May 22, 2012

How do I treat unpaid interns?

Curious about the legal (and ethical) standards for inviting someone to spend time at a for-profit private sector company without any monetary compensation, I did some research into unpaid internships. The U.S. Department of Labor’s Wage and Hour Division publishes a useful fact sheet – Fact Sheet #71: Internship Programs Under The Fair Labors Standards Act (April 2010) [PDF].

Below are the six criteria they say must be applied for a for-profit private sector unpaid internship. Disclaimer: I am not a lawyer – I do not know if this information is correct or current – and none of this should be construed as legal advice. Apply this information at your own risk, and before doing anything, consult your own lawyer.

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
February 16, 2012

Great startups fail if they can’t reach their audience

There was a recent thread on HackerNews comparing the traffic driven by HN vs r/programming to a blog post written by an entrepreneur working on an iPhone app. I made the following observation:

I know this is just a fun article, but to get more serious for a minute; the missing thing here (what most people seem to forget when they’re attracting traffic) is that neither of these audiences are part of his target market. He mentions his call to action is attracting votes, and maybe that’s all he really cares about, but it’s worth remembering that the target customer of this app is neither reading HN nor r/programming.

I don’t have a good alternative for how to reach “iPhone-owning NYC cab riders who care enough to review drivers”; I’m just trying to make a general observation about these kinds of traffic-from-A-vs-B tests. Of course, I’ve assumed his objective is app sales, not attracting hacker/VC attention. Nothing wrong with the latter!

I’m not trying to pick on Alastair Coote; he made an awesome app as a proof-of-concept, and my assumption about his goals were incorrect (he was targeting the right audience to attract votes).

His post just touched a raw nerve my obnoxious evil-marketing-suit alter ego has with a lot of the ideas floating around the startup community. Startups with great ideas, even great executions, fail epically when they’re unable to reach their target customers in a cost-efficient way.

GroupOn is a perfect example of the hilarious absurdity of a company that has a couple terrible things going for it:

  1. They pay more to acquire customers than their customers spend over their lifetime as customers.
  2. There is no second point.

Now, what about all those brilliant venture capitalists who invested in GroupOn? They made a killing at the IPO and stuck the dumb hold-for-value public with a worthless company. Psst… the stock market is for suckers.

But I digress.

The idea comparing acquisition costs (AC) vs lifetime value (LTV) is not new, but lots of people jump over the part where you actually identify your market and decide if you can reach them at all.

The problem with consumer web apps and mobile apps is that “everybody” is a really shitty audience to sell to. You need things like puff pieces in newspapers and million-dollar adword budgets. Narrowing the definition of the  audience has a direct relationship with reducing the cost to reach them.

For Alastair, “everybody” goes down to “New Yorkers” then to “iPhone owning New Yorkers”. That’s not super helpful, but already you can start to have all sorts of geolocation-specific ideas like advertising through foursquare when someone checks into a bar after midnight. Those people only represent maybe 10% of the potential customers, but worse, the group probably includes 100 times more people than those who would even consider using the app. Reaching those people is a waste of money.

The real question is still how to reach “iPhone owning New Yorkers who ride cabs and want to participate in a cab reviewing system”. So here’s what your thought process should be in evaluating a startup idea:

  1. who wants to buy this thing?
  2. can I reach these people to tell them about this thing?
  3. can I do it cost-effectively?
  4. is that group big enough to make enough revenue to cover the fixed costs?

Then you leave the realm of the underpants gnomes to reach great success.

August 21, 2011

How to show hidden files in Mac OS X Mountain Lion

I’m continuing to get my new Macbook Air set up, and I’ve been getting adjusted to the new Finder. This helps if you’re a power user:
  1. Open the terminal (found in /Applications/Utilities/)
  2. Type the following (without quotation marks) to show hidden files: “defaults write com.apple.finder AppleShowAllFiles -bool true”
  3. Hit enter
  4. Type the following (without quotation marks) to restart the Finder: “killall Finder”
  5. Hit enter

You can turn hidden files back off by doing the same thing, but switching the “true” to “false” in step 2.

And a random tip navigating in the finder: press  (command + up arrow) to navigate to the parent folder, all the way up to root.

August 17, 2011

New isn’t novel – stop chasing fame.

I came across a post on HN today complaining of the lack of important things happening in Internet startups. The author, Swizec, makes a case for the existence of an echo chamber effect in Internet startup-land that leads to incrementalism.

I couldn’t agree more.

Here in NYC, there’s an echo chamber in the media world. Everyone knows the common wisdom; reaching your audience requires things like “starting conversations” and “engaging media” and “gamification”. All the speakers on the talking-head circuit say the same thing, and we all spend time hanging out together reinforcing these ideas.

No one in media seems to care about quiet successes, those great ideas that make things better, but don’t win any awards.

The same thing is happening in Silicon Valley.

The craze over the past few years has been “social”. I don’t just mean social networks like Facebook. Every darling Internet startup seems to be based on re-imagining something everyone already does, but making it social. Certainly, that’s the basic nature of the Internet, but there’s also this unspoken rule: you should want your startup to be famous, and to be famous, it better be social (with matching hockey-shaped adoption curve).

That’s why you want a famous angel investor, instead of one that’s tapped into your target industry. That’s why you shmooze at tech startup events instead of the events your target audience hangs out at. That’s why you want a nice writeup on TechCrunch.

You’re chasing the wrong dream. Fuck fame.

Fame is about the shiny new play thing, “the next XYZ but with twice the social”! The problem is that most of these fame-seeking new ideas aren’t novel.

Take airbnb, a company that democratizes the hospitality industry (i.e. locals can post their residence up there and have tourists rent the space). I pick on them because they’re actually doing something quite disruptive to the hospitality industry. Unfortunately, there’s nothing particularly interesting about disrupting the hospitality industry.

Airbnb provides a solution that used to be provided by hotels, craigslist, word-of-mouth, and so on. Certainly, they’re doing it better. They’re adding something new. But there’s not much they let you do that you couldn’t do before. Airbnb lets you… rent places.

I know I’m going to get a lot of flack for ragging on Airbnb. But really – better vacations? Talk about first world problems.

Or take a more obvious example: groupon. Their bright idea is… *drum roll*… to send out coupons. Woopee!

Everyone seemed to be thoroughly impressed by their business model until word spread that they were losing money hand over fist acquiring merchants and consumers – not in itself a problem – but also that merchants weren’t particularly interested in using the service again after their first promotion. It’s hard to make a business selling things people don’t want.

So, I have a thought for entrepreneurs over in silicon valley:

You can make a fine business applying your technical know-how to make things a little bit better, a little bit faster, a little bit more democratic for consumers. If you do, you’ll be able to raise some money (for now, at least) and churn out Yet Another Consumer Web App. Get enough buzz, and you might even succeed.

The alternative is to build things that fix problems that couldn’t be solved before.

There was no reasonable way for me to give directly to an entrepreneur in Sub-Saharan African before Kiva. There was no reasonable way for me to buy science textbooks for a student in Kansas before Donorschoose. I didn’t have access to the smartest people in the world before TED. Or if those are all too philanthropic for you; I couldn’t (automatically) keep track of my finances before Mint.

But I think you’ll have trouble finding many consumer problems that Western Society hasn’t already found some fix for, online or offline. That means you should either think harder about mass market problems in the developing world, or ignore the consumer segment and focus on domain-specific problems in industry.

These kinds of companies aren’t behoven to the Silicon Valley echo chamber. They don’t require fame.

June 1, 2011

Google +1: A response to Facebook Like-button, minus the usefulness

Google has released their +1 button, an answer to the ubiquitous Facebook “Like” button.

As a publisher/advertiser, the attractiveness of Facebook’s Like-button is in the way it gets your communication into a user’s social feed. If enough people in my Facebook social circle like a page, it will probably show up in my news feed, and I may be tempted to check out what all the fuss is about. This is the core mechanism that makes something go viral on the social network. Google’s +1 button aims to do the same, but there’s a hitch.

Who exactly is my “Google friend”?

Facebook still gets a lot of flak for mixing up our various “friend” contexts; do I really want to have one place where I connect with family, friends, co-workers, or strangers I met at a party? But over time, individuals come to some sort of equilibrium about how they use Facebook. Google can’t say the same; at least, not yet.

The now-defunct Google Wave worked by pulling in all of our Gmail contacts, but as many of us have over a half decade of email history, this isn’t an accurate reflection of people whose opinions we trust. Herein lies the unanswered element of Google’s social platform – what is the context of my “friend” relationships?

And the elephant in the room … will the search algorithm change to reflect my individual social/usage history?