Day 2 - DMA's net.marketing - 3/5/99

From: <richard_at_tenagra.com>
Date: Fri, 5 Mar 1999 22:17:05 -0600 (CST)

Below is a special mailing to The Online Advertising
Discussion List about the DMA's net.marketing Conference,
written by Ann Handley, editor-in-chief of The ClickZ
Network. You will receive these reports in addition to your
normal Online Ads posts/digests.

************************************************************
DMA's net.marketing Conference: Day 2

Ann Handley
Editor in Chief
The ClickZ Network
************************************************************

If day one of net.marketing delivered some uninspiring
keynotes, day two nailed it between the eyes: Two great
keynote speeches by venture capitalist Ann Winblad and,
later, Creating Killer Web Sites author David Siegel.

Both were like Best Picture nominees at the Oscars:
Engaging, compelling, wholly entertaining, and --
fundamentally -- leaving you with something to think about
after you leave the theater. Winblad -- a founding partner
of Hummer Winblad Venture Partners -- delivered an excellent
primer on securing venture capital. And when she was
through, half the audience was shaken, and other half
swarmed the podium to get her business card.

Winblad is a small person -- the podium nearly blocked her
from audience view -- but she clearly won't be
underestimated. The VC game is a tough one -- where only a
small fraction of the companies who seek funding are
actually granted it, where entrepreneurs are supplanted by
teams of well-connected CEOs and CFOs, and where the name of
the game is to grind your heel into the competition. It's a
game Winblad knows well, having funded a host of Net
startups like HomeGrocer.com, AdForce, Liquid Audio and
theknot.com. "The good news is that there's even more money
available today than there was yesterday," said Winblad.

Whether that money is available to everyday entrepreneurs,
of course, remains a mystery: Winblad acknowledged that her
company has funded only a tiny fraction of the entrepreneurs
who have presented their business plans to her. Over the
past nine years, Hummer Winblad has invested in a mere 50
companies.

But for the right company with the right team in the right
market... the payoff can be huge. If 42 percent of all web
users a year ago were visiting less than 10 sites a month,
the objective for any Internet-based business is to bulk up
as quickly as you can. The goal of the game is not to be
slightly better or to have a different twist, but to have a
radical market advantage. The companies most likely to
attract VC can answer three questions:

1. How big is the market?

2. What market share can you own?

3. How can you be number one?

Said Winblad flatly, "If you can't be number one, we're not
interested."

No longer do companies have the luxury of growing
organically over time, building both market share and
evolving business models slowly. This is a whole new
ballgame where to survive you must lunge ahead of your
competition and cut off their oxygen as quickly and cleanly
as possible. "We are in the declare victory model. We
declare it and get there as fast as possible," Winblad said.

How do you do that? Winblad offered some advice:

* Make sure you own enough of your market to minimize
supplier dependencies.

* Establish barriers to competition in the form of loyal
customers, partners, and flexibility.

* Think ahead. "Squint," Winblad said. "Pretend there's
broadband and think how it will change your future."

* Deliver superior product. "Show you have what the
customer wants and that it works," she advised.

* Demonstrate scalability. "Scale or die," Winblad said.

* Prove you can keep your customers.

* Build a business model you can explain. "How do we know
if you are winning? How do we know if you are losing?"
Winblad said.

* Make sure you have a great CFO. The CFO is no longer
the "Rodney Dangerfield" of the management team.

* Hire great people FAST, and incentivize them with a
great stock option plan.

* Be digital, and use the technology available to you.

* Bet early... and race to the number one position.

Siegel Vision

Creating Killer Web Sites author David Siegel gave the good,
the bad, and the truly ugly of web site design. What works,
according to Siegel, are sites that design for the customer
and NOT the IT guys. Check out his comments in their
entirety here: http://www.siegelvision.c om Profile of A
Great Entrepreneur

What makes for a top-shelf entrepreneur? Someone who...

...is knowledgeable, dedicated and hungry.

...thinks outside of the box.

...identifies rules that can be broken.

...can make history.

...has confidence and composure.

...has integrity.

...can turn today's uncharted opportunities into tomorrow's
sizzling IPO.


Reality Check

Later in the day, a two-person panel on raising capital
offered a refreshing counter-point to the VC lovefest in the
main ballroom. As Jon Goodman, executive director of EC2,
said, "The big myth of venture capital is that any of you
are likely to get it." Bill Reichert of Garage.com laid out
the five myths of VCs, namely:

1. VCs fund start-ups. In fact, they fund established
companies; angels fund start-ups.

2. VCs take risks. In fact, they look for investment
opportunities that are nearly sure-things that will return
10 to 20 times an investment.

3. VCs build companies. Actually, VCs fund companies and
entrepreneurs build companies.

4. VCs back teams. In reality, VCs back future returns.

5. There's more money out there than there are good
ideas. Actually, the opposite is true. Said Reichert,
"Venture financing is a fragmented, inefficient market. It's
a very painful, tough place to go to get money."

Conversely, Reichert laid out the five myths of
entrepreneurs:

1. If I build it, they will come. The reality is that
anyone can build it. The key is execution.

2. My technology is unique, proprietary and patented.
"It's not enough to build a better mousetrap, you really
have to want to kill mice," Reichert said.

3. Someone will steal my idea. The truth is that somebody
already has your idea...AND your next one.

4. Find a need and fill it. In reality, you should
anticipate a need and invent a market.

5. The VCs don't get it. The truth is: They sure do.

What Investors Are Thinking

Ann Winblad offered some guidelines for how investors view
the Internet space:

1. Only a few portals can be huge.

2. Wild ideas are still open for funding.

3. Web content alone is a tough business.

4. Look ahead... broadband will be increasingly real.

5. Large niche sites are still open.

6. The game's just beginning... but it's Game Over for
many.

Quotes of the Day "If my Internet connection dies, I am a
shell of my self." - Ann Winblad, Founding Partner, Hummer
Winblad Venture Partners

"One thing I've learned after all this time is that I always
let my gut override my brain." - Jon Goodman, Executive
Director, EC2

"Think of your business as an investment that needs fuel.
And the fuel that's good at sea level is not the same fuel
you need to go over Pike's Peak." - Jon Goodman

"Companies that turn out to be roadkill on the information
superhighway have one commonality... they didn't hire a
great CFO." - Ann Winblad

"It's not your father's Sand Hill Road. There's a lot of
money out there." - Ann Winblad

"When you see the words 'Surrender Dorothy' in the sky...
you don't surrender." - Ann Winblad

"Most home pages are one big argument." - David Siegel,
Founder, Siegel Vision, and author of Creating Killer Web
Sites

"Would you rather own 100 percent of the telephone booth on
the corner or 1 percent of AT&T?" - Jon Goodman

"Most sites don't accommodate intermediates. That hasn't
been a problem yet, but it will." - David Siegel

"It's not the amount you give away, it's the terms and
conditions." - Jon Goodman

"I don't care if you don't like it. I don't care if I don't
like it. I don't care if your CEO doesn't like it. I care if
your customers like it." - David Siegel

Tchotchke of the Day It's true: the net.marketing show is
indeed a tchotchke-rich show. But forget the mouse pads, the
Frisbees, the bags, balls and caps. What really turns heads
is when companies give away product. And when you are the US
Mint, and your product is cash, that makes for a very
compelling tchotchke indeed.

Well, not cash exactly. Actually, coins: Newly minted 1999
quarters of limited imprint. They aren't uncirculated coins,
but they haven't been in circulation. That's a subtlety coin
collectors understand, said the US Mint's Chris Heuer, who
has one of those impossibly long government titles.
Anyway... to me, they just look shiny.

Chris wasn't exhibiting here. But when he stood up after his
presentation Tuesday and called out, "Free samples!," he
drew a swarm thicker than the Ben & Jerry's freezer at the
afternoon break.


************************************************************

Copyright (C) 1999 ClickZ Corporation. All rights reserved.
 May be reproduced in any medium for noncommercial purposes
as long as attribution is given.

************************************************************

SUBSCRIBE INSTRUCTIONS
To subscribe to the Online Advertising Discussion List,
Fill out the form at: http://www.o-a.com/

UNSUBSCRIBE INSTRUCTIONS
You may leave the Online Advertising Discussion List at
any time by sending an email message with the word UNSUBSCRIBE
(just the word) in the body or content of your message to:

        online-ads-digest-request_at_o-a.com

if you get the digest version, and

        online-ads-request_at_o-a.com

if you get the non-digest version.


Online Advertising Discussion List
http://www.o-a.com/

a publication of The Tenagra Corporation
http://www.tenagra.com/



Received on Sat Mar 06 1999 - 08:32:49 CST