Is Craig's List Killing Innovation?

I was having a conversation over e-mail with a friend about the local startup eegloo. I don't know much about the company, so I won't take any liberties to elaborate; you can read their executive summary [PDF link] yourself.

What I do know is that they, and many, many others, are trying to improve the Internet classifieds market that Craig's List currently dominates. Craig's List holds their market share for a lot of good reasons. It's clean, simple, free and most importantly it has massive scale.

I don't have exact quotes, but Craig's List has made it clear that they aren't looking to innovate any further, improve usability or make significant changes to the site. That's not to say they aren't doing things like combating spam and fraud (to a limited extent), but they aren't looking to change the way their website works.

This poses a huge problem for innovation in online classifieds. How can you compete with the massive scale of Craig's List?

Newspapers are certainty failing at it, but we haven't seen them use innovation to try and upset Craig's List's lead. Newspapers are generally relying, wrongly, on their own reach and ability to go to market. In this example users have a choice: go to Craig's List and see a ton of listings, a ton good and a ton that are crap or go to your local paper and see a limited selection and still a ton of crap. At least there are more choices with the former.

So you have startups like eegloo that think they've found a better way. Maybe they have, but challenging the scale of Craig's List isn't even an uphill climb - it's upmountain.

My theory is that there are much better classifieds solutions out there, but Craig's List is killing them. They've basically frozen the market for the foreseeable future and I, just like everyone else it seems, haven't quite figured out how to break them.

I plan on doing it by skipping the destination site and creating highly scalable software that others can use to power their own idea of an innovative marketplace.

Connecting Data Seamlessly

Everyday we work to connect data types. We do it by searching on Google.

I think of something I want see, I ask Google for it, it searches it's vast database and makes suggestions. In theory, it's a simple transaction:

What's happening here, while very complex, is not entirely complicated. Google is compiling information and deciding, based on your query, what to show you. The idea is that the results are relevant. In this particular transaction, you're required to make a query.

Google compiles all the information it can get it's hands on. This is a good strategy for them and works well, but when you start to silo off that information and group it together, you get communities. These communities can be very broad, Facebook, for example, or very niche, NextNY, for example.

The information that these communities draw upon is usually called your 'profile.' This isn't to mean that all profiles are filled out by the user. It can be based on information you provide, your behavior, the data and media you create, the friends you keep, etc. These silos, by themselves, don't mean very much.

When you start connecting these silos, in intelligent ways, it starts to get interesting. This is most often done at the user's request. I know what I'm interested in, so I seek out and join communities that share my interest. It's intelligent because it's human.

Sites with existing large communities, again Facebook is a good example, are starting to find ways to suggest intelligent connections. Here are people you might know, based on them being friends with your friends. Here are topics you might be interested in, based on what you've been interested in in the past.

Suddenly unexpected, but intelligent, communities are being formed.

So what does this mean to you? Well, the great part is, you don't really have to do anything. Unlike submitting a query into Google for information, there are solutions being developed that anticipate what information you're looking for.

Most of the innovation in this particular space takes place around advertising. Send an e-mail in Gmail to a friend about your apartment search and you're bound to see ads for real estate sites. But what if, instead of seeing advertisements for various marketplaces, you were connected directly with the market?

I'm working on something that connects people who can help each other. If I have an apartment that's a good fit for what you're looking for then we belong, whether we know it or not, to the same niche community. I want us to connect. Seamlessly.

I'm Alive

I'm still here, just had my mind on other things recently. I've decided to make the switch from ROO (now known as KIT digital) to The FeedRoom, which I think was a great decision for myself. I had several reasons - most of which I won't cover here - but the biggest plus is that The FeedRoom is a much better cultural fit for me.

I quit smoking, which feels great. I moved, which also feels great. I'm still just as involved as ever with technology, so I'll begin posting my thoughts on that again soon.

Starting A Company Without Raising Money Pt. 2

I got some good feedback on my question posted yesterday.

Ed Costello:

This is just my opinion and has no factual support whatsoever, consult an attorney, do not read while operating nuclear machinery, etc., but:

• You won't have a sense of the value of your company until after you're up and running and potentially earning revenue. It's possible to have value without revenue if you're developing some sort of unique intellectual property which would have value separate from your company.
• You own the company, you and your co-founder can decide how much equity you're willing to give to advisors in return for their advice and support, create your pool of shares from there.
• If your advisors are holding out for a specific dollar amount or percentage of equity, I suggest you look for other advisors.
• Keep it simple enough to bring advisors onboard without wasting too much time. The more complex you make it, the more billable hours you'll pay for.
• Reward your advisors, but don't give away the store. They're offering advice, answering questions from experience, but they're not running the company, they're not risking their own investments nor representing other investors. Reward them for their help (if they've made a meaningful contribution) but don't think of it as paying for their services or support or advice, it's a gratuity.

Lindsay Watt:

Here are two thoughts for you:

1) Find some companies that have had a public Series A/Angel Investment that you know of and compare yourself to them

-You can likely find some companies that are similar to yours (try going to PEHub.com and trolling their archives)

-You can assume that most angels/VCs will likely take 25-50% of the company. Therefore if a company received $500K, the total valuation was likely $1-2M

2) Valuing illiquid companies is a black art

-I'm guessing you have no/minimal/negative cash flow but huge (yet uncertain) growth prospects. There's no way you can value your company using any of the traditional tools like free cash flow, etc. so you're just going to have to accept that if you want to offer equity the price is going to be very subjective (and to a certain extent it will be pulled out of your ass). Try getting some data in part A and then you'll have more ammunition to support whatever price you eventually come up with.

I like the idea at looking at the valuation of similar companies and assigning a similar valuation based on that. PEHub.com has been helpful.

It also makes sense to keep this very simple. My advisers are just that, advisers, not employees and I'm super excited to start talking to a few people about how they can help us.

Starting A Company Without Raising Money

I put this question out to the NextNY e-mail list and will follow this post up with any answers I come up with. In the meantime, feel free to leave a comment if you have something to add. This question, of course, applies to something I'm working on, but I'm not quite ready to get into specifics.

Hi All,

Maybe this is a silly question, but I'm looking for a little direction...

On the finance and legal side of things, there are a ton of great
resources out there for entrepreneurs, including this e-mail list, but
I'm finding information hard to come by for companies that haven't
raised money and don't plan to in the near future (or ever). So my
question is fairly simple...

We have 2 founders and we're self funded, but I would like to bring on
an advisory board and offer equity, as discussed recently here. How do
we do that if we haven't been valuated by a Series A or angel
investment?

Besides the advisory board there are other many other reason we would
like to have a pool of shares to leverage. Without outside investment
how do we determine the number of shares, their value and what does it
all mean? I don't want to just pull it out of my ass - it has to mean
something.

Thanks in advance,

Andrew

Leaving QR Codes in The Dust

I had a very interesting meeting yesterday with Sam Kleinman of Craze. Craze is the leading digital urban record label. But I'm more interested in what they are doing on the technology side.

Sam is working on a product, already launched in the UK, that kicks QR Code's ass - even with Google's backing. The concept is the same, you take a picture of something with your mobile phone and information is returned back to you.

With QR Codes your phone has to have special software, but more important, the manufacturer of the product has to be on board and actually print the code. With Craze's idea, they are digitizing what a product looks like, in this case the fronts of CDs in the UK. The idea is, you take a picture with any camera phone, send it off and within a minute you have more information, the option to download the tracks digitally and more.

The product implementations are endless. Think about taking a picture of your kid's favorite toy and getting recall information sent back to you. Or take a picture of your TV and get a list of detailed replacement parts. Or, even, take a snap shot of me and get back links to this blog and my LinkedIn profile.

This can even be driven by the users. Take a picture it doesn't recognize and you get prompted to fill in the details. There's no software installed, but so much more importantly, there's no reason at all to get manufacturers/printers/advertisers on board.

I didn't tell Sam that I was going to blog about this, and hopefully he doesn't mind, but he's looking for a partner or company to take this full scale in the US. If you're interested let me know.

I first wrote about QR Codes back in January.

Just Trying To Keep Up

Keeping up is hard.

I'm trying to keep up with a more than hectic work schedule which includes travel, meetings, calls and the hardest part... dodging bullets.

I'm about to move which comes with an entirely new set of challenges. I've been in my current place for over 3 years - the longest I've lived in one place. Ever. Now I'm off to Bushwick from Bay Ridge to live with Rachel. You can buy us a housewarming gift here.

And then, of course, there's the social graph that we all love to hate and hate to love. RSS feeds. Twitter. Status updates. Startups launching, funding and failing. And this blog. That's the most difficult, because I actually do care and now I realize that I need to prioritize what this is all about.

I won't even get into trying to keep up with friends and family.

But, it's nothing new, right? We all face the same challenges every day. I'm just now learning that I can be happy and not have to do it all. It's about balance and I'm slowly getting there.

Quoted on RWW

I was quoted on ReadWriteWeb. Just noticed it.

I've already asked this question on Twitter itself and am getting some great responses (my Twitter id is rww). Several people have suggested that their family members may use a Twitter-like messaging system embedded in a social network. On this point, Andrew Baisley noted that "the barrier to entry must be much lower". However, said Andrew, if family members "could update Twitter from their Facebook status" then yes it might be used.

Click here for the full post.

SXSW Wrap-up

Keeping this short... SXSW was okay, Austin is a great city, we had fun.

Here's the loft we stayed in. It was in one of those new condos, the Amli, on 2nd Street.

Here's the view from the balcony:

We spent a lot of time on the pool deck of the building at a three day and night Jelly NYC party. Three stages, lots of Brooklyn bands, two open bars, guitar hero, shuffle board and video games on the roof of the parking garage. Not bad.

Hipsters would have loved the bar-b-q we ate at Rudy's. They proclaim themselves as "The Worst Bar-b-q in Texas" which is ironic because anyone from Austin knows that just isn't true.

We rented bikes and rode all along the greenbelt and Barton Springs, checked out the view from Mt Bonnell and sampled the local brews at The Gingerman.

There were a few hiccups along the way, but overall, it was a good vacation.

Heading Off to SXSW

I'm heading out to SXSW tomorrow (if my flight makes it through the rain). I'll touch base back here, hopefully with pictures, when I get back.

Hiring a Sales Assistant / Designer

I'll be heading to an NYU job fair later this afternoon in search of a sales assistant / designer. If you're interested in applying, or know someone that might be, please let me know.

I can send a full description to interested parties, but in short this is an entry level position supporting the sales and business development teams at ROO with day to day operations. You'll also be responsible for putting together compelling, exciting, and totally awesome mockups and presentations - this is where the /designer aspect comes in.

Besides, who wouldn't want to work with me? ;)

Finding an Apartment in New York City

Finding an apartment in New York is no fun. Your best source of listings is Craig's List, but that's full of spam and, frankly, brokers that flat out lie. I realize why they do it - competition is tough, but isn't there a better way? A 8'x8' room in a 6th floor walk-up is not something that I would call, "Cozy."

Can't we apply the Match.com method to apartment hunting? Broker fills out a profile for each apartment, I fill out a profile outlining what my requirements and nice-to-haves are and I get back some kind of compatibility match. Brokers can be rated on their honestly, their ability to actually show up at a viewing and on how easy it is to work with them.

Are you an old lady, reading this blog, sitting in a fantastic, rent-controlled apartment in the East Village ready to keel over and give me your apartment? You are?! Well here's what I'm looking for:

Requirements:

• If in Brooklyn, must be close to the L train. No, not the J, M, Z - it's not the same.
• Must allow dogs (don't worry, it'll be a small, hipster-type French Bulldog)
• Must be in the $1,300 per month range - hey, I don't want to spend all my money on rent

Nice-to-haves:

• If in Manhattan, near the 4, 5 or 6 trains
• I'd much prefer a converted factory loft over a traditional apartment
• Outdoor space would be great. Balcony, small yard, whatever.
• Big windows are a plus
• Elevators are nice, but I can take the stairs if I have to

That's it! Shouldn't be so difficult. I've seen a few places I like, but I'm taking the time to find something perfect - I'm not stuck in a lease, so I can go anytime.