DealHorizon - the faster, easier way to create and share business plans

My philosophy concerning CRM as it relates to bars and restaurants could quite easily be summed up by the "Cheers" theme song: Regardless of location, I prefer to frequent two to three establishments "where everybody knows your name". It's fun to do this,to get to know the staff, and get to know other customers. And let's face it: "Your usual table?" is the original loyalty program.

Which makes it amazing to me that there are still some times when, despite copious amounts spent, and the best intentions, restaurant owners miss the concept.

Take Carmines, a terrific Italian restaurant and gourmet shop built on the water on PGA. Four times a month for two to three years, I have been frequenting this place - 95% of the time for their amazing tomato-based seafood risotto, and the rest of the time for their steaks and shaved black truffles on scrambled eggs.

Almost as frequently, it has been the same Maitre d' - yet not once has the maitre d' ever acknowledged my previous patronage, or even shown that he remembers me.

I find this extraordinary. If I ran a restaurant and you returned forty times (and especially if you returned on several occasions surrounded by large numbers of people with bottomless stomachs and excellent taste in wine), I think I'd start taking notes. I'd look to see what tables you like. What drinks you like. I'd go to some lengths to impress you - Why? Because regardless of anything else, it makes good sense for the business.

In addition, if I ran a restaurant, I'd greet people that I recognize by actually asking them "your usual table?" and send them they favorite drinks to sip as they look peruse the menus. Come to think of it, what is the harm of asking a stranger if they'd like their usual table?

Thankfully, there are still some places that understand that the customer enjoys being recognized as having spent money there before. My world headquarters (the Angry Moon cigar bar right next to Carmines) gets this, as does the Oakwood Grill and the legendary John Spotto, just down PGA.

Outside of FL, I would recommend the excellent Peninsula Hotel in LA and Lucy's El Adobe in Hollywood, the Lancaster Hotel in Paris, the Raffles Hotel in Singapore (and the fabulous Straits Kitchen at the Hyatt), the Sheraton in Kuwait (and especially the Al Hambra), Pastis bistro in New York, and Nobu anywhere (the guy has just an amazing, amazing memory of his earliest customers).

The folks that run these places remember - and celebrate - their customers, even when months pass between visits - and this elevates the outing and makes the whole meal more enjoyable. It guarantees that a one-day visit to LA will see me at the Peninsula, and a one day visit to New York will see me at Pastis. It's smart business.

Note: on my most recent visit, Carmines presented me with a "loyalty card" - obviously the work of a highly-paid "customer loyalty consultant". But the Maitre d' still didn't recognize me when I walked in.

Okay valued readers, two highly disruptive startups that I've invested in are having their debut in the next couple of weeks:

Heardable.com, an awesome social search analytics engine, and;

LenderExchange.com, a place where businesses can get funding online.

Please do me a favor and sign up as a beta tester on the home page. I need your feedback. Great feedback will be rewarded with steak dinners and cigars.

Yesterday's news story about six year old Falcon Heene yesterday supposedly stealing his father's home-made balloon for a joyride was the best story I've seen in years. It had everything - an air chase, a ground chase, and multiple happy endings (the first, when a gallant rescuer made a grab for the craft as it descended and helped pull it to ground in one piece - the second when Falcon was found hiding in the attic after letting Daddy's toy adrift).

As we all know now, Falcon was hiding in the attic of his family home the whole time. Interestingly, about fifteen minutes into the piece, someone left a comment on MSNBC saying "he's probably hiding in the basement, trying to escape the whipping of his life". Attic, basement - that person should start a 1-800 business. There's also an interesting comment from Falcon himself ("we did this for the show") - see above.

Watching yesterday's story, I was reminded of the very first manned balloon experiment, which took place in Paris on the 19th of September, 1783, aboard a handsome balloon - the Aerostat Réveillon - designed by Jospeh and Etienne Montgolfier, the 12th and 15th-born sons of an Annonay family of paper makers.

The balloon's creator's did not wish to expose themselves to the uncertainties of flying but instead placed aboard a sheep, a duck and a rooster. With the success of the flight, performed in front of Louis XVI and Marie Antoinette, they followed it up with a flight two months later in which a doctor, Pilâtre de Rozier, and an army officer, travelled nine kilometers, and soared to 3,000 feet.

And here, we leave Wikipedia for myth. A popular myth among balloonists is that the aforementioned doctor had some concerns they may, in dropping from the sky, be taken for the eighteenth century version of aliens. So he took the precaution of including a bottle of fine French champagne aboard the craft - so that anyone arriving with pitchfork in hand could be convinced as to their authenticity as Frenchmen.

Travelling by balloon is so much fun, and so frivolous and grin-inducing, that I'm inclined not to disbelieve this, just because in this case, the truth really doesn't matter. And as for our future-past time-traveller, he/she could do worse than arrive back in our period of history with a bottle of champagne aboard his craft. At a minimum, it would help smooth their introduction.

The normally-sensible Straits Times came out with a story this money that breathlessly predicts the current "capital bubble burst" will cause the world's innovators to run short of funds by 2012. The also normally sensible Adeo Ressi of TheFunded.com was quoted as saying:

"I consider this the first dark sign of really bad collapse coming in 2010. The system needs new money to fund new ideas or the world will face a breakdown in innovation by 2012."

I predict the opposite will happen. If capital raising indeed remains a tough game, that will translate into good news for the funds able to raise it, and the community as a whole.

Why? The community will grow smaller, smarter and stop investing in every startup that walks through the door. It will start becoming rather more picky, and possibly begin providing the best returns ever on investment on the basis of a more finely-tuned investment strategy - a move that in itself is long overdue.

I'm halfway through Richard Dawkin's "The Greatest Show on Earth" and enjoying it immensely - except for the parts where Dawkins inexplicably gets in behind a minor argument that is distracting to the important one he is arguing - and potentially annoying to the readers that want to read him most.

For example, at one point, after a lengthy chapter about how pedentic zoologists can be with respect to class naming conventions, Dawkins takes us to a footnote to explain, basically, his prejudice in favor of colonial-era names for foreign cities, such as "Peking" instead of Beijing, and "Bombay" instead of Mumbai.

His book is written in English, he explains, so the use of "Peking", rather than "Beijing", should be expected, and, by inference of the tone of his explanation, henceforth encouraged.

I simply don't understand this. The majority of English words have foreign origins - including, no doubt, Peking. And it is perfectly natural that the Chinese should wish others to use the name that they themselves use for their captial city. In discussions with Beijing-ren in Beijing, I have found them quite attached to the name and rather more fond of their own entimologies ("Bei-jing" properly identifies the capital as the "northern capital", as opposed to the older, southern capital, "Nan-jing").

It's a strange thing - when caught using the word "mankind" to formulate an argument, Dawkins quickly (and properly) apologizes to women for the linguistic slight before continuing. He correctly uses the word "Inuit" to describe folks the old colonists of the polar regions knew only as "Eskimos". So what is so wrong with calling Beijing, "Beijing"?

With this argument, Dawkins stops the reader in his tracks, and asks him to question the author's broader judgement based on something far less important than his main theme - the evidence for Darwin's theory of evolution. Which is unfortunate - if the Gallup stats are right, Dawkins already has more than enough opposition. He doesn't need China and India in the opposite corner as well.

I think when it comes to "pay to pitch", there are some additional subtleties that need to be discussed. Sometimes, the entrepreneur is not really serious about his stated intentions: he has no intention of taking on the fight he is proposing.

Yes, not every entrepreneur pitching wants the money, or the advice. We are all aware, I'm sure, of examples of this - there are some people out there that, when pushed, will stop short of taking the final step. These "weekend rock stars" just want to be able to tell their friends they "gave it a shot."

I'm sure the same is sometimes true with investors as well - lack of sincere intent. How can an entrepreneur even know if the angel in front of them truly has the ability to invest? They may be out of investment dollars, but still want to appear to be in the game. There is no way for the entrepreneur to know.

If the investor does have money to invest, why the need for the fee? Any decent-sized investment outfit has a team of analysts in place (or at least one) for the purpose of protecting their principals from time-wasting business plans - and moving plans forward through due diligence. Investor has zero support staff? Don't waste your money on pitch fees.

The test for both sides is sincerity of purpose. If the entrepreneur is truly ready to take the risk and is willing to take investment and advice in support of building his enterprise, he should not have to pay to have his story heard. If an investor is truly in the business of investing, and has the capital and staff to support that activity, there should be no need to charge fees.

Note re coaching: I disagree with some of the comments re coaching. I think this can be money well-spent. There are some really, really smart people out there that are incapable of writing a business plan or setting pricing for their services - because their smarts lie more in the area of storage array design or protease inhibitor innovation. For these folks, paying an Excel jockey or a business coach may be the difference between being able to articulate a business and floundering in obscurity.

*If you're getting a sense of deja vu reading this, this blog first appeared on Fred Wilson's A VC blog this morning as a comment.

Search engine startup Surf Canyon just landed a small amount of money today. IMHO, they should have been handed a huge chunk of change - 10x at least.

I just went over to their site and tried three searches - one of them for information relevant to DealHorizon.com. The results blew me away. Twitter, correct order, correct levels of importance - finally, someone is taking into account the publisher's view of content relevance.

The results they listed were so much better than any of the majors, I was - for the first time in weeks - left really impressed with something new.

It's always nice when a startup - and especially a new search engine - delivers on its promises.

Great job, SurfCanyon.

Michael Arrington at TechCrunch posted a great video up to docstoc.com from his blog today - Aaron Patzner reveals what he learned from Mint.com that could benefit other startups:

Startup Building 101 -

This article from Xconomy writer Greg Huang is a 'must-read':

Royalty-Based Venture Financing, Born in Boston, Could Shake Up VCs and Startups from New England to the Northwest

I think everyone has a place in their heart for California. I certainly do - I lived there for seven very happy years. But things seem to be reaching a crisis point in that state now. There have been a raft of articles lately claiming that the Golden State's days are over. Can it be?

The Guardian went so far yesterday as to repeat the claim that California is on its way to becoming America's first "failed state", quoting net emigration losses, hunger-striking teachers, and California's recent issuance of IOUs to government employees as evidence.

From my narrow perspective, things seem to be continuing much as before. Venture capital investment into new companies in California continues unabated (yes, the downturn has affected things, but on a weighted basis, CA has not stopped relative to other economies).

In fact, according to data compiled here at DealHorizon.com, more than $7 billion in equity investment has gone into California-based firms since the start of 2009, not counting investment into public companies via PIPES, or debt-based instruments. That number includes some of the top investment recipients this year, worldwide - such as Facebook, Twitter, and Pacific BioSciences.

The California venture industry remains the largest of any economy in the world. CA firms have also been among the most successful at protecting investor returns and raising new funds this year, with several funds registering new multi-hundred billion dollar funds.

Despite the economic downturn, the firms remain the most active in the nation as well. California venture firms took five of the "ten most active" positions in the PWC MoneyTree report for Q2 2009. The next most active state? Pennsylvania, with two firms.

Perhaps what is emerging is a glimpse of the make-up of future states. More than any other state in the US, California is the home of invention.. which means efficiencies leading to labor-reductions, changes in the tax contribution base, and different infrastructure and education requirements may show up here first.

If that is true, what could be emerging is not a dying state but a parallel "two Californias" - a set of older, more labor-intensive industries that are rapidly reducing in scale (and as a result, paying less in corporate taxes), and a set of industries that are more capital-efficient, but employ fewer people, which creates an increase in the unemployement rate (and possibly a deficit of personal taxes.)

It is possible to survive this set of changes. Singapore, a country in which I happily resided for twice as many years as Califonia, battled through similar problems related to technology shifts earlier this century and not only made it to the other side, but has prospered.

Singapore's tax rate remains one of the lowest in the developed world, unemployement is a miniscule 3% (one quarter that of California), and the country's government is moving everything - education, policy, infrastructure, investment - in behind a strategy of keeping the populace competitive and prosperous.

California's education system, infrastructure, and policies towards business, in stark contrast, are getting worse. According to the Guardian's report, 30% of California's 19 years olds were in university last year, down from 43% in the mid-nineties. CA's infrastructure is tired (especially compared to what is happening in my home neighborhood in Florida). Doing business is CA is so unweidly, it's hard to consider setting up an HQ there with so many attractive alternatives available to new businesses.

Singapore's advantages in the area of governance include a smart set of folks that are paid well and look out far into the future, and a system that enables them to work together without the distraction of constant sniping or petty politics. In more than one sense, the whole country acts as a kind of giant, successful venture capital firm.

One hopes that California's politicians will rally and make the tough decisions and act beyond their petty short-term political goals. But a decade of inaction would indicate that it is unlikely that fundamental positive change will come from the incubents.

The next hope? California could become endowed with a government willing to make tough decisions by virtue of a plan being drawn up by the governor's office to redraw the electoral map. It's a long shot, but I think we'd all love to see it come off.

Note: A quick search using the excellent ZoomProspector tool indicates the degree to which some of California's cities are losing ground relative to other cities on the basis of education standards - but also the intellectual strength of other cities, such as Menlo Park. Two thirds (66.78%) of Menlo Park's 30,736 residents have a batchelor's degree or higher.

Dave McClure of the Founders Fund presented an excellent powerpoint at SeedCamp in London this week that should be required reading for anyone starting a web-based startup. Here it is:

Startup Metrics for Pirates (SeedCamp, Sept 2009)

As exciting as it can be to watch the growth of a single-cell idea into a company, sometimes the cells don't divide fast enough for the organism to survive. Many times, the post-mortem of a startup reveals a basic lack of understanding about why startups start up.

Firstly, let's agree one thing: startups are not a new concept. The idea of a venture-backed company has been around for hundreds of years. The first trans-Atlantic telecommunications cable was a venture-backed startup (their target ROI was based on the potential arbitrage opportunities made possible through the transmission of real-time stock and commodity information between the US and London.)

British Telecom passed on investing venture capital into the "wireless" technology pioneered by Marconi. Tesla famously took on funding for his AC power technology from the Westinghouse patriach - who himself made his initial money from an improved railway braking system - the early equivalent of succesful entrepreneurs funding promising new entrants. You all know thousands of similar stories.

One thing all successful startups display is an understanding that the fundamental goal of a startup is to take an existing process and make it more effective or efficient (AC power, the transfer of information between London and New York) - or establish a new market for a new product (Coca Cola, King Gillette's disposable razor). In other words, your startup needs to do something:

• Better
• Faster
• Cheaper
• Entirely new

These days, it's rare to spot a technology or cleantech company doing somerthing enitrely new. Chances are, your energy, SAAS, or semiconductor startup is improving an existing process, or making a manufacturing process more efficient.

If that is the case, a really thorough understanding - and a demonstration - of the ROI associated with such an efficiency is necessary to obtain top-tier venture backing for this kind of effort. Your ability to maximize your price, your return on investment, and your initial valuation, will be highly dependent on everyone involved understanding exactly the ROI that you are targeting, and can deliver.

In the area of life sciences and some biotech firms, one of the attractions is that some startups in this space are indeed attempting something entirely new. The quid pro quo here is that they are biting of a huge speculative risk that requires large investments - but the promise of massive returns if everything goes right.

Entirely new products and processes happen less often than improvements on existing products. Predicting whether or not an entirely new product will "hit" and create a brand new category has resulted in some specutalur successes (Coke, HBO, RedBull, AdWords, Twitter to pick some at random) - but over the past two hundred years, the roadside has become littered with failures.

To achieve success for an entirely new product, you need that rare combination of a great vision backed by a working technology, backed by a one-in-a-million marketing team and patient investors, and lots and lots of luck.

Taking the first step along this path involves taking some time to think. You need to be able to tell your closest advisors why your startup is going to succeed - the better you can articulate exactly why your approach is better, faster, cheaper than the competition, and what that difference will mean in terms of cash in the hand over time, the better you will be able to protect your valuation, and create a return on investment for everyone involved.

John Cook blogged about using the new Starbucks iPhone app this morning, and posted a video about his experience.

I don't see single-product-payment solutions like this taking off - especially ones tied to a clunky bar-reader type device that doesn't actually work very well (see video). I could understand this if it were a supermarket payment alternative, but is sure seems like a lot of work if you're only ever going to buy coffee using the app...

I went to my doctor recently complaining about a pain in my wrist. He suggested that I may be spending too much time on my computer, and as a result, suffering from the early stages of RSI (repeditive strain injury.)

"Hogwash," I thought to myself, as I drove home one-handed. But then as I sat down in front of my laptop and started tapping, and my wrist started hurting again, I started to wonder - exactly how many repetitions of actions do I take on this PC? Has anyone done any studies?

I decided to seek out some basic stats. What I found (at the site of Remedy Interactive, based in Sausilito, Calif.) floored me. Their data - specific to RSI analysis and prevention - illustrates a far greater breadth and frequency of computer-related activities than I ever would have imagined.

Here's some of the stats published on their site, from a case study Remedy conducted at an unnamed workplace using their GroupInsight tool:

564 mouse clicks per day? 13,360 keyboard strokes? 531 uses of the scroll wheel? 95 switches between keyboard and mouse? Four thousand three hundred plus words typed by the average employee? That data describes an extraordinary amount of tiny motor movement. Dr R., I owe you an apology.

Note: Remedy Interactive's customer list would indicate that large companies are only too aware of the issues in this area. If you're in a management positoin at a large (or even a small) firm, you might want to consider checking these guys out. Their software looks like something every information-based company could benefit from.

It was recently reported by eWeek and others that Jeff Bezos, founder of Amazon, stated at a conference in May that Kindle sales now account for 35% of book sales on Amazon - a figure that flashed up impressively on a flash-based powerpoint filled with social media stats that I watched yesterday.

That stat bothered me. I got to thinking... how can this be? Are there really that many Kindles out there that they could account for 35% of all book sales on Amazon?

So I set out to find out. And as it turns out, I'm not the only one who had trouble parsing that stat. Steve Weber of WeberBooks.com condensed the problem nicely, and backed it up with his own sales data as an Amazon-publised author:

... there are more than 80 million paperback book buyers on Amazon, and less than 1 million (perhaps less than 500,000) Kindle owners. While I can believe Kindle owners buy more books than the average book buyer, I don't believe they're buying THAT many more books, and it's certainly not reflected in my sales reports.

Obviously, either Bezos misspoke, or the folks who reported the event misheard him. Cowen and Company agree with this finding. Their recent (August 11, 2009) forecast states that Kindle services will represent 10 percent of Amazon's total North American sales within five years, accounting for $2.3 billion in GAAP revenues.

That sounds more like it.

*Interesting note added by Weber - he claims Amazon's business model for Kindle is 65% Amazon, 35% author/publisher. That's even better than iTunes.

Over the past three stories, no doubt you've read many times the stories of how Doug Engelbart and his team of Xerox researchers invented the mouse, windows, the point and click GUI, only to see them adopted and productized by Apple, Microsoft, and others. It's happening again - this time with vanishing ink.

Vanishing ink is the opposite to invisible ink. Invisible ink starts out invisble, then is rendered visible, historically by a heat process that turned the acidic ink permanently readable. Vanishing ink starts out readable (i.e. in the form of a bus pass, drug prescription or amusement park ticket), then turns invisible within a set period of time (say 24 hours, or one week).

Note: This set of chemicals - a mix of gold dust, silver and methyl methacrylate - will not be replacing the lemon juice-based science project at your local high scool anytime soon.

Xerox has made plenty of announcements over the past several years, and thought of several really nice applications that have splendid connotations for the environment (reusable copy paper, packaging that fades to environmentally-friendly colors over time). But once again it would appear they will not be the folks to bring this innovation to market.

As reported this week in the Economist, Northwestern University researchers are also working hard on coming up with a vanishing ink solution - and appear to have succeeded in coming up with a process that the paper describes as "more deployable", and, as a result of being able to reuse the materials hundreds of times, far less cotly, and far better for the environment.

This is not great news for Xerox, or PARC. I have some buddies at PARC from my old ISS days in Singapore. I would encourage them to read this week's article in the Economist, then emulate either Jerry Maguire (and post a memo to everyone's inbox in non-vanishing ink), or emulate Howard Beale's speech in Network ("I'm mad as hell and I'm not going to take it anymore!")

Beale's speech was first published, coincidentally, in 1976 - around the time a young Steve Jobs was watching over Doug Engelbart's shoulder.

*Note: for more on the subject of Xerox (and some very interesting and enlightening comments), check out Amazon's book reviews for "Fumbling the Future..."

Elaine Giam, who was our highly effective 'go to' PR chief at Singapore-based Channel KTV, posted a cool video to her Facebook page yesterday that had some nice social media stats embedded in it.

Who is Generation Z? Socialnomics9, one on the 670,000 viewers of this video left a nice list of "the named generations" taken from "Generations" by Strauss and Howe. Check it out:

• The Lost Generation (1883 - 1900)
• The Greatest Generation (1901 - 1924)
• The Silent Generation (1925 - 1942)
• Baby Boomers (1943 - 1960)
• Generation X (1961 - 1981)
• Generation Y (1982 - 2001)
• Generation Z (2001+)

A good friend of mine who writes about social media strategies, trends and technologies recently asked me to fill out a short Zoomerang survey on SEO and web marketing spending ahead of a talk he's giving at the Harvard Club in New York next month.

If you have a few minutes, please take the survey and share your thoughts - the more inputs, the better. The link to the survey is http://tinyurl.com/nyngvh.

We don't have television in our house, which three years ago was something we didn't often share because people would give us pitying looks. Now, we mention it with pride - because today, more and more people are watching TV on the Internet.

The next wave? Twitter search. If you're reading this on Wednesday night in North America, try this example - go to Google, then Bing, then Yahoo, then Twitter, and type in "America's Got Talent" (this show is big in our house).

On the old style search engines, you'll find pages of archaic references about the show, some going back to the dawn of time, but virtually no information about the finals that just happened two hours ago. Search Twitter, and the results couldn't be more different.

On Twitter, the most recent information is presented first, which means if you're looking for sports scores, stock prices, job vacancies, breaking news, latest blogs on a subject, happening bars, or... the winner of AGT (spoiler alert - the chicken farmer took top prize, not the opera singer)... Twitter is the most logical destination.

Add some (18-34) demographics into the mix and it becomes abundantly clear why the smart money is ready to accept a billion dollar pre-money valuation for Twitter's next $50mm round. There are a lot of people at any one time searching for stuff that is time-relevant, and a whole lot of those searches are connected to a purchasing decision.

On some search engines, only the advertising is fresh. On Twitter, the content is fresh too.

Two decades ago, both my father and mother were diagnosed with Parkinson's Disease - a disease of the basal ganglia section of the brain characterized by muscle rigidity and increasing difficulty in movement.

In those pre-Internet days, information on a diagnosis generally came from one source - the diagnosing doctor - and whatever other (typically out-of-date) sources you could lay your hands on. In our small rural farming community in Australia, there were only a small number of sufferers, and relatively few resources. Our local library had exactly one up-to-date reference.

At the time of their diagnosis, I was living in LA. I called an old girlfriend who at the time was doing brain research at UCLA. She arranged access to a microfiche machine and UCLA's extensive news archive and research library.

With her help, I was able to pull together a massive amount of documents, some of which were early studies on the bowel-brain connection and basal ganglia-based problems, a connection now being followed by several well-funded life sciences companies.

However, we then ran into an unexpected problem: we were suddenly better-researched than the doctors. You know what happened next - the doctors ignored the research, and, given the strong bonds in our small town, my parents felt obligated to follow their advice.

Roll forward to today. Today, thanks to the Internet, and sites like PatientsLikeUs.com and similar destinations, there is not only a wealth of scientific data instantly available to the likes of celebrities suffering from relatively rare diseases, such as Steve Jobs or Scott Adams, you can also access data directly from people that are two years ahead in their treatment programs, and capture clues on what might work best for your own situation. Amazing.

For the past ten years I've been working mainly in Internet security, and have often heard the phrase "no one ever died because of the Internet". This phrase simply isn't true - you only need to look at cases like Megan Meier and the recent cluster of cult-like "Internet suicides" in Japan.

But what I suspect is also true, is that for every life endangered by the Internet, thousands are being saved, through better access to information. More and more people with rare ailments are able to live longer and better-quality lives because of what they are able to do to find paths to healing, by themselves, using the Internet.

*Note: Though my mother passed away a couple of years ago, my Dad continues to amaze us all. Despite the massive challenges Parkinson's introduces to daily life, he has worked on staying fit, retained his sense of humor, and remains active (some would say *too* active) 25 years after his diagnosis. He is my hero.