Required Reading for Web 2.0 Entrepreneurs

I just recommended that our World Vital Records team all get copies of the new book from 37signals called Getting Real. Get this: you can read it free online or buy a PDF or paperback version of it. They’ve sold 20,000 copies so far.

I will probably read part of it online and then buy the paperback version so I can mark it up like crazy, and put my notes at the end of the book the way Tim Sander’s teaches you to read in “Love Is the Killer App” (my most highly recommended business book of all time.)

Also, I was on a Facebook online marketing group tonight and found out that Paul Graham’s Y Combinator has released a reddit-like news aggregator for startup entrepreneurs. Check it out: it’s going to be recommended reading for all the entrepreneurs I know.

Paul Graham’s Y Combinator is an incredibly cool incubator/seed stage funding mechanism with an incredible focus on technology startups. If I ever do an incubator again (after spending the next N years running World Vital Records), I’ll meet with Paul first and try to learn from what he is doing. I think he’s nailing it.

But, I may never do an internet incubator again, since Geni just demonstrated that a genealogy/family social networking web site can become worth $100 million in about 8 months.

Can you believe it!!! With 100,000 users in less than 2 months, and with $10 million in new funding (at a $100 million post-money valuation) Geni is poised to become one of the most important players in the genealogy world.

It will be interesting to see their revenue model, as it unfolds.

We found at MyFamily.com that it was nearly impossible to make money with online advertising. When people are engaging with their family in private communications and content sharing, they are in what we called a “heads down” mode, that is, they were really focused on their family, and not willing to click on advertisements. We tried all kinds of things, but nothing worked.

Many other content sites are “heads up” sites, where people are in exploring or research mode and are totally ready to view ads and click on them. Our advertising click rates at MyFamily.com (where I worked from 1996-2002) were about low as I have ever seen anywhere.

So the Geni model, if it is advertising based, will be interesting to watch.

My guess is that Geni could be like YouTube–get acquired for a ton of money because of its number of users, without any regard whatsoever to revenue. That surely must be what the venture investors are thinking. If an exit like that happens, more power to them.

But if an exit like that doesn’t happen, in other words, if Geni is required to make money (and a lot of it because the valuation is so high), then the company might have to severely compromise its user experience, and bombard people with online and email ads in order to survive.

World Vital Records has been working on its “MySpace for Families” business for several months now, before we had heard about Geni’s launch in January. So we believe in this space. But unfortunately, we weren’t the first one’s to launch a real Web 2.0 application for family history.

But we believe that our angle is very unique. Our team has deep roots in family history, and our approach is very different from Geni’s, although we can certainly learn a lot from what they are doing. Our social network site won’t have to make money because our genealogy subscription site is doing that for us (we had a record month in February), so it can focus on member acquisition and user generated content.

Our site will be called FamilyL— something. Stay tuned.

Multiple topics

TOPIC 1.
Marty Fahncke, an outstanding direct-response marketer, finally convinced me to join with him as he launches www.learnfrompaulallen.com. I guess he really couldn’t have done it without me. Our first conference call, where I will answer questions from listeners about internet marketing and other entrepreneurial topics, will be held on Thursday, September 7th at 1 pm MST. This is a free conference call, so register now for one of the limited spaces.

Please don’t think because I’m doing this that I know everything or that I wouldn’t rather be learning from someone else. I view this whole conference call experience as a group learning experience. Like my brainstorm lunches, I love the questions entrepreneurs ask and the answers that everyone else at the lunches give. We all can learn from one another.

TOPIC 2.
In the last week, I’ve been promoting the Provo Labs Academy, where we provide office space and internet marketing training to startup companies for as little as $200 per month.

We’ve had nearly 30 inquiries so far, and two individuals who want to promote the Academy for commission. A large local newspaper wants to do a story about the Academy. And the city has been showing a lot of support. Economic development activity, according to Governor Huntsman, drives everything else by providing funds for education and transportation. Provo City really supports entrepreneurial activity. I am thankful for all they are doing to support the Academy.

Before we spend tens of thousands of dollars on furniture, equipment, and phones, I decided to create a little online survey for all of our possible tenants. It took me about 20 minutes to write 4 survey questions after signing up for freeonlinesurveys.com. It’s an okay tool. Does anyone out there use something else that they like even more?

Once we get feedback from the possible tenants on their phone and computer needs, then we’ll make the necessary purchases. It is so nice to have email and the web to attract customers and then find out when they want.

My favorite experience in finding out customer needs was at MyFamily.com where as VP Marketing I wrote many surveys every week (sometimes several in a single day) and got thousands of responses every day from our active users. I loved finding out what my customers liked, disliked, and wanted us to do next.

TOPIC 3.
The FundingUtah.com speedpitching event at Thanksgiving Point yesterday was superb. Out of the 10 companies that pitched, Simplifile was rated the best pitch by the investors there. But there were several other excellent ones as well, including more than one company that was profitable. One of my favorites is a company that had its first profitable month in August after 18 months in business. None of the six founders have ever been paid. They are all working to create future equity value. Hopefully they’ll get funding so they can eventually pay themselves, but I am very inspired by a team of entrepreneurs who can build a great company simply because they don’t take any salaries.

If all startups did that, I bet nearly 100% of them would survive.

TOPIC 4.
I’m speaking at the Provo Orem Chamber of Commerce lunch on Friday. I think I’ll talk a lot about how startups can become worth a lot if the founding team will defer all of their compensation.

I’m listening to an audio book called the Portable MBA or something like that. It claims that companies that incorporate stay in business for at least 8 years 50% of the time. 25% of them are still run by the original entrepreneur. 25% of them are run by someone else.

I guess the really bad statistics about business failure might take into account companies that never incorporate. Maybe they were never really a serious business in the first place.

The author also says that 4 of 5 venture funded companies are still alive after 5 years.

TOPIC 5.
I accidentally posted this blog without a title. Makes me wonder how all the RSS readers out there will handle it? And how will it show up in MyYahoo, which usually links from the title of a blog post to the blog site.

So I’ve updated the post and it now has a (lame) title. But does anyone know what happens out there if people post without titles?

May I help you grow your business with powerful internet marketing tactics?

Yes, this is an advertisement.

It’s an invitation for you to bring your startup company to the new Provo Labs Academy, where you will learn dozens of important internet marketing tactics that can help you find more success for your business.

In September, a new office building will open in Provo with space for dozens of small startup companies. It is adjacent to BYU on Ninth East, across from the Creamery on Ninth. If you like the BYU Dairy chocolate milk (best tasting in the world) you will love moving your small business into our new space.

For as little as $200 per month, you can join the Provo Labs Academy and learn all about growing your business through internet marketing. I will be drawing on 10 years of personal experience (including what I learned at MyFamily.com and 10x Marketing) and hundreds of case studies to teach you dozens of tactics on how to get your web site noticed and build up your customer base.

You’ll learn about pay-per-click marketing, search engine optimization, email marketing, online advertising, affiliate marketing, web site design and development, blogging, using web analytics to improve your conversion rate, customer surveys, online PR, using auctions to generate revenue, viral marketing, how online audio and video can help you succeed, and much, much more. Provo Labs tracks its portfolio companies in 51 important areas. You’ll learn how to make smart choices in each of these areas in order to improve your chances of success.

You may be a BYU or UVSC student preparing your business plan for a competition. Or perhaps you want to start a new company on the side and need just a few hours a day of office space. Or maybe you just want to learn internet marketing skills every week so you can more effectively promote your current company. We may have exactly what you’ve been waiting for.

Or, if you need dedicated space so you can work around the clock, we can accomodate you as well.

We’re even offering a chance to win a free one-month membership in the Provo Labs Academy, a $200 value, if you sign up on our web site by August 31st.

Provo Labs has leased the entire 1st floor of this new building and divided it up into small spaces that are ideal for a small startup company. You can sign up for as little as $200 per month: that includes space, desk, computer, phone, high speed internet (using iProvo’s fiber optic network), access to our business library, conference room and break room. And, it includes all the training that the Provo Labs Academy will provide.

I teach internet marketing at BYU and love to help students and entrepreneurs learn online marketing tactics. To help you succeed, I will be inviting dozens of friends and associates who have been incredibly successful in their own internet careers to come to our training meetings and teach you the valueable things they know.

This is a rare opportunity to learn from true experts and to network with other entrepreneurs. We hope the Provo Labs Academy will become a center point of innovation in Utah.

Register for more information and a chance to win your first month free — a $200 value!.

This offer ends soon and space is limited.

End of commercial. Please spread the word. :)

Provo Lab’s Eleven Bets

So in the past 7 months, Provo Labs has started or invested in 11 companies. It’s been a bit wild.

So for the next 6 months at least, we are going to stop investing and incubating new ideas and focus 100% of our energies on helping our current portfolio with revenue growth, with the goal of getting each company to cash flow positive without any additional investment from Provo Labs.

Our companies are in the following areas: online genealogy (vital records), online history, LDS search, ebook publishing, corporate networking and relationship management software, mp3 audio books, angel investing, entrepreneurial training, Web 2.0 development outsourcing, real estate web tools, internet marketing (including SEO) and audio messaging services.

I emailed all the portfolio company CEOs yesterday with a success that one of our companies had using Craigslist. I shared the case study with each of them and asked them to come up with a quick-to-implement craigslist strategy for promoting their products and services. I intend to spend most of my time finding sales and marketing strategies that work and then encouraging all the companies to test them as well. Almost all of the companies use web analytics from Omniture and I’ll have an assistant who works in the Philippines compile daily key metrics for each of them, using a shared spreadsheet from Google.

So the focus now is on execution, not new ideas. This is a big shift for me, but one that I’ve done before and look forward to doing again. It’s all about tactics that work, that are easy to implement and measure, and trying new marketing and sales tactics every day. It’s about resurrecting my old 10x Marketing Scorecard and making sure that each company gets an "A" with each element of their online marketing strategy — that they are using PPC, SEO, affiliate marketing, email marketing, conversion rate marketing, web analytics, online PR and online auctions in the best possible ways. It’s about testing, learning, sharing and executing, portfolio-wide.

Wish us luck!

Utah Entrepreneur of the Year Winners

Congratulations to the winners and finalists in the Ernst & Young Entrepreneur of the Year Competition for Utah. The Deseret News had a nice article about the black tie awards ceremony on Friday evening and listed the 15 winners.

The whole evening was inspiring for me. I especially liked seeing Greg Warnock honored for his incredible support of entrepreneurship in Utah. And presenting Will West with his Master Entrepreneur award for his unprecedented accomplishments in forming companies and attracting venture capital to them was a real honor.

I think the most memorable quote of the evening for me was in the video about one of the finalists who runs a distribution business to supply car wash equipment. His business is in a small community. Over the years, he has gained a profile in the community as a business owner, obviously, one who is doing well financially. In his interview he said the most satisfying thing for him is that he inspires others in his community to believe that they can be more than just a laborer, they can aspire to higher goals, because he proved that it could be done.

Perhaps the greatest contribution entrepreneurs make to the world is inspiring others to believe that they can make a difference too!

I love entrepreneurs. I love the mind set. I love the passion and the desire to succeed. It is definitely contagious.

I wish I could convince everyone who wants to start a business (recent surveys show that 12% of adult Americans would like to quit what they are doing now and start their own business) that they really can do it. And then I’d like to provide them with tools that will help them to succeed.

Most new businesses don’t succeed, for a variety of reasons. I really want to find a way to increase the chances of success by giving more startups better access to best practices, case studies, angel investors, and inspiring examples of never-say-die entrepreneurs. There are ways to overcome almost every business challenge.

Provo Labs Academy will be training local entrepreneurs every week. We’ll be offering lectures on internet marketing and recording guest lectures on other business topics. We will create a curriculum that we hope will help entrepreneurs worldwide find greater chances to succeed.

Let me know if you’d like more information about our upcoming incubator space and training classes.

Provo Labs: Business Incubator

I recently wrote an article for Connect Magazine about business incubators and Provo Labs in particular. It explains what we are trying to do at Provo Labs and why we think it will work.

One thing we have learned already since December is that our internal team needs to focus on one major project at a time and get it to completion, rather than having 5-10 simultaneous projects that are "on the brink" of completion but aren’t generating any value for customers.

For the last 2-3 weeks, most of our development team has been working on getting LDSMedia.com launched. It is the largest LDS search engine in the world. Our new version rolled live yesterday. I like the new author search and title search functionality. It makes it easy to find any article or book by any author. I especially like doing keyword searches in the title search box. (For example, do a title search for the word "debt" and find 142 articles or book chapters that contain the word debt. This feature will be invaluable to anyone wanting to do a quick survey of Mormon literature on any topic.)

Next the developers will be working on our PlugNSearch technology for the next few days. I described what PlugNSearch will enable in a post on March 24th. Phil Burns described how PlugNSearch fits into our web site management software framework on April 9th.

Shortly thereafter the developers will fix up our world history search engine and then we’ll likely put our entire Provo Labs team on our new genealogy search engine project. Both sites will be designed like LDSMedia.com — easy to browse and to search — and the major databases will be listed after any search along with the number of hits in each database. This makes it extremely easy to navigate through search results.

We’re hiring our first search engine marketing employee on May 1st and soon thereafter we will be bidding on tens of thousands of keywords on Google, Yahoo and MSN. (And of course we use web analytics software to track our results.)

The constant temptation in an incubator is to start more projects. But each one costs money and requires a ton of energy and attention. So we are trying to launch some of our projects without incurring any payroll costs. For example, we have a blog network project underway where 4 individuals own 20% of the company and Provo Labs owns 20% of the company, but besides an investment of some server space and startup costs, we won’t have any payroll expense. The ROI on this "investment" will be excellent.

As incubator projects mature, they attract dedicated full-time employees and then Provo Labs doesn’t have to nurture them so much anymore. This is when success really starts to happen: when a talented team focuses enough energy on reaching customers and solving real problems.
This happened last year when FundingUniverse.com, a company that helps entrepreneurs meet angel investors, attracted its management team and got new life. FundingUniverse was recently mentioned in the Wall Street Journal online Startup Journal and got some good coverage of its new online video pitching service.
This is what is happening now with 10Speed Media, a company that we incubated that grew out of the Blastyx vidcasting vision of Phil Burns. It then merged with Big Idea Communications (a PR 2.0 company) and BusinessJive.com (a business podcasting company.) Under the leadership of Chris Knudsen and Judd Bagley, 10Speed Media is really starting to rock, landing clients in multiple states already. 10Speed Media can dispatch a vidcasting crew virtually anywhere to capture events or interviews that companies want to promote and then get online distribution for video clips.

Time Constraints and Portfolio Strategy

This post may only be interesting to the few die-hard believers in business incubators. During the bubble, everyone wanted to jump in and start an incubator. But most failed, and failed quickly.

So here I am in 2006 running an internet business incubator. Our plan is to use our small staff to test different ideas, see what sticks, and then to invest seed capital (from $20,000-250,000) in the ideas that seem to be the most promising.

Each company then needs to either get to cash flow positive on that initial investment or generate enough traction and revenue from customers that the company looks interesting to angel investors or VCs.

It is hard enough to do that with one company. So why would any incubator team be able to do it with 5 or more at a time?

That’s where my portfolio strategy comes into play. This is my theory and I’m betting that it will work.

If our portfolio companies are built on the same core concepts, such as content acquisition, indexing/search, internet marketing (as the primary way to get customers), and online community building, then we don’t have to be good at everything. In fact, we just need to be great at a few things and then we can share “best practices” with the team members in each startup.

Our primary content businesses are:

1. LDS Media (parent of ldsaudio.com and ldslibrary.com)
2. mp3books.com
3. worldhistory.com
4. new genealogy company (to be named)

All four need to acquire content, make it accessible and usable, bring in visitors, and then get our visitors to become members of our community, interacting with one another, contributing content, tagging content, and spreading the word.

But content today means so much more than text. In the early days of Ancestry.com we were just acquiring genealogy records. But now you have images as well as audio and video, and customers expect it.

So we are launching Blastyx, to produce and get online distribution for “renegade videos.” We are also acquiring a Web 2.0 saavy web development company, a blogging network, and a podcasting/PR business. We are already developing an enterprise scale SEO technology that we will use to manage tens of thousands of keywords for our companies.

Blastyx is hiring very skilled audio and video and blogging folks, so that we can produce/distribute media in various formats for our customers and get massive online distribution of that content.

All these companies will provide valuable resources to all of our portfolio companies.

But how should I spend my time? That’s the scarcest resource of all for an entrepreneur/investor.

As I’ve thought about how I should personally spend my time in an effort to help all of my portfolio companies, I’ve concluded that I should focus on visits to universities, and try to accomplish the following with each visit:

1. Visit the technology transfer offices to see if Blastyx can use our video and audio story-telling skills to shine a light on the coolest research projects that are going on at the university.
2. Find out if the university (library, press or archives) has any audio or video content that we can license and commercialize.
3. Meet with the leading historians on campus so they can point us to sources that we need to include in worldhistory.com and give us input on this project.
4. Visit the business school to find out more about local angel investors and to invite the people running the business plan competitions to invite all the winners to post their plans to www.fundinguniverse.com
5. Speak to business students/computer science students about entrepreneurship or internet marketing, keeping my eyes out for potential recruits or investment opportunities.

While on these trips, I suppose I should also meet with local genealogy societies and experts to see how we can best work with them.

And if we launch an online education company sometime soon, then I suppose I could look for subject matter experts and instructors for it as well.

I’d like to think that a successful university trip could add significant value to each of our portfolio companies, if I can use LinkedIn and other networking efforts to set up the meetings listed above. I hope to try my first university trip in February or March.

Any suggestions? Which universities would you visit first if you were me?

Goals for 2006

I’ve been thinking a lot about goal setting recently. As a Christian, I have always liked that Ezra Taft Benson (Secretary of Agriculture under Eisenhower and later, President of the Mormon Church) explained that all of us should follow the example of Jesus Christ in making progress in four areas of life.

The single biblical verse that describes Jesus’ life from age 12 to 30 says: “And Jesus increased in wisdom and stature and in favor with God and man.” (Luke 2:52)

Ezra Taft Benson explained that every person ought to set goals and make personal progress mentally (wisdom), physically (stature), spiritually (favor with God) and socially (favor with man). It is easy to be happy when you are making measurable progress in these four important categories.

So I’ve been contemplating what I want to achieve in 2006 in these four areas.

Mental

I have a large reading list of great books and want to devote significant time daily to reading. I read in the Love-is-the-Killer-App way, taking notes every time I come across a big idea. I am also planning to finish reading the Book of Mormon in Russian. I graduated from BYU in Russian 15 years ago, and haven’t kept up the language skills like I want to.

I also want to do more writing. My Connect column always challenges me. I need to write more thoughtful articles for my blog. And I want to prepare to do a national column on entrepreneurship. I also want to make progress on writing my first book. Since I will be internet marketing at BYU again this coming fall I intend to be better prepared with more curriculum material for my students.

Physical.

I hope to run another half-marathon on my next birthday; but I also hope to do my longest 1-hour run so far. Last year I did 6.83 miles in an hour. (I know that is slow, but it was my personal best.)

I also want to eat a more healthy diet. I’ve studied the diets of Thomas Edison and Buckminster Fuller (very contradictory by the way), and I’ve also recently skimmed the book “Fast Food Nation” which is a real wake up call. I’ve spoken with several vegetarian friends. I watch the statistics about obesity and the predictions about diabetes and Alzheimers for our aging population. I think a healthy diet and regular exercise are the best ways to combat these epidemics, and yet most people don’t seem to adopt them. I did well last year but want to do even better this year.

Spiritual/Social. My goals in these areas are private. But I will say that I admire Mahatma Gandhi, who said in his Autobiography, “”What I have been striving and pining to achieve these thirty years is to see God face to face.” I admire those who believe that God is our Father and that all men and women are brothers and sisters. I appreciate those who live their lives trying to keep the two great commandments: love God with all your heart, and love your neighbor like yourself. Those two commandments really cover the Spiritual and Social areas well.

Okay, so now for my blog readers, here are the more important goals, the ones that deal with Provo Labs and our various internet businesses.

Here are the main things I hope that we accomplish in 2006.

1. We will acquire and/or build a dozen revenue-generating web sites that will offset the costs of all of our Provo Labs staff. This is our top priority. If we use our fund to pay for headcount, then having ten employees will use up a good deal of our fund. But by building or buying high traffic sites and generating revenue (affiliate or AdSense) from them, we figure that we should be able to support at least a dozen employees without dipping at all into our fund. If we can pull this off, then our success is virtually guaranteed, because our core team will be able to build startup companies with subsidized labor costs, giving each company a chance to get to positive revenue on very little capital.

2. Provo Labs companies will become the #2 player in the genealogy/family space, the #2 player in the history space, and the #2 player in the audio books space. MyFamily.com, The History Channel, and Audible.com are great companies delivering excellent content to millions of customers. But it is hard to think of any brand in the number two position, because all the other players are extremely far behind. We hope to become players in these very interesting categories by delivering unique services to new platforms and integrating text, audio, and video in unique ways. My love of knowledge motivates me to stay involved in genealogy, history, and all kinds of content.

3. Blastyx will become one of the hottest online marketing agencies in the country as it starts using insider audio and video-casting and blogging as online marketing tools. Every Provo Labs startup will be launched with the help of Blastyx.

4. FundingUniverse.com will become a household name among entrepreneurs as its speedpitching events for investors and its regional events start to attract hundreds of serious investors and well-prepared entrepreneurs. Every Provo Labs company that needs outside funding will utilize the growing network of angel investors and venture capital sources in the FundingUniverse.com network.

5. We’ll get back into the political arena with a relaunch of iCount.com. Our mobile commerce technology company (to be announced) will roll out its first product and start attracting a lot of attention. Our SEO technology company will reach profitable after signing up several larger enterprise clients. And I hope we launch an online education company that holds online classes in dozens of subjects like MyFamily.com does in genealogy.

So that might be way too much to bite off for the new year, especially since some of these goals are simply ideas at this point. But if we aim for the sun and hit the moon, we’ll be pretty happy and we’ll end the year 2006 in the words of Cervantes with an oar in every boat and a finger in every pie.

Most importantly of all, I hope Provo Labs helps create a culture of innovation, networking and knowledge sharing in Utah. We need to bring the good parts of the Silicon Valley culture here. We need to think big, and do what it takes to bring world changing ideas to fruition. There are hundreds of great companies that can be formed here and that can succeed here. We have the technical talent, the language skills and the internet marketing skills. But we need more ways for people to meet, share ideas, collaborate, and form partnerships that are win/win.

I am optimistic that this will be the best year ever. As an entrepreneur I have to believe this, or I should go get a real job. As Robert Browning said, “The best is yet to be.” I believe this is true. I believe this will be the best year of my life so far. Here’s to hoping …

Official Provo Labs Announcement

Provo Labs is now funded.

Our small incubator team intends to launch between 12-20 internet startup companies in the next 2-3 years. We have an office at Canyon Park now (in Orem) but as per our name, we’ll be moving to Provo early next year.

Our m/o is to generate great ideas, build working prototypes (or live web sites) quickly and by using the best internet marketing techniques, bring enough visitors to each web site that we can prove each concept.

If a business idea passes the initial market test, then we will provide enough seed capital to build a team and fund a go-to-market strategy. Our goal is to reach positive cash flow from Provo Labs initial investment.

But some startups will need more than just seed capital. If necessary, we’ll use FundingUniverse.com to help us find angel capital, or in some cases we might seek venture capital.

We love Provo and believe this is the right place to do internet business incubation. The talent pool is excellent. The language pool may be the best in the U.S. (because of BYU and the Mormon missionary system which sends thousands of young men and young women to live in more than 160 countries for two years.)

Some of my Silicon Valley friends who are struggling to find developers (since Google is hiring all the best people) have congratulated me for launching in Provo. They believe it will be a real advantage.

In the coming months we’ll be looking for part and full time developers, internet marketers, content experts, sales people and interns and lots and lots of contractors.

Our current investments include Infobase Media, which markets audio products, and FundingUniverse.com, which matches angel investors with entrepreneurs.

Our newly funded projects incude Worldhistory.com, where we intend to build the largest database of historical events, Blastyx, a Web 2.0-ish online promotion/marketing company, and a new mobile e-commerce technology company that we are doing with Alan Hall.

We are also exploring various other ideas including genealogy and family, online education, mapping, vertical search engines, social networking and blogging, politics, and international opportunities.

We also have a budget to acquire a number of web properties that have unrealized potential, where our team can significantly increase the traffic and revenue.

Our core competencies include content and search, online community building, and metrics-driven internet marketing.

If you want to experience the pace and intensity of Silicon Valley (yes, we are as passionate as Google about changing the world) while enjoying the Utah lifestyle, then please drop me an email or send a resume to Amy Rhoads at amyrhoadsATgmail.com.

We’ll invite you to some Geek Dinners or some entrepreneur Brainstorm Lunches, where we can get to know you better and see if there’s a place for your on our team.