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Tuesday, February 28th, 2012 digital strategy No Comments

There’s Only One Way To Make A Ton Of Money And Be Happy Selling Your Start Up

Source: http://www.businessinsider.com/theres-only-one-way-to-male-a-ton-of-money-selling-your-start-up-2012-1


Venture Capital Ad

There is a common belief that venture capital has become a necessity to get start-ups off the ground.

The seemingly endless flow of funds is very appealing to the up-and-coming company looking to sling-shot themselves to instant growth.

While VC funding can give an important vote of confidence and is absolutely necessary for large infrastructure projects, there’s another side to VC funding— it can actually become a huge hindrance. As I’ve discussed before, skipping venture capital can leave your company with the freedom to grow in a sustainable way, creating more value for all stakeholders.

This means when you do sell – as my company AdoTube did recently— you are able to reap all the rewards of selling a healthy profitable company while being a big part of its future. Read below for the 5 reasons why skipping the VC can leave you with more money and probably more importantly a better company legacy.

1.       VCs just want their return

Venture capitalists have a portfolio of investments consisting of multiple start-ups, and therefore only care about average portfolio results. On the other hand, founders have all their eggs in one basket. Not only is this company their brainchild, but it is also their savings on the line. While founders are interested in the eventual payout, providing a product or service that consumers are excited about can be even more important. This focus on the long-term can lead to a greater eventual pay-out as well as a better company legacy.

2.       It’s easy to waste VC money, diminishing overall value

It is easy to overspend when it is not your money. When a small company comes across millions of venture capital, a lot of that cash can get thrown out with the bath water. Keeping the company small and growing it with your own sweat, blood and hard earned cash can lead you to be thriftier in your decisions. When AdoTube started, we made sure every purchase would earn us back revenue, otherwise why waste the money? Ultimately, this allowed us more value for our investment and helped us get a better return.

3.       VCs go big or go bust

Multiple rounds of VC can put founders in a situation where the company either becomes extremely successful or goes bust. Venture Capitalists’ are looking for the big payday, and if the instant pay-out is not immediately apparent, the company can come to a screeching halt. Founders, on the other hand, can take their time building the company up growing it organically. Without venture capitalists looking for their end return, there is still a lot of middle ground available to time a company’s growth spurt with the market.

4.       VCs don’t care about company culture

VCs aren’t incentivized to make deals that are best for the company and the founders. They are incentivized to sell for the most money. The problem is that while every founder dreams of retiring to the Caribbean after they sell, the reality is that their role with the company is often far from over. Founders are often needed to stay on board to steer transitions or integrations are also often the best person to run the newly acquired company. Culture is paramount in making sure all of this happens smoothly and benefits everyone.

5.       VCs don’t know what’s best for the company

Venture Capitalists don’t understand your business like you do. They study revenues and look for synergies with other companies. VCs can even value companies differently depending on how they might merge with another. Valuing a company based on this can take away from the goals of founders, forcing companies to work more like a widget factory than a company. A simple sale could also mean the instant death of your company, destroying all the value that you created (just talk with the guys at Foursquare). While the VCs walk away with a pay-day the company that you spent years creating is gone in an instant.

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Thursday, January 12th, 2012 news No Comments

Switching to Private Label Products is Accelerating and Irreversible

See the charts below from comScore, Nielsen and Symphony/IRI.  The percent buying branded products of past has dropped to 43%.  The percentage switching (2nd graph) is most in OTC drugs and apparel. And even if the economy improves, consumers would continue to buy private label. Whole Foods has been offering their 365 “house brand” for many years and Trader Joe’s also has great private label products that are often equal to or arguably higher quality than branded alternatives.

Brand Loyalty is Declining

 

 

 

 

 

 

 

willingness to switch to generic or private label versus branded product

 

 

 

 

consumers will continue buying private label even when economy improves

 

 

 

Related Article:  Spend Polarization – consumers save money in the down economy by buying more from Costco, Sam’s Wholesale, and BJ’s but when they splurge, they buy ultra-high-end.

 

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Monday, November 28th, 2011 Branding No Comments

Search Ads versus Display Ads

UPDATED:  April 10, 2012

AdSafe study shows that a quarter of display ads are never in view on publishers’ websites. And it gets worse from there — 41% never in view for content networks and 46% never in view for ad exchanges. Users are there to view content, not ads. And they are conditioned to avoid the top, right side, and bottoms of web pages (see eye tracking at the bottom of this post).

Image Source: http://www.emarketer.com/Article.aspx?id=1008965

Cumulative Time that Digital Display Ads Worldwide Are In-View, by Platform, Q4 2011 (% of total)

ORIGINAL POST:  March 25, 2011

Hands down, search ads beat display ads in click through rates (CTRs).  In every one of the examples below and the several dozen more that I did not screen shot, search is more effective than display because the ads are brought up when the user types in the search term and are looking for something, vs display which is served up alongside content.

search advertising versus display advertising display ads vs search ads CTRs search CTRs vs display CTRs search ads display ads

Facebook display advertising click through rates are even sadder (i.e. worse) as you can see from the chart below — like an order of magnitude

lower (0.024%)
facebook ad click through rate

display ad spending search ad spending emarketer

search ads vs display ads

digital display vs search ads

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eye tracking studies show that most users are already conditioned to avoid looking at the top and right side of web pages because they know that is where banner ads or display ads go.

 

 

 

 

 

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Friday, March 25th, 2011 analytics 1 Comment

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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