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The Roundup August 24

Shoestring Venture The Startup Bible cover

I’m thinking we shoulda’ called it The Micro-Startup Bible, since that’s the new VC fashion.

Venture capitalists learn a new fashion — micro-startups. Kind of like a shoestring venture, no?

Two dozen companies displayed their wares on Wednesday in brief talks that are the graduation ceremony at Y Combinator, which invests up to $20,000 in Silicon Valley entrepreneurs and nurtures them through a three-month boot camp. . . .

The newest crop of Y Combinator companies, all just weeks old, are a far cry from traditional venture-backed start-ups that take years to find revenue and profits.

“They are making money in a downmarket” said Andrea Zurak, a venture capitalist in XG Ventures, which is made up of former Google (GOOG.O) employees. Speaking of a company whose presentation was off the record, she said: “They are adding immediate value.”

(“New micro start-ups geared to revenues in recession,” Reuters, August 24) I know a couple people in this year’s graduating class from Y Combinator and, as near as I can tell, these are businesses founded on the entire shoestring ethos which we’ve been preaching in our book and here for the last nine months. Some of these companies are even generating profits (on $20,000 of seed money). On trick to attracting VC investors is, well, success. If you can succeed without VC funding, that usually is a good indicator that you can succeed even better with it. But before you start salivating after VC money, successful shoestring ventures are not necessarily VC fodder. VC’s aren’t necessarily looking for a successful business model, they’re looking for a successful growth model. They’re looking for high return rates primarily from the future sale of their equity interest in the company. Here are the new VC rules, folks: you’ve got to prove yourself and have big-league growth potential.

And now, Microsoft gets into the phone game. And it’s pretty cool.

Have a basic cell phone? Can’t afford a smartphone? . . .

“OneApp dynamically launches just the parts of a mobile app that a person wants to use,” a Microsoft statement explains, “eliminating additional installation time and the need for a person to store all of the mobile apps on the phone.”

It does it through the cloud. By keeping information in data centers instead of locally on a phone, OneApp will streamline the ability to run many applications that normally would clog up the phone’s memory and storage. OneApp will take up just 150 kilobytes, Microsoft said.

(“,” Seattle Post-Intelligencer, August 24) Classic Microsoft move. While other people narrow consumer choices in one or more critical aspects (if you want iPhone Apps, you have to have an iPhone with ATT as your wireless carrier), Microsoft takes a “everyone can come to this party” strategy. Got an LG basic phone? You, too, can do Twitter and, hopefully, all the ton of cool things you can do on an iPhone or a Blackberry. It was inevitable that the whole mobile phone app world would move to the cloud, but the current owners of that world (Blackberry, iPhone, Palm), want the iPhone app world to be centered on their hardware. Managed correctly, this has the potential to be the game changer. (But don’t get your fur in a fly, yet. Microsoft is only offering the service in South Africa. I don’t know why. Something about aliens in a slum or something.)

They may be inglourious, but Twitterers love these basterds.

After lukewarm tweets from Friday screenings caused weekend drops for pics like “Bruno” and “Funny People” earlier this summer, “Inglourious Basterds” came along this weekend and rode a crest of tweeting goodwill.

(“‘Basterds’ is Twitter Age’s first true success story,” The Hollywood Reporter, August 24) This is a first in movie history (and something every independent should take note of). Twitter, for the most part, has been pretty unkind to the movie studios in this, the Year of the Tweet. A couple films have fared fine on Twitter, but expectations were high. Inglourious Basterds is the first film that went in weak with expectations and was tweeted to major boxoffice. Now, I started working with studios and independents about four years ago and I can tell you that as recently as that, distributors were scared to death of text messaging. It used to be that films at least got three days for word-of-mouth to kick in and tank a clunker. Witness Godzilla from 1998. Everyone at Sony who saw the final cut knew that they needed to make several freighters of lemonade out of that lemon in the first three days of its release, or they’d lose their shirts on the big-budget disaster. So they literally blew their entire marketing budget in the week before its release and cruised to a nearly $70 million opening weekend. And then, when word got round that waterboarding would be more entertaining, audiences stayed away in force and total domestic box office, including opening weekend, managed to squeak a bit past $90 million. Text messaging took that window of opportunity away as legions of devoted fans or teens could whip out their cell phone on opening day while sitting in a darkened theater and in a few short thumb presses, “this really sucks,” drive that opening weekend audience away. Twitter was just one more head-busting headache in a sea of tech-inspired headaches for the industry. But, with Inglourious Basterds, we find Twitter actually creating an opening weekend audience. Proving once again a rule that I’ve repeated ad nauseum to my film clients — often resulting in my getting fired — that if you want good word-of-mouth marketing for your film, word-of-mouth that actually gets people to buy tickets, make a good film. It’s not rocket science.

Yet another example of how lucrative the boomer market is — and how hard it is to convince others.

More certainly does not. Age infiltrates almost every article, and while it is a touchy subject for readers, advertisers are wary about it as well. More’s average reader is 51, among the oldest in the magazine business, making selling ads a challenge, More executives say. While it tackles ageism in its pages, it is getting a good dose of it from advertisers.

(“The Readers Are Over 40. (Don’t Tell Advertisers.),” New York Times, August 24) Okay, let’s just crunch the numbers. More has increased its readership every year since its founding in 1998; it currently as 1.3 million readers. Not huge, but very, very respectable. Readership declined in the first six months of this year by 3 percent; everyone else is counting their losses in double digits. Oprah Winfrey’s magazine, O, is down 25% this year. Faithful readers of this blog know that boomers are a huge market with unbelievably generous amounts of discretionary income to throw around (the average reader of More makes $93,000 a year while the average reader of Vogue makes about $61,000). Yet, still, advertisers just don’t get it. They only know how to sell to people under 40. Put a boomer advertising campaign in front of any major ad agency and the creative directors will stare at you like deer caught in the headlights. All this spells opportunity for entrepreneurs and creative professionals. Since the big folks, both advertisers and the agencies they hire, don’t know how to market to folks over 40, that means that the upstarts, either entrepreneurs or agencies, who develop that competency will have their ticket punched, I say, they’ll have their ticket punched.

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