Bugherd experienced a brief outage early Friday morning AEST which apparently was unrelated to the fact that they’d been mentioned in the morning’s US tech press including TechCrunch, GigaOm, VentureBeat, ReadWriteWeb and AllThingsD.

Some of the coverage on the investment announcement

It wasn’t news to me exactly, since there’s been talks with the 500Startups team since Alan and Matt pitched in the 500Startups Mountain View office with the Startmate crew back in April, but it was great to be able to talk about the deal finally, and especially gratifying to be mentioned alongside some other really promising startups.

Alan and Matt will be over in Mountain View in July and August, for demo days with the 500startups team and other meetings. But Bugherd’s not attending for the full incubator program because it’s further along in its journey towards hugeness.

500Startups’ decision to invest means they’re excited in the potential of the product and the company, particularly when it comes to delivering a service all early-stage web startups need: a great issue tracking tool. Interested enough that being on the other side of the Pacific isn’t too far away, even. Hope we can get Dave McClure and Christine Tsai out here soon to visit and meet some of the other great people in the startup community here.

I’ll keep track of any further coverage of the announcement at http://bit.ly/500startupsinvestsinbugherd

Try Bugherd now if you need the world’s simplest bug and issue tracker. I have it on good authority the free beta period is about to close, but beta users will get a big discount when pricing is announced in the near future.

Those blasted McHappy Meals usually go half-eaten so it’s not the few moments of fat, salt and sugar that makes them irresistable, it’s the movie tie-in, limited-time collectible nature of the bloody near-worthless-will-break-before-your-car-leaves-the-carpark toy included with the meal.

Believe it or not, what works for selling fast food also works for selling enterprise software products.

Mike Cannon-Brookes is a fellow mentor/investor in Startmate.com.au and also the co-founder of one of the most successful Australian software companies of this generation.

When Mike recently spoke at a Sydstart event in Sydney, he said he realised some time ago that Atlassian’s most effective marketing strategy was not to sell software, but to sell very witty, cool t-shirts that developers will kill to get their hands on. “We sell great t-shirts that you have to buy a software licence to get,” he said.

Most of the Sydstart audience thought he was joking, and he was funny, sure, but he was serious. By selling t-shirts individuals want and bundling them with software corporations need, Mike has been practicing the ‘good’ kind of bait-and-switch — the kind that creates a desire so powerful for one thing, you end up buying another just to get it.

Why bait-and-switch? Well, there’s nothing funny or exclusive about selling software that helps developers track bugs and publish internal wikis. So getting customers passionate about Atlassian and its products would be tough, if the company restricted itself to just marketing software.

But after trialling all sorts of give-aways and branded items, Mike and his team hit upon the ideal marketing medium for Atlassian: short runs of exclusive, clever and usually very funny t-shirts.

It’s impossible to underestimate the importance of clever t-shirts in developer culture, but if you are a developer, you likely have a problem expressing yourself in conversation, and a great t-shirt message makes a great warning signal, much like the yellow and black stripes on a poison dart frog, except, well, less cold and slimy. Usually.

A great developer t-shirt will include a message, graphic, or both that will leave passers-by in no doubt that they haven’t watched enough cult sci-fi movies, played enough cult XBOX games, listened to enough undiscovered bands, or compiled enough great code to really understand the person wearing this t-shirt. One of my favourites of all-time just had the message, “Of course you realise I could replace you with a shell script?”

You see, a shell script is… Oh, never mind.

T-shirts are also great because they make the fashion decision for you — wear a business shirt to work and you need to decide between stripes or plain, tie or no tie, etc. A t-shirt is a t-shirt and a developer can pull one out, tug it on and be one pair of jeans and one pair of shoes away from being ready for work. That’s how stereotypical developers roll.

Atlassian’s newest promotion, playing off the popularity of the iOS/Android game Angry Birds is wonderful marketing. See how it plays off a current meme, borrows from exactly the kind of landing page design that nearly every web business other than Atlassian uses these days, and most important of all, stacks on the developer in-jokes that only they will truly understand (or will believe that’s the case).

The key to good bait-and-switch marketing (and all subculture marketing) is to make your audience feel like you are peers in the same subculture, and this promotion achieves that beautifully. There’s even what I think is a clever stab at Mike and his fellow co-founder Scott under “The Founder” (at least, I think it is, after all I’m not truly a member of the Atlassian customer subculture). You can’t be peers with Mike and Scott unless they are brought down a couple of pegs.

Finally, this may look like a promotion for what might be the lowest-selling iPad game of the year, but it isn’t. It isn’t even an ad for Atlassian software (see their products, or any of their features, or benefits, mentioned anywhere on the page? No.)

Instead, it’s an opportunity to buy a witty/cool t-shirt or plush toy. A  t-shirt or plush toy that, had you not read this, you would not be cool enough to understand. Which would make developers wearing the t-shirt very happy, and more likely to feel that Atlassian was a brand that understands them.

If I were Mike, I’d make sure I had very limited stock of this merchandise, and I’d make it clear that if you’ve missed out, there will be no reprints. You’ll just have to pay closer attention to Atlassian, act faster next time, spend less time considering the purchase decision rationally and get used to making emotional decisions about Atlassian products.

Because Mike’s clever enough to know he’s not selling software, he’s selling emotional engagement, in XS, S, M, L, XL and XXL.

Mick Liubinskas at Pollenizer is “Mr Focus” — much of the value he brings to clients is his ability to create and maintain laser-like focus; on the problem a startup needs to solve, on finding customers, on raising capital, on recruiting the right team.

Me? I’m more “Mr Shutterspeed”, “Mr Aperture”… basically, anything but “Mr Focus”. I wield my firehose-like lack-of-focus on many projects, many products, many problems and many ideas. Not all of them at once, either, it’s more of a wild spray across from the first to the last and back again.  Sometimes this frustrates me, I know it can frustrate Mick when we work on something together. But it’s who I’ve always been and I’m making progress, really I am.

But enough about me, let’s talk about what I’ve been doing lately…

Earlier this year I snuck in as one of the mentor/investors participating in the early-stage tech startup seed fund Startmate.com.au but, since I’m Mr Shutterspeed, how could I possibly stop at just one early-stage tech startup seed fund? So now I’m delighted to say I’m also a mentor/investor in Pollenizer’s new Pollenizer Ventures fund (no separate website for it but here’s Pollenizer’s announcement).

The $500k seed fund is made up of some of Australia’s most experienced technology veterans including:

Scott Farquhar, Atlassian
Mike Cannon-Brookes, Atlassian
Matt Macfarlane
Stuart Richardson, Adventure Capital
Adrian Vanzyl, Adventure Capital
Matt Dickinson, Growth Angel
David Cooper, Deloitte
Mark Greig via Elevation Capital
Adam Broadway
Rob Antulov & Nick Gonios via 3eep Ventures
Chris Hitchen, Getprice.com.au
Domenic Carosa, Dominet Digital
Phaedon Stough, Mitchell Lake
Tony Faure

…and yours truly, Mr Shutterspeed.

Whereas Startmate is a seed fund for technical founders looking for business advice, Pollenizer Ventures is a seed fund for business founders looking for technical advice, so the two ventures are quite different and compliment each other nicely. After all, how else could Mr Focus also be involved in both funds?

All the tell-tale signs are there: Google, whose next-biggest acquisition was for online advertising powerhouse DoubleClick for a mere US$3.1B back in 2007, has US$33.4B in cash and securities with which to rule the world, and yet was prepared to throw a reported US$6B at the deal. That’s 18% of Google’s money pile. For a startup only three years old which earned an estimated US$350M in the past year. A 12x valuation. Why?

Because the bigger you get, the more of the industry you have to try and dominate to keep shareholders satisfied that you’re doing your sole job: to dominate. As the internet’s influence on the world broadens, and your company gets bigger and slower, this becomes impossible. There are too many new sectors, and your internal communication processes are slower than they were when you were only 200 people.

Next, a startup sector booms under your nose, a sector you thought would never be big. It turns out this startup has everything you need to solve a long-standing problem your business has, to consolidate your dominance (in this case, small business advertising online).

But you’ve left it too late. You try to poach people but nope, all the best people are having too much fun where they are. You wonder if you can hire an entire team from one of the top five, but nope, they’re all hanging on because they want to be just like the number one team. Can we get a meeting with the number one team? What’s it called again? “Groupon”? WTF does that mean? (yeah, right, and you’re called “Google”).

You finally get a meeting. Your team goes in trying to negotiate as if you’re the whale and they’re the minnow, but this minnow has a huge ego, a ridiculous idea of its own value, and wants some surreal conditions attached to the deal. Who the f@#ck do they think they are? Who can negotiate with these people? (by some estimates, GroupOn CEO Andrew Mason would pocket US$530M from a US$6B deal).

You keep trying, but each time you talk to them, they double the number they first thought of. By meeting three it’s like a game to them. They’re thinking, ‘if we can get our IPO out before the market sours on the news that we declined Google’s offer of US$6B, we are going to be richer than gods’. They’re openly laughing at you as they walk back to their scuffed and dented cars in your attorney’s car park.

‘You know what?’ Your engineers say, ‘F8ck them, if we wanted to rule in this space we could have something live in a month and bury them before the end of the quarter. With our resources? With our audience? They’d never stand a chance.’

So what happens next is one of two things. Option one: you listen to your engineers and you spend the next two years learning, that actually, over-compensated search engineers who now have spouses, children and a life, burdened by too much PowerPoint reporting, corporate bureaucracy and blame-shifting, do not make the best competitors for a lean, hungry startup motivated by a consecutive series of wins.

Alternatively, after a series of embarrassing, root-canal-painful meetings in which you eat a lot of humble pie, you end up managing to acquire the number two or number three competitor to Groupon, thereby making those guys’ dreams come true and doing nothing for your own shareholders, employees or market domination because the good members of the team leave you as soon as their earn-out period ends and the bad ones stick like shit to a shagpile.

The deal makes you a little bit bigger, a little bit slower still, and begins to turn the tide of sentiment against you, to shorten the leash the board and major shareholders have you on. You think you could have moved faster this time? Wait till you see how many hoops they require you to jump through before they’ll let you try and make the next acquisition.

Google, this is a new sector you don’t dominate in and may never. Get used to it, there will be more. This is your decline.

Many great startup ideas fail because they ‘run out of runway’ — they find out too late that they’re nearly out of cash, and there just isn’t enough time to raise some more money. Even larger startups with more money can crash at the end of the runway, if the CEO isn’t getting the truth from the person managing the finances, because that person is trying to hide the bad news in the hope things might improve.

Here’s a great, quick solution that’ll keep CEOs and startup co-founders directly in-touch with exactly where you are on the ‘runway’ — how many days you have left on your current earning/spending rates. It’s InDinero.com.

Give InDinero your bank and credit card account details and it will login securely as you, download your transactions and start categorising them as income, sales, utilities, etc. It needs a little help at first to identify each kind of transaction but it learns fast.

In fact, speed is where InDinero really tries hard — it tries to offer a near-real-time view of your financials, so that each time you login it goes and sucks down your latest transactions. This is both good and bad — I’ve found that InDinero sometimes responds too slowly when I’m helping it categorise unidentified transactions — presumably because it’s ducking out to go check my transaction history for other similar transactions.

But compared to other financial dashboards, like ANZ Money Manager it seems clearer to read, more automated, and faster to use. And it’s made specifically for small businesses, it doesn’t try to cover both personal and business financial situations.

As well as your bank transactions you can enter in upcoming bills and invoices; this is when InDinero becomes really useful, forecasting in big, simple graphs your future cash position. If you’re earning money you can work out when you might have the cash to be able to hire someone to take care of marketing, or warn people that unless they ramp up sales in the next three months, nobody will be getting paid in March.

What I love most is that InDinero automatically sends me a weekly email detailing my business’ income, spending, bank balances, and what categories I spent money on. It’s something I should know all the time, but the reality is, because I’m not a book keeper, I don’t.

Great startups fail all the time because they lose track of their basic financial performance. This no longer needs to be you.

Start, by @boetter

Are you a technically-focused startup founder looking for a little funding and a lot of advice to help you get to that crucial point of a Minimum Viable Product and then on to an introduction to investors in Australia and Silicon Valley? Startmate.com.au wants you (or someone just like you).

Startmate is a new early-stage startup seed fund initiated by Niki Scevak. I’m an investor and mentor in the program, and there’s many more impressive names than mine on the roster.

Our first program will fund five startups and begin in January, 2011 in Sydney. We’ll spend three months helping you launch your company and win your first customers.

Applications are open now and interest has been very strong so far, so please do your best work and give us all you’ve got.

Drop me a tweet if you have any questions. They better be good ones…

Still, my gut says the biggest problem is not homepage conversion rates but actual use of the product. I bet they find too few new signups get all the way to creating and marketing something they’ve made using Traindom. In fact, I think I could build a bigger business teaching people *how* to make this kind of material and inspiring them with examples they can cut up and use as templates.

Here’s what I mean:

Another friend, Yorke Hinds, started Bed And Breakfast Institute, selling an online course for people who’ve always wanted to own/operate a bed-and-breakfast. He’s smart: he could try and build a web platform to help people operate their B&B, but because there’s so many steps of investing commitment and time in those sorts of decisions, a tiny percentage of the people who dream about doing a B&B ever actually start one.

The principle is: avoid business models that depend on convincing people to take a big step. Until they take that big step you’re either waiting to bill them, or you’ve billed them for something they haven’t used and so won’t pay for when their free trial expires in 30 days.

Even if you’re taking that big step down a few notches by giving them a web platform, it’s still a big step and you can spend a lot of time waiting for them. If you can build a platform that lowers the height of stairs, then apply those skills to lowering the height of a low stair, so that you’re taking it away altogether. Then there’s no barrier, no hurdle, no reason not to, no reason to wait until you’ve thought about it some more, and every reason to come back and back again.

'Steps' by Jan Tik

Yorke’s online education course addresses a small step: it helps people decide whether they really want to start a B&B by teaching them about what it’s really like. It’s marketed as a course that will teach you the insider secrets of the most successful operators in the B&B industry but that’s the justification the customer needs to sign up. The benefit he’s offering his customers is to help them make a big decision, so he’s not waiting for them to make that big decision before he’s able to sell them something. He’s grinding down that small step so it’s level with the ground, so you don’t even pause before you decide to buy.

If you want no barriers to conversion, start with a smaller barrier.

These days, web platform design and development is so cheap and fast to do, there’s  not much downside if a startup idea doesn’t get traction. And we know it’s possible to test many startup ideas without doing much coding at all. It’s worth building an MVP and seeing what testers think of it. But test a MVP as soon as you can so you can test whether you’re trying to shave a few centimetres off the top of a huge step, or whether you’re levelling a step only a few centimetres high.

Not my lawyer, but a dead-ringer.

I don’t do NDAs, for a few reasons:

• I’ve learned not to sign things without my lawyer reading it first. He’s a great lawyer, so he’s not cheap. Spending a couple of hundred dollars before I’m able to have a coffee with someone isn’t a viable operating model.
• I work with too many businesses every year to be able to manage and abide by the aggregate terms of an archive of NDAs.
• You may be trying to protect the wrong thing. If your idea’s awesome, it’s probably not unique. The value is not in your idea, it’s in your execution.
• If I couldn’t be trusted with your ideas, a quick web search would make that clear, since I’ve been doing this since 1995.
• A big part of the value I bring is my communication skills and the network of people I know. When the time is right, you need me to be able to talk about this.

I have signed NDAs in the past, and I wish I hadn’t, because I have no idea where my copy is now. I take comfort in the knowledge that the other party has almost certainly mislaid their copy too. Making the whole exercise expensive and pointless. Who wants to do expensive and pointless?

Corporates and big brands, that’s who — they specialise in expensive and pointless, many of them devoting whole departments of people to making things more expensive and pointless. I will sign NDAs when I work for corporates and big brands because they will pay me good money and I know I’ll get paid.

Whereas you with the great idea, the back of a napkin and a sharpie pen? I want to like you, and you want to like me. Don’t ask me to sign something that can best be summarised as “we don’t trust you” before we even get to know each other.

I will, however, abide by the terms of a FriendDA.

We’d probably agree that startups are lean, cash-poor, energy-rich adventures, that startup founders are mavericks, dreamers and misfits, driven by the belief that there must be A Better Way. But do startups have to involve new technology or new business models? Do they have to be built on the hope of massive profits at some future date? Can we scale the whole model down and still be talking startups?

I bet the husband and wife who decide to leave their corporate careers to start the bed-and-breakfast they’ve dreamed about feel like they’re on a lean, cash-poor adventure, doing something they’ve never done before. In my book they’re startup entrepreneurs just as much as, say, the pair of software engineers with a new web platform.

The sums invested might be smaller but the financial risk is likely to be huge. The business plan will seem just as unfamiliar and full of holes. And they’re doing it because they have a passion for something. They feel like misfits, renegades and dreamers.

So it doesn’t take the promise of $50 million to make it a startup, and it doesn’t require some new gizmo. We’ve proven a B&B can be a startup. Can we scale it down further?

Sure we can; just look for people who want to find A Better Way, misfits backing themselves on the strength of a business plan they haven’t quite finished yet.

You’ll find startup people like these on Kiva.org, a not-for-profit online venture that acts as a broker of micro-loans to people like the new B&B owners, like the bright young tech startup CEOs too, but these are startups on a vastly smaller scale, and they aren’t in Sydney or San Francisco, they’re in Senegal or San Salvador.

Zoila Hortencia Sobrevilla Cajamarca - one of Kiva's startup entrepreneurs

Kiva encourages hundreds of micro-lending funds in developing countries to apply to join its field partner program, then raises funds for lending out to field partners’ clients. The money itself comes not from big pension funds and multi-national banks, but from tens of thousands of regular folks like you and me.

A typical Kiva loan might be to a Samoan woman wishing to borrow money to buy tools for a vegetable farm, or for a man in Kazakhstan to fund repairs to his taxi. Most loans are less than $500 — these are likely the smallest startups you’ll ever see.

You can get started lending to these startup entrepreneurs using your credit card to transfer money online to Kiva, via PayPal. You can start with as little as $25.

Lenders like me find the people and loans we want to support by browsing a directory of borrowers, searching or browsing by location, sex and purpose of loan. You can see names, faces and read about their family and life to help you make a decision. It can be an emotional experience, but not because they’re begging for money; far from it, these are proud resourceful people determined to get ahead, who only need the smallest boost to get started. (Note: Kiva never discloses any information about you to the borrower).

It’s up to every Kiva lender to decide how much of any one loan they cover but most loans are usually covered by 50-100 people all lending $25-30 each.

Once a loan has received sufficient lenders, the capital is paid out from trust accounts held by Kiva to the local micro-lending field partner, which administers the loan and monitors the borrower’s progress on paying back the loan, so you’ll receive periodic updates from the local ‘lending manager’ by email, often with a photo of the borrower.

The qualification criteria are very strict, to protect borrower and lender alike, since a reputation for shady deals would sink the venture as fast as news travels over social media. I’ve made nearly a hundred micro-loans through Kiva and haven’t had a single dollar go unpaid (at the time of writing, Kiva said 98.91% of all loans were repaid in full).

The best bit of all is that when a loan is repaid, your contribution to that loan is returned to your Kiva account. You can choose to withdraw it and pat yourself on the back, donate some to Kiva to help with operating expenses, or best of all: match up another micro-borrower and fund another new entrepreneur. Over a year or two, your $25 can help kick off a startup business again and again and again.

As someone who advises, invests in and sometimes co-founds startups, I often think about the reasons why people decide to get into startups, and also why people decide to invest in startups.

On the investment side, there’s no doubt the promise of a high risk/high return attracts many Investors for the MBA version of betting on horses — it can be very lucrative.

But there’s another kind of investor too — the kind who find themselves in the fortunate position of being able to contribute to someone else’s success, to the satisfaction of seeing capitalism create recurring value from hard work and good ideas like nature makes a tree out of CO2, sunlight and water. It’s good for the soul. It’s just the right thing to do.

You don’t need to be a captain of industry to be this kind of venture capitalist. With $25 on your credit card and ten minutes of your time once every couple of months, you can experience the same emotional and spiritual rewards a VC feels when a business takes off.

Like me, you might want to set aside the price of a coffee once a week and every month, tip that into your Kiva account. You’ll hardly miss the money but your hundred bucks will make a huge difference to many lives around the world, and unlike donating to a big charity, you can choose who gets your money and you get your money back if you wish!

Check out the Team Pollenizer page on Kiva, where me and other current and former members of the Pollenizer hive do our micro-startup-lending. You can join our team, Stuff You Should Know team, the Stephen Colbert team, or just go it alone.

So go ahead, help someone create some recurring value out of good ideas and hard work. I can’t guarantee you an interview with Techcrunch any time soon, but doing your venture capital investing through Kiva will create a lot of good news for a lot more people.

Startmate wants to help technically-focused founders get started, with a small amount of capital, advice and a mission to Silicon Valley.

Startmate is a pool of funds and a roster of mentors who’ve all built hands-on successful web startups that began in Australia. We’ve been where you’re going and most of us are still on the journey, so we think we bring some useful perspective and experience to the challenges of getting an Australian tech startup up-and-running.

Our first program will fund five startups and begin in January, 2011 in Sydney. We’ll spend three months helping you launch your company and win your first customers.

Startmate is a bit different because:

Why crazy? I understand that sometimes those messy, chaotic moments in startup life seem like the very things you want to forget. You’re on a mission to change the world and I’m taking photos of a three person all-hands meeting? What’s that about?

This is what it’s about: with a few years of hindsight as perspective, some of these will be the moments you miss the most and the things you’d give anything to recapture.

My job title at Doing Words is “Chief Hindsight Officer” for two reasons. I’m not just working with you because I bring the perspective of many startup experiences of my own, I’m also busy capturing as much as possible from your startup’s early history because some of it will be important to you one day.

You won’t know until you look back on it whether the person you’re meeting for a coffee will become the most important hire you ever made. You don’t know if whether that lunch appointment will result in your biggest-ever distribution deal or your biggest-ever waste of time. Perhaps that diagram we just threw up on your whiteboard is a heap of delusional crap, but maybe it includes a significant insight that will one day power not just your business but a whole ecosystem of businesses.

Crazy talk, sure, but not that unusual. And because I’ve missed enough of these pivotal moments of my own, I’m determined to capture yours if I can.

I can’t be there every day, even if you can afford me, so I’ll try to help you understand why it’s important to capture the little moments along the way, and I’ll try to tutor you to remember to capture them yourself when I’m not around.

When you boil it down to a few simple rules, it’s really not that hard. They are:

• If an external meeting isn’t subject to an NDA that specifically forbids it, try to take a photo.
• If an internal meeting isn’t disciplinary, try to take a photo and a video.
• If it goes on a whiteboard, take a photo of it with something like JotNot so the words will be legible.
• If you aren’t capturing your company processes and business rules in something like a Wiki, start immediately. If you already are, make it a key goal in someone’s metrics to keep it maintained, authoritative and consistent. Trusting it to ‘everyone’ is guaranteed to leave you with a tangled tagliatelli that makes no sense to anyone in a few years’ time.

Of course, there are some startup milestones that nobody needs a prompt to remember: the first time someone invests in your idea, the first time you go cashflow positive, and sometime between the two, the first time you have a paying customer. But there are ways and then there are ways to celebrate these more obvious milestones, and if you don’t make the time to celebrate them properly, then you are selling yourself and your team short.

One very inspiring example of remembering the first customer is this wonderful letter from makedo founder Paul Justin, which accompanied a beautifully packaged recycled cardboard bucket of the company’s creative play craft materials. Yes, Paul goes long on the big picture in his letter, but as his first customer and one of his product’s biggest fans, I want him over-the-top on this, because I’m pretty darned close to the top on it myself.

The text of his letter reads:

Dear First Ever Customer,

This is quite the moment. By receiving this package you have made reality of what was merely an idea one year ago.

Behold Makedo.

You are the first beat of the heart, the first breath of air.

I invite you to get involved and become a spirited presence in the life of makedo.
There is so much potential for what is possible, so many conversations to be had, so many ideas to be thought, and of course things to be created and shared.

We have created makedo.com.au as a place for you to think large, share your voice, express your ideas and inspire the world with your making.

Be part of the journey. Makedo was made for you.

Smiles,
Paul Justin
Inventor and founder of makedo.

Wow! Now that is a startup company that stops to remember the little-stuff-that-could-be-big. Can you tell how exciting it is to be a Makedo customer? Can you imagine how exciting it will be to be a Makedo employee or a Makedo investor? I encourage you to do the same. Don’t sweat the small stuff, but make damn sure you remember it.

The greater risk is that the industry may turn away from Apple if groupthink decides that Apple’s strategy is flawed. We’ve seen it before.

Could Google's Android Market really overtake Apple's iTunes Store?

“Instant publishing” versus “approval process” is an old battle in online publishing, arising from the classic ‘cathedral and bazaar‘ dilemma. The ‘cathedral’ is a marketplace ‘curated’ by expert specialists to ensure quality, conformity and fraud-free experiences. The ‘bazaar’ is a marketplace where ‘caveat emptor’ is the only rule, and consumer-driven social media tools are the way users avoid bad experiences, bad software and bad people.

Bazaars naturally grow wider and faster. Cathedrals are naturally less prone to the risk of law suits and prosecutions. Both good things to have. But if you can’t easily choose both, which do you choose?

It’s extremely hard to design curation process that scales to the massive growth and depth of the world’s online creativity with its cultures, subcultures, languages, niches and special interests. If you don’t curate, the threat of getting your ass sued or prosecuted by customers, competitors, regulatory authorities and whole geographies can be enough to scare investors away before you even get started.

It takes more than building and then opening the floodgates to make a successful bazaar. You need location, momentum, viralocity and an engaged customer community that’s prepared to do some of your curation via social media tools. If you don’t open a bazaar, you risk being overtaken by a larger, more dynamic community of users.

Can you do both? Usually, no. It’s easy to end up with twice the cost of curation and half the benefit of the bazaar. You can see what that looks like on Nokia’s Ovi platform. Epic fail.

Cathedrals are sooo uncool

In many publishing settings, a cathedral-based system is best, but cathedrals are sooo uncool, and being uncool can cost you industry sentiment, which can cost you… well, everything in business. I learned this valuable lesson while working at Yahoo! a decade ago.

See, at the beginning, Yahoo!’s founders felt that new submissions to our directory should be reviewed by a team of highly-trained and skillful curators (who we called Yahoo! Surfers.) They would ensure not just that they were good enough to help our users find what they wanted but also that we were able to list them in the correct spot in the Yahoo! directory. One of the earliest hires at Yahoo! was Srinija Srinivasan, an expert ontologist, to guide our curation strategy. She was (still is, maybe) a Dewey Decimal Rockstar and her team of web surfers were some of the best available, all specialist subject experts, information theoreticians and librarians.

The Yahoo! directory was great quality content. You were really hard-pressed to find a bad website or a poorly placed listing in our directory. And of course, very early on, we knew our model was never going to scale to the growth and scope of the interweb — it could never include every website that was submitted to our surfers. To cover the rest — to have one foot in the bazaar — we worked with Inktomi, AltaVista and a tiny startup called Google to provide search engine results to cover the rest of the web.

Unfortunately, as the Long Tail became the coolest idea in the industry, it seemed like Yahoo! was outsourcing its Long Tail solution to Google. That was a concern to the industry and it began turning the market as a whole against Yahoo! as the best way to find stuff on the web. Now, the number of search results mattered more than the nature of the search results. While Yahoo!’s solution was still helpful, it wasn’t the coolest thing in town, Google was. Users, advertisers and the new SEO optimisation flocked to Google. Everything Yahoo! attempted to claw back that leading perception now felt like catch-up, and it attracted derision and disbelief — sometimes because it was merited, but often just because it was something from Yahoo!.

Uhoh, iTunes Store is a cathedral, Google is a bazaar

Undoubtedly, iTunes Store is one of the biggest, uncoolest cathedrals in technology. Whether you’re publishing music, TV, movies, podcasts or apps for the iPhone and iPod Touch, every piece of content must be reviewed and approved by somebody at Apple.

Like all classic cathedrals, Apple keeps all information on its approval processes and procedures very close to its chest. There is very little information from the company about how the approval process works, how long it takes, and what happens if your content gets rejected.

There are many good reasons for this: it’s valuable proprietary information, it is probably evolving rapidly and subject to change, and in many cases there is probably a large element of grey area to deal with — editorial calls need to be made unhindered by complex rules and regulations.

There are many bad reasons for this too — it doesn’t just fail to scale with the growth of the web, but it encourages industry speculation in the form of tweets, blog posts, conference sessions and industry gossip. All that backchannel discussion is negative, and in our hyper-connected online community, it can easily gain enough momentum to become an unstoppable meme that makes the hop from industry to consumer communities, like the one I saw crush Yahoo! as a search destination.

Meanwhile, Google’s Android marketplace is much more like a classic bazaar. It’s easier for developers to get apps out on the Android market, but that doesn’t necessarily help them market, merchandise or build a relationship with new customers. Frankly, Google sucks at both curating and marketing, if its Android,  OpenSocial and iGoogle marketplaces are anything to go by. They are all designed for developers first and foremost, with very little thought given to how to create an engaging ‘retail’ experience for consumers.

Do consumers actually want a bazaar for their phone?

Thing is, consumers and app publishers are not a single community — they actually have very different needs from an app marketplace. I don’t think the frustration Joe Developer feels with mysterious app approval processes should make the jump to Joe iPhone Owner.

Most consumers really don’t want a bazaar when it comes to apps right now, especially on mobile phones. An iPhone or an Android phone brings your essential personal information closely together with entertainment, sure, but none of us wants to install anything that might be a security risk or that might impair our ability to make a quick and simple phone call.

Mobile phones have limited screen real estate and input methods that make it harder to browse, evaluate and personalise large volumes of apps. Even when new apps only cost a dollar, most consumer iPhone owners I’ve observed tend to choose one app per category and stick with it if it’s well-designed and well-supported. They would rather have the best app recommended to them by an expert editor than have the choice of 100 apps in one category they need to evaluate and decide on themselves.

xkcd: oh yes, there's an app for that!

Can Apple have a foot in the bazaar too?

Sure, Apple could do a better job of implementing ratings, user reviews and ‘genius’ recommendations to help users recommend the best apps in cluttered categories.

It would really help Apple if it made the review processes for all content sold in the iTunes Store less opaque and unpredictable. There has to be a reasonable middle ground between Apple’s usual default of extreme privacy and giving away trade secrets. Publishers should be able to login to a dashboard of some kind, something that could show a timeline of the stages of the approval process, the average waiting time, the number of apps ahead and behind, all your apps, and flags for any outstanding issues.

Apple’s relevant people should be prepped and allowed to speak about this whole set of issues, to industry conferences, trade publications and in blogs and online documentation. Can you name your favourite ‘iTunes Store Industry Evangelist’? Or even an ‘iTunes Store Publishing Genius’? That’s a terrible omission.

Once an app is on iTunes Store, Apple could really do a better job of providing marketing data on consumer interaction with the app in terms of views, clicks, purchases, as well as anonymised data from apps in the same category to use as a benchmark.

It would also really help if Apple worked on extending its lead on helping developers and publishers market and merchandise their content on iTunes Store. There’s currently no advertising space on iTunes Store — everything is either algorithmically determined or chosen by an iTunes Store editor. Why not lock out some space for publishers to pay to market their apps?

Apple also does nothing to help you market your app outside iTunes Store aside from allowing you to copy and paste the url of the app and the publisher in iTunes Store. Why not provide an RSS or Atom feed of positive reviews and star ratings? Make it easier to create a video of the app in play? Make it easier for app developers to contact customers who’ve bought an app previously?

Industry: you are not a good use-case

If you take just one thing from this lengthy article, take this: we in the industry are not typical consumers. I, for instance, have purchased 139 iPhone apps! That’s extreme, but none of us is the mainstream Joe Consumer by the very fact that we work in the industry and we invest much more in this than Joe Consumer. Don’t make the mistake of thinking that what’s best for the iPhone app developer community is also best for the iPhone consumer community. Think before you lobby for bazaar over cathedral.

More good reading on this topic:

• Ars Technica: respected developers fleeing iTunes Store
• Manton Reece: The only two fixes for iTunes Store
• Fred Wilson: The power of instant approval

Why? Often ‘the street’ (your customers) will use your platform for surprising purposes. Likely, purposes you didn’t have in mind. Should you ignore their preference and try to force customers to bend to your will, or bend to theirsand try to find a commercially successful model for what they’re doing?

The answer is almost always the latter: try to find a legal, commercially-viable model for what your users want to do with your platform. Ebay, Twitter and Kazaa are all great case studies in learning and adapting to what customers do with a platform (yes, I know Kazaa got sued out of existence by the RIAA but those guys had a successful monetization strategy, if only they’d been given a chance to implement it.)

A new and very interesting example I’ve come across is xtranormal, which is a platform for making and sharing animated cartoons. One cool feature is the ability to create dialogue with text-to-speech — type in the dialogue and your animated characters speak them, in a flat, robotic monotone that really kills the buzz if you’re trying to create an animated romantic comedy or a smooth marketing pitch.

But it turns out this very same flat, robotic monotone works very well indeed when applied to sarcasm. Watch this hilarious exchange between a mobile geek and a girl intended to represent  Nokia’s Ovi store, below.

We go shopping in Nokia’s OVI Store from The Really Mobile Project on Vimeo.

So many of the highest-rated videos on the xtranormal website use sarcasm to such great effect — can the founders of xtranormal have not noticed this? Have they noticed it and decided to ignore it? Or are they even now hatching plans to build a community of consumers frustrated and angry with the bad experiences they’ve had with brands and products? Are they even now thinking up ways to use that emotion to motivate customers to create movies and share them with the world?

I know I would be. No, I’m not being sarcastic…

An exception — and also a great case study in visitor-to-customer conversion — is Mycharitywater.org. Mum, by the time you read this, Mycharitywater will have moved on from their milestone of reaching USD$500,000, which translates into 100 water development projects in poor communities in the third world. There are many reasons for this success, but you only need to examine the design of Mycharitywater’s homepage to understand: these are people who understand how to convert online visitors to customers.

Online visitors are famously fickle. While online marketing is the most targetable, measurable marketing medium, and anything from a tweet to a well-written paid search ad might bring a visitor to your website, most visitors won’t become a customer (sign up, buy, donate, or whatever else your conversion goal is).

An online visitor must invest very little effort to engage with our brand (compared to the effort required to recall a radio, newspaper or TV ad when next in a retail setting) and their commitment to staying around is correspondingly low. If you don’t hook them on the first glance at your homepage, you’ve lost them.

Homepage design needs to be all about converting visitors to customers, and you only need a few minutes on the Mycharitywater website to see how to do it well (click on the image below if you need to view a larger version of the page).

My ugly green boxes illustrate how the Mycharitywater homepage puts the "Action" and "Progress" parts of the homepage right in front of your eyes. If you're not quite ready to take action, the Learn More section is positioned directly below.

What is working so well?

1. The most important visitor action is highlighted in the only contrasted elements on the page — the two “get started now” buttons. Quickly glance at the page and away again — what stays with you? Those two buttons.
2. The page is clearly prioritised vertically to address what you need to know before you take action. Want to understand what the charity does? A simple three-step infographic tells you everything. Want to be sure that you’re doing something that lots of other people are doing too? Here’s a clear table of donations to date, people served, projects delivered and members. Want to learn more? There’s a text version of the founding myth and a founding myth video to address both accessibility issues and the different levels of attention of online visitors.
3. The organisation’s logo takes a back seat to conversion. Every startup has a battle between the need to gain customers and the need to build a brand. Trust me: the best way to build brand awareness is to make every visitor a happy customer.
4. This is the most exciting element of the page design for me: the key frame of the Learn More video doesn’t display a computer screen! Instead it shows a dramatically-lit, interesting face, head tilted to indicate an animated and engaging speaker, clearly about to tell you an interesting story.
5. The Learn More video is an absolute cracker of a narrative, building on a clear, memorable and exciting founding myth, it builds momentum over time and leaves you feeling like many great things are possible, if only you take the first step.

So, take the first step. Signup with Mycharitywater yourself and see if the experience of being their customer matches the experience of visiting their site for the first time. So far, it has done for me.

Well, no. Compare Hollywood box-office takings and the top 100 videos on YouTube and it illustrates how anyone can get a large audience, but it takes talent, experience and some budget to make something that puts money in the bank. Your startup’s demo video doesn’t need to make money directly, but it needs to convert visitors to customers, and those customers need to make you money.

In the course of my work I see a lot of demo videos, so many in fact, that I don’t watch most of them, because so many are so very, very bad. I could compile a short piece of my own, a “Top Five Worst Demo Videos” (let me know if that sounds like fun.) Clearly anybody can capture video from a computer screen and talk about it, but it takes some planning and some experience to create a great demo video.

Whether it cost you 30 minutes of your time or $2,000 to outsource it to video freelancer, it’s wasted money, wasted time and a waste of a conversion opportunity if your demo video isn’t watched. More importantly, it doesn’t convert visitors to customers.

Here’s a great demo video, produced for Dropbox.

After the click, my guide to what makes the difference between a good and a bad demo video.

No waffle

A good video has to be both quicker to consume than the text-and-pictures version of your Learn More page and more informative. For a typical page and a typical early-adopter with good skim-reading skills, that’s not very long at all.

Every second wasted watching a video feels like an hour. You’ll clear your throat, tell me your name and title, say nothing for a moment while you scroll down the screen and jiggle the mouse to check the pointer’s responding, and then tell me what I already know (“I’m going to show you some of the features of Product X’).

By now I am so long gone, the dust of my passing has fallen, compacted, become moistened by falling rain and germinated seeds. All you’ve succeeded in doing is pissing me off and making me reconsider using your product.

If your face is not in the video, don’t mention your name, your job title, or thank the viewer for watching. Even if you are in the video, don’t greet the viewer — you’re not ‘there’ with them. If feel you really must introduce yourself, limit yourself to, “I’m Joe.”

Don’t step the viewer through the process of registering a user ID and a password (they will know how to do that.) Don’t take time to point out the obvious elements of the interface and where everything is located. Just get started doing.

A ‘learn more’ video five minutes long is four minutes and thirty seconds too long. Need to show more than 30 seconds of functionality? Consider cutting your demo up into separate videos for each major feature, so users can skip straight to the feature they most want to learn about.

Cut, cut again

The best way to keep your duration short and your fact-to-fluff ratio high is not to run an unedited video. Invest in some video editing software (or choose one of these free web-based tools) and cut, cut, cut. It takes a real professional to get something completely right in one take, and if you’re not a professional you will need to edit together the best of several attempts to get the quality I expect as a visitor.

If you are smart enough to be a Mac user, iMovie is good enough, and you should have a free copy. If you want the best, ScreenFlow is absolutely fantastic for exactly this kind of work (I give it 5 stars). ScreenFlow offers two really important features; it allows you to zoom and crop video to bring out smaller elements of interface in a ‘call out’, and it allows you to record one or more audio tracks separately. Let’s talk about those two points in more detail…

Maximise the frame

Keep in mind the size (in pixels) that your final video will be displayed in, and plan your video recording so that you maximise your work for that limited size. Keep in mind the format (4:3 vs 16:9) your final video will be published in and record in that format so you don’t have distortion or letterboxing on the final video. If you’re going to host your videos on YouTube or Vimeo, keep in mind the final dimensions of the video will be limited by that hosting choice and record accordingly.

Next, minimise interface elements that distract and make the workspace smaller by turning off browser toolbars, status bars and bookmark bars. Is your interface dynamic enough to cope with a little browser resizing? If so, resize your browser window to pack the most interface into the smallest space without obscuring important elements. Then, if you have an editing tool that allows you to zoom and/or crop, get right up close to the action, especially if your browser interface is small and complex. It goes without saying that you should use the browser and OS your potential customers are likely to use — no good confusing them with an unfamiliar browser and OS interface when they’re supposed to be paying attention to your product’s benefits.

Record your soundtrack

People (and men in particular) are very poor at multi-tasking, and this becomes very apparent in a demo video — it’s actually very hard to demo interface and speak at the same time. Moving the mouse, clicking or selecting things from menus really messes with the part of our brain that manages speech and we compensate by introducing stutters, umms and ahs — stuff that reduces viewer comprehension and retention. If you sound distracted, I’ll get distracted too.

Fix this by recording the video of your demo first (talk to yourself while you do it, if you must, but don’t record the audio or delete it afterwards.) Now, playback the video and record an audio track where you talk about what’s happening in the video playback. It might take a couple of takes before you know the video playback well enough to make the audio commentary sound confident and authoritative but you’ll find it much easier than trying to manage the interface demo and the commentary at the same time. Which brings me to…

Don’t speak a script

Planning your demo video with a brief script is a great idea — you want any kind of narrative, demo videos included — to have a strong beginning, informative middle and climactic end. But writing a great audio script is a whole separate profession and speaking a great audio script is a whole other separate profession, both of which take years of dedicated practice to get right. (Watch this great bio video on Don LaFontaine, the original and the best.)

You can’t write and speak a great script, so don’t try because you’ll fail and I don’t want to see you fail. Instead, be yourself. You’re a startup founder for many reasons, but one of those reasons (I hope) is that you can be persuasive. So celebrate your natural persuasive self and use that instead of a script. Don’t try to use fancy language or fashionable buzzwords you wouldn’t ordinarily use because they’ll trip you up. If you’re naturally high-pitched, don’t try to be Don LaFontaine. If you’re naturally nasal, don’t try to be Patrick Stewart.

Watch that video you’ve recorded of the demo a few times so you can remember what’s coming up next, then play it back again and this time, record yourself talking about what’s happening on screen. It might seem a little weird, but hopefully it will be refreshing, different, animated and real when it is playing on your website. When you play it back, if it sucks, then face facts: you cannot be the demo video voice of your new web startup. Choose another member of the team, or if there are no other members of the team, recruit a friend. But for Jebus’ sake, don’t get an amateur actor friend or a sexy bubblehead bimbo. Actor friends will way over-act it and sexy bimbos may look sexy but they rarely sound sexy.

Be creative

The team at Commoncraft are well-known for their “In Plain English” series of videos that explain many common web technologies using stop-motion video and hand-drawn illustrations. This  video, for Aussie craft startup Makedo, is the best stop-motion animation for a startup I’ve ever seen.

If you have a boring interface, or you have a reason to show real people and real physical objects instead of menus and mouse clicks, please, I’m begging you, give it a try. It can be so much more engaging and entertaining, and while it takes longer to create, it can really pay off.

If you’re a Mac user, here’s how to get started with stop-motion animation the quick-and-dirty way. Take a digital SLR still camera and set it on a rapid-fire mode so that shots are taken at a regular interval. Cue up your real-life scene, Commoncraft or Makedo style, and then act it out in front of the still camera, so you capture the whole thing as a series of still photos. Next, import them into iPhoto, and then choose Export… from the File menu. You’ll see you can export the still photos as a QuickTime movie. Drag the exported QuickTime movie into iMovie and you’re more than half-way towards creating your stop-motion masterpiece.

Useful resources

How to optimise video production for YouTube (eHow).

How to optimise video production for Vimeo (Vimeo FAQ).

Check the comments section of this Techcrunch story on demo videos for links to a range of production houses that tout their ability to do great demo videos.

You remember the future we were promised, right? It had flying cars, robotic housemaids, one-piece shiny suits and meals in convenient pill form. We don’t live in that future because the people planning utopia fell in love with their own beliefs about what consumers wanted. They missed the gross and subtle cues that consumers use to indicate that this is not something they want, need or are prepared to pay for. It’s important to learn how to read those cues or your own startup vision may turn out to be as popular as nuclear flying car.

But first, let’s look back on the brighter, shinier future we were promised. As an impressionable adult I look back on when I was an impressionable boy and remember how deeply I had bought-in to that utopian future. At the age of 12 I had decided I’d be working as a journalist in a bustling colony on the Moon by the age of 30, flying to work, my only wardrobe choices the silver one-piece or the bronze one-piece, working late each night on a dinner pill. I’m a geek and I bought it wholesale. This was the future I wanted. Turns out, I was in the minority!

What happened to our bright utopian future? Real consumer behaviour happened. Society did not and does not really want a utopian future. Consider this: each of those emblemic utopian products kinda/sorta exists today:

Flying car: the Terrafugia Transition is more of a driveable airplane than a flyable car but it’s roadworthy, and once it has approval from the authorities you can drive it to an airport and fly it to another airport. The future we were promised included nuclear fusion-powered saucers, so where did the utopian product manager go wrong? He Underestimating the bureaucracy of the FAA, sure, but really the big mistake was an unfounded optimism that if consumer demand was high enough, the nascent nuclear industry would be able to solve the safety and disposal problems of nuclear energy. Turns out, no amount of commute time saved is enough to offset the fear of contaminating your neighbourhood with radioactive waste for the next half a million years. Almost always emotions (fear) beat logic (we’ll solve this) in the consumer mind.

Meals in pill form: turns out in reality meals are more easily delivered in powder form, and you can even get something better than a meal, if what you want to do is lose weight. Turns out the powdered meal replacement marketplace is quite a bit bigger than the market for flying cars but it’s not something most people choose to do. What went wrong? If asked, “Would you like to be able to save time by consuming a meal in pill form?” most consumers will say yes: sometimes they would like that. But the unasked question is, “how often?” and our utopian product manager either didn’t ask that or didn’t want to hear the answer.

Shiny one-piece suits: you only have to go to a fashion show, a car race, or buy one online to debunk the idea that these are somehow more practical and comfortable than jeans and a tee. Our utopian product manager was on happy drugs for this one.

Robot housemaid: the robot housemaid could be easily the most mainstream utopian product that exists today, yet consumers just won’t go for it. The iRobot company of Massacheusetts makes a whole range of the things. I pitch the joys of Roomba ownership to almost every visitor to our house — I’m famous for it — and I’m not too shabby at the art of the pitch. Anybody who doesn’t believe me need only check Amazon – this is a product that gets a 5 star review from nearly half the people who’ve bought one. So why have I been unable to convert even one single person yet?

Two simple reasons: almost everybody who cares about a clean floor already has a vacuum cleaner; and without exception they actually prefer to clean their floor themselves to make sure the job is done to their own high standard. They don’t want to be freed of the burden of cleaning the floor. They might tell a utopian product manager that they would love to be able to trust the cleaning to a robot, but you know what? They never will. Their housekeeping ability is closely associated with their self-esteem. You would have to pay them to allow a robot to do it, and even then they would stand there and watch it work, waiting for it to fail. That’s not increasing quality of life, it’s increasing anxiety. The only product people are prepared to buy that increases their anxiety is tobacco, apparently.

Even good startup founders make bad decisions

As startup founders designing online services, what can we learn from the mistakes of the utopian product manager? It is this: the very faith that makes you a good startup founder makes you a lousy judge of what consumers truly want to buy from you.

To even get a break as a startup founder you need an idea; more than idea, you need a dream, preferrably an unshakeable one. You need to evangelise not just consumers but sceptical investors, employees, industry and media. You can walk in with a meter-high stack of convincing-looking qualitative and quantitative research meant to back you up, but at best that’ll help with the post-purchase rationalisation. People will get on-board because they believe you, and they will believe you only if you have faith. And faith does not require facts. In fact, the more you have faith, the less you need facts and the more likely you are to select the facts that reinforce your faith.

The successful startup founders I know often have the uncanny ability to go to bat — and hit a home run — for ideas they don’t have much faith in. It’s a psychological makeup that is useful in sales roles; perhaps that’s why I know many successful startup founders from a sales background. Faith can really get in the way of building products consumers want. Not having faith in your product and your strategy requires you to apply reason, it allows you to subject a business to the strictest scrutiny, to make 110% sure that consumers aren’t just being polite to the nice young man who asked them if they’d be interested in buying a nuclear-powered flying car.

If you have faith, perhaps you have the wrong product, or you are the wrong person for the job. Get yourself a CEO (stay on as founder) an equal partner or an advisory board who don’t need faith and then pay close attention to what they’re telling you about what the market is saying.

Sadly for those of us who’d still love to be flying our robot housemaids, if you don’t have faith but everybody believes you anyway, you’re well on your way to success.

(That’s a depressing note to end on, so here’s a very funny skit about flying cars and what you should — or shouldn’t — be prepared to do to get one.)

I’m tired of seeing my friends across the globe at the wrong times. I shouldn’t be awake and neither should they! My friends on the west coast of North America? If you’re still awake and working at 3am when I’m waking up at 6 or 7 am, then something is wrong. Those in the UK and Europe? When I’m doing a bit of extra work at 9pm at night and its 3am for you? Not cool. My Kiwi and Aussie friends? Get. To. Bed.

And later,

Over the past few months I’ve realized that the sacrifices I have made haven’t always been the right ones — partly because I’m conflicted. I’m sure we all feel this pressure in some way: in order to provide for my family I feel more pressure for the business to do more — take on more work, expand what we’re doing, have more income so that I can provide more comfort, more food, more whatever. more. more. more. But at the end of the day, it just feels like less and less and less.

Great post, and I agree. Why is it happening? I think there’s three reasons: technology, knowledge work and wealth.

Technology has allowed us to bust work out of the workplace and distribute it unevenly through our lives so that it can reach us wherever and whenever it needs to. Blackberry, iPhone, browser-based apps, Skype, calendar-sharing and collaborative file sharing have fundamentally changed how and when we work.

Working in teams across timezones and on projects for customers on the other side of the world is increasingly common (would have been almost unknown outside IBM, BBN and diplomatic service 30 years ago.) More of us work for globalised organisations, and more of us work for ourselves. In both cases, technology has allowed us to find the best team members, not just from our office, but from a global pool of talent.

I’m on a team with people in another office in Sydney and someone on the NSW North Coast,  plus some people in Switzerland and some in India, with clients in Australia, Europe and the US. I don’t say that to big-note myself — I’m nobody special. If you’re not yet working that way, it’s because “the future is unevenly distributed.” You will be sooner or later.

Another part of the equation is that when you’re a knowledge worker, you really can achieve much more by putting more in. When you’re working on an assembly line, punching out widgets faster than the rest of the assembly line can use them just creates a backlog. When you’re operating a cash register, your working hours are set according to when the customer expects to find your store open. As a knowledge worker there have been times when I’ve helped achieve enormous changes in the space of a frantic, crazy few days and nights. Doing it once or twice a year makes you feel like you have superpowers. But superpowers can be addictive.

Final reason: wealth. As knowledge workers we’ve seen how workaholics have created incredible wealth for themselves and we know that our capacity to earn is directly related to the time we spend working. Some of us are better at resisting burnout than others but our cultural heroes have become the borderline Aspergers Syndrome-afflicted founders of the latest generation of internet startups. I was listening to This American Life while walking the dog this week and they mentioned the amazing fact that the ‘global pool of money’ that nearly dried up as a result of the global financial crisis is not only back, it’s now about 20% larger than it was when it caused the descent into crazy risky loan products. How’d it grow so fast? Knowledge industries.

Nowhere in the media have I seen the celebration of young, intelligent leaders who’ve gone surfing for a month or worked for a charity overseas for a year. The people working the hardest are the people we have aspired to be.

I’m nobody’s hero — aside from my house and some memorable travel experiences, all I have from a decade spent in startup teams is reading glasses, a terrible posture and some great friends. But I’ve been doing my best to achieve some work/life balance since I left Yahoo! in 2002.

I have to admit I’ve met with varying levels of success according to the work opportunities facing me and the expectations of the people I’m working with. Most recently I’ve chosen not to pursue a partnership in a business where I felt the other partners were working at unsustainable levels that would create a company culture of burnout.

I rebound into bad habits all the time — this week I was on my Mac past midnight one night, just working on my writing and my web hosting setup. And another night I picked up my newly-arrived copy of World War Z at about 9pm, telling myself I’d read until I was sleepy. It was a great book, I couldn’t put it down, and it was 2.00am when I’d finished it. The whole book.

That’s not a good habit, and I wouldn’t even be able to do that and get through the next day if I wasn’t an old wreck of a startup guy. Derek’s right: it’s usually not worth it, you owe it to your relationships not to do it, and it will make you unhappier and unhealthier if you keep it up.

How important is a brand name?

First, let’s recognise that a great brand name doesn’t make a great product. Neither does a bad brand name condemn a company to failure. Can you think of a successful business with a crappy brand name? Let me see… Google, Wal-Mart, GE, Ford — if we were sitting around a coffee table with $5,000 and an idea, none of these would be in a top 5.

Fortune's list of biggest companies is a list of blah brand names... With the possible exception of Total (I can see some appeal there for the megalomaniac demographic).

It’s possible to build a strong brand by building a strong company around it. Brands can also be strengthened, tweaked, broadened or focused over time — you don’t have to get it completely right the first time. But it helps.

There are many dimensions to what makes a good brand name and ‘branding’ is a specialist marketing discipline. Brand consultancies can help you find the best-possible brand for your startup if you have the money and the time. But you’re a startup and you may have neither right now. You may have four weeks to get some code running on a web server, with a pitch to an angel investor in six weeks… you  need a business card, you need a logo on a slide deck, you need a holding page on a URL, you need something to call this thing, and you need it now.

What makes a good brand name?

Assuming you could choose anything you want, what makes one brand name better than another?

The list of criteria could be as long as War And Peace but when you’re in a hurry and you know you can tweak it later, there’s only four that matter. They are:

1. Essential: you must be able to trademark the brand name (you must not risk infringing someone else’s trademark either.) You don’t need to register a trademark today, but you do need to be able to do it in the near future.
2. Essential: you must be able to register an internet domain name for it.
3. Important: it should be easy to type and to spell. If you went with the brand name “Szyzygy.com” Think of the time wasted in the next five years spelling this out every time you call and leave a message for someone. Think of the mistakes people will make typing your domain name into their browser. Think of all the competitors who’ll register Szyzygz.com, Szyzzgz.com, etc and redirect traffic from those domains back to their own businesses. Think about how annoying it will become.
4. Important: it should relate in some way to your product, its benefits, features, attributes, or to your customer.

There are many other criteria you could consider helpful — brief, emotive, exciting, etc — but these are all dependent very much on the nature of your business/product and they are all nice-to-haves.

What process should I use to find brand and choose a brand name?

This is an adapted version of the process I use with clients, simplified so you can run it yourself.

There’s one essential rule that applies to this process: capture and keep everything. Branding is not a linear process — you may need to take backward steps and sidewards jumps, and you will always need to understand how you arrived at where you are. Don’t throw anything away, no matter how crazy it might initially seem. In the winnowing stage below, make sure you don’t trash the stuff you remove, just file it for later.

1. Brainstorm

1. Make a list of the brand name ideas you already have — it’s likely that one or more of you will already have some ideas (that’s just one of the things we lie awake thinking about at 2am, right?). Capture those. Need more ideas?
2. Make a list of words that describe some of the features of your product or business. For example: balance, tally, track, report, reconcile, transact, export.
3. Make a list of words related to the benefits of using your product or business. For example, save, time, money, share, streamline, cloud.
4. Make a list of words that could be used to describe your customer. For example, SME, businessperson, business, salesperson, sales, accounts, clerical, book-keeper, manager, working, ambitious, planning, growing.
5. Make a list of words that could be used to describe yourselves. For example, driven, passionate, fun-loving, fun, laugh.
6. Wordoid is a great online tool that helps find prefixes and suffixes and latin roots and foreign language ideas for brand names and domains. Input your word lists from the previous steps into Wordoid and see what it comes up with.

Wordoid.com does a great job of finding natural-sounding names using common prefixes and suffixes in English and other language

2. Prioritise

• Try to sort your lists by how important each word is to your customer and yourselves. This step isn’t essential but it can be helpful to agree which words are more important to you. If nothing else, they may become helpful to brief marketing employees and external agencies at a later date.

3. Synthesise

1. Make new compound words by jamming together two words from the lists you just made. Write down both permutations (e.g. moneyworking as well was workingmoney).
2. Try the same exercise using three words from the lists. Write down any permutations that make sense (e.g. drivingworkingmoney but not moneydrivingworking).

IP Australia's ATMOSS trademark search engine lets you check registered names and images. More advice on trademarks in plain English is available from IP Australia.

4. Top-and-tail

See if you can make some combinations better by adding a suffix or prefix to the compound word, or by removing a suffix or prefix that was already there. Suffixes and prefixes can either be part-words (like “-oid” or “-ist”) or whole words like “your” or “our”. For example, from moneydriving you can derive moneydrive, moneydriver, yourmoneydriver, ourmoneydriver, yourmoneydriven, etc. Wordoid.com can also help with this.

5. Winnow

You now have lots of words! Meet as a group and remove the compound words that definitely aren’t appropriate and rank as a group the top 20 or so remaining compound words.

Now you need to check whether it already means something in another context or language. Working with social calendaring startup Mixin, I found the word ‘mixin’ is a common expression in software development. Fortunately, it had no negative connotations in software development, but it made it harder to optimise Mixin for SEO with all these references to the software development meaning already indexed by search engines. Working with mobile social networking startup Bluepulse, there was a graphic artist who used the username ‘bluepulse’ to create and publish illustrations online that… well… let’s just say they didn’t align with what we were trying to do with the Bluepulse brand.

Many words have different proper or slang meanings in other languages.

Wait, what does “Pajero” mean in Spanish?

6. Domains and trademarks

Now check the ranked compound words against registered domains and trademarks. Here’s some useful tools:

As an Australian startup your two key markets are .AU and .COM. The US Patent and Trademark Office's TESS search engine lets you do a similar search on trademarks registered in the US.

IP Australia's ATMOSS trademark search engine lets you check registered names and images. More advice on trademarks in plain English is available from IP Australia.

Democracy is a bad thing if you don’t have much time

Gotta hand it to dictatorships: they can sure get stuff done, fast. The biggest way to save time when choosing a brand name is to reduce the number of people making the final decision.

Early in your startup’s life, it can be fun to have everyone involved with an equal say in each decision, but if you’re grownups you’ll know that at some stage in the future, roles will need to specialise and you should each back away from the things you’re not good at. That doesn’t mean, by the way, that you hand off all the work in developing possible brand names to one person but make the final choice a group decision — that actually slows you down. The way to save time is to delegate the whole responsibility (the grunt workand the final decision) to one person or a sub-unit of your team. As long as that unit or person has the right skills, brief and process, you should be able to trust them to do it alone, while you get onto other stuff.

If you must make the final decision as a group, be smart about the decision process and recognise there’s going to be a lot of precious time chewed up on it. Put the choices up in an online form on Google Docs or use a free poll builder tool and have everyone who must be in on the decision rank the candidate brand names in order of preference. Try to get them to rank every brand name, since there may not be enough overlap if there are, say, three of you, 20 candidates and you only rank three candidates each.

Report back!

I would love to hear from you if you’ve used this process, had to adapt it, or if you have used a different process altogether. Where did you start? Where did the journey take you? What did you finish with? Are you happy with it? Leave me your comments below. Thanks!

photo credit: laverrue

Despite my baby-face, I’m so old that I had a career as a journalist and PR consultant before my interweb production career. While I no longer have to practice media relations every day, most startup founders find they have to wear many hats, and one of those may be the natty trilby hat of media relations.

I’m so old that the PR agency I first worked for had a secretarial pool who had the only word processors. All the consultant staff wrote up correspondence long-hand for the secretaries to type. Then I’d have to proof-read the draft and ask them to make corrections, then check another draft, and so on. And I rode a brontosaurus to work… kidding about the brontosaurus — the rest is true.

We all know the practice of journalism has been dramatically changed by the advent of the interweb, but less well-known is how much media relations has changed. So in the next few posts I’m going to share some tips for startup founders who find themselves donning the media relations hat.

First, let’s talk about the role secrecy plays in startup evolution, and how to balance secrecy against disclosure to win friends and influence people.

Let’s talk about secrecy and startups

Secrecy is sexy, ain’t it? There’s nothing more enticing than a private beta page, inviting me to leave my email address, suggesting that  maybe one day I might be allowed to try something otherwise explained by nothing more than a logo and three bullet points. If there’s such a thing as frisson in business, this is it.

Early in the development of your startup business, it will be important to keep some information secret from your business contacts, the marketplace, the media and perhaps even your friends and employees.

But such is the sexiness of secrecy, it can sometimes get a bit out of control: friends get annoyed because they don’t know what you’re doing anymore, the market decides you’re paranoid and won’t deal with you, or journalists start writing snarky pieces about you and your plans because you won’t give anything away. It’s not really your fault — secrecy is sexy — but you need to start sharing information at some point.

Sometimes the transition from total secrecy to disclosure can get very bumpy. You don’t want to piss-off the media by giving information exclusively to some journalists and not others. You don’t want to be taken out of context or mis-quoted. You don’t want a colleague saying more than you (or feeling like they’re restricted to saying less than you.) When is it OK to tell friends what you’re doing? What if you have friends who are also journalists? Or bloggers? It gets bumpy.

The best way to balance on the fine line between saying nothing and giving away everything is to “withhold the four Ws” or as I like to call this, “W Fu” (pronounced “Woo foo“). Note that people in media relations will tell you there are usually five ‘Ws’ but I’ve added a sixth W: “What will it cost?” because sometimes that’s the whole angle of a story:

1. Who
2. What
3. Where
4. When
5. Why
6. What will it cost?

How to become a W Fu Grandmaster

I think it was the ancient venerated sage Preswun Toocontinew who once said, “A true W Fu Grandmaster appears open, trusting, honest and relaxed, yet he or she is actually in control of the exchange of information, protecting themselves and their startup from the harm of excessive or premature disclosure.” (No wonder he’s no longer widely quoted.)

You too can become a W Fu Grandmaster by practicing the art of telling most people only the What and the Why.

Here’s an example of using only the What and the Why:

“I love my cell phone but I hate my monthly phone bill. So we’re working on a web platform that will help consumers understand their phone bill and make better choices about switching plans and carriers.”

Without knowing the Who (me and the celebrity ex-CEO everyone loves), the Where (in the shiny new offices on 14th St), the When (we launch 14 October) or the What will it cost? (it’s free!) there’s not really enough to make a good story that a blog editor might run as their lead for the day, or that might get passed word-of-mouth through your industry contacts and straight to your competitors. At most, you risk a little gossip item up the back page but even that will have a positive effect, because it tells people you’re doing something exciting, worthwhile and valuable but it doesn’t give away anything that can be used against you.

The W Fu is strong in this one!

Even if what you’re building is truly the first solution to a problem that has plagued all of humanity throughout recorded history, the sensitive information is not that you’re building it. The sensitive information is your solution to the What. (Ooh, do I need to make my rule “How to withhold the four Ws and an S”? nah, that doesn’t exactly roll off the tongue, does it?)

Journalists are here to help you, if you let them

Often the startup founders I’ve worked with have started off on the wrong foot with industry journalists. That is most often because the founder has been so uncertain of what they can say that they’ve chosen to say nothing at all, repeatedly, or over a long period of time. Their W Fu is weak. Perhaps they have no W Fu at all!

That’s crazy. Journalists aren’t your enemy — though they can be, if you choose to make it harder to fill their quota of words or airtime. They are usually keen to help you promote yourself and your business if you’re able to disclose more than just the What and the Why.

However, it’s very important to agree with your other stakeholders in advance on what other Ws are disclosable, to what level of detail, because you’ll damage the relationship if you disclose something to one and not another, and you’ll make yourself look foolish and unreliable if your business partner is saying too much while you’re disclosing not enough.

So take the time to work this out in advance early on. Typically, you might decide that the Who is going to come out soon enough anyway and is OK to disclose next, then a little later on, perhaps when you have key distribution or retail relationships secured or your marketing strategy is finalised, it might become OK to disclose either the When or the What it will cost.

Should you ever disclose all six Ws before you launch?

Keep in mind that as soon as you disclose all six Ws, all you have left to disclose to the market is the experience of the product or the service itself. Only companies that almost always execute well (such as Apple Computer) can safely disclose that much information in advance, confident that the consumer experience will be so positive that it will generate a wave of great coverage when D-Day comes. Don’t try that at home, folks.

OK, I get it with journalists, but what about friends and family?

We all have friends who are bloggers and Facebook users, and these socially-active web users are effectively journalists with a smaller audience. Social media connects these small audiences together, making large virtual audiences or long chains of audience that can stretch out to mainstream media.

So it’s good practice to exercise your W Fu skillz by withholding the same elements of the story from your friends too, since any of them might kick off attention you don’t need right now.

This is hard! My W Fu is weak!

Wax on! Wax off! OK, it’s not just about practice. The easiest way to withhold Ws is just to appear really humble about what you’re doing — practice including fewer Ws when you talk about your venture with just about anybody and you’ll soon find that you come off sounding humble rather than secretive. Humble is the ‘new black’ in this new econolyptic era. Nobody hates a humble startup guy. But lots of people will start disliking you if you remain a secretive startup guy.

Meanwhile: Wax on! Wax off!

For web businesses, web platforms are not like phone connections and photocopy paper, they are tightly woven into the fabric of every aspect of your company

But first, big props to Balsamiq, the mockup tool I used to do the image above. It costs $79, comes in Mac, Windows, and Linux versions, or you can use it from within Confluence, JIRA and XWiki wikis if you use one of those to manage your product process. It’s the best quick mockup tool I’ve ever used – quicker even than pencil and paper, and after about a month of use, it’s an essential part of my paper prototyping and developer briefing toolkit. Product people: if you have a customer or business process owner who’s always bugging you, give them this to use and tell them if they can sketch it, you’ll build it. It’s so easy to use even the dumbest marketing manager can figure it out. It’ll teach them more about web development than a week of workshops and you can get some real work done in the meantime. More about Balsamiq later.

If you’re starting a trucking company, you need at least one guy who knows about trucks. If you’re going to franchise a network of muffin bakeries, better get yourself someone who can make great muffins. Have a guess what kind of skills you need to have before you decide to open a scuba school… give yourself a gold star.

Late last week I met with a potential client (yay, I love potential clients, sometimes even more than actual clients.) The potential client shall remain nameless to protect their identity.

We met. They stepped me through an impressive and well thought-out introduction to the business, all the way through a detailed business plan, laboriously detailed spreadsheets listing costs to be incurred in the first three years, introduced the entire executive team and… uh oh…

…there was no Chief Technology Officer on the executive team. There was no budget line for recruiting a top-line team of web developers, product manager, interaction designer and customer service manager. They were planning to outsource the whole lot.

Common mistake, but critical mistake nonetheless.

Let me be absolutely clear on this: if you are a web business, you need to own your own web platform. You need to have the people responsible for the web platform represented at director level in your company, aligned with your business goals and sufficiently motivated to bring onboard a web platform team of the highest calibre.

If you’re starting a trucking company, you need at least one person who knows about trucks. If you’re going to franchise a network of muffin bakeries, better get yourself someone who can make great muffins. Have a guess what kind of skills you need to have before you decide to open a scuba school… give yourself a gold star.

In other words, web businesses are usually not businesses-that-happen-to-have-websites. When you outsource a web platform you not only incur additional cost and add to your relationship-management burden, you miss out on all the intellectual property of actually running the business.

For instance, if you discover a better way of helping customers choose and add something to a shopping cart, you can act on that learning lesson more quickly if you own the team that implements it, and crucially you keep the IP on not just the business process but the platform code used to build it, which lets you get better and faster at making other improvements in the future.

If you’re a web business, how well your web platform works defines the success or failure of almost every metric of your business: converting consumers to customers, average revenue per customer, customer churn, competitive moves, and most crucially of all, time-to-iterate. Name a big, successful web business that is still on an outsourced platform.

It’s OK to be the founding team and not have a senior technology guru there with you from day one, just as it’s OK to not have your CFO or even your CEO hired yet. But recognise that you will need that person, and you will need that person to hire a team, and that team, while it may use off the shelf and SAAS and hosted components to build your web platform, will ultimately deliver something unique that your competitors can never hope to imitate; something your suitors will pay an arm and a leg to get to… the experience that comes from building and  operating a successful web platform.