From Wikipedia, the free encyclopedia

Vevo is a music video and entertainment website. It is owned by Sony Music Entertainment, Universal Music Group and Abu Dhabi Media Company. The service was launched officially on 8 December 2009. The video hosting for Vevo is provided by YouTube, with Google and Vevo sharing the advertising revenue. Vevo offers music videos from three of the four major record labels, Universal Music Group, Sony Music Entertainment and EMI.
One of the reasons cited for the launch of Vevo is the competition that music videos have in the form of YouTube. Warner Music Group apparently removed its content from YouTube in March 2009 for this reason, but is said to be considering hosting its content on Vevo. The concept for the site is described as being a Hulu for music videos, with the goal being to attract more high-end advertisers. It is believed that some advertisers are ambivalent to hosting advertising on the YouTube site alongside user-generated video. In the future, the site could host other types of premium content.
Universal acquired the domain name on 20 November 2008. Sony Music Entertainment reached a deal to add its content to the site in June 2009. On 18 November 2009, Vevo announced that the service would be launched at a party in New York on 8

December. Like YouTube, Vevo uses the Flash video format for its content. The player size is 850 x 480 pixels, which is designed to offer higher picture quality than the current default formats on YouTube.
The Vevo website is not currently available in all countries, but is scheduled to go worldwide in 2010. Viewers with an IP address where it is unavailable will see the message “We’re sorry, VEVO is not currently available in your country. Please stay tuned.”

The Vevo artist channels are available to view worldwide on YouTube, although some of the videos may produce the message “This video contains content from Vevo, who has blocked it in your country on copyright grounds.”


Lady Gaga becomes a ‘billion-hit’ artist

If you have watched any of Lady Gaga’s online videos, you are part of this story.

The controversial, and for some too racy, artist’s online videos have recorded one billion hits making her a record breaker.

The three videos on YouTube and Vevo that helped Lady Gaga set the record were Just Dance, Bad Romance and Poker Face with Poker Face alone recording around 375 million hits.

So how did a singer with weird wigs and outfits outdo more mainstreem popstars like Beyonce on the internet?

Eileen Koch is the owner of Eileen Koch & Company, a Los Angeles-based public relations company.

Rob van Vuure vertrekt, hij verlaat Sanoma

Rob van Vuure, bekend als de ‘bladendokter’, verlaat op 22 april Sanoma Uitgevers.
De 65-jarige Van Vuure stopt met werken, maar blijft actief als bladenmaker, schrijver en columnist van de Volkskrant. Ook gaat hij verder als ad interim hoofdredacteur, blijft hij projecten voor Sanoma doen en er komt half mei een nieuw boek van hem uit: ‘Pas op, u wordt verleid’.
Van Vuure begon zijn carrière als leerling-redacteur bij Libelle waarvan hij al snel op jonge leeftijd hoofdredacteur werd. Zijn vakmanschap was zo succesvol dat hij vervolgens werd gevraagd voor een hele reeks andere titels. Hij was hoofdredacteur van in totaal 17 bladen bij Sanoma. Van Margriet tot Playboy, van Viva tot Panorama, van Yes tot Tuin&Co.
Van Vuure was de laatste jaren creative director van Sanoma Uitgevers. Deze functie wordt niet ingevuld, dit was een persoonsgebonden functie. Hij verlaat het uitgeefconcern op de laatste dag van de Media Parade van dit jaar, donderdag 22 april. Die dag is speciaal aan hem gewijd.

Geweldige man heb hem eenmaal bij de VNU ontmoet, Alaska men hij geloofde er wel in en terecht achteraf, de VNU niet, daarom is het denk ik nu ook Sanoma. Charismatische man, hij stopt niet met werken hij gaat verder als een ZZPer, columnist en dat is mooi het nieuwe denken.


10 Essential Rules for Brands in Social Media

The 1% Rule and How to Make It Work for You

by Taddy Hall on 03.22.10 @ 11:00 AM

These days everyone seems to have advice about how to run your social media marketing program. There are so many tips floating around, it’s hard to know what truly essential strategies you should follow to effectively use social media to build your business. Questions abound: Do Facebook fans drive sales? Why should I fund forums for consumers to pillory my products, ridicule my service and tout the competition? And, whatever I decide to do, how I will I know if it’s working?
In the search for truth, sometimes social media is its own worst enemy. With a self-credentialed guru waiting at every click, finding actionable, fact-based insight is tricky.

So, in a modest attempt to bring a dose of sanity to this intellectual frat party, I’ve reined my impulse to lob more “personal picks” into the fray. Instead, I’ll follow the wisdom of an august data mining colleague to just “let the data speak.”

Our process was to query data from hundreds of our brand clients to see what testable truths emerged — and here’s what we found: 10 rules that hold up across category and time.

1. The 1% Rule
In category after category, our data show that a small fraction of site visitors are responsible for a substantial portion of total site traffic. On average, the percentage of influential users (defined for our purposes simply as a visitor who’s subsequent sharing actions result in at least one additional site visitor) on a given site is 0.6% and rarely above 4%. However, these influencers regularly generate 20%-50% of total site traffic and an even higher share of conversion (defined however a site owner so decides). To make social media marketing effective, marketers have to identify and engage — and better recognize and reward — these super-influentials.

2. The 2-4X Rule
When it comes to conversion, visitors driven to a site by influencers are to to four times more likely to convert compared to visitors from other sources, such as display advertisements or paid search. That means your landing pages for people coming from shared links and social sites should reflect these visitors’ interests and offer enticing deals that will encourage them not only to convert but to share the deals with others.

3. The New Media/New Pipes Rule
In today’s socially driven internet, it matters far more what consumers do with your content than what you do with your content. What they say about your brand means more than what you say about your brand. Our data shows that content spread from consumer to consumer through word-of-mouth is far more powerful at driving brand preference and purchase intent than content distributed by the brand itself. This has profound implications in social media. To illustrate, if a brand puts content on its Facebook fan page, it is far less likely to go viral than if an influential consumer puts that very same piece of content on his or her page or posts it to a relevant community of enthusiasts.

4. The Martha Stewart Rule
Throw your own party; don’t just cater someone else’s! If you base your social campaigns in venues you don’t control — such as Facebook or YouTube — you may get great “attendance,” but data show it’s hard to convert and retain these party-goers. If your goals are anything beyond building brand awareness, it’s better to have a house of your own where friends can find you — such as your own branded social site, contest site, or customer forum.

5. The Power of “Weak Links” Rule
Influentials generally do have many direct “friends” and “followers,” but what makes them truly valuable is the number and relevance of their extended or indirect connections. As Albert-Laszlo Barabasi illustrated in “Linked,” you are far more likely to find your next job through a friend-of-a-friend than through an intimate contact. These “weak links” matter in the “real world,” and they matter even more online. A critical implication for marketers is the need to track the extended social graphs of their content if they are going to be able to understand and activate the dynamics of influence.

6. The Feed the Fire Rule
Consumers love to share relevant, engaging, useful, and entertaining content with their friends. Make it easy for them to find your content and make it easy for them to share your content. Ninety percent of internet pages have fewer than 10 links pointing to them — making them effectively unfindable. Avoiding this abyss of irrelevance requires more thought and effort than just pasting a sharing tool on your pages. It means actively syndicating and curating your content and distributing it not only through your brand’s social graph, but through the graphs of your most influential advocates and fans. Easy ways to do this include following/friending your influentials’ followers/friends and retweeting/posting content even if it’s not yours.

7. The More Things Change Rule
Our research consistently demonstrates that e-mail and IM remain popular ways to share content. So don’t throw out your old e-mail marketing methods just because Facebook and Twitter are the newest communication platforms du jour. The tried-and-true methods of getting customers to share links via e-mail and IM are still extremely valuable sources of traffic. Furthermore, incorporating social elements into your e-mail, such as incentives to share, can dramatically enhance an investment you’re already making.

8. Horse Before the Cart Rule
Success in social media happens when brands infuse their content with social dimensions (Facebook Connect, most notably), not when they simply stick their ads and content in social forums. In other words, if you want to succeed in social media, your brands and content need to have social attributes — content worth sharing, brands worth talking about, sites that encourage consumer participation and dialog. If your social strategy relies on advertising in social media, it’s probably better to hang on to your money.

9. The PR Pitfalls Rule
Blogger outreach and content seeding may be popular ways to get your message into the social world, but our data show that more than 90% of seeding has no material impact. Up to 5% gets some response, but less than 2% of seeding drives valuable traffic. In other words, if you can’t track efficacy of these efforts, don’t bother.

10. The Customer-Service Rule
Social marketing programs succeed when they provide a service to the consumer. Traditional media-planing processes that begin with reach and frequency targets are largely unhelpful in social media. Reach and frequency — as well as engagement, preference and conversion — are positive consequences of giving consumers content that is sufficiently relevant and useful that they propagate your message across their own social graphs. Focus on providing useful content and offers to your target audience and they will spread your messages for you.

Social media isn’t a science, but applying data-backed principles to your social efforts provides a structured framework that will enable you to improve effectiveness and ROI over time. And one final note: Every rule has exceptions. We live in dynamic times. Find what’s true for you — and share.

ABOUT THE Teddy Hall
Taddy Hall is chief operating officer of Meteor Solutions and former chief strategy officer for the Advertising Research Foundation.

How Miracle Whip, Plenty of Fish Tapped Lady Gaga’s ‘Telephone’

Singer’s Manager Dishes on All Those Product-Placement Deals (and Lack Thereof) in the Nine-Minute Video

by Andrew Hampp and Emily Bryson York

LOS ANGELES ( — The most-talked about aspect of Lady Gaga’s Beyonce co-starring, Jonas Akerlund-directed music video for “Telephone,” which premiered Thursday night, was not the singer’s flagrant partial nudity, girl-on-girl kissing or mass-murder sequence in a diner featuring Tyrese Gibson.

It was the product placement.

At least nine different brands make appearances in the nine-minute music video, from Gaga’s own Heartbeats headphones to a “Beats Limited Edition” laptop, from HP Envy to “telephone” partner Virgin Mobile, and from Miracle Whip and Wonder Bread to Diet Coke.

Almost instantly, the video lighted up the web with reactions from the likes of the Huffington Post, The Guardian, Jezebel, Rolling Stone and Interview Magazine, which gave a helpful rundown of all the brands — including fashion and accessories — that make appearances.

But despite the cornucopia of products, only a handful were paid placements, said Gaga’s manager, Troy Carter, CEO of Coalition Media Group.

Mr. Carter told Ad Age that several of the brands were Gaga’s ideas and did not pay to be included. A scene in which Gaga curls her hair with Diet Coke cans was an homage to her mother, who used the exact same grooming technique in the ’70s. Another sequence, in which Gaga poisons a whole diner full of patrons, is interspersed with footage of the singer making sandwiches with Wonder Bread and Miracle Whip. Mr. Carter said Gaga wanted to juxtapose the poison sequence with all-American brands, and suggested Wonder Bread for an unpaid placement. Miracle Whip, meanwhile, made a paid appearance to appear in the clip. A Miracle Whip spokeswoman confirmed the brand’s paid integration, but didn’t comment further. The product shots feature new Miracle Whip packaging, and seem the latest in a series of Gen-Y outreach maneuvers, including a new campaign promising “we will not tone it down.”

Featured throughout “Telephone” are shots of a Virgin Mobile cellphone, a nod given to the mobile sponsor of Gaga’s Monster Ball tour, as well as a Polaroid camera and photo booth as part of Gaga’s new role as the camera company’s creative director. Several characters are also seen listening to music on Heartbeats by Gaga headphones from Interscope Music and surfing the internet on the “Beats” laptop from Hewlett Packard, all of which were unpaid extensions of Gaga’s marketing partnerships., an online dating site, also makes a surprise appearance, the result of ongoing talks with Gaga’s marketing team at Universal Music to find the right project.

Plenty of Fish VP Kimberly Kaplan on Friday said the dating site got into the video through an ongoing partnership with Interscope Records. This just the second music-video integration for Plenty of Fish, which still does the bulk of its advertising online. She admitted the brand was “nervous” without creative input, but very pleased with the outcome. Plenty of Fish had seen a 15% increase in search by close of business Friday, but wasn’t yet able to quantify an increase in traffic.

If ‘Thriller’ were made today
“We have a lot of fun with it now,” Mr. Carter said of the “Telephone” video’s product placement. “If Michael Jackson was making ‘Thriller,’ he would do this too. These million-dollar music videos have to have partners to be produced.”

Dyana Kass, who heads up pop music marketing at Universal Music Group, added, “We were trying to line up brands that were organic. There were natural pieces in there, like being in a kitchen, so those kind of scenes that just made sense for brands. But we always agree creatively, and get sign-off before we walk down the aisle.”

Mr. Carter would not comment on the nine-minute, Jonas Akerlund-directed video’s budget, other than to say, “Lady Gaga plus Beyonce equals an expensive video.”

The video was shot across three days and took a month and a half to edit. Its premiere airing on E! News, after the network’s 11 p.m. ET time slot, attracted 833,000 viewers, a 32% increase from the network’s average performance in the time slot.

Mr. Carter said E! was selected over MTV and other music networks because “we wanted a network partner that was going to show the video as it was intended to be shown. They gave us 20 minutes of real estate on their network … and it was pretty much unedited.”

Online, music-video site Vevo bought a slot on the YouTube home page that referred users to the “Telephone” page on, which crashed the morning of the clip’s premiere. The video broke all Vevo single-day traffic records and had already generated close to 4 million views on YouTube in less than 24 hours.

As for the “To be continued…” message at the video’s end? “Stay tuned,” Mr. Carter teased.

Eckart Wintzen leeft voort

22 mrt John van Schagen

Precies twee jaar geleden overleed managementgoeroe en succesondernemer Eckart Wintzen. Wat heeft u aan zijn befaamde cellentheorie?

Eckarts Notes
Voor een enkeling die bij de naam van Eckart Joachim Wintzen (1939-2008) nog geen bel hoort rinkelen, stellen wij deze goeroe in vogelvlucht nog even voor. De man was in veel opzichten een markante persoonlijkheid. Een opvallend uiterlijk – baard, lange haarlokken, professorbrilletje en doorgaans in spijkerbroek – combineerde hij met een ongezouten mening en een opvallende bedrijfsfilosofie. Die van de zogeheten cellenstructuur. De medewerkers van zijn Bureau voor Systeem Ontwikkeling (BSO) waren daarbij opgedeeld in kleine, volledig zelfstandig opererende eenheden. Dat denken van kleinschaligheid legde de ondernemer geen windeieren. BSO groeide uit tot multinational met kantoren in 21 landen en een jaaromzet van 375 miljoen euro. De verkoop van het bedrijf aan Philips betekende in 1996 zijn grote klapper.

Houd het intiem
Wintzen heeft een grote fanschare opgebouwd in Nederland. Een van zijn supporters is Sjoerd Keijser, oprichter en mededirecteur van de Lectric Groep. Onder de vlag van de groep hangen zeven apart van elkaar opererende internetbedrijven. Elke bv kent een eigen directeur. “We hebben heel bewust voor deze strategie gekozen”, zegt Keijser. “Je ziet dat kennis in de intimiteit van een kleine groep meer tot wasdom komt. Mensen zijn veel meer betrokken bij de organisatie en voelen de verantwoordelijkheid voor hun handelen. Doordat je klein bent, hebben medewerkers minder mogelijkheden om zich te verschuilen achter collega’s.”

Leger aan accountmanagers
De Lectric Groep telt tweehonderd medewerkers, maar in geen enkele bv werken meer dan 65 mensen. Houd het klein, zo verwoordt Keijser de Wintzen-filosofie. En ga splitsen zodra de toko te groot wordt. Dat komt ook het contact met uw clientèle ten goede. “Doordat je kennis decentraliseert, komen klanten razendsnel bij de juiste mensen. Je voorkomt dan dat er in de organisatie legers met accountmanagers ontstaan die eigenlijk weinig toegevoegde waarde hebben.”

Persoonlijk ondernemerschap
Wintzen was een groot prediker van persoonlijk ondernemerschap op de werkvloer. Iets dat bij trainingsbureau Schouten & Nelissen dagelijks terugkomt. “Onderdeel van de celfilosofie is dat je je corporate staf beperkt en de mensen zelf resultaatverantwoordelijk maakt voor hun handelen”, zegt directeur Nicole Eggermont. “Zo werken wij ook. Bij veel adviesbureaus zie je juist dat er wordt gewerkt met partners die het contact met de klant onderhouden. Ons idee is dat je die twee niet te veel uit elkaar moet trekken. Adviseurs van Schouten & Nelissen zijn zoveel mogelijk zelf omzetverantwoordelijk. Bovendien aquireren en onderhouden ze hun eigen traject. Die persoonlijke stijl van werken zorgt ervoor dat onze mensen zich goed in de klanten kunnen verdiepen.”

Deze manier van werken doet volgens Eggermont een enorm appèl op het persoonlijke ondernemerschap en vormt één van de pijlers onder het succes van Schouten & Nelissen. “Je merkt dat mensen zo ook buiten de scope van hun functieomschrijving om zaken willen realiseren. Het betekent een enorme stimulans voor de proactiviteit.”

Word ook een succesvolle loser

22 mrt Rob Hartgers

Dirk Scheringa weet een goed slaatje te slaan uit het DSB-drama. Hoe slaat ook u munt uit een mislukking? Kom er in 3 tips achter.

Het DSB-drama is voor Dirk Scheringa niet alleen kommer en kwel. Zijn lezingen in het land zijn een ware goudmijn. Hoe doe je dat eigenlijk: munt slaan uit een mislukking?

1. Ken geen gêne
Als er iemand weet wat het is om te verliezen, is het internetondernemer Arko van Brakel wel. “Ik ben een paar keer in mijn carrière flink op mijn bek gegaan”, vertelt hij bijna trots. “De eerste keer lik je je wonden, de tweede keer heb je halverwege in de gaten wat er gebeurt, de derde keer zie je het van verre aankomen.”

Waarschijnlijk was iedereen Van Brakels zakelijke mislukkingen allang vergeten, als hij ze in columns en lezingen niet steeds weer oprakelde. Dat doet hij met een reden: hij vindt dat Nederland toleranter moet worden tegenover fouten. “Je moet kunnen verliezen om te kunnen winnen. Mensen die blijven hangen in hun schaamte zullen nooit werkelijk succesvol zijn.”

Zijn ergste fouten maakte Van Brakel naar eigen zeggen in situaties waarin hij niet luisterde naar zijn intuïtie. Zoals in het geval van het jammerlijk mislukte internetbedrijf Jamby. “Ik had er vanaf het begin geen goed gevoel over, maar liet me leiden door wat anderen tegen me zeiden. Achteraf neem ik dat niemand kwalijk. Je toekomst wordt bepaald door de momenten waarop je een beslissing moet nemen. Geen beslissing is ook een beslissing, dat vergeten veel mensen. Ze zoeken een excuus om hun eigen matige presteren te rechtvaardigen. Het is echter vooral de angst om fouten te maken die leidt tot middelmaat.”

2. Ha, een blunder!
Wil je John Vollenbroek echt gelukkig maken, vertel hem dan een anekdote over een grove fout of stevige blunder. “Mensen en organisaties die feilloos willen zijn, maken geen ontwikkeling door”, doceert de ‘foutengoeroe’, die met zijn adviesbureau Human Error Consultancy van fouten zijn beroep wist te maken. “Pas als je je eigen feilbaarheid accepteert, kun je leren van de mislukkingen van anderen. Ik ga er nooit van uit dat ik alles op orde heb. Fouten zijn nu eenmaal nooit uit te sluiten. Je kunt wel de kans op herhaling verkleinen. Vaak gaat het om simpele dingen. Controleer bijvoorbeeld altijd een factuur voor hij de deur uit gaat. Vooral bij routineklussen liggen fouten op de loer.”

Managers hebben het niet makkelijk met mislukkingen, erkent Vollenbroek. “De manager is een januskop. Enerzijds moet hij voorkomen dat er fouten worden gemaakt, anderzijds moet hij niet te bot reageren op gemaakte fouten. Werknemers mogen merken dat je baalt van een fout, maar doe moeite om te begrijpen waarom het misging. En vertel over je eigen mislukkingen.”

Om te illustreren hoe het niet moet, vertelt Vollenbroek een anekdote: “Ik bezocht een fabriek waar een zwaar ongeval was gebeurd. Het bleek dat men op de werkvloer al langer wist van de onveilige omstandigheden. Het hoofd veiligheid vroeg aan een lasser waarom hij dit niet eerder had gemeld. De lasser vertelde dat hij vreesde zijn baan te verliezen als hij kritiek uitte op de werk omstandigheden. Het echte probleem lag dus bij de veiligheidsmanager. Die man sprak nooit met zijn medewerkers.”

3. It’s het calvinisme, stupid!
Niet mogen mislukken is de schuld van onze cultuur, denkt Arjan van Dam, auteur van het boek De kunst van het falen. “Het is het calvinisme. De cultuur van zaaien met de liniaal, het hard afstraffen van fouten. Mensen gaan daar niet harder van lopen,
ze worden hooguit behoedzamer.” In het Nederlandse onderwijs ligt de nadruk te eenzijdig op prestaties, vindt Van Dam. “We leven in een toetscultuur waarin alleen het resultaat telt. Dom, want wie geen lessen trekt uit mislukkingen, gooit het kind met het badwater weg.”

Ook Van Dam ziet fouten als voorwaarde voor succes. “Mensen die bang zijn om op hun bek te gaan, worden nooit succesvol.” Het ergste vindt hij mensen voor wie alleen presteren telt. “Zij zijn alleen uit op een positieve beoordeling of – erger nog – het voorkomen van een negatieve beoordeling. Zo’n werkhouding maakt angstig en depressief. Dat soort mensen gaat uitdagingen uit de weg.”

Geen leermiddel is immers zo effectief als het eigen falen, stelt Van Dam. “Maar ook het falen van anderen kan leerzaam zijn.” Het bijwonen van een spreekbeurt van Dirk Scheringa kan dus best nuttig zijn, concludeert hij. “Maar je moet opletten op wat hij vertelt. Zijn eigen analyse van wat er misging bij DSB is niet automatisch de beste.”

The Top Ten Lies of Entrepreneurs

January 08, 2006
(Since I’ve antagonized the venture capital community with last week’s blog, I thought I would complete the picture and “out” entrepreneurs to begin this week. The hard part about writing this blog was narrowing down these lies to ten. Luckily, my partner, Bill Reichert, had already documented this list of the top ten lies of entrepreneurs.)

We get pitched dozens of times every year, and every pitch contains at least three or four of these lies. We provide them not because we believe we can increase the level of honesty of entrepreneurs as much as to help entrepreneurs come up with new lies. At least new lies indicate a modicum of creativity!

1.“Our projections are conservative.” An entrepreneur’s projections are never conservative. If they were, they would be $0. I have never seen an entrepreneur achieve even her most conservative projections. Generally, an entrepreneur has no idea what sales will be, so she guesses: “Too little will make my deal uninteresting; too big, and I’ll look hallucinogenic.” The result is that everyone’s projections are $50 million in year four. As a rule of thumb, when I see a projection, I add one year to delivery time and multiply by .1.

2.“(Big name research firm) says our market will be $50 billion in 2010.” Every entrepreneur has a few slides about how the market potential for his segment is tens of billions. It doesn’t matter if the product is bar mitzah planning software or 802.11 chip sets. Venture capitalists don’t believe this type of forecast because it’s the fifth one of this magnitude that they’ve heard that day. Entrepreneurs would do themselves a favor by simply removing any reference to market size estimates from consulting firms.

3.“(Big name company) is going to sign our purchase order next week.” This is the “I heard I have to show traction at a conference” lie of entrepreneurs. The funny thing is that next week, the purchase order still isn’t signed. Nor the week after. The decision maker gets laid off, the CEO gets fired, there’s a natural disaster, whatever. The only way to play this card if AFTER the purchase order is signed because no investor whose money you’d want will fall for this one.

4.“Key employees are set to join us as soon as we get funded.” More often than not when a venture capitalist calls these key employees who are VPs are Microsoft, Oracle, and Sun, he gets the following response, “Who said that? I recall meeting him at a Churchill Club meeting, but I certainly didn’t say I would leave my cush $250,000/year job at Adobe to join his startup.” If it’s true that key employees are ready to rock and roll, have them call the venture capitalist after the meeting and testify to this effect.

5.“No one is doing what we’re doing.” This is a bummer of a lie because there are only two logical conclusions. First, no one else is doing this because there is no market for it. Second, the entrepreneur is so clueless that he can’t even use Google to figure out he has competition. Suffice it to say that the lack of a market and cluelessness is not conducive to securing an investment. As a rule of thumb, if you have a good idea, five companies are going the same thing. If you have a great idea, fifteen companies are doing the same thing.

6.“No one can do what we’re doing.” If there’s anything worse than the lack of a market and cluelessness, it’s arrogance. No one else can do this until the first company does it, and ten others spring up in the next ninety days. Let’s see, no one else ran a sub four-minute mile after Roger Bannister. (It took only a month before John Landy did). The world is a big place. There are lots of smart people in it. Entrepreneurs are kidding themselves if they think they have any kind of monopoly on knowledge. And, sure as I’m a Macintosh user, on the same day that an entrepreneur tells this lie, the venture capitalist will have met with another company that’s doing the same thing.

7.“Hurry because several other venture capital firms are interested.” The good news: There are maybe one hundred entrepreneurs in the world who can make this claim. The bad news: The fact that you are reading a blog about venture capital means you’re not one of them. As my mother used to say, “Never play Russian roulette with an Uzi.” For the absolute cream of the crop, there is competition for a deal, and an entrepreneur can scare other investors to make a decision. For the rest of us, don’t think one can create a sense of scarcity when it’s not true. Re-read the previous blog about the lies of venture capitalists, to learn how entrepreneurs are hearing “maybe” when venture capitalists are saying “no.”

8.“Oracle is too big/dumb/slow to be a threat.” Larry Ellison has his own jet. He can keep the San Jose Airport open for his late night landings. His boat is so big that it can barely get under the Golden Gate Bridge. Meanwhile, entrepreneurs are flying on Southwest out of Oakland and stealing the free peanuts. There’s a reason why Larry is where he is, and entrepreneurs are where they are, and it’s not that he’s big, dumb, and slow. Competing with Oracle, Microsoft, and other large companies is a very difficult task. Entrepreneurs who utter this lie look at best naive. You think it’s bravado, but venture capitalists think it’s stupidity.

9.“We have a proven management team.” Says who? Because the founder worked at Morgan Stanley for a summer? Or McKinsey for two years? Or he made sure that John Sculley’s Macintosh could power on? Truly “proven” in a venture capitalist’s eyes is founder of a company that returned billions to its investors. But if the entrepreneur were that proven, that he (a) probably wouldn’t have to ask for money; (b) wouldn’t be claiming that he’s proven. (Do you think Wayne Gretzky went around saying, “I am a good hockey player”?) A better strategy is for the entrepreneur to state that (a) she has relevant industry experience; (b) she is going to do whatever it takes to succeed; (c) she is going to surround herself with directors and advisors who are proven; and (d) she’ll step aside whenever it becomes necessary. This is good enough for a venture capitalist that believes in what the entrepreneur is doing.

10.“Patents make our product defensible.” The optimal number of times to use the P word in a presentation is one. Just once, say, “We have filed patents for what we are doing.” Done. The second time you say it, venture capitalists begin to suspect that you are depending too much on patents for defensibility. The third time you say it, you are holding a sign above your head that says, “I am clueless.” Sure, you should patent what you’re doing–if for no other reason than to say it once in your presentation. But at the end of the patents are mostly good for impressing your parents. You won’t have the time or money to sue anyone with a pocket deep enough to be worth suing.

11.“All we have to do is get 1% of the market.” (Here’s a bonus since I still have battery power.) This lie is the flip side of “the market will be $50 billion.” There are two problems with this lie. First, no venture capitalist is interested in a company that is looking to get 1% or so of a market. Frankly, we want our companies to face the wrath of the anti-trust division of the Department of Justice. Second, it’s also not that easy to get 1% of any market, so you look silly pretending that it is. Generally, it’s much better for entrepreneurs to show a realistic appreciation of the difficulty of building a successful company.
PS: here is an interesting commentary on this blog by Jason Fried.
Written at: Vallco Shopping Center, Cupertino, California

Read more: Guy Kawasaki
PS: here is an interesting commentary on this blog by Jason Fried.

The Top Ten Lies of Venture Capitalists

January 05, 2006
Venture capitalists are simple people: we’ve either decided to invest, and we are convincing ourselves that our gut is right (aka, “due diligence”) or there’s not a chance in hell. While we may be simple, we’re not necessarily forthcoming, so if you think it’s hard to get a “yes” out of venture capitalist, you should try to get a conclusive “no.”

This is because there’s no upside to communicating a negative decision. Entrepreneurs will simply hate us sooner–instead the game is to string along entrepreneurs in case something miraculous happens to make them look better. (An example of a miracle would be Boeing approving a $5 million purchase order.)

Alas, entrepreneurs are also simple people: If they don’t hear a conclusive “no,” they assume the answer is yes. This is an example of the kind of breakdown of communication between venture capitalists and entrepreneurs that causes much pain and frustration for entrepreneurs.

To foster greater understanding among the two groups, here is an exposé of the top ten lies of venture capitalists.

1.“I liked your company, but my partners didn’t.” In other words, “no.” What the sponsor is trying to get the entrepreneur to believe is that he’s the good guy, the smart guy, the guy who gets it; the “others” didn’t, so don’t blame him. This is a cop out; it’s not the other partners didn’t like the deal as much as the sponsor wasn’t a true believer. A true believer would get it done.

2.“If you get a lead, we will follow.” In other words, “no.” As the old Japanese say, “If your aunt had balls, she’d be your uncle.” Well, she doesn’t have balls, so it doesn’t matter. The venture capitalist is saying, “ We don’t really believe, but if you can get Sequoia to lead, we’ll jump on the pile.” In other words, once the entrepreneur doesn’t need the money, the venture capitalist would be happy to give him some more–this is like saying, “Once you’ve stopped Larry Csonka cold, we’ll help you tackle him.” What entrepreneurs want to hear is, “If you can’t get a lead, we will.” That’s a believer.

3.“Show us some traction, and we’ll invest.” In other words, “no.” This lie translates to “I don’t believe your story, but if you can prove it by achieving significant revenue, then you might convince me. However, I don’t want to tell you ‘no’ because I might be wrong and by golly you may sign up a Fortune 500 customer and then I’d look like a total orifice.”

4.“We love to co-invest with other venture capitalists.” Like the sun rising and Canadians playing hockey, you can depend on the greed of venture capitalists. Greed in this business translates to “If this is a good deal, I want it all.” What entrepreneurs want to hear is, “We want the whole round. We don’t want any other investors.” Then it’s the entrepreneur’s job to convince them why other investors can make the pie bigger as opposed to re-configuring the slices.

5.“We’re investing in your team.” This is an incomplete statement. While it’s true that they are investing in the team, entrepreneurs are hearing, “We won’t fire you–why would we fire you if we invested because of you?” That’s not what the venture capitalist is saying at all. What she is saying is, “We’re investing in your team as long as things are going well, but if they go bad we will fire your ass because no one is indispensable.”

6.“I have lots of bandwidth to dedicate to your company.” Maybe the venture capitalist is talking about the T3 line into his office, but he’s not talking about his personal calendar because he’s already on ten boards. Counting board meetings, an entrepreneur should assume that a venture capitalist will spend between five to ten hours a month on a company. That’s it. Deal with it. And make board meetings short!

7.“This is a vanilla term sheet.” There is no such thing as a vanilla term sheet. Do you think corporate finance attorneys are paid $400/hour to push out vanilla term sheets? If entrepreneurs insist on using a flavor of ice cream to describe term sheets, the only flavor that works is Rocky Road. This is why they need their own $400/hour attorney too–as opposed to Uncle Joe the divorce lawyer.

8.“We can open up doors for you at our client companies.” This is a double whammy of lie. First, a venture capitalist can’t always open up doors at client companies. Frankly, he might be hated by the client company. The worst thing in the world may be a referral from him. Second, even if the venture capitalist can open the door, entrepreneurs can’t seriously expect the company to commit to your product–that is, something that isn’t much more than a slick (10/20/30) PowerPoint presentation.

9.“We like early-stage investing.” Venture capitalists fantasize about putting $1 million into a $2 million pre-money company and end up owning 33% of the next Google. That’s early stage investing. Do you know why we all know about Google’s amazing return on investment? The same reason we all know about Michael Jordan: Googles and Michael Jordans hardly ever happen. If they were common, no one would write about them. If you scratch beneath the surface, venture capitalists want to invest in proven teams (eg., the founders of Cisco) with proven technology (eg., the basis of a Nobel Prize) in a proven market (eg., ecommerce). We are remarkably risk averse considering it’s not even our money.

10. I’m at a Starbucks in Hawaii writing this blog. I’ve been at it for ninety minutes. I don’t have my charger with me. My PowerBook is out of gas. You’re going to have to be happy with the top nine lies of venture capitalists until “Dear God” ships the PowerBook Vaio.
Written at: Starbucks Ward Center, Honolulu, Hawaii.

Read more: Guy Kawasaki

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