Why? Because the strategic plan is what binds all the different parts of the organization together so that each group knows what It needs to do to move the business forward. It is what the entire leadership team should use to define what success looks like in the future. This picture of the future is derived from a shared base of knowledge created by analyzing market, customer and competitive trends and the organization’s strengths and weaknesses. The process provides a disciplined approach for looking at external forces, such as economies, markets, competition, customers, suppliers, etc, considering a variety of potential scenarios, and exploring new opportunities for growth. As part of the process, the organization can determine how to best use its strengths while mitigating any weaknesses and examine the impact of new markets, products and services in order to achieve future success. By formulating a picture of the future, the organization is defining success and how success will be achieved and measured.

Based on the analysis and the vision, we recommend that the leadership team select a manageable number of key objectives - typically no more than 7 to 10, and less can definitely be more - to accomplish over the next 18 months to 3 years. These are the key objectives that if accomplished will enable the organization to achieve success. These mission-critical objectives provide the foundation for the work to be performed and the parameters by which success is measured. They define the company’s priorities and enable the rest of the organization to allocate resources accordingly.

These objectives in the strategic plan become the business outcomes and serve as the stakes in the ground around which each part of the organization builds its operational plan. Whether you’re in sales, marketing, engineering, manufacturing, customer services, these initiatives are the basis for your plan. This is why the strategic plan is so important - it is the cornerstone for action. Many of you tell us you are revisiting your marketing plans in light of the current economic environment. As you solidify your plan, be sure you have the strategic plan front and center so you the marketing objectives and performance metrics are aligned around what matters most to the organization.

VisionEdge Marketing, Inc, is a leading data-driven metrics-based strategic and product marketing firm located in Austin, Texas. The company specializes in consulting and learning services that help organizations use data to make fact based decisions to address market, customer, and product opportunities and to improve and measure marketing performance. For more information, go to www.visionedgemarketing.com.

I caught the swine flu which has taken me out of commission.  I feel a little like Rip Van Winkle after a long rest.  Waking up to see a flurry of M&A activity as well as large financings.  In the last couple of days we had EA buy Playfish for $400M, Google buying AdMob for $750M, HP acquiring 3com for $2.7B, and just recently social gaming provider Playdom raised $43M in venture financing.  Is this the sign of an early tech rally?

There has been some interesting controversy in the local search space.  I have been opinionated about local search and if you are interested you can check out a couple of my posts here and here.

Seattle-based startup, HelpHive, recently altered their service based on some strong opinions from local business owners.  The gist of the controversy was that HelpHive was building business profile pages and substituting a HelpHive run direct response number.  I personally think that is a great service for small business owners.  Like many of us, I start out most of my local service recommendations with search engines.  In the case of some paid for performance services like Service Magic (they are like the LendingTree of local services providers), you get a number of local businesses that have basically paid to get leads.  You could argue that HelpHive should be more upfront about providing lead generation services to small businesses which is what they ended up doing.  It is an interesting question as to how do you protect your local brand and what rights do you have as a local business owner.

Another approach is what Marchex recently introduced, there “Reputation Management” product.  Its akin to getting your FICA score for your business.  It aggregates all the various review sites into one place and acts as a master dashboard for your business sentiment.  Its a cool concept.  Clearly, once you have the dashboard then you can sell other services into those businesses.  Its a different approach than HelpHive.

In the end, both services really require massive scale in order to be successful.

My high school track-and-field coach would show us Steve Prefontaine footage before races.  As an adult, I watch presentations from CEOs that I admired before I would do large group presentations.  A little Steve Jobs goes a long way in the CEO inspiration department.  I always thought that it would be great to compile a list of best startup and/or CEO pitches for a blog post.  This entrepreneur already beat me to it.  Great post.

There is a widespread myth that the most important part of building a great company is coming up with a great idea.  This myth is reflected in popular movies and books: someone invents the Post-it note or cocktail umbrellas and becomes an overnight millionaire.  It is also perpetuated by experienced business people who, for the most part, don’t believe it. Venture capitalists often talk about “the best way to pitch your idea” and “honing your elevator pitch.”  Most business schools have business plan contests which are essentially beauty pageants for startup ideas.  All of this reinforces the myth that the idea is primary.

The reality is ideas don’t matter that much.  First of all, in almost all startups, the idea changes – often dramatically – over time. Secondly, ideas are relatively abundant. For every decent idea there are very likely other people who’ve also thought of it, and, surprisingly often, are also actively pitching investors. At an early stage, ideas matter less for their own sake and more insofar as they reflect the creativity and thoughtfulness of the team.

What you should really be focused on when pitching your early stage startup is pitching yourself and your team.  When you do this, remember that a startup is primarily about building something.  Hence the most important aspect of your backgrounds is not the names of the schools you attended or companies you worked at – it’s what you’ve built.  This could mean coding a video game, creating a non-profit organization, designing a website, writing a book, bootstrapping a company – whatever.  The story you should tell is the story of someone who has been building stuff her whole life and now just needs some capital to take it to the next level.

Of course a great way to show you can build stuff is to build a prototype of the product you are raising money for.  This is why so many VCs tell entrepreneurs to “come back when you have a demo.”  They aren’t wondering whether your product can be built – they are wondering whether you can build it.

My last startup was an information security company — SiteAdvisor — that was acquired by McAfee, where I then worked for a while. I am no longer working in security, but have many friends that do and I try to stay in touch with what’s going on in the area.

The widespread sense I get is that we are going through a period of unusual calm, especially on the consumer side.   Instead of repeating the historical pattern where new types of threats emerge every few years, we’ve seen the opposite: threat types have actually gone away or been seriously mitigated. Spyware/adware is basically gone, as most of the businesses that were pushing it (yes, it was mostly driven by legal, US-based businesses) have gone bankrupt.  Spam has been mostly controlled, at least if you use Gmail or a good spam filter like Postini.  If you use a Mac you don’t have to worry about viruses or malware.  Mobile security hasn’t ever really become an issue, mostly because the telecom carriers (and now Apple) carefully screen the installation of 3rd party apps.  Identity theft is a real issue but not really something consumers can do anything about – most of it happens offline or through enterprise data center breaches.

On the enterprise and government side, things are more turbulent.   Distributed denial of service attacks using botnets remain almost impossible to defend against. There have been a number of breaches of sensitive consumer information and those will likely only get more common, especially as more information gets centralized in the cloud. Military and terrorist computer attacks also seem to be a likely future threat.

All in all, though, the good guys have been keeping the bad guys down.  This relative calm is generally great news for the computer users, but – let’s be honest – bad news for the computer security industry and venture capital investors.  As an investor, I’ve only made one security investment in the last few years — in a cloud security startup called Vaultive. Everything else I’ve seen seems to be trying to solve non-problems or rehashing solutions that were developed years ago.

Inevitably, the calm will end and new classes of threats will emerge. But for now we should enjoy the relative peace.

Followup to Ning’s Viral Loop article
I was recently sent a copy of Viral Loop by Adam Penenberg, which just came out. I was first introduced to Adam in early 2008, when Marc Andreessen wrote us both while Adam was starting to write an article about Ning and their viral loops. That article was ultimately published in April 2008 as Ning’s Infinite Ambition, which you should read if you haven’t. After the article, Adam subsequently spent more time researching the topic, ultimately resulting in the book. I finished it and wanted to share a high-level summary and also talk through some points that the book brings up.

Summary
The book mostly covers a series of case studies from both offline and online companies. These include detailed dissections of viral companies from all stripes, including:

• Offline: Tupperware, Ponzi schemes
• Andreessen’s companies: Mosaic/Netscape, and Ning
• Bubble era companies: Hotmail, eBay, PayPal, HotOrNot
• Web 2.0 startups: Flickr, YouTube, MySpace, Bebo, Tribe, Tagged
• Widgets and apps, etc: Facebook, Slide, RockYou, Zynga

Some of the companies get pages and pages, and others just get a paragraph or two. But there’s a lot of stories that were new even to me, which is always a good sign, since I tend to love reading this kind of stuff.

The book also covers a bunch of high-level concepts about virality, such as the viral coefficient, viral loops, RockYou’s model for calculating virality, etc. All in all, a useful intro to all the major concepts in the field. It’s a great walkthrough of the history of viral companies since the late 90s when some of the formalizations started to happen.

Metrics-focused virality versus not?
One of the interesting distinctions that isn’t made in the book is the trend of startups who use quantitative techniques to optimize their virality versus products that went viral through other means. In particular, a lot of modern techniques are borrowed from the world of leadgen, ecommerce, and advertising, including:

• Formally defining landing pages (and using associated techniques)
• Creation and formal creation of funnels
• A/B testing
• Extensive use of analytics and targeting
• Deep understanding of email marketing, deliverability, and addressbook importing

From my personal experience, it seems like a lot of these ideas about virality ultimately originated from a few small teams here in the Bay Area who have now helped generations of viral companies succeed.

To me, the most important work in metrics-based viral marketing came from these companies below – I’ve listed the companies along with “descendent” startups who took the culture, playbook, and to build the next group of viral companies

• PayPal (Peter Thiel and Max Levchin)
  • PayPal mafia (Slide, Yelp, YouTube, Linkedin, Geni, etc.)
• Jumpstart (Greg Tseng and Johann Schleier-Smith)
  • Crushlink, Tagged, Hi5, others
• Plaxo (Sean Parker)
• Tickle (James Currier)
  • Ooga Labs (Medpedia, Wonderhill)
• BirthdayAlarm (Michael Birch)
  • Bebo, Flixster

There is lots and lots of overlap amongst this group above, and people cross-advise each others’ companies. Let me also caveat that the list isn’t exhaustive, and there are plenty of important VCs, advisors, and entrepreneurs that “get it” and help cross-pollinate between companies. In particular, I’ve found that the PayPal folks are involved in a tremendous number of companies in the Bay Area, and have been teaching their various companies to go viral for quite a while.

That said, I believe that the social relationships above have become less important over time to startups, as the knowledge around designing and optimizing viral loops has become more widespread. Certainly the Facebook economy has taught a wider generation of 20-something developers on how to build highly viral applications, with or without the help of the folks above. I’d note that some of them aren’t as numbers-oriented as copycat-oriented, but it’s still working for many people. As a result, I think the Bay Area is set up nicely to create the next generation of web companies as the bench in this area has gotten very deep indeed.

Who am I missing? Email me or let me know if I am in the comments. Or if someone on the above list would like to graciously identify who taught them the viral playbook, I can help trace the history further

“Viral Loop” stays high-level
One aspect, both good and bad, about the Viral Loop book is that it stays pretty high level. As mentioned above, even after you understand what a viral loop is, you have to understand the tools of the trade well enough to go execute one. Learning the ins-and-outs of direct marketing takes a long time, especially to become an expert.

Adam does a great job keeping the book high-level and relevant to people both inside and outside of the industry, but certainly it doesn’t go into any of the details that have to be mastered to do the actual execution part.

It is for this reason that the total supply of viral experts will always be relatively constrained. Anyone worth their salt would likely be working on an amazing project, early on in the team, rather than working for an established startup. Instead, what tends to happen is that the community operates on a “money + knowledge” type of relationship, in which successful viral experts advise new startups to provide both angel investment and advisory.

The limitations of viral loops as a force multiplier
Another thing that isn’t discussed much in the book, which I think is very important, is the limitations of viral loops. The quantitatively marketed companies that I mention above certainly have their successes, but similarly, many of them are plateauing and failing as well.

The reason is that there are some important factors that are not well-understood by the extended community.

First, I refer to this great presentation by Siqi Chen (of Serious Business) and David King (of Green Patch), called Metrics for Social Games:

The first slide contains a deep truth: Metrics are a force multiplier. If you don’t have a great product, then you won’t get anywhere. But if you have a great product, then it help you build a huge business.

I’ve written about a similar concept in a blog post called Creating value versus optimizing revenue.

Hitting saturation in viral networks
Another important limitation is that there’s a finite number of users out there, and after you churn through all of them, all you have to look forward to is the long plateau. I first wrote about this in my post Facebook Viral Marketing: When and why do apps “jump the shark.”

I wrote that post back in March 2008, and a lot has happened on the Facebook platform since then. This includes an incredible growth rate of the underlying platform itself (now hitting 325 million monthly actives), the appearance of Social Gaming, and it turns out that the current model to beat on Facebook comes from Zynga. They get around the jumping the shark issue by releasing lots and lots of games – 17 on Facebook, 9 on MySpace, 8 on other networks, and 5 on iPhone. And more to come every day

Although it doesn’t seem like much of a problem for most companies to hit the saturation ceiling in the networks they are operating in, it is a huge problem for VC-backed startups because then the story stops being about growth. So for the entrepreneurs who are working on their startups, it becomes important to hit a product/market fit early, and scale then, rather than prematurely going viral without a long-term product direction.

Buy the book here
Hope you enjoyed the post, and you can buy Adam Penenberg’s Viral Loop here.

Want more?
If you liked this post, please subscribe or follow me on Twitter. You can also find more essays here.

Strategies for social media and SEO are so… squishy.

You know what I mean. You can’t measure “authenticity.” You can’t measure “relationships.” You can measure “subscribers” and “followers” and “uniques” but that doesn’t tell you anything about influence or reach or effect. You can measure “page rank” and “search engine position” but those algorithms are shifting and unknowable.

Without units of measurement it’s hard to experiment, and without experiments it’s hard to have data to drive conclusions. This is a sucky situation for the scientist in me.

Recently, however, I’ve come across several sources of empirical, experimentally-sound data sources that do tell us how to be awesome at both SEO and social media.

So on behalf of the geek in all of us: Enjoy.

Changing content leads to higher search engine position

This is really a story within a story — a story of an entrepreneur forced to get hard data to sell his product.

I’ve mentioned Gerry Cullen on several occassions. We did ITWatchDogs together and a weird VC-funded beast before that. Gerry is a great mentor to me and much of the philosophy on this blog is a direct result of his mentorship.

Gerry’s latest venture is Changing Content — a hosted service that puts a scrolling newsbox of relevant content on your home page. Before you scoff that “there’s automated services that do that for free,” this is content hand-picked and edited by a human for just $99/month.

But it was hard to sell. Here’s how a typical sales call looked:

Customer: Why would I want a newsbox?

Gerry: It makes your website more interesting.

Customer: Are you saying I’m not interesting?

Gerry: Our beta customers report that people call them up to talk about the stories on there, so it generates conversations.

Customer: That’s kinda cool, but it’s not tangible enough to justify giving you money.

Gerry: It increases your search engine ranking because you will have changing content with relevant keywords.

Customer: OMG! R U 4 reals? Sweet, I’ll take it. I need all the SEO help I can get.

Gerry: Great!

Customer: So how much does it increase my ranking?

Gerry: I don’t know, but all these bloggers say that regularly changing your content improves search rank.

Customer: Oh, you’re just guessing.  You don’t know that it increases search rank.

Gerry: Well…

Customer: No sale. Come back when you have proof.

Every time Gerry got to “improves search rank position because content is changing,” the response was always: “If you prove it, I’ll give you money, otherwise get off my phone.”

So Gerry did an experiment. Two sites, identical in all possible ways: Same subject matter, keyword density, number of words, average word length, page layout, picture size, alt-tags, IP address, domain age, number of inbound links and from which source sites. The only difference was that one site had the newsbox and one didn’t.

The result? See for yourself in this short but powerful report (PDF).

(Bonus lesson: Reports like this with real data get you credibility no matter what your business is. It’s a better marketing technique than any “whitepaper.”)

<H1> doesn’t matter, and 13 other mind-blowing facts from SEOmoz

SEOmoz has positioned themselves as the leader in SEO tools. If you’ve hired an SEO consultant, changes are they’ve given SEOmoz money.

SEOmoz has amassed billions of data points on web page construction, web site interrelationships, and the search ranks. Periodically they crunch this data into reports about what really matters in search engine optimization.

Here’s a great article that summarizes 14 of their recent empirical findings. Some highlights follow (but really, go read the whole article):

• The <H1> tag doesn’t matter for SEO. Use it for site structure and as a guide for people with disabilities or low-grade browsers, but don’t use it to “trick” search engines. This kills me because there’s about 5,245 articles on the Internet stating that <H1> tags are super-duper important.
• “Alt” tags in images really do matter.
• Don’t use query parameters in your URLs (e.g. say “/category/essays/great-post.html” instead of “/post-query?category=essays&title=great-post”). I thought search engines were smart enough to be OK with that, but no.
• Too many links in the footer is a silent killer.

Nine Scientifically Proven Ways to Get Retweeted on Twitter

Once again HubSpot is leading the charge in real information about inbound marketing and social media. I know, I’ve thrown an elbow at them in the past, but that was just a love tap.

The latest awesomeness comes from Dan Zarrella, HubSpot’s “Viral Marketing Scientist.” Dan authored the up-coming book aptly named The Social Media Marketing Book, and as part of its promotion he’s created a free, 22-page guide telling you how to get retweeted. (The “cost” is you have to subscibe to his blog.)

But this isn’t Just Another Linkbait Report Constructed By Scraping Tips Off Other Bloggers. This is the result of statistical analysis of 40 million RTs. So what’s that, like four days worth?

For me, one of the big eye-openers was that using TinyURL incurred a massive penalty on the likihood of a retweet:

I use TinyURL for my little “Retweet” button at the top and bottom of blog posts. (Hey You! Do me a solid and nail that button whenever you enjoy a post!) Guess I’ll have to switch to bit.ly.

Oh and a bit of bragging: Turns out my advice about asking for the RT was correct!

Tricks of on-line dating

My favorite new blog is OkCupid’s. They’re an on-line dating site, but their blog isn’t crap like “10 fun things to do on a first date.” Instead, they crunch numbers.

Geeks! I love it!

I mean, where else can you get a heat-map of the European countries and American states in which people are willing to role-play rape fantasies?

But wait, this is relevant. Well, not the rape stuff. Crap, now “rape” appears like three times in this article. This is totally going to weird out my keyword ranking…

Let’s take a look at their analysis of exactly what to say in a first message. What gets you a response?

Go read the article for all the fun facts. This stuff matters because a lot of what you do in business is try to get a response from a stranger. Like:

• Making first contact with a blogger/twitterer who doesn’t know you.
• An email following up with someone who just downloaded a whitepaper or software installer, trying to get them to talk to you.
• Any cold-call.
• Mass advertising in any form.
• A webinar where you hope not to lose half your audience in the first 5 minutes.

Here’s one of their findings: Starting an email with “Hi” (like I have been — oops!) is the worst thing you can do, but starting with something friendly and non-offensive like “Howdy” works well. So what does that mean about all the emails you send to strangers?

And yeah, some of this advice won’t apply to business, cavet caveat, blah blah blah. But it’s a fascinating and unusual glimpse into the human psyche and those guys are funny too, so just read it.

Penelope Trunk tells you how to blog

OK this is sort of a cheat because it’s not exactly empirical, but here’s my argument:

1. Penelope has 44,000 RSS subscribers.
2. Everything she says is repeated elsewhere by other successful bloggers.
3. Nothing is contradicted by the piles of advice at the go-to blogging knowledge sites like ProBlogger and Copyblogger.
4. I’ve gone from 200 to 5,700 subscribers in 12 months by following all this advice.  (More detail on that in a future post…)

So yeah, it’s not exactly a controlled experiment, but there’s enough evidence in my eyes to recommend it as gospel.

This is her guide. Live it and enjoy your hard-earned success and alienation from all your friends. Oops did I say that out loud? Penelope would tell me not to hold back.

What hard data do you know about? Don’t hog the knowledge: Leave a comment already!

A quick reaction:

I don’t get how a blast of small messages not necessarily intended for you is better than email. I can see it being complementary at best. At worst, a huge distraction.

If you are needing something specific, an answer to a question for example, then absorbing a stream sucks. Asking the stream is better. But a person-to-person message (e.g. email) to a known answer source is best.

Streams seem to excel when you want to get a sense as to what’s happening in general.  And, there is a place for that.

But, no one can sell what we already have in enterprises, email. Perhaps something new has to be created so that there is something new to sell.