Archive for May, 2011
Here are 14 of the most interesting trends identified by the Startup Genome Report, some of which are intuitive and some of which may come as a surprise. Among them? Investors may be less help than they think. Take a look:
- Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.
- Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all.
- Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical cofounders despite indicators that show that these teams have a much lower probability of success.
- Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)
- Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.
- Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.
- Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.
- Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams.
- Most successful founders are driven by impact rather than experience or money.
- Founders overestimate the value of IP before product market fit by 255%.
- Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.
- Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.
- Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.
- B2C vs. B2B is not a meaningful segmentation of Internet startups anymore because the Internet has changed the rules of business. We found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.
A device that looks like a smartphone is making supermarket shoppers—and stores—happier. Perched on the handle of the shopping cart, it scans grocery items as the customer adds them to the cart.
Shoppers like it because it helps avoid an interminable wait at the cashier. Retailers like it because the device encourages shoppers to buy more.
With the system called Scan It—in use at about half of Ahold USA’s Stop & Shop and Giant supermarkets in the Northeast—shoppers scan and bag their own groceries as they navigate the aisles, while a screen keeps a running total of their purchases. About a dozen times per shopping trip, the device lets out a “Ka-ching” as an electronic coupon appears on the screen. “Last week, right after I scanned coffee, I got a coupon for coffee creamer, which I needed,” says Patty Emery, a Caldwell, N.J., dental assistant, who estimates she shaves 20 minutes off her weekly grocery shopping trip at Stop & Shop. “It is really cool.”
Stores have been under siege in recent years, not just from the rise of online shopping but also from the way mobile phones empower people to compare their store’s prices, item by item, with a rival store nearby. Now, stores are fighting back with their own mobile technology.
Shoppers who use the Scan It system spend about 10% more than the average customer, says Erik Keptner, Ahold’s senior vice president for marketing and consumer insights. He attributes this to targeted coupons and the control consumers feel while using the Scan It (actually, Ahold calls it “ScanIt!”) device. Full article
In media, for example, people can wake up every morning and use the search engine to construct a newspaper different from the day before. In real estate, people may buy houses without ever setting foot in a real estate office. How do existing businesses survive the upheaval? How are newcomers profiting from these profound changes? This BusinessWeek slide show explains Jarvis’ ideas about how the lessons of Google could be applied in 18 different fields.