craigslist to a huge user base as well as provide the coveted social connection users crave. In addition, it legitimises the trustworthiness of the buyer and sellers by revealing who is connected to who.

Although classified competition will continue to heat up…social networks will continue to persevere by building walled-gardens and catering to its’ users as a one-stop shop. Niche social networks may end up being the resilient cockroaches of the Web 2.0 blowout.

NYT has the full scoop.

I finally understand CBS’s motivation behind the WallStrip purchase. After reading a WSJ Yahoo News article this morning it seems CBS is syndicating its’ content to as many websites as possible. According to WSJ 10 plus sites initially. Unless CBS is obtaining royalties for content syndication (doesn’t seem apparent) I can’t see the other revenue model unless there is a revenue split with the portal website based on metrics and user consumption of CBS content (I think we’re on to something).

Although the medium is different subsidizing content through advertising is not. This move again showcases the increased desire of traditional media to continue brand extension into the online arena. One thing we know for sure, traditional media such as News Corp and CBS are not afraid to pay for it whether broad or niche.

CBS forks out $5 million big ones for Wallstrip according to reports from jossip. Wallstrip is a humorous take on Wall Street and sustained an original investment of 500K from Union Square Ventures (Fred Wilson). One has to wonder as Techcrunch poignantly mentions why would CBS pay so much dough for a company that makes absolutely zip in revenue. Do you think CBS is getting caught up in the online media frenzy of M&As currently happening in the web 2.0 space?

On the other hand it may be too early to throw CBS under the bus. They obviously have a road map (one would hope) for this web property. At least it sets a precedent on valuation for entrepreneurs like us. A zero revenue generating web property targeting a very niche market can go for 5 Mill. Sounds good to me.

Mr. Draper looks like he is holding up about 10 million unique visitors in the form of Natalie Portman who will be showcasing her life 24/7 in the celebrity version of Justin.tv. Image and full scoop is at Valleywag. Web 1.0 may have been attempting to converge the PC / TV, but Web 2.0 is clearly the convergence of content distribution that transcends all mediums. The celebrity “fish-in-a-bowl” musings already has a template deal structure and proof of concept in place based on the amazing success of Will Ferrell’s funnyordie.

The question I ask, do you feel this trend of celebrity voyeurism will continue or will it be a flash in the pan business model with limited novelty? Leave me your comments.

You are probably expecting me to say something trite like “I can’t believe we are ready to launch”. The truth be known I wish I had another week minimum. It’s called Beta for a reason so I guess it is time to release Startup Addict to the world. Please enjoy the networking and resources you will find and most importantly don’t be bashful on reporting bugs or telling me features that would make the site even more smokin. If the servers are provisioned correctly we should be a go by midnight tomorrow. My programmers continue to give me death stares every blog post I unleash about how ready we are. In my eyes it’s not quite there, but as one of the panelist at Startup School mentioned, “If your not embarrassed of your version 1.0 launch you waited to long to bring it to market”. My vision for the site beyond beta will be strictly driven by you the users.

On another note I added two more blogs to my favorite links and resource section Venture Hacks and StartupCompanyLawyer. Both blogs possess a wealth of information for the advice-thirsty entrepreneur. Great resources.

I came across my new favorite VC site “The Funded” this morning and was dying to blog about it. The site allows entrepreneurs to rate and review their experiences with Venture Capital firms and individual VCs. Some of the comments are down right appalling while some are laugh-out-loud funny. Either way a simple yet compelling site for both parties to frequent whether friend or foe.

Michael Arrington from TechCrunch makes a good point stating the vast majority of startups are rejected from VC, therefore a tendency for more negative feedback to prevail persists rather than positive. On the other hand it also shows the true underbelly of a closed door community. The Funded has decent coverage on the national VC firms and funds they manage. Beside adding famous insight it allows a startup to gauge the temperament of different VC firms based on the originating startup concept or idea. This is one going in my blogroll for sure.