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The most effective financing processes, like the most effective auctions, create scarcity. Of late, many founders have been triggering pre-emptive financing processes for their raises. This is my interpretation of their playbook.

Strategy

First, founders build credibility with investors. This can be done in many ways like cultivating a long term relationship with a handful of VCs or in less direct ways like brand building through social media and blogging. Founders have established credibility through referrals from people-in-common. And of course, business performance is the trump card. Walk in with great numbers and you establish your company as an expert.

In 2010, Gaia Online started a user acquisition campaign to grow their user base. To simplify the on boarding process, they launched the Big Red Button home page below. It worked. Conversion rates from the home page spiked.

Simple user experiences, like this big red button, are effective because users understand what is expected of them. There is just one flow.

In every one of my conversations with Peter Lehrman, founder of AxialMarket, he always speaks about AxialMarket as “the business.” Never the company, the startup or any other word.

At first blush I thought it was a trivial semantic difference, a New York-ism, but over time I’ve come to realize this word choice marks a significant difference that manifests itself in culture, product and go to market.

Calling any company a business connotes a formality the word startup doesn’t share. A business is serious. A business is a stand-alone self sustaining entity. A business evokes thoughts of goals, revenue, profitability, execution and a performance mentality.

Many of the promising marketing and media innovations of the past six years, daily deals, subscription ecommerce, social gaming and social media, have been struggling. This trend is plain to see from IPO performance and negative press cycles.

I’ve been asked a few times whether there is consumer investment fatigue as a result. Fatigue is too strong a characterization. It would be foolish for any investor to write off consumer investing as a category because of the massive opportunity consumer internet companies offer. The fastest growing and often the largest Internet businesses are consumer businesses: Google, Amazon, Facebook, Instagram, Pinterest, to name a few.

Two weeks ago, James Reinhart, founder and CEO of ThredUp, led his company through a branding exercise. The team spent an afternoon comparing and contrasting the brand attributes of Starbucks and Peets, Whole Foods and Safeway and a few other competitive pairs. The team quickly distilled each company’s brand into one word.

Long ago, each of these brand selected the value that would define their brand. Every decision since that point had been made with that value in mind. Netflix: freedom. Apple: simplicity. Starbucks: quality. Nike: inspiration. Google: focus on the user. Zappos: service

Must content distribution platforms be reinvented every few years?

Left to its own devices, the mob will augment, accessorize, spam, degrade and noisify whatever they have access to, until it loses beauty and function and becomes something else.
Seth Godin

Given the noise and misinformation disseminated on Twitter both during the election and the Sandy disaster, I’ve been wondering how Godin’s thoughts apply to new information networks: blogs and feeds.

Sifting the feed in search of the truth

There is an undeniable early movement toward editorially curated publishing. The Twitter founders have launched the most visible response. Medium, a low volume, high quality content site is a direct (and opposite) reaction to the high volume, noisy Twitter feed.

We negotiate every day in almost every conversation and exchange, whether it’s rescheduling a flight, asking for a product return or responding to a term sheet.

I’ve been reading Getting More, a book by Stuart Diamond, who trains the military, Google and many others on negotiation. Everyone should read it.

This book is set apart because it recognizes the nature of relationships, emotion and human nature, forgoing concepts like ZOPA and BATNA. Instead, the book focuses on simple, tangible tactics:

How much is a social media click worth compared to a email click or a search click for an eCommerce site?

Monetate, makers of optimization software for eCommerce landing pages released data answering this question

Key: Conversion rates = conversion to order from click; AOV = average order value in $; Relative worth = indexed measure of click value based.

At the center of every startup is a secret. A secret is not an unknown. Rather, it’s something just not widely believed to be achievable or feasible. In other words, it’s an insight. Exploiting that secret should be the aim of every entrepreneur. Leveraging the secret means disruption and ultimately success.

The genesis of every secret is the word why. “Why are things done this way? Why can’t we do better?” Why is the predecessor to change. It’s the progenitor of every great idea because the word why challenges the status quo.

I love freemium businesses. I have met with many of them, work with one and if I were to start one, this would be my game plan, the characteristics of the product, market, distribution channels, conversion point and team.

Product Characteristics

The existing solutions are either email and spreadsheets or software architected before the turn of the century. In either case, the alternative is painful to use, so excruciating in fact, that individual employees are willing to circumnavigate IT’s policies in search of something better.