Monthly Archives: April 2012

Introducing Seattle’s New General Assembly: SURF Incubator

Posted on by

As a startup founder, not too many things are more important than where you and your team will spend most of their time building you world changing, billion dollar company.  Before you receive an influx of cash and are able to have your own office space, the choices are basically 1) toughing it out in your home, 2) hopping between coffee shops or 3) spend an arm and a leg for office space in a place you really can’t afford.

Although starting a company today is quite a bit cheaper than it was 10 years ago, square foot for office space is not so much. It’s actually getting more expensive.  And it sucks, especially for a young startup that is likely pre-funding and cannot afford much more than cloud hosting.

So what to do?

Well, I’m going SURFing.  Since the beginning of the year, SURF Incubator has been quietly building a network of technology focused entrepreneurs, mentors, investors, and corporate partners. On April 30th, the SURF community will come to life when it officially launches with fifteen incubating startups.  I am proud to say Seconds is one of them, and very excited to be a part of this burgeoning startup community.  Located directly downtown Seattle, this is perfect location for startups, as it’s 5 minute walk from Pioneer square, Westlake mall and a short bus ride to South Lake Union.

SURF has also been collaborating with various corporate partners to develop a robust benefits program to aid in the growth of our young companies.  By leveraging the support of service providers and larger technology companies, SURF is able to provide opportunities that reduce the costs to start a technology company in Seattle. Bringing down the economic barriers associated with building a technology company has the potential to significantly advance the growth of Seattle’s startup community. SURF has already received applications from entrepreneurs located from Vancouver, BC to South America.

This is exactly what Seattle needed.  There are a number of places for co-working and startup office space, but none that were this neutral and spoke with the most potent vision.  Most other spaces are in connection to an accelerator, investment or other ties to companies and investors.  Not SURF.  Their vision is to provide cost effective space (over 15,000 square feet) for innovation and collaboration between tech startups and greatly impact the general startup scene.

It’s crazy because I had this idea last fall and wanted to organize a handful of startups to make it happen, which as I got further into the planning I realized it was a quite a bit larger undertaking than I had time for.

Thanks to the support of some of Seattle’s most respected technology companies and service providers, SURF Residents will not only benefit from subsidized office space, but they will also have access to a suite of free or significantly discounted services. One of the many benefits associated with building a startup at SURF are the free educational workshops provided by corporate partners – covering topics on company formation, intellectual property, fundraising, various programming languages and more.

The monthly SURF membership fee of $300/month per entrepreneur, which nicely suits early startups comprised of 2-4 founders.  They even offer evening hours (which would be 5pm on) at $200 per month.

SURF and its network partners are making it dramatically less expensive to start a technology company in Seattle.  I now know where I am spending most of my time!

Some of the other startups include:

Shopobot – tracks price changes at major online retailers. Using this data, Shopobot helps consumers get the best price on books, cameras, computers, and video games. Name your price, and we’ll alert you when it’s reached. Shop Shopping in the dark!

BBC Easy – dedicated to optimizing the commercial lending process between banks and their borrowers.

Translational Software  – simplifies the logistics of genetic testing and transforms test results into actionable guidance for doctors.  The cost of molecular diagnostics is falling precipitously but genetic tests are not useful without interpretive information.

Knotis – helps consumers discover great deals from local merchants. Customers can find personalized, location-based offers – happening in real time.

 

 

Instagram’s Billion Dollar Idea Wasn’t Photos After All

Posted on by

I wasn’t alone in almost spilling my coffee mid-drink when I discovered Facebook purchased Instagram for $1 billion. Much has been covered on this, including talks of another bubble or irrational exuberance.   A billion?!  As a startup CEO, it’s sometimes hard to grasp how these types of platforms, which openly opine they are not concerned with making money can end up in such a successful outcome.

[So to all the investors out there, I guess we shouldn’t be focused on business models and making money, should we?  I digress…]

Yet the more I thought about the acquisition and the entire startup experience in general, a few lessons came to me that in hindsight are blindly obvious but bear repeating.  As founders, we tend to get lost in our vision.  We tend to over-think and over do our product to the point where our initial value proposition loses it’s inherent value to the market.

What do I mean?  Well, most likely you bloat your product with way too many features.  You also convolute your value proposition based on the latest moves of your competition.  You think if they jab right, you should jab right as well.  You then confuse your users as to why they should be using your product.  This is probably the main reason why your 15 month old startup is not fielding attractive acquisition offers.  It’s because there is no clear place in the market for your company so you just get lost in all the noise.

Instagram didn’t do that.  They kept it simple.  They kept is so simple that I had to write about it since I think most of us don’t realize how powerful a needle point actually is.  Needles cure disease, hoses don’t.

Here’s my view of how Instagram positioned their product for a massive acquisition from Facebook.  All startups, no matter what industry need to keep these principles top of mind if they want a positive business outcome.

Do One Thing World Class

Intagram has been referred to lately as a mobile social network, but in reality they are a much less than that since social networks just collect around specific things.  Instagram chose to focus on photos – and determined to do it world class.  They identified weakness in the current user experience of taking a picture with an iPhone and trying to share that with your friends.  They found the process was way too slow and cumbersome.  They realized the most important thing to people was how quick they could complete the process.  Optimizing how photos were uploaded sped up the process and greatly enhanced the user experience.  Instagram quickly became known as the fastest and easiest way to take and share mobile photos with your friends.

Interestingly, the precursor to Instagram was Burbn, which was what the founders built before changing to “Instagram.” Co-founder Kevin Systrom explains how they launched the service primarily as a checkin, social geo-location app full of hoards of features, on which users could quickly upload photos and share them with friends. (Heres a great interview on the background of Systrom and Instagram)

Burbn had attracted a core following of users, but was not exactly taking off. Upon further evaluation the founders noticed that photo uploading was the strongest and most used feature. Instantly, they cut all other features, kept with uploading photos and moved forward with the newly minted Instagram.

Systrom resisted being all things to all people and in the end sold his 15 month old company for $1 billion.  Think about that  for a second.  By removing most of his product and getting down to the essential, he drastically enhanced its value.

Do you have the stomach to gut your product down to the bare essentials in order to make it more attractive?   You need to find the needle.

Networks of Distribution

The success of any product or service greatly depends on people actually discovering it.  Instagram beautifully leveraged the major distribution networks of today – Twitter, Facebook and Foursquare – to quickly gain user traction.  Take a picture, instantly shoot it out to your friends and followers… People click on it, see Instagram and think “that’s cool, I need to use Instagram.”

You may be thinking this is obvious and being a technology blog most people should understand the concept of leveraging social channels.  Well, this is not about leveraging “social” channels, but rather about finding the appropriate networks of distribution for your specific product or service.  Too many businesses think they need a “viral strategy” when their user experience is far from viral.  Lost in the noise about Twitter and Facebook are all the other options your company may be missing.

Neil Patel does a great job of explaining how to co-brand with a leading brand, illustrating how Spotify jumped onto Facebook and instantly saw millions of new users.  He also says, “besides reaching a wider audience, co-branding your work will also propel your brand faster, double your strength, give you someone to lean on and adds credibility.”  Well said Neil.

What adjacent platforms or companies are sitting there waiting for a strategic partnership with your company?   Are there existing distribution networks already perfectly placed where your user experience will greatly benefit all parties involved?

Aimed Directly at Competition

Systrom and company did something amazing which seems to be overlooked by most startups: find a gaping hole in a major player’s armor and expose it right on their front lawn.  Facebook, being the largest social network and the primary place people connect and share photos with friends, was embarrassing lacking an adequate mobile solution.  They were pretty late to the mobile game and when they showed up, their mobile experience was flat out clunky.

Instagram was built from the ground up as a mobile platform, specifically around photo sharing.  They not only identified there was a hole in the market, but they filled it and shoved it right in the Face of Facebook showing them how much better Instagram was than Facebook at the mobile game.  Zuckerberg knew it the whole time and from what we can read about the situation the latest $50 million raise was the last straw.  He pulled the trigger and bought the company knowing Instagram was a growing problem for them.

Here’s the point:  Don’t go build “another similar product” copying the competition simply because you are lazy and they showed you the market wants what they are offering. The outcome is typically not very good.   Why not study the market, find the hole and then go do that specific thing?  Own that thing.  Be known for that thing.  And do that one thing world class.

Using Instagram as a perfect example, that’s the billion dollar idea.

@jnickhughes

Here’s A Lesson On Why You Should Listen To Your Early Customers

Posted on by

Here’s a great write up on how Seconds is transforming an office catering business.  Molly’s Salads is one of our early customers, and in fact our most important to date.   Truth be told, they were actually the ones who came to us with the idea for text payments.   Their CEO simply said “can’t we have a system where people just text the word “sandwich” to our number and it automatically charges them?”  We looked at each other without blinking and said “um sure, we can do that!”

From the article:

How does Seconds work from your end, as the merchant?
From our end, it’s super simple. The technology just reads what [customers] text. So if they text SALAD, it just reads SALAD and automatically bills their card for whatever the price of a salad is. That is built right in. The sales go directly through us. We plug in our gateway, and it goes directly into our bank account. The only work we have to do is when somebody has an issue. When they say, “My card’s not working,” or “There’s none of this left in the fridge,” that comes straight to my email. I can respond through my email, and it goes straight to their phone. Everything is automatically billed, and then I can monitor how sales are going by going to my dashboard.

read the entire article….

As we walked out of the initial meeting I looked at my CTO and said “dude, he’s dreaming.”  He just chuckled.  Amazingly, we ended up building it within a month or so and the rest is history.  Multi-billion dollar, multi-national corporations are reaching out from all over the world are now expressing interest in what we are doing.  It’s awesome and we owe it to Molly’s Salads for leading us towards this cool concept.

Below is the simple way people are paying for Molly’s food using Seconds.

A Great Article On Mobile Payments, Quoting Yours Truly In The Process

Posted on by

Connected smartphones and other devices can take the place of any number of other items, including calculators, watches, maps and GPS devices. It’s only a matter of time before they also become mobile wallets, too, and in fact, that’s already starting thanks to companies like Square, PayPal and Google. But it isn’t only big companies rushing to fill that need; the space is a point of focus for plenty of smaller players, too, many of which are trying to do something a little different than what’s already out there…. read more for my quote.

Should Paying $950 With A Text Be This Easy? (video)

Posted on by

Seconds is the simplest way to pay using a mobile device.

Take paying your rent for instance.  It sucks to have to write a check, get a money order or remember to go online and make a payment.  Even if you use an automatic online rent payment system you might not remember what day it will be taken out of your account, which can be frustrating.

So should paying with a text message be this easy?  In a word – yes.  Life shouldn’t require you to download a specific app or stop by the cash machine to get cash.  Seconds is the simple way for you to make a mobile payment for everyday things.

Watch the video below to get an idea of how fast Seconds payments can be.

1. Type “Pay Rent”

2. Confirm the amount

3. Receive a text stating the completion of your payment.

Imagine what else you can pay for with Seconds.  Imagine your life…. in Seconds.

 

Slideshow: Imagine Your Life… In Seconds.

Posted on by

Seconds is the simple way to pay with your mobile device.

As I have stated before, virtual transactions – payments made without having to swipe, show or display anything – will transform the payments landscape like no one has ever seen before.  Since people carry their mobile devices with them everywhere, it makes the most sense to streamline transactions through the computer in their hands.  With cloud computing and offsite secure services holding payment credentials for every consumer, people now have an ability to make simple, quick and easy mobile payments ANYWHERE.

I have also said this before but it bears repeating: what if SMS messaging was not only for communications?  What if, as a very efficient information transport  mechanism organically built into billions of mobile devices around the world, it was used for payments and transactions?  Seconds drives secure payments through text messages, allowing someone to quickly make a instant and automatic transaction by simply texting a keyword to a merchant.   Conversely, a merchant can ping your mobile phone with a message to complete the transaction by simply responding with a specific prompt.

Below is a brief slideshow to imagine your life… in Seconds.

The Evolution Of Digital Payments Says Anything Made Of Matter Is Toast

Posted on by

The payments landscape is changing almost daily and the overall industry is truly one of the most exciting business studies around.    Payments?  Exciting you say?  Yes, well if you don’t’ think $1 trillion up for grabs in the next 5 years is something to get excited about I would check your pulse.

As an natural observer I tend to look under the hood whenever something unusual is going on, since whenever peculiarity is present change happens.   Curiosity is actually what drove me to start Seconds, my mobile payments company.  It all started with observing how consumers interacted with merchants, repeat interactions in particular.  Isn’t it funny how we go to the same coffee shops, restaurants, retail stores, gas stations, and other everyday activities each day.  In fact, we do this so much the person at the counter who “swipes” your card actually recognizes you and may even know your name.

Although loyalty started my entrepreneurial journey, it did not end there.  I started to think a bit deeper about what usually happens each time you go to the coffee shops, restaurants, retail stores, or gas stations?  You got it – payment!  There it is, the one data point which can trace commercial actions, habits, relationships and trends.  Imagine being able to aggregate and see all those data points in your own life.  Things like where you spend your money, how much, when, buying what and how often.  Now imagine it on a merchant wide level.  How about a worldwide level?  I think you get the gist of where we are going.

This thinking brought me to Seconds, which is the fastest way to transact and interact with merchants.  I believe if you speed up a traditionally laborious process, make it available to the widest range of people possible and emancipate the data to be used in adding value to the system, great things will happen.

During this study it came to my attention how much the payment experience has evolved, and how much more it will change.   Below is a quick discussion on where we have come from and where we are going with digital payments.  You will notice this discussion is all about digital payments, since cash and coin have always been available and will still be around for quite some time.   The current focus is on the digital payment experience and the changes we should expect.

Payments 1.0

When plastic cards came into the market the obvious question became “how do we use these things?”  Naturally, swipe terminals popped up in retail locations everywhere, in addition to such places as gas stations and movie theatres.  Major players like Verifone, WorldPay and others transact billions of dollars each day through proprietary devices which translates information from your plastic card into electronic data and ultimately ending in a transaction.

Important to note is the placement and positioning of the terminal, which can be found on the specific merchant’s counter or apparatus.  Why is this important?  Without the terminal, I cannot pay.  No terminal, no card, no soup for you!  This gave credit card companies and the electronic payments companies a leg up in the economic chain.  But innovation has no master and things quickly change.

Payments 1.5

We are currently seeing new methods of swipe transactions involving the mobile device hit the mass market.  These swipe solutions enable a mobile phone or tablet to become, in essence, the terminal itself.  The terminal has jumped off the merchant’s counter and into their hands with products like Square or PayPal empowering anyone to become a merchant.  All anyone needs is a mobile device, the app, and the swipe dongle attached to the device.  They are now ready to take a card payment.

As amazing as these solutions may be I argue they don’t truly change the payments space, they only augment it.  They allow us to use our credit cards at more places – which depending on who you are that could be good or bad – yet it’s still a credit card.  Some people call this mobile payments but it’s really just a mobile terminal. The requirements of products and devices can be cumbersome and troublesome if lost.  Forward progress?  For sure!  But not truly an innovative new movement which will have landscape shifting effects.

Payments 2.0

True innovation upsets the masses and ultimately establishes a new norm, with new rules and new players.  Virtual transactions – payments made without having to swipe, show or display anything – will transform the payments landscape like no one has ever seen before.  Since people carry their mobile devices with them everywhere, it makes the most sense to streamline transactions through the computer in their hands.  True authentic mobile payments do not require any hardware outside of the mobile device.  With cloud computing and offsite secure services holding payment credentials for every consumer, people now have an ability to make simple, quick and easy mobile payments ANYWHERE.  As the consumer, the terminal is now in your hands.

Platform agnostic solutions will enable any mobile device holder to transact and make a purchase with any merchant or brand connected to the platform.  It shouldn’t require me to have an iPhone, Android or any other specific device.  I don’t’ think “sorry, we only accept iPhones” should replace “sorry, we don’t accept American Express.”  Everyone is created equal and every dollar bill is $1.00, no matter who is holding it.  This principle  should remain the same as we evolve into a purely digital society and work through determining the appropriate payment methods.

And as payments become virtual, platforms such as Dwolla start to make a lot more sense.  If you were a merchant looking to accept mobile payments, which would fee you rather pay – a flat 25 cents or between 2-3% of a transaction?  It’s no contest, Dwolla’s fee structure could put credit card companies directly out of business, unless they bring down their fees to a competitive level.

I have said this before but it bears repeating: what if SMS messaging was not only for communications?  What if, as a very efficient information transport  mechanism organically built into billions of mobile devices around the world, it was used for payments and transactions?  Seconds drives secure payments through text messages, allowing someone to quickly make a instant and automatic transaction by simply texting a keyword to a merchant.   Conversely, a merchant can ping your mobile phone with a message to complete the transaction by simply responding with a specific prompt.  How did they know to do that?  Your phone number has now become your payment credential, and interestingly enough they can instantly reach you via short message from pretty much anywhere in the world.  Imagine how things will change when we all can interact and transact with any brand in the world in Seconds?

I am not sure how much quicker we can make things but a second is pretty damn quick.

@jnickhughes

How To Deal With The Agony and Ecstasy Of A Startup

Posted on by

Every startup founder is probably nodding their head right now as they read the title of this post.  It’s like being part of a club or a gang where you were initiated and were forced to endure the pain.  Then afterwards you have a sense of relief – a thought of  “wow,   I’m glad I got through in one piece!”   Well, it’s safe to say I’m right in the middle of it and here I am thinking out loud on how to deal with it.

The Agony

The agony can be described as an immense downward pressure, something akin to gasping for air when lacking oxygen.  When you start a company, everything has to be created out of thin air and requires extraordinary feats to pull it off.  Things like the legal entity, the team, the product, the customer base and the cash reserves are not there in the beginning and have to be created somehow.  In the beginning it’s all chaos and panic.

And it’s an agonizing experience.  Anything that can go wrong will go wrong.  Your progress will take twice as long as you expect and if you are an impatient person like myself this is extremely difficult.  If entrepreneurship can be described as a roller-coaster ride, the agonizing times are the extreme lows you will face as a startup founder.   Seth Godin calls this The Dip.  Some don’t quite make it out of the dip and become statistics (half of businesses fail in the first 5 years, 1 out of 1,000 ever receive venture funding, etc..)

The Ecstasy

The ones who do make it out of the lows shoot right up to the highs and experience periods of ecstasy and bliss.  Similar to a chemical induced euphoria these natural created feelings are what keep you going through the entrepreneurial journey.  A great first meeting with a high profile investor, media coverage on a highly visited blog or website, the cold call out of the blue requesting a new partnership that could land a potentially lucrative new customer, or the hundreds of new twitter followers after a new blog post goes live are all exciting and exhilarating experiences.

These are what you live for as an entrepreneur.  And they are addictive.  They are additive because these types of experiences release dopamine and other neurotransmitters in the brain that result in a heightened state of emotion.  Interestingly, that same process happens as we experiment with recreational drugs.  It’s funny how entrepreneurship and mental disorders are so close in relation yet are looked upon from society in the extremely opposite light.

How To Deal with The Agony and the Ecstasy

If you are an entrepreneur, you will have to deal with this type of life.  Here’s a few ways I deal with the ups and downs of startup life.

1) Exercise – Expending energy helps release pent up stress so I can relax and  breathe a little easier.  It also allows me to stay healthy since I am less active these days.  This is the single most important (and simple) way to handle stress in your life.

2) Get Advice – I lean on my Board of Advisors to help me to understand things I may not see just yet.  They are all older than me and have been through similar situations (or see others go through them), which affords them a perspective I can use to help me make better decisions.  I tend to think I am smart enough to realize I don’t know very much.

3) Come To Grips With Reality – The reality is you are on the roller-coaster of life and it constantly goes up AND down.  When in the dip, it’s healthy to understand the dip won’t last too long and not too far down the path things will go up.  The only thing you must figure out is how to minimize your time in the dip and how to maximize your time above water.

Preparing yourself and understanding how to handle the ups and downs is the smartest (and healthiest) way to get through the rough patches.  It’s your responsibility to learn as you go… I know I am.

@jnickhughes