Sean Ammirati is a partner at Birchmere Ventures and the former COO of ReadWrite.

It’s 2019, and Rosa steps into the law firm she worked at five years ago as a paralegal. It’s a far smaller company than the one she remembers—just a few partners and a small amount of support staff.

Back then, she saw the writing on the wall: Her employer had started using computer programs to automate the grinding work of reviewing documents she and her colleagues had been hired to do.

Rosa recalls a moment of fear, and then determination: She decided to learn how to program. She got a new job as a software developer, then a product manager.

While not all of her colleagues had chosen to pursue a career in software, most today were freelancing on more creative and enjoyable work than the routine scouring of documents they used to do.

Now she was back at her old firm to talk about launching a startup based on an idea she’d been working on for the last few months. She was a client now, potentially a founder of a company—and she realized she had never been so excited to step foot in that office.

The Robot Workforce

Take this scenario across all kinds of white-collar jobs—accounting, human resources, and administration. Any office job that involves drudgery is a candidate for automation. The next generation of robots may not have mechanical limbs, but they’ll do work that humans used to do in much the same way they’ve taken over our factories and warehouses.

This future state is much more likely than most people realize. Over the next decade, I believe sophisticated algorithms running in the cloud and referencing huge data sets will replace most routine professional tasks.

You can actually look back over the last few decades and see a similar transformation in routine manual labor brought about by industrial robotics. The National Bureau of Economic Research published a fascinating paper earlier this year on “The Micro & Macro Disappearing of Routine Jobs.” In the research, the paper’s authors classified occupations into four categories based on the combinations of the work being either routine or non-routine and cognitive or manual. They matched these occupations against statistics from the US government’s Current Population Survey from January 1976 through the end of 2012.

I found it particularly interesting to look at the disappearance of “routine manual” per capita employment over the 36-year period studied. Consider the explosion of the industrial robotics industry over that same time period. The chart below is from the NBER paper:

General Motors installed the first industrial robot in a factory in Trenton, New Jersey, in 1961. According to the International Federation of Robotics, in 1973, there were 3,000 industrial robots in operation. Ten years later, there were 66,000. That exploded to 1.1 million by 2011.

GM installed a spot-welding robot in its Lordstown, Ohio, facility in 1969. Here’s how the IFR described GM’s productivity gains: The robot “boosted productivity and allowed more than 90 percent of body welding operations to be automated vs. only 20 percent to 40 percent at traditional plants, where welding was a manual, dirty and dangerous task dominated by large jigs and fixtures.”

Did this robot destroy jobs? Perhaps not, as Cynthia Breazeal has argued:

“With any new technology, they take over the jobs that people don’t necessarily want to do anyway, and they create new jobs. They empower people to do more interesting work.”

Consider the IFR and NBER data together. The industrial robotic revolution changed the nature of routine manual labor. It also created a new, multibillion-dollar industry growing by double-digit percentages annually. It also, as Breazeal points out, has empowered people to do more interesting work.

Rosa’s tale is a bit of speculative science fiction. But when I look at the progress in computer science, I believe over the next handful of years we’ll see big data and machine learning have a similar transformative impact on professional occupations that industrial robots have had on routine manual occupations.

Looking at a specific field like natural language processing illustrates the point. There is a long history of individuals theorizing about using machines to understand and translate words, even before the first computer. After World War II, researchers began to explore developing techniques used for code breaking for translation in general.

In 1954, Georgetown University and IBM collaborated on the first working demonstration of a computer translating Russian to English. This immediately created national headlines and optimistic predictions about the pace with which progress would be made over the next few couple years.

In 1970, Terry Winograd at the MIT Artificial Intelligence Lab created SHRDLU, sometimes known as Block World. The idea was that in a very constrained environment—a world of simple shapes which would not be unfamiliar to a kid playing Minecraft—a computer could “understand” what a user meant when talking about that environment.

For the next two decades, most natural-language-processing systems focused on building sets of more and more complex rules. However, in the late 1980s, the field evolved as researchers started to leverage machine-learning algorithms to deliver on some of the promises first made about computer translation in the 1950s.

Thanks to the incredible processing-power gains from Moore’s Law and an exploding amount of digital content on the Web, these algorithms now include the use of unsupervised learning algorithms, which beat “supervised” systems—ones given a set of rules in advance—in tackling a wider range of languages and documents.

This transition is where the impact of NLP on industries becomes even more interesting. For example, as the Wall Street Journal reported last year, the US Department of Justice has approved the use of this technology for reviewing documents during legal discovery. The first example of this being used in a DOJ case was the merger of Constellation & Crown Imports. It’s estimated this saved the companies 50% of the cost of manual review.

A report by the Rand Institute For Civil Justice, “Where the Money Goes: Understanding Litigant Expenditures for Producing Electronic Discovery,” suggests that machines can do work of higher quality than humans, at lower cost:

Because this is a nascent technology, there is little research on how the accuracy of predictive coding compares with that of human review. The few studies that exist, however, generally suggest that predictive coding identifies at least as many documents of interest as traditional eyes-on review with about the same level of inconsistency, and there is some evidence to suggest that it can do better than that.

When you think about it, this is the real catalyst for the coming automation of routine professional tasks—delivering higher-quality results much faster and cheaper. At my firm, Birchmere Ventures, we think electronic discovery is just the beginning of the legal profession’s transformation by these technologies.

One way to think about occupations ripe for robots is to look at different professional tasks with a knowable problem and solution—even if it’s really complex to figure out that solution.

When I think about this trend the societal impact will be dramatic. I teach at Carnegie Mellon University. My students come from a variety of different graduate programs there, from computational biology to business. They’ll all have a very different career path over the next few years because of this.

I believe our educational institutions need to prepare our students to be able to navigate this transition to “more interesting work.” To start with, they need to work on developing the skills necessary to solve unknown problems with unknown solutions. That’s why I argue even those who aren’t interested in doing a startup right out of school may benefit from my Lean Entrepreneurship course at CMU.

The good news is that I believe everyone wants to be creative. There should be a lot more opportunity for this as routine work is minimized. Finally, we also need to be preparing students to create their own careers and in many cases be their own boss as a freelancer (something 34% of the workforce is already doing) as  “organizational” infrastructures shrink.

If you’re interested in reading & thinking more about this evolution, I can’t recommend The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies strongly enough.

Photo by Matthew Hurst; charts via NBER; SHRDLU image by Terry Winograd

The post What To Do When A Robot Takes Your Job appeared first on ReadWrite.

While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and is a critical step in the development of their business. This can be an intimidating experience so I’ve put together a list of five tips for raising a venture round. This is by no means an exhaustive list so I’d love to hear other suggestions from you in the comments of this post.

Editor’s note: This story is part of a series we call Redux, where we’re re-publishing some of our best posts of 2011. As we look back at the year – and ahead to what next year holds – we think these are the stories that deserve a second glance. It’s not just a best-of list, it’s also a collection of posts that examine the fundamental issues that continue to shape the Web. We hope you enjoy reading them again and we look forward to bringing you more Web products and trends analysis in 2012. Happy holidays from Team ReadWriteWeb!

Tip 1: Make Sure You Are Ready to Scale

First, before you even start the process of raising a lot of money, make sure you have figured out your model and are truly ready to scale. Earlier this week on ReadWriteStart, Steve Blank used research at The Startup Genome Project and explained:

One of the biggest surprises is that success isn’t about size of team or funding. It turns out Premature Scaling is the leading cause of hemorrhaging cash in a startup, and death.

If you’re early in the investment process, a small angel round or partnering with an accelerator may be the best approach. In fact, research conducted by the Startup Genome Project found that the best practice in the first phase, a.ka. discovery, is to only raise between $10,000 and $50,000.

Tip 2: Have A Real Lead

Next, if you are going to raise a round, find one or two partners to do it with. As Mark Suster pointed out yesterday on his blog, he’s seeing more and more cases where “entrepreneurs are working hard to make sure they have as many VC names and famous angels on their cap table for signaling value.” He explains five problems with this and I couldn’t agree more. Remember, once you screw up your cap table it’s really hard to go back. So in your first few funding rounds, try to raise money from as few people as possible and make sure they really will help.

Tip 3: Conduct Diligence on Your Potential Investors

When you get close to finding a lead, don’t be afraid to ask to speak to some CEOs who have worked with the firm. They are going to poke and prod your business to figure out if you’re someone they want to work with. You should figure out the same thing. Pay special attention to investors who are willing to introduce you to CEOs of their portfolio companies that went through hard times. This is when your potential investor will really show how committed they are to the companies they invest in.

Tip 4: Really Understand Key Terms

Once you get the term sheet make sure you know how to read it. I strongly recommend reading Brad Feld and Jason Mendelson’s Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist. This will give you tons of information on all the terms you’ll encounter when raising a venture round and how they could impact your deal. This includes things like how liquidation preferences impact future rounds and ultimate liquidity, to why VCs ask to expand an option pool before investing as part of their term sheet. Too many entrepreneurs focus exclusive on the valuation number and this book can really help you understand all the implications around the term sheet you receive.

Tip 5: Remember Time Kills Deals

Once you have a term sheet you are happy with, don’t over negotiate. You have a business to run and more importantly don’t forget one of the first principals of any sales process: “time kills deals”. The worst thing that can happen is for you to drag your feet over some meaningless terms (which you’ll understand are meaningless thanks to reading Brad and Jason’s book above) and end up having your potential investor get cold feet or even have something that’s outside your control change. Just get the deal done once you’re happy with the material terms and have an investor you trust and want to work with.

Bonus Tip: Run a Great First Board Meeting

When the cash is in the bank, you’re not done; in fact you are just starting. Once you’ve raise your round, you’ll almost certainly end up with at least one new board member. It’s really key that you run a great first board meeting at this point. If this is your first round, this may be the first formal board meeting you’ve had, so prepare for it and make sure you know what you want to accomplish. This will set the tone for future board meetings so make sure that board members take your meetings seriously. There are a number of great posts on this topic and I may try to summarize these in a future post, but one of my favorites for now is from Guy Kawasaki on “The Art of the Board Meeting.”

As I said at the beginning of this post, this isn’t an exhaustive list. I’d love suggestions in the comments below for other tips when raising a venture round.

Thanks to Mark Coggins for creative commons use of the photo.

The post 5 Tips for Raising a Venture Round appeared first on ReadWrite.

In my last post on ReadWriteStart, I talked about how, in many cases, it wasn’t an advantage to build your start-up in stealth mode. As a continuation of that theme, I thought it would be interesting to explore five tools you can use to iterate and improve your startup idea before writing one line of code. There is nothing worse than building a tool no one is interested in, so I’d encourage you to consider these options before starting down the path of building your next startup.

Specifically, these five tools can help you do three critical activities before starting to write a line of code: create a wireframe, get feedback from the target market and test value proposition through multiple landing pages.

Editor’s note: This story is part of a series we call Redux, where we’re re-publishing some of our best posts of 2011. As we look back at the year – and ahead to what next year holds – we think these are the stories that deserve a second glance. It’s not just a best-of list, it’s also a collection of posts that examine the fundamental issues that continue to shape the Web. We hope you enjoy reading them again and we look forward to bringing you more Web products and trends analysis in 2012. Happy holidays from Team ReadWriteWeb!

iMockups for Wireframing Concepts

If a picture is worth 1,000 words, then a good mockup is worth 1,000 lines of code. If you own an iPad, iMockups is a killer solution to quickly and efficiently create wireframes. It’s been interesting to watch a number of the startups I advise shift from trying to use PowerPoint or Keynote to flesh out concepts, to using iMockups. The feedback from those startups has consistently been that the iMockups tool makes it so much faster to put wireframes together that the time savings was well worth the $10. Check out the video below to see iMockups in action:

Feedback on Concept from Target Market

Once you’ve got a concept put together, it’s often valuable to get some early feedback from your target market. Obviously, in many cases this can be done by setting up meetings with your target customers and walking them through the idea.

Another simple and relatively low cost way to get feedback from a critical mass of potential users is to use Ask Your Target Market. While there are a lot of online survey tools, the nice thing about this tool is it has developed a great network of respondents (or “panel” in market research parlance) who you can target for response. This allows you to get statistically meaningful feedback from a specific target audience.

Build & Test Landing Pages

A final obvious technique to testing and improving your idea is to build some landing pages to test out different value propositions.

LaunchRock: We’ve covered them a few times before, but with tools like LaunchRock that have automated the process of developing these landing pages this is a great way to test interest and get signups.

If you aren’t familiar with LaunchRock, see the video the team did for a demo with Robert Scoble:

A/B Testing Different Value Propositions: To take this approach to the next level, you can even use a solution like Optimizely, Google Website Optimizer or Sumo Optimizer. For a thorough review of these options check out this analysis on our SMB channel ReadWriteBiz of the tools. The general technique of optimizing your landing page is a practice most startups should do. But before you build out your solution you can actually see which value propositions and features are more compelling by testing which call to action – for example “find new sources of information” vs “filter the information you already read” – gets a higher percentage of requests from users.

Conclusion

As an entrepreneur, you have to figure out the right plan to test and build your product. However, locking yourself in a room and designing and then building your product is rarely optimal. Before opening your IDE of choice, maybe the best step next time is to launch one of the tools mentioned above and started getting some feedback? Do you have other techniques to test out your ideas? Let me know in the comments below.

Test tube image from Horia Varlan

The post 5 Tools to Improve Your Idea Before You Write a Line of Code appeared first on ReadWrite.

If you think there’s a lot of demand for data storage now, you better brace yourself. According to projections pulled together by CenturyLink, we’re in for a deluge of big data. By 2015, CenturyLink says that we’ll see a four-fold increase in data being created and replicated.

This year, CenturyLink projects that 1.8 zettabytes of data will be created. By 2015, the projection is 7.9 zettabytes. That’s the equivalent of 18 million times the digital assets stored by the Library of Congress today.

The biggest contributor to all this data is video, which is expected to be 50% of consumer Internet traffic by the end of 2012. Most of that traffic is coming from North America and Europe today, but don’t expect that to last. And by 2015, it’s expected that the bulk of that traffic will come from wireless devices.

The funny thing about data creation is that users aren’t even aware of a lot of the data they produce. Much of it is considered “shadow data,” like search history and other logging your online activity produces. Every time you visit a Web page, download a file or check your Web mail there’s data generated that you never see. Users create, on average, 322GB of data through direct activity and 335GB of data of shadow data.

All of that data has to go somewhere, and even though the cost per GB has dropped (until recently) to one-sixth of what it was in 2005, the capital expenditures for handling data has grown by 50% in the same time.

Naturally, enterprises hold most of the data, whether it’s created by consumers or by knowledge workers on company time. That’s a lot of responsibility for managing data: What’s your company’s data strategy to handle the incoming deluge of data?

This infographic was created by CenturyLink, which sponsors the ReadWriteEnterprise channel.

The post Infographic: Data Deluge – 8 Zettabytes of Data by 2015 appeared first on ReadWrite.

Today’s chat’s topic is spot-on for all of you working with virtualization: Intelligence Matters: Virtualize your Business Critical Workloads with Confidence. Please join our very own Scott Fulton as he’s joined by Mitch Shults from Intel and Stephen Shultz from VMware to discuss this critical topic. You can join by interacting with the chat widget below.

The post Live Chat Archive: Virtualize your Business Critical Workloads with Confidence appeared first on ReadWrite.

In the late 90s, Tom Peters famously declared that we were all CEOs of our personal brands. In Fast Company he wrote:

“Regardless of age, regardless of position, regardless of the business we happen to be in, all of us need to understand the importance of branding. We are CEOs of our own companies: Me Inc. To be in business today, our most important job is to be head marketer for the brand called You. It’s that simple – and that hard. And that inescapable.”

This is even more true for professionals today and no group more so than entrepreneurs. When you talk to investors, partners, customers and most potential new team members one of the first thing all of them are going to do is get a sense for who you are and what you’ve done. When you first start a company, the corporate brand hasn’t yet developed a reputation or any customer momentum, so most early-stage companies leverage the brands of the individuals involved for credibility. If you don’t believe me, think how many times have you described a startup to someone by first describing the background or people involved? Therefore, for those of you planning to be serial entrepreneurs your personal brand is an invaluable asset.

One quick but important note – similar to managing any other type of brand – it’s not a sustainable strategy to try and cover up terrible products with a good brand. For more information on this or inspiration check out one of my favorite marketing books, Seth Goodin’s Purple Cow which he describes as:

“(A) plea for originality, for passion, guts, and daring. Not just because going through life with passion and guts beats the alternative (which it does), but also because it’s the only way to be successful. Today, the one sure way to fail is to be boring. Your one chance for success is to be remarkable.

If you’re not focusing on being remarkable, the rest of this is irrelevant! With that out of the way, I’d like to get to the heart of this post:

How do you highlight things that are remarkable about yourself to build your online brand? Or put another way, how do you manage your online identity or brand?

What we mean by brand in this post?

Evan Williams wrote a post back in April about Five Easy Pieces of Online Identity in which he summarizes a different things that could be called branding. In this post, I mean what Evan calls “representation.” The whole post is worth reading if you missed it back in April, but to quote the key point from representation:

“Back in the day, us web geeks thought everyone needed (and would want) their own website with a custom domain. Turns out, that’s a pretty high bar, and not even that useful for a lot of people. But most people online have ‘profile pages’ on one or more services. People also choose profile pics/avatars and usernames to represent themselves.

“Obviously people care a lot about how they appear to others in the real world. Turns out, they do online, as well. They spend tons of time (and sometimes money) working on representing themselves. Representation is a large part of any social network, but some more than others.”

Four key strategies

While the specific tactics you take for each of these will be certainly different depending on the tools you choose to use, I think everyone needs to take steps around the following four strategies:

• Refine your personal elevator pitch
• Monitor what’s being said about you online
• Proactively do content marketing
• Aggregate and curate to reinforce

I’ll spend a little time expanding on each of these 4 strategies, but would love to hear other key strategies in the comments below.

Refine your personal elevator pitch

Before you start trying to figure out what you want to do with your online brand, it’s worth stepping back and thinking about how you want to position your experiences and goals. As you’ve probably experienced, in a startup your elevator pitch can be a great management technique for clarifying the things your organization should focus on. In the same way, this is your personal elevator pitch that similarly can help clarify what activities you should focus on doing. There are tons of tips for developing your startup’s pitch.

An interesting question to consider for your personal elevator pitch is: how would you want someone to describe you (professionally) at a cocktail party? In talking to entrepreneurs, I have found this forces them to keep it simple and concise when thinking about their personal brand.

Monitor what’s being said about you online

Again similar to the advice many good brand consultants would give for a company, it’s important to make sure you know when people are saying things about you online. This is not a new recommendation. In fact, ReadWriteWeb first wrote in 2008 about tools to monitor what’s being said about you online and later in 2009 talked about the future of social media monitoring. Most of these tools are still making it possible to easily monitor what’s said about you today online. However, the important thing is to actually make the investment of time to do it.

Proactively do content marketing

Content marketing is creating relevant and valuable information for prospects and customers as part of a brand’s overall marketing mix. It’s becoming a bigger and bigger part of the way many brands allocate their marketing budgets. In fact, according to CMI:

“B2B marketers allocate approximately 26% of their total marketing budgets to content marketing initiatives. 51% of B2B marketers plan to increase their spend in content marketing over the next 12 months.”

In the same way that companies are using these techniques to improve their position in the marketplace, individuals need to think about speaking, writing, commenting and generally contributing their expertise online to improve and reinforce their brand.

Aggregate and curate to reinforce

Finally, many people end up leveraging a tool to serve as the central place they aggregate and curate certain content to reinforce their brand. This can be everything from setting up a website to just creating a compelling about.me page. For example, our Founder and Editor-in-Chief, Richard MacManus, leveraged WordPress to setup his own personal blog to aggregate personal and professional information about himself as well as links to other social profiles at ricm.ac (screen shot below) If you’re active across a number of sites, this central location pointing to all your profiles and selected links and personal blog posts seems to make a lot of sense. Even if you don’t setup a homepage, you can be intentional about the “atoms” (in both senses of the word) that are being broadcast across your social communities.

It’s worth pointing out that the landscape is changing with frictionless sharing. Richard MacManus, Joe Brockmeier and David Strom all diagnosed the implications of these changes. Richard’s post pointed to a great analysis by the Atlantic, The Problem With Facenbook’s Frictionless Sharing, which captured this implication perfectly:

“The problem with that, of course, is that it eliminates the curation aspect of our self-presentations. It would be as though I told everyone that I was wearing blue jeans and a somewhat worse-for-wear t-shirt right now in addition to revealing that earlier today I wore a sharp, tailored suit. Both are accurate, but only one is the impression I’d like to leave with people. (The latter.)”

Obviously if this becomes a trend or you trust Facebook to maintain your key profile this is something you need to be aware of.

Conclusion

As stated at the beginning of this post, it’s extremely important for anyone manage their personal brand. However, as entrepreneurs this is even more true then usual. I’d love to hear other strategies or techniques you have found valuable in managing your personal brand.

Thanks to Paul Watson for moleskin image.

The post 4 Strategies for Managing Your Online Brand appeared first on ReadWrite.

Mark your calendars for the next ReadWriteWeb live chat on November 1st! The first two live chats here on the ReadWriteWeb Solution Series have focused on The Changing Nature of Storage Virtualization and Virtualized Storage and High Availability Made Easy.

This chat’s topic is Intelligence Matters: Virtualize your Business Critical Workloads with Confidence and will be hosted by our very own enterprise correspondent Scott Fulton. He’ll be joined by experts from both VMware and Intel.

Send us Your Questions in Advance to Win an iPad 2

To win the iPad 2, all you have to do is follow the rules and submit a question by end of day (Eastern) on October 31st. Post a question (in the form directly below) you would like to pose to an expert and you’ll receive one entry into the drawing for an iPad 2.

We look forward to your questions. Be sure to join us on November 1st at 10 a.m. PDT for the chat!

Fill out the form below to get a reminder about the chat:

The post Next RWW Live Chat Tuesday 11/1 @ 10am PT & Chance to Win an iPad appeared first on ReadWrite.

A few weeks ago, we did our first RWW Live Chat with our partners VMware and NetApp. The discussion was very good and proved to be a great way to get your input about a critical issue. Today we’d like to announce our next live chat on Oct. 18 at 10 a.m. PDT. This discussion will focus on “Virtualized Storage and High Availability Made Easy” and will include experts from VMware and also Symantec.

The chat will be moderated by our very own Joe Brockmeier. It also will include Andrew Nelson from VMware, and Ruchi Goya, Fahima Zahir, Eric Hennessey, and Steven Hindman from Symantec.

This promises to be a very lively discussion with a range of issues and topics covered including:

• How can we improve provisioning and automation for virtual storage?
• What are the current trends/innovations in virtualized storage that companies need to be aware of, but aren’t?
• How is high availability achieved with virtualized storage – and what impact is it going to have on costs, equipment, etc.?

Sign up for a reminder to make sure you don’t miss the chat:

The post Next RWW Live Chat: Virtualized Storage and High Availability Made Easy appeared first on ReadWrite.

It’s tough to be a startup in the daily deals space these days. To quantify some of this, CB Insights has released a report covering valuation multiples for both M&A and venture financing for daily deal startups. It’s not a pretty picture as valuation multiples of both price per subscriber and price per voucher are dropping quickly. Yesterday, The Wall Street Journal (courtesy of aggregator Yipit) reported that nearly one-third (170 out of 530) of all daily deal sites have been shut down or acquired. If you blend the Yipit Data with the CB Insights data it looks like 98 have been shut down and 72 have been acquired. (Of course this is two separate data sets so you have to be careful but it’s probably directionally accurate.)

Focusing specifically on the 72 acquisitions in the CB Insight’s report, it looks like an increasing percentage of these acquisitions are being done to acquire talent as the graph from their report shows below:

I still maintain that the real lesson from Groupon and Living Social is this emerging “default business model” of enabling commerce. However, clearly there are a number of copycat daily deal sites that are in real trouble as that market appears to have jumped the shark. As Schumpeter would no doubt point out, this could be just the natural cycle of creative destruction that accompanies times of innovation, but clearly a number of the remaining players in the market are going to need to be much more creative and differentiated. For additional depressing statistics for any of you in the daily deal space check out the infographic below courtesy of CB Insights.

And now to try and end the post on a more positive note here is the original ‘jumping of the shark’ video:

Image thanks to the amazing Todd Barnard & creative commons.

The post Did Daily Deal Sites Jump the Shark? [Infographic] appeared first on ReadWrite.

Today, Tuesday, September 20 at 10:00 a.m. PST, we’ll be holding our first live chat on The Changing Nature of Storage Virtualization. We had a lively discussion on Twitter with yesterday’s RWW Big Question. Now If you want to continue the conversation interactively on our live text chat, just come back to this post at 10:00 and join in the conversation.

The discussion will be led by our very own David Strom with three experts from our partner NetApp – Jean Banko, Vaughn Stewart and Julian Cates – and Wen Yu from VMware.

You can see a summary of the above chat here.

The post Live Chat Archive: The Changing Nature of Storage Virtualization appeared first on ReadWrite.

As I mentioned in the post announcing this series, we are going to be doing three live chats as part of the ReadWriteWeb Solution Series. The first live chat will be focused on The Changing Nature of Storage Virtualization at 10 a.m. PDT on Sept. 20. This live text chat system is a new way for us to communicate with you and we’re hopeful you find the conversation informative and add your own comments and reactions.

The discussion will be led by our very own David Strom with three experts from our partner NetApp – Jean Banko, Vaughn Stewart and Nick Howellin – and Wen Yu from VMware. Some of the topics we plan to discuss include:

• How do you allocate storage appropriately when you don’t know what your needs are?
• How important is thin provisioning for your storage solution, and where do these features need to be integrated?
• Does your backup solution need to be virtualization-aware?

We’d love to hear from you about other topics you’d like to discuss. Please join us.

The post First RWW Live Chat: The Changing Nature of Storage Virtualization appeared first on ReadWrite.

I’ve found myself thinking a lot about the research being conducted by the Startup Genome Project these days. The data is an absolute goldmine and provides quantitative benchmarks for issues I’ve thought about for years. One of the findings from their first report was:

“Most successful founders are driven by impact rather than experience or money.”

This certainly maps to my experience as a founder and also working with other entrepreneurs. However, in most cases it’s a little more complex than that, as I find a number of goals typically intertwine to get people to jump in and start a business.

There are players in the ecosystem driven by other goals, such as job creation. For example, the Kauffman Foundation, an institution I partnered with when I was a research fellow Carnegie Mellon and continue to hold in very high regard, has proposed the Startup Act as a way to encourage entrepreneurs and strengthen the economy.

As part of this, they produced an excellent 3 minute video (embedded below) talking about what entrepreneurs do and specifically highlighting their role in birthing innovations, creating jobs and producing net new wealth.

I certainly wouldn’t disagree with any of these outcomes from successful founders or a program that makes the economy more entrepreneur-friendly.

However, getting back to the original question of this post, given the community here at ReadWriteStart, of entrepreneurs and also supporters of entrepreneurs (such as investors), what motivates you? Please leave your answers in the comments below and also explain your role in the ecosystem.

DNA photo by net_efekt

The post What Motivates You? appeared first on ReadWrite.

I’m just returning from VMworld and walking the show floor you couldn’t miss how virtualization was having an impact all across the IT landscape. We’ve long been a leader in covering the trends behind Cloud Computing and Virtualization on our ReadWriteCloud channel.

However, I’m also excited to announce our ReadWriteWeb Solution Series is returning for a new series of great content. In this upcoming Solution Series we’ll explore a number of critical issues to the future of virtualization and IT in the enterprise including:

• Understanding mission critical applications,
• Desktop virtualization,
• Storage and
• Security

In addition to the editorial posts you can expect around these themes, we’ll be doing three live text chats on ReadWriteWeb. This is a new way for us, our subject matter experts and our team to interact with our community. We’ll be going into more details on the chats in a follow up post later.

Finally, I’d like to thank VMware and their alliance partners NetApp, Symantec and Intel for providing the support to make this Solution Series possible.

The post It’s Back…the ReadWriteWeb Solution Series appeared first on ReadWrite.

If you haven’t read my colleague Scott Fulton’s post on “The Steve Jobs Formula and Why It Works” go read it right now! It’s a very insightful piece written by an expert who literally watched Apple grow up, and there are plenty of lessons for all entrepreneurs in the Steve Jobs formula he spells out. However, to be “fair and balanced” here at ReadWriteWeb I think it’s also important to point out some things that as an entrepreneur you’d be well served to disregard. What follows are four factors of the Apple formula to ignore. I’d love to hear what you agree and disagree with in the comments below as well as other factors that should have been included.

Read our coverage of the Jobs
resignation here:

• Steve
  Jobs Resigns as CEO of Apple, Tim Cook Named as Successor
• As
  Steve Jobs Steps Down, Linux Turns 20: Which Changed the World
  More?
• The
  Steve Jobs Formula and Why It Works

Don’t Be Secretive…Go Anti-Stealth

Steve Jobs is notorious for how secretive he is. Every product is built in isolation, and while the details of Apple’s product development process are not that open either from what I’ve heard, often engineers don’t even have a full picture of the product they are building.

A few months ago, returning from SxSW, I wrote about my concerns about the increasing percentage of business I heard that were building “stealth.” As I pointed out in the post, there are three big advantages to building your business in anti-stealth:

• Leveraging product feedback earlier in development
• Building a reputation and community in your target market
• Building relationships with potential investors pre-fundraising

Don’t Expect a Perfect Version 1.0 … Release Early & Often

Related to this first point, there was an expectation when Jobs stood in front of a crowd to unveil a new product that it was going to be truly amazing, groundbreaking, revolutionary and life changing. As an Apple fan, I must admit I do truly find myself feeling that way about my iPhone, iPad and MacBook Pro. However, as Reid Hoffman is famous for saying, the better advice for most entrepreneurs is to be embarrassed by their first product.

Basically, I think this one comes down to the fact that very few teams are as strong as the team that Apple assembles, in terms of understanding what a group of people want and building that with limited feedback. In other words, you are no Steve Jobs or Jonathan Ive and so it’s extremely unlikely you’ll predict as accurately as they what needs to be built. Instead, think about testing your idea before you write your first line of code.

Don’t Start Building in Isolation…Look to Swarm Existing Communities

Apple basically starts with the assumption that it can build a community from scratch instead of swarming an existing one. This works for them in most situations – although I think there are even examples where this hasn’t worked for Apple (Ping).

As an entrepreneur, this is foolish. I had the pleasure to meet Chad Hurley for coffee a few months before he sold YouTube to Google because we had a close mutual friend. One really interesting thing he talked about, which I’ve found myself reflecting on often over the years, is that both PayPal and YouTube were businesses built to swarm existing platforms with unmet needs (payment on eBay for PayPal and videos on MySpace for YouTube).

Now obviously over time as both – but especially the YouTube/MySpace example – show, you may becoming larger then the platform you start with, but it’s very helpful to find an existing large community with a need for what you’re offering to get started.

Don’t Be Closed…Create an API Day 1

Apple products are also notoriously closed. In fact, they are so notoriously closed that Alex Payne wrote:

“The thing that bothers me most about the iPad is this: if I had an iPad rather than a real computer as a kid, I’d never be a programmer today. I’d never have had the ability to run whatever stupid, potentially harmful, hugely educational programs I could download or write. ”

This also doesn’t work for a startup. As venture capitalist Fred Wilson said at Future of Web Apps last year:

“I think it’s important to make your application programmable, and make it possible that others can build on top of or connect to or add value to, in some way, your Web application. That means API’s, and in my opinion read/write API’s…Not all of our companies, by the way, have launch read/write API’s, and we’re constantly hounding them to do that, but the important thing about programmability is that when people can add value to your application, they are in effect adding energy to your application, bringing more users to your application, and also bringing more data and more richness to your applications.”

So as I said at the beginning, I’d love to hear other factors you think entrepreneurs should avoid from the Steve Jobs formula, or things I’ve included you disagree with, in the comments below.

The post 4 Things Entrepreneurs Should Ignore From the Steve Jobs Formula appeared first on ReadWrite.

After moving back to Pittsburgh, I’ve had a chance to again watch and do my part to help technology scene develop. Pittsburgh is certainly different then NYC and Silicon Valley but I’m confident we will ultimately build a different but great startup tech community. Many attributes of Pittsburgh’s entrepreneurial community remind me of NYC in 2003. Pittsburgh and NYC are not unique — at ReadWriteWeb we’ve regularly covered places across the world in our ‘Nevermind the Valley‘ series.

And beyond our coverage, people talk about this all the time as it seems to be on every regions’ set of goals. First off, if you’re trying to build an entrepreneurial community, I strongly recommend you send everyone the following video by luminary venture capitalist Brad Feld:

It has been great to see so many places focus on this and at least start down the ’20 year commitment’ that Brad talks about. However, one thing I’d add that I think a lot of people overlook is the importance of creating a culture among the bigger companies in the region to “buy local.” In Pittsburgh I’ve been working to address this with a team of entrepreneurs, local corporate leaders and professors from Carnegie Mellon to help coordinate a group called Innovation Happens.

This cultural change is especially important for B2B technology startups – ie startups targeting other businesses as their customer, and not consumers. For these companies the increase in value and probability of success between zero and one customers and then again from two to five customers is massive. The value from these customers is even more dramatic if the customer is local and so a larger group of the team members can interact.

Obviously the startups need to earn the business, but in many regions it’s actually unintentionally a disadvantage to be local. This is often because you can learn much more about the local startup and sometimes give the benefit of the doubt to competitors. For example, I talked to a CIO a few years ago who explained he had chosen a startup from across the country instead of one locally because “they were much larger.” It turned out they were exactly the same size and the local startup had actually raised more money. To some extent this is just an example of not doing your diligence, but it remains a fact that it’s easier to do more & more in-depth diligence of local vendors. (By the way this easier access to diligence is actually a benefit if you’re strategic about this.)

Yet more to the point, the irony is that its actually much better for the customer to buy local – as you can get more personal and face-to-face support when necessary. Also, when large companies choose to work with startups they often get an injection of innovative thinking that can really improve the business in unexpected ways.

While certainly sometimes you need to work with a startup from across the country or even the world, the injection happens even more freely when they are down the street. Therefore, support your local entrepreneurs – buy local technology! And who knows your business may end up more healthy as well.

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John Borthwick is doing a fireside chat with me next week at our 2WAY Summit. If you aren’t familiar with John, he is the CEO of Betaworks, one of the most fascinating companies focused on building internet-focused startups today.

You may not be familiar with Betaworks but you certainly are familiar with some of their companies: Tweetdeck and Summize (both acquired by Twitter), as well as other startups still independent (at least for now) like Bitly, Social Flow, Chartbeat and news.me.

The focus of our conversation will be on the lessons John has learned about designing products and businesses for the emerging Web. As a general framework to explore these lessons I’m planning on talking to John about the past, present and future of Betaworks.

As fellow entrepreneurs, I’d love suggestions from the ReadWriteStart community on topics you’d like to see discussed. To get the creative juices flowing you can check Richard MacManus’s twopart interview with John our our site last year.

Also, if you haven’t registered yet – get your tickets now with the discount code “BETA” to get $200 off and enjoy two days of amazing conversations about The Future of the Internet.

The post Help Me Interview John Borthwick appeared first on ReadWrite.

The number of daily deal sites is growing at an amazing rate. Recent data from daily deal aggregator Yipit, shows there are now over 480. The number has grown by almost a factor of 10 over the last year (chart below).

Entrepreneurs definitely have become interested in this model. The largest, Groupon, is actually being studied by some leading academic researchers. We thought it’d be worth summarizing five interesting observations from this research.

Summary of Research being Referenced

Early research was done by Dr. Utpal Dholakia at Rice University. He published a paper summarizing a survey he completed of 150 different businesses.

“The promotion was profitable for 66% and unprofitable for 32% of respondents. When compared to businesses with profitable Groupon promotions, those with unprofitable promotions reported significantly lower rates of both spending by Groupon users beyond it’s face value (25% vs. 50%) and return rates to purchases from the business again at full prices (13% vs 31%)”

Interestingly,82% of those who found it ‘unprofitable’ some will run another Groupon again. This is closer to (but still lower than) Groupon’s internal number of 97% of Groupon merchants who ask to run a campaign again.

Based on this research, Dr. Dholakia and a group of researchers at Harvard have both written papers further examining this issue of profitability. I’d encourage you to read both Dholakia’s recent paper “What Makes Groupon Promotions Profitable For Business?” and The Harvard Business School working paper by Edelman, Jaffe and Kominers, “To Groupon or Not to Groupon: The Profitability of Deep Discounts”

The HBS Working Paper focuses on building out a model that explores how “consumer demographics and offer details interact to shape the profitability of voucher discounts.” The paper by Dr. Dholakia explores 5 hypothesis and tests them using a linear regression against the 150 data points from his original survey mentioned above. He does acknowledge that the 150 business’s who respond form a “convenience sample” and therefore may have limitations but he also points out that it’s diverse across the Groupon client base and a “41.7% response rate can be characterized as ‘healthy’ and in line with published research.”

5 Observations

Getting back to the goal of this post, I’d like to explore 5 interesting observations from both these studies:

Observation 1: Theoretically there are two benefits for retailers doing daily deals offers

The HBS paper opens by exploring two benefits of Groupon like offers for retailers:

“First, discount vouchers can facilitate price discrimination, allowing merchants to offer distinct prices to different consumer populations. In order for voucher
offers to yield profitable price discrimination, the consumers who are offered the voucher discounts must be more price-sensitive (with regards to participating merchants’ goods or services) than the population as a whole. Second, discount vouchers can benefit merchants through advertising, by informing consumers of a merchant’s existence. For these advertising effects to be important, a merchant must begin with sufficiently low recognition among prospective consumers.”

Observation 2: Spending beyond face value at redemption is not predictive of profitability

Dr. Dholakia tested 3 hypotheses for attributes that would increase the likelihood of a profitable Groupon: “A) New customer acquisition efficacy, (B) spending beyond the Groupon’s face value, and (C) repeat full-price purchase.” Interestingly, the first and third factors were predictive but the second was not. He explains:

“It appears that for firms running a Groupon promotion, simply getting new customers to purchase the Groupon even when they do not spend beyond its face value on the occasion of redemption is sufficient to have a profitable promotion. This result supports the importance of the Groupon promotion as a means for the small or medium-sized business to receive exposure in a new customer base.”

Observation 3: A larger face value & redemption duration helps attract new customers but the discount does not

Based again on Dr. Dholakia’s survey data, it appears that while face value and redemption duration are important to attracting new customers the amount of the discount didn’t appear significant. As the paper states:

“The results offer interesting practical guidance to firms suggesting that they may be better served offering a coupon with a higher face value but a lower depth of discount to garner a profitable Groupon promotion.”

Observation 4: If possible, don’t allow using multiple vouchers

The HBS model explores the impact of allowing customers to purchase multiple vouchers. While this certainly doesn’t immediately cause a Groupon offer to become unprofitable, as the model shows it’s ideal to not allow the use of multiple vouchers at the same time. While this may be difficult to police, definitely something worth striving for and something new initiatives (like Google Wallet and Offers) should take into consideration as a design goal.

Observation 5: Repeat Customers Driven by Employee Satisfaction

One of the most interesting hypothesis tested by Dr. Dholakia in my opinion was looking at employee satisfaction with the Groupon as a predictor for customers returning to purchase products at full price. The linear regression showed these attributes to strongly correlated. While there has been plenty of research over the years showing employee satisfaction is predictive of customer satisfaction, it’s interesting to see this carry forward to the implications for the success of Groupon offers.

Future Investigations

It’s clear that there is a lot more research to be done in the ivory towers of academia as entrepreneurs change the way we buy and sell things each day. From an academic perspective, I’d love to see additional quantitative surveys from more retailers and also (as Dr. Dholakia himself acknowledged in his paper) looking at other daily deal sites such as Living Social. What types of questions would you like to see academic researchers explore in this area?

Dubai Shopping Mall photo by Uggboy, SM Mall photo by Jun Acullador, Mall of America photo by Aine D

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Excitement is building for the upcoming RWW 2WAY Summit in New York on June 13th and 14th. This is our biggest live event to date. If you haven’t yet, please check out the program and consider registering!

We wanted to take a moment and thank our sponsors as the event truly wouldn’t be possible without them!

Qualcomm – Reception Sponsor

Qualcomm is sponsoring the attendee after-party reception after the first day of of exciting conversations on the future of the Web. The Qualcomm team also will be doing a fascinating breakout session led by Sayeed Choudry, director of product management, who will be discussing “The Great Debate: Web Apps vs. Native Apps“

Mashery

Mashery has been a sponsor of ReadWriteWeb longer then any other advertiser and we’re excited to have them supporting our upcoming event. If you aren’t familiar, its Web services platform allows companies to manage their APIs using Mashery’s expertise. You can find out more about APIs and their business use at www.mashery.com.

TokBox

A new sponsor at the event is TokBox. OpenTok by TokBox is the leading global online video communications platform, enabling the addition of live video-based interaction into any Web property. Incorporating scalable, customizable solutions for enterprises, entrepreneurs and developers through the OpenTok API as well as pre-packaged widgets, anyone with a Web presence can harness the power of real-time communications to drive user engagement within their site or service.

Tagged – Registration Sponsor

Tagged is our registration sponsor. If you’re not familiar with Tagged, it is the leading social network for meeting new people, and with over 100 million worldwide users has established the category of social discovery. Based in San Francisco, Tagged is an INC 500 Fastest Growing Company, profitable since 2008, and recently named one of the top 10 places to work in the Bay Area. If you are looking for a great place to work, they want to let you know “We’re hiring!” and invite you to learn more at http://about-tagged.com/jobs

Media Sponsors

In addition to our sponsors above, we have a great set of media sponsors below:

If you are interested in sponsoring the event, we still have a few opportunities available. Please send me an email and let me know your interest.

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As an entrepreneur it can be dizzying to watch Groupon and Living Social grow so quickly, raising huge venture rounds at massive valuations while contemplating multiple billion dollar acquisitions and IPOs. While certainly this is something even the most disciplined founders find themselves dreaming about, the experience is such an outlier it’s not something you can build projections from. However, I do think there is one key lesson entrepreneurs should look at – we are moving into a new “default business model” for consumer software that many of the fastest growing startups are applying to their business.

While most consumer software over the last few years was commercialized by serving advertisements (and before that by charging licensing fees) increasingly I expect consumer technology to be commercialized by enabling purchases and taking a percentage of the transaction over the next few years.

By “default business model” I don’t mean that there will not be other ways to commercialize technology or that no one has made money using this model before today. eBay certainly has enabled purchases and built a very large business doing this. However, that was an outlier relative to the majority of tech companies focused on online advertising.

The Last Shift: License Revenue to Advertising

For perspective, it’s helpful to look at why the last shift from licensing fees to advertising happened. Certainly one of the big trends that drove this was the amount of consumer software that became Internet-enabled. This change and connectivity opened up significant opportunities for targeted advertising to be delivered. It also become easier to monitor and more importantly adapt based on user behavior.

Beyond the technology driver, there was also some market implications that drove this. The market dynamics were succinctly observed by looking at the dominant consumer software business Microsoft focus on advertising. As Robert Scoble said when Microsoft launched adCenter (May 4, 2006):

“So, why does Microsoft care so much about the world that Google is the leader in? Well, cause the advertising industry is a lot bigger than the software industry. Translation: the MBA’s here see a lot more growth potential in advertising-backed software than they do in software that you go to Fry’s and buy.”

It’s also worth pointing out that at that point in 2006 Microsoft revenues were $44 billion and Google revenues were $10 billion . Today Microsoft does about $62 billion and Google does about $30 billion annually. While Microsoft still earns more revenue than Google, the MBA’s were correct: today Microsoft does about twice as much revenue as Google as opposed to doing about four times like in 2006.

Trends Enabling this Change

Just like the last shift, there are both technology and business-model changes enabling this one. From a technology perspective, the increasing percentage of Internet experiences through mobile devices is one key driver. We have documented the increase in mobile broadband well.

However, there is also a similar market dynamic as the last shift. I imagine a lot of MBAs at Google are saying similar things in terms of the migration from online advertising to commerce. (I imagine this is how Google internally reportedly made the case to acquire Groupon and certainly justified the investments made to develop the recently released Google Offers and Wallet.) While Google and Microsoft both have impressive financials, Walmart did $418 billion of revenue at the end of its most recent fiscal year (1/31/2011). Obviously, it has a very different cost structure than either Microsoft or Google but that just shows how big the market really is!

What Should You Do?

As an entrepreneur, ultimately you need to pick the business model that makes sense for you. However, if my thesis is correct that this is increasingly a default model, it’s important to become more conversant in both the enabling technologies trends and economic drivers. This will allow you to determine if it makes sense to use it as your next business’ revenue model. There are three resources I’d recommend you check out to learn more:

A key enabling technology will be near field communications (NFC). Between increasing the speed that devices can synchronize remotely (think Bluetooth without the pairing process) to enabling purchases from mobile devices it’s very likely that NFC will become a core enabling technology for this trend. If you haven’t checked out our series on ReadWriteMobile about NFC I’d encourage you to go read every post immediately!

There are a few books in every industry that represent a number of the “first principals” either explicitly or implicitly understood by most of the market. From people I’ve talked to in the retail business, I understand Why We Buy to be one of these books. It’s worth picking up.

Finally, we’re going to have an outstanding panel at our upcoming RWW 2Way Summit: “Mobile Payments, NFC and Your Future Wallet”. If you haven’t registered for the event, do so today with the promo code PAYMENTS and get $200 off your ticket price. If you want to start to understand the payments part of this equation, you can look forward to insight from Qualcomm, Intuit, Mastercard & Rovio.

So what do you think? Is commerce the future default business model for consumer software? Let me know in the comments below.

Photo selected from iboy_daniel’s pictures under creative commons on Flickr.

The post Why You Should Really Care About Groupon & Living Social appeared first on ReadWrite.

It’s not easy to build a great Web application. While open-source tools, readily available APIs, social platforms and cloud hosting providers have made it easier in many ways, being a Web entrepreneur is still not for the faint of heart. It’s challenging to design, build and deploy software. It’s also challenging to attract and retain a loyal community of customers and users.

This is one of the reasons that it’s so important to have a good co-founder. Although you certainly can make the case for a single-person startup, it’s so much easier to have a co-founder and we’ve covered in the past tips on finding a good one. In this post, I’ll focus on a few keys to helping co-founders work together to build a better product. A quick note, while I primarily talk about co-founders, the same principals should also be applied to interacting with all early employees as you really are partners on the mission to build a great product.

Use Solid Agile Process for Estimating Development Timeline

Almost every software engineer I’ve ever worked with is irrational in how fast they believe they can build software. While the optimism is a great trait in many ways, it can be a huge cause of frustration between co-founders when the technology takes longer to develop than originally estimated. It also can cause problems when critical deadlines or scheduled opportunities are missed.

At my last startup we eventually started using a process called “scrum,” which is basically a framework for managing agile engineering projects. Obviously, you need to figure out what process works for you. However, one of the great things about scrum is that you are always estimating forward the amount of work remaining in a given task.

In other words, say you have a widget that you think will take three days to build. At the end of the first day you would have two days left to meet the deadline. In scrum, however, after the first day you would say, “How much time do I think it will take to finish this widget?” If new complexities have become obvious and it will actually take four days, that is fine. Over time you begin to have a sense of the average decrease in estimates (called “velocity”), which allows everyone to accurately project deadlines from what often are very optimistic estimates.

I’m a huge fan of scrum and would encourage any startup to explore it. One fast way to explore its principals is to check out the hour-long video below from Ken Schwaber (the de facto grandfather of scrum) at Google where he reviews all the key principals.

Never Minimize the Value of Your Co-Founder

A few years ago at SxSW, Jason Fried gave a presentation on “Stuff We’ve Learned at 37 Signals.” This is a talk that has really stuck with me over the years. One of Jason’s 14 lessons was to “watch out for red flags,” which he defined as words or phrases causing problems in communications. Specifically, try to avoid the following words: need, can’t easy, only, fast. These end up being words that often minimize the value of a partner’s work. So for example, don’t say, “It must be easy to add those two features fast .” I should also point out that a technical co-founder shouldn’t do the same thing and say, “It must be easy to get more users fast.”

Clarify What You’re Building Up Front

In my last post, I touched on five tools to improve your idea upfront. An overarching point is to figure out what people want right up front and then build that. The techniques discussed in that post also eliminate a related problem: a lack of clarity between founders about what they are actually building. You want to tap into the creativity of everyone on the team, and miscommunications about what you’re building can minimize a partner’s ability to contribute and also lead to frustrations later when misunderstandings are discovered.

As a serial entrepreneur, I love startups and want everyone to succeed. Hopefully the tips above will make it easier for you and your co-founders to build a great product. Let me know in the comments below other techniques you’ve come up with to work together.

Working Together Lead Image from lumaxart

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