The latest from TechCrunch
- Winner's Curse: Why Losing A B-School Biz Plan Competition Is Better Than Winning
- "Misunderstanding": Twitter Japan Now Says There Won't Be A Subscription Model
- Video Professor Tries To Bully Washington Post, Fails
- Twitter Japan To Introduce Paid Premium Accounts Next January
| Winner's Curse: Why Losing A B-School Biz Plan Competition Is Better Than Winning | Top |
| One of the best things about being an academic is being able to mold young minds and guide them to success. When one of my students , Andrew Leblanc told me he was entering the Duke Startup Challenge Elevator Pitch Competition , I told him to come and see me and do a practice run. After all, I had judged several of these contests at Duke and other universities. I thought I knew what worked. After the eleventh iteration, Andrew got it right. He wasn't trying to pack his presentation with unnecessary details. He had slowed down his pitch, added a personal touch and was now exuding confidence. Andrew even researched the background of the judges and tailored his message to their interests. So after two hours of intense preparation, I had little doubt that Andrew would win. Andrew lost. I was surprised. But what I told him afterward is that it really doesn’t matter. Contrary to what the organizers of these competitions will tell you, university business plan contests don't produce winning companies. Yes, a number of companies have emerged from business plan bake-offs that have been moderate or small successes. But not a single home-run has emerged from this now-omnipresent practice. This is not to say that the contests are bad. Instead, they educate students in entrepreneurship and motivate them to come up with interesting ideas. But for all of you out there who think a biz plan victory is a ticket to the big time, think again. And for all the engineering students who think any outcome but victory is a waste of time, you also need to think again. Even though he lost, Andrew met a potential partner and also got to speak with Bill Maris of Google Ventures, a priceless encounter. (Bill promised to introduce Andrew to the Google Power Meter team. Don’t forget, Bill!). In fact, let me throw out a radical thought. I submit that losing in a business plan contest is actually more beneficial than winning. There is a growing body of research that children who are praised too early and too easily end up under-performing peers who are not praised but are told, in constructive terms, they can do better. This is one of the core tenets of Po Bronson’s new book on parenting, " Nurture Shock ." Extending this to the realm of entrepreneurship might be a leap (and it could be great fodder for a future PhD dissertation). But to me the outcomes don’t lie. Business plan competitions don’t breed winning businesses. Rather than winning a beauty contest, building a business is a marathon that requires steady and constant effort , surmounting regular difficulties , and living through emotional peaks and valleys. The very roots of the current business plan craze go back to one of the periods that represents a low-point in sane business practices. The business plan competitions first started in the dotcom days. At that time, there was a frantic rush to start new companies. Entrepreneurs would create professional-looking, buzzword-laden business plans. Venture capitalists would then trip over each other to fund these plans, usually with way too much money. The prevailing theory was that a good business idea and enough money were enough to create the next hot IPO. B-schools readily jumped on the bandwagon and soon an arms race ensued to see which school could offer a bigger prize to winners. With the bursting of the dotcom bubble, the tech world was reminded that even a great idea funded by venture capital didn’t necessarily produce business success. In hindsight everyone saw that it took more than a good idea. It took a thorough understanding of the market, excellent management, and the ability to navigate rough waters to build a thriving enterprise. Some of the biggest dotcom winners came from me-too ideas that were executed better than the originals. Nor was this anomalous. Ask any seasoned entrepreneur in any industry, and he or she will likely tell you that his or her first business plan was probably the best work of fiction they ever created. A glimpse back through the big winners of the Dotcom Era also underscores the lack of impact business plan competitions actually had. Amazon, Google, Ebay, Yahoo—none of them won a business plan contest. In fact, not a single home run from that era won a business plan contest. And one of the biggest successes of its time, Akamai Technologies, actually lost the M.I.T. $100K contest . After the great Internet Bubble burst, venture capitalists and entrepreneurs quickly adapted to the new reality and went back to basics. But no one told the b-schools. From Silicon Valley to Research Triangle Park to New Delhi and Shanghai, new contests are still sprouting. Only now, the prizes have gotten bigger and the competitions more serious. Yet real successes remains non-existent. (If I’m wrong in five years on this, then call me out). But failure is no surprise for these b-school business launches Without a solid understanding of market needs and real-world validation of their ideas, few young entrepreneurs can achieve their business-plan projections. The hottest startup methodologies of today, built around ideas fostered by Y-Combinator and TechStars emphasize giving startups almost no money and encouraging them to get a product to market as quickly as possible in order to get real world validation. This is almost the exact opposite of the current business school competition ecosystem, where market validation is non-existent. So realistically, few of the business school plan entrants can even understand whether their business plans even make sense. Business plan judges, for their part, are equally in the dark most times. Andrew’s plan involved utilities and power management, a topic I know virtually nothing about. B-school contest judges are usually generalists who have only superficial insights into the internal dynamics of the industries at which these plans are aimed. It would seem, then, that the insights of long-time experts in those industries would likely be far more valuable to a prospective entrepreneur. Again, I am not at all saying that business school plans are inherently bad. To the contrary, Andrew learned an enormous amount about starting a business, the importance of understanding markets, utility and power management technologies, and team building. His plan to build software that would allow residents of college dorms to track their power usage through a visual interface and more easily understand the direct impact of their behaviors on electricity consumption was not a bad idea. In fact, it was a good enough idea that many others are currently attempting similar types of systems for various social settings and environments. My colleague, Lesa Mitchell at the Kauffman Foundation believes that these contests foster collaboration between business school students and engineers or scientists. This, she says, teaches valuable lessons about launching businesses to both potential inventors and would-be CEOs alike. Finally, let’s not confuse failure to execute or unrealistic plan expectations with bad ideas. Young CEOs going into industries they barely know armed with b-school plan competition money are like lambs to the slaughter. But the core idea behind their plan may be quite innovative and powerful. My takeaway from all this? If you want to be a successful entrepreneur, don’t win a business plan competition. If you do win, your first act might be to hire a CEO with industry experience. And win or lose, the most valuable lessons you’ll learn will come more from playing the game than from coming up with the best plan. Editor's note: Guest writer Vivek Wadhwa is an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. Follow him on Twitter at @vwadhwa . Crunch Network : CrunchBase the free database of technology companies, people, and investors | |
| "Misunderstanding": Twitter Japan Now Says There Won't Be A Subscription Model | Top |
| We reported yesterday about Twitter Japan’s plans to start charging followers to view tweets from certain users starting January and explained why this paid subscription model could work in Japan . Well, please forget it, this won’t happen. Just a few minutes ago, Digital Garage (the company responsible for Twitter operations in Japan), issued a press release ( English PDF , Japanese PDF ) stating there won’t be any fee-based services of any kind on the site and that Twitter in Japan will remain completely free for the foreseeable future. There’s also a blog post by the Twitter Japan team (who just copied and pasted the press release text, providing no further explanation). Digital Garage says the media reports on their plans to monetize Twitter are based on a “misunderstood presentation by a DG subsidiary, DG Mobile”. So what happened? Kenichi Sugi, not really a nobody but DG Mobile ’s COO, delivered a presentation [JP] during a mobile tech conference in Tokyo where he talked about the future of the digital content business. IT Media, one of Japan’s most biggest online media companies, reported in Japanese (quoted in Robin’s article yesterday ). The report was later picked up by Japanese media (i.e. Slashdot Japan ) as well, as it laid out all the details of the plan: launch in January 2010, monthly fees ranging from $1.16 to $11.60, pay-per-tweet micropayment option, 30% cut for Digital Garage, celebrities as likely candidates to draw paying followers, etc. So first the company gets into such details and now says it’s all just a misunderstanding? Or is it the (mostly negative) initial reactions by Japan’s Twitter users that triggered this development? Whatever the reason, the payment model is scrapped for now. (We reached out to Digital Garage for a comment.) On a side note, it would have been interesting to see if paid accounts worked as a way for Twitter to monetize the service in the world’s third largest Internet market. The concept has proven to be successful in similar fashion elsewhere in Asia. Filipinos, for example, can subscribe to their favorite celebrity’s “livestream” via SMS (not using Twitter but a service called KText). Every time the celebrity in question writes a message to his fans, all subscribers get billed a certain amount and pay via their cell phones. Some celebrities have tens of thousands of subscribers and share the revenue with KText (thanks @mikewalsh for the pointer). This is something Digital Garage had in mind for Japan, too. A comeback of their idea to monetize Twitter isn’t impossible, at least in some places in Asia. Here’s Digital Garage’s press release in full (”Recent Press Coverage about Twitter Service in Japan”): In response to media reports stating that Twitter Japan will be launching a paid-premium accounts service on Twitter, we would like to officially state that this is not correct. To be clear, Twitter service in Japan is a free service and neither Twitter Inc. nor Digital Garage, Inc. (JASDAQ code: 4819, headquartered in Shibuya-ku, Tokyo, Japan, CEO: Kaoru Hayashi, henceforth DG) have discussed or have any plans for paid-premium accounts. Also to clarify, Twitter Inc. and DG enjoy a commercial partnership but do not have a joint-venture arrangement in Japan. The recent media reports are likely a result of a misunderstood presentation by a DG subsidiary, DG Mobile, about potential business opportunities that it could explore as a third party. DG Mobile’s presentation was unrelated and separate from the Twitter and Digital Garage partnership. DG apologizes for this misunderstanding and for the delay in correcting the information. We hope this clarifies our commitment to helping Twitter Inc. continue to grow and enhance its free service for Japanese users. Crunch Network : CrunchBoard because it’s time for you to find a new Job2.0 | |
| Video Professor Tries To Bully Washington Post, Fails | Top |
| Video Professor continues to be angry that I called them a scam in my original Scamville post. They’ve gotten nowhere reaching out to me directly (more on that below), so now they’ve tried complaining to the Washington Post , which has syndicated our content since 2008. The Washington Post stood firm beside us today and kept our original post as written. Good for them. Essentially Video Professor is arguing that they didn’t have the chance to respond to our post before we published, and that in general we aren’t behaving very journalistically. One of my favorite habits of journalists is that they refuse to state an opinion. Instead, they find a source to say whatever it is they want said and then quote them. And when I say “favorite,” what I really mean is that I hate it. The story the journalist writes has the look of objectivity but really it’s just the same as if the journalist wrote what she or he meant, directly, in the first place. A gold star journalist will then find a “balancing” quote from someone else, often the person or entity being attacked. “ When did you stop beating your wife, ” etc. I prefer to just skip all that nonsense and get right to the meat of a matter. And most of my favorite bloggers do the same. None of us have the audacity to think that we are your only news source. You can find other opinions elsewhere, and judge them on their merits, too. The Video Professor Scam Video Professor was a side note in our original Scamville post, just one of a bunch of scams that were making their way into social games on Facebook and MySpace. But now we’re focused on them like a laser. Video Professor is unlike mobile scams which look to get a relatively small $10 – $20/month subscription on your mobile bill and hope you never notice. They go for the big kill: $190 – $290 charged to your credit card on time. I haven’t found the Video Professor scam on Facebook social games since the Scamville posts, but the site is still live, and there are still lot of links from Google and Facebook (they still advertise directly on Facebook). What you see when you first hit the site depends on how you got there – directly or via an advertising partner. The least scammy version is what you see if you go to videoprofessor.com directly. On the home page in very small font is a statement that you are going to be charged $290 if you engage in a transaction with them. But that’s the only on-screen disclosure you’ll see. Click on a product and go to the next page and you are told you get lots of stuff for free, all you have to do is pay up to a $10 shipping charge. You choose your product and you’re on to the checkout page. Nothing is stated about the $290 charge. After that you are on the final checkout page, showing a total price of $4.56. There’s no fine print, just two links on the page to pages with hugely long agreements with text hidden in the middle of it all that you are actually being sent tons of products and you’ll be charged $290 for them all if you don’t cancel in ten days. Needless to say, people who get this stuff either don’t read fine print and are charged, or try to return it. There are hundreds of user complaints about refunds not being paid. 271 complaints to be exact, on RipoffReport alone . I’ve put the purchase flow at the bottom of this post. Remember that this is the least scammy version I’ve found ( here’s how they lured people in from Facebook a couple of weeks ago). For users who hit the site via Facebook, Google or other advertisments, it’s even scammier. Is This A Scam? You’re damn right it’s a scam. Users are obviously being tricked into buying something they don’t understand and wouldn’t want even if they did understand the details. The company says they comply with federal and state laws. But they continually refine the landing and checkout pages to comply with the bare minimum of legal requirements while maximizing ROI. Jump to 3:15 of this video for a description of how services like these trick users into buying useless products. Here’s an easy way to determine if something is a scam – would users pay for it if they knew exactly what they were buying? In Video Professor’s case, the answer is no, and the company has to resort to tricking the user into paying nearly $300 for a bunch of CDs. Our governments should be protecting us from this nonsense, but they can’t or won’t. I’m be damned if I’ll stop writing about it, though. Here’s what people have to say about video professor. See this article and comments , as well as Amazon and epinions reviews. And to the people behind these companies – how do you sleep at night knowing that you are nothing but a deadweight loss to society, taking money from people who aren’t Internet savvy enough to know they’re being scammed? When you’re 80 and look back at what you’ve done with your life, is this really what you want to have spent your time doing? History Of Threats I’m not surprised that Video Professor is going to so much effort to shut me up – this is how they do business. Video Professor has gone after people who’ve criticized the company . Some of the links in this article pointing to other criticisms are now dead links – victims of litigation? When Video Professor sent me an email after my post arguing that they weren’t a scam, I replied “It’s a huge fucking scam. And you know it.” Which pretty much summed up my position on the matter. Here’s the letter they sent to the Washington Post. Note that they argue that they simply want to tell their side. I argue that their website tells their side of the story: Dear [removed], [removed] referred me to you, after we inquired about this story: http://www.washingtonpost.com/wp-dyn/content/article/2009/11/01/AR2009110100018.html In the story, Mr. Arrington accused us of being a “Scam.” Mr. Arrington never contacted us in advance of making this charge for an opportunity to present our side of the story. Assertion with attribution. We contacted Mr. Arrington, and essentially answered the questions he didn’t ask of us prior to writing the story, and it appearing in the online edition of the Washington Post. His response to me was as follows: “It’s a huge f*cking scam. And you know it.” ( I replaced the “u” with the asterisk in case your filters prevent this sort of language from reaching your inbox) Two question sir: 1. Is it now the policy of the Washington Post, either in print or online editions to make such assertions, without first contacting someone prior to accusing them of being a Scam? 2. Is it now the policy of the Washington Post, either in print or online editions to have their writers respond to inquiries with the “F” bomb? For the record, and the point we tried to make with Mr. Arrington, we are not a scam. We are members of the BBB with whom we maintain an “A” rating. The BBB reviews all of our marketing materials on a regular basis. We also are in full compliance with all rules and regulations of the FTC. All we ever asked was a chance to offer our side. Mr Arrington would then have been free to “call it as he saw it.” But we were essentially told to “F-Off” I’d appreciate your thoughts sir and also your time and attention. Yours truly, Brian D. Olson Brian Olson Vice-President of Public Affairs Video Professor, Inc 303-232-1244 Ext 380 The Washington Post’s response? In a nutshell, “you’ll have to discuss directly with the editors at TechCrunch.” Crunch Network : MobileCrunch Mobile Gadgets and Applications, Delivered Daily. | |
| Twitter Japan To Introduce Paid Premium Accounts Next January | Top |
| The news of the day in social media land: Twitter is apparently going to start experimenting with paid premium accounts through its Japanese subsidiary, which has always been a bit separated from the rest of Twitter and in many ways a playground for the company ( Groups , Twicco , Twitvideo.jp ). Details are sketchy at this point, but Japanese media are reporting that Twitter is going to introduce a tiered payment model and aims to charge people to view tweets from certain premium Twitter accounts. Twitter Japan, which is operated under supervision of Twitter investor Digital Garage , launched in April 2008 and boasted display ads right out the gate. At a conference earlier this week, Kenichi Sugi, COO of DG Mobile (a Digital Garage subsidiary), announced that Twitter would now add paid subscription options starting in January 2010, allowing account holders to charge audiences for access to their tweets, more text, images, links to their external websites and so on. Billing would be done on a monthly basis for a price that ranges from 100 Yen (approx. $1.15) and 1000 Yen (which converts to roughly $11.5). Users will apparently be able to use their credit cards, have their mobile carrier include it in their invoices, or even purchase a prepaid ticket at a convenience store to pay for the premium service. Finally, Twitter will be taking a 30 percent cut on transaction fees. The assumption is that this model would be fit for account holders who deliver real-time information, news and educational content, and tend to include original photographs, video images and audio in their tweets. The idea isn’t exactly brand new: Twitter co-founder Biz Stone mentioned earlier this year they were thinking of commercializing accounts as a way to get some revenue out of the popular service. But the surprising part is that people will actually be charged for access to premium accounts, rather than having holders pay for them. At least, in Japan. If I were a betting man, I’d say this is not something Twitter is going to be rolling out in the rest of the world any time soon though. (Thanks for the tip, Paul Papadimitriou and ITmedia for the image below – more coverage at The Next Web and Brandrepublic ) Update: TC contributor Serkan Toto (who’s based in Japan) followed up with six reasons why this subscription model might just work out well for Twitter … in Japan. Update 2: "Misunderstanding": Twitter Japan Now Says There Won't Be A Subscription Model Crunch Network : CrunchBoard because it’s time for you to find a new Job2.0 | |
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