Category: Startups

Back in 2009, I attended the Ryan Carson produced Future of Web Apps conference in Miami, Florida. There 37signals co-founder Jason Fried spoke an interesting truth that’s resonated with me ever since.  He told everyone to “monetize your sawdust.”

When a lumber company creates wood boards, there’s sawdust that falls to the factory floor.  That sawdust gets swept up and used in the creation of other products.  The lumber company is monetizing their sawdust.

He challenged everyone to look at the by-products of the work that they’re doing for their business and look at ways they could potentially make money or generate new opportunity off of them.   For 37signals, the examples were the programming framework Ruby on Rails and a book that was essentially a group of their past blog posts.

When I was at Clearspring (now called AddThis), we were working on getting our sharing tools on every website we could.  Over my tenure we saw the usage grow from 200,000 domains to over 11 million (and its even higher now).  While data about a specific publisher was never made public because it was private to that publisher, we realized we had all this interesting aggregate data about where and what people were sharing and searching for online.

That aggregate data was incredibly marketable.  We took the aggregate data about the state of the different social & sharing services on the market and went to the tech media.  They wrote about it and the story always talked about how the data came from AddThis. Initially, we were just taking screenshots from Microsoft Excel charts.  Eventually, I got our creative director looped in and he started making us super sexy infographics, which the media ate up even more.

I didn’t have a marketing budget.  I wasn’t trying to arbitrage Google or Facebook ads in order to drive traffic.   I was monetizing our sawdust.  Our aggregate data was a view on the world that no one else had.  It was great.  We’d do a data-related announcement during the lull between product announcements. We wanted everyone talking and thinking about us all the time.   And, it worked.

I’ve had the pleasure of working with and mentoring a number of different startups.  One of the most common pieces of advice that I give is to “monetize your sawdust.”  Look at the by-products that are created from the production of your core product.   There’s probably something there that you can sell or use to generate excitement/awareness which will help make you more money.

As we enter 2013, have been thinking about what startups & apps excite me. One has been especially relevant as of late. It’s DogVaycay.

My wife and I love to travel but we have a cuddly pitbull Latte. So it’s important to find a loving boarder for Latte who’ll care for her when we’re out of town.

We had been using a boarder but she was pretty expensive (I’ve stayed in hotels cheaper) so we had been looking for someone new. That’s when we found DogVaycay.

DogVaycay allows anyone to advertise their capability for watching your dog. You search for the best match based on location, price, and reviews. The site facilitates the reservation & payment. It’s still pretty new in DC so it was harder to find someone with more reviews.

We did find a new dog boarder via DogVaycay that we’ve used twice now an she’s great. Plus she’s considerably cheaper than the woman we had been using before.

The site even facilitates boarders sending photo updates of the dogs back to their owners. I wouldn’t be surprised if they nudge the boarders to do it cause it increases likelihood that you’ll use that boarder again.

I’m sure that DogVaycay has big plans too. They just raised a bunch of money from investors. I’m excited for their future.

The other day my friend Jonathan Perrelli (JP), Founding Partner at DC’s Fortify VC, tweeted that he was able to avoid some traffic by using the iPhone app for maps & navigation Waze. I’d been hearing about Waze on This Week in Tech with Leo Laporte but just had never downloaded it.

After hearing about JP’s experiences, I knew I needed to give the app a shot. I’ve now used Waze quite a bit. I’m really impressed. Some of the gamification and crowd sourced stuff they’re doing is really cool.

The experience underlined a principle that having a great product user experience is the foundation of all great marketing. Users need to be able to easily get into your product and see how it’s going to improve their lives. If you fulfill your product’s promise and do it in an extraordinary way then people will talk about you and you’ll naturally get more users.

It’s not good enough to just be good. You have to be extraordinary. The world will start talking about how you’re solving a problem in a new & novel way.

Marketing shouldn’t be manufacturing excitement. They should be amplifying the excitement from the people that are already using it.

There are a lot of entrenched players in the mapping & navigation space. To be a new entrant in the space is kinda crazy. What Waze is doing is different, interesting, and worth trying.

What kind of products have you been getting excited about?

As a company, we exist because we offer some sort of product or service that solves a problem. By solving that problem, we deliver happiness to whomever our core customer/constituency is.

When I sign up for a new app the first thing that I’m look for is… does this fulfill its promise of solving the problem that I have or how long do I have to wait to get my problem solved? How long do I have wait for the happiness? I call the time from when you sign up for an app to when it actually delivers on solving the problem the happiness gap.

The private town car service startup Uber is classic for getting this so right. Their goal is that after 5 mins of ordering the car phone that it should arrive. Once it happens, you feel like a million bucks. BOOM. Happiness.  Uber gets that what they’re doing is bigger than providing transportation services.

The design ecommerce platform Fab gets this too. You’d order an item and it’d take 3-4 weeks for it to arrive at your door. It was just too long. I’d forget that I’d ordered something from Fab. The happiness gap was too big. That’s why they’ve invested in their own warehouses and taking inventory so they can be more in control of the UX of shipping and fulfillment.

What service or product do  you deliver to your users?  How can you expedite the delivery of happiness to your users?

Over hyped apps Airtime & Color have been making the headlines again and getting a fresh round of criticism.   It underscores a few things… the importance of when you build something that you need to actually have a problem that you’re trying to solve, people need to have that problem, and   you have to be in a unique position or have a unique approach to solve that problem.

As we’ve seen day in & day out in the headlines, the Apple Maps that was released via iOS 6 was a big flop.  In many cases, the maps were just wrong.  Lauren and I went to Hilton Head last weekend for a wedding and were consistently frustrate with Apple Maps as we tried to navigate.

The poor quality of Apple Maps led to a media and community up roar.  Countless blog posts were written about it.  There was even a Tumblr blog about all of the app’s mistakes.

When you’re the user and you’re having a problem with a product, the worst feeling in the world is when it feels like the company who made the product is so out of touch that they don’t know that there’s a problem.  That’s when the relationship between the user/customer & the company starts to disintegrate.

Well, I was really happy to see that Apple CEO Tim Cook wrote a letter on their site saying that they realized that Apple Maps for iOS 6 was sub-par and that they were working as quickly to fix it. They even went as far as alerting people to their competitors, as possible alternatives while Apple Maps improves.  He was saying to the Apple community, “I hear you. We screwed up.”

Apple’s not known for being a company that’s overly communicative or transparent.  So, seeing this kind of olive brand extended is definitely a notable moment.   I hope that we’ll see more.

It’s also a great object lesson in crisis communications for us all.

Every 5 minutes there’s a new startup popping up that’s building some new & exciting app to solve some problem I have.  It’s great but to be honest I get bored with it all.   Yes, your app’s functionality solves my problem but so does a dozen other apps out there.

What can you do to be different?  In addition to solving my obvious problem, solve the deeper problem.   Serve my life in a way that I didn’t anticipate.  Surprise & delight me.  Make my life happier.  Make me feel better about my future.

For example, Fab.com does a great job of helping me connect with & buy from designers & artists.  The deeper problem they solve is that they make my life more exciting & fun.    Additionally, Zillow helps me find houses that are for sale.  Right.  The deeper issue is that I want to find a place for my life to unfold… for my future to happen.  I want some security that I’ll find the right place.  Zillow makes that possible.

Coincidentally, both companies have just put out TV commercials selling this.

First from Fab.com…

Second from Zillow…