Author: Dana Oshiro

In the words of legendary investor Mark Suster, “Entrepreneurs don’t noodle, they do.” While it’s important to be analytical in your decision making, it’s also important to act when opportunities arise. Yesterday over drinks with some investors and entrepreneurs, I marveled at the difference between the life of a startup founder and the life of an investor. Founders manage multiple staff and stakeholders with heavy emphasis on operational issues. Meanwhile, investors manage multiple portfolio companies across a number of industries. The common trait amongst both is decisiveness.

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Suster’s recent blog post speaks to the value of being able to make a quick decision. For investors, not only are most investment pitches met with the answer “no”, but investors recognize that some of their portfolio companies will not offer the anticipated returns. The ability to be decisive while also factoring in a margin of error is exactly what keeps both worlds running smoothly.

Says Suster, ” The best entrepreneurs have a bias for making quick decisions and accept that at best 70% of them will be right.  They acknowledge that some decisions will be bad and they’ll have to recover from them.  Building a startup might be a game of inches but you don’t get timeouts to pause and analyze all of your decisions.”

While it’s important to lay out a product plan, create a good business strategy and study your competition, don’t expect to be perfect. Leave room for a margin of error and don’t be afraid to pivot quickly if your company needs it. You can’t be a startup founder without taking any risks – if you were really that safe you’d be working for someone else.

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A year ago we launched the ReadWriteWeb Guide on Community Management with the knowledge that “Community Manager” would become an increasingly popular job title. Since then, the requirements of keeping your customers engaged have become more demanding. According to one report, contests are becoming increasingly popular. ReadWriteWeb caught up with Strutta CEO Ben Pickering, to find out what businesses can do to generate more participation from their contests.

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Similar to Wildfire Apps and Meme Labs, Strutta lets you collect user-generated content and showcase it in a seamless web contest experience. Users can upload videos and photos, vote on other contest content and promote entries to their Twitter and Facebook friends.

While the site has helped create success for high profile campaigns including the Crate and Barrel Ultimate Wedding contest, UN Development Programme’s photo competition and Operation Gratitude, not every contest has been successful. Pickering offers some great advice to ensure your effort doesn’t go unrewarded.

1. Set Goals: Contests are a great way to engage users, get customer feedback and even drive traffic to your site. Nevertheless, it’s important to be realistic with your expectations and set specific goals. Some of the factors you can take into account to measure success include earned media, email opt-ins, engagement across social networks, monthly site traffic and in some cases, direct revenue.

2. Be Relevant: It would be silly to create a car contest for a community of cyclists or a meatloaf recipe contest for a community of vegetarians. One of Pickering’s most successful contests is Adorama’s Picture Perfect Contest. The contest invited community members to showcase the object of their passion – their photography. Pickering also suggests the barrier-to-entry was significantly reduced as participants had multiple ways to submit their work including via an iPhone app.

3. Give Them Incentive: In addition to prizes, Pickering suggests that community managers keep in mind the importance of recognition. By opening your contest to public voting, users receive public recognition and the community becomes more active in watching the competition unfold. Additionally, because Pickering’s service offers integration with Twitter and Facebook, an open competition may encourage participation from those outside of the community.

4. Offer Support: Pickering points out that video contests may require some support. He suggests community managers consider setting up a blog, Twitter account and Facebook group to help answer questions and walk users through the process. In the case of New Zealand’s Your Big Break Contest entrants were expected to submit a script and a short film. Tourism New Zealand set up a Facebook group to discuss the contest and by the time it was ready to launch, hundreds of filmmakers were poised to upload their submissions.

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This morning Canadian startup accelerator Bootup Labs showcased some of its program graduates at Plug and Play Center’s Sunnyvale location. While a number of the companies show promise, it was a gaming product that caught our attention. DimeRocker is offering developers a chance to elevate the level of gaming experiences and monetization on sites like Facebook, Myspace and Bebo.

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Unbeknownst to many, world class gaming companies like EA Sports, Relic and Propaganda Games call Vancouver their home. With great industry connections and a firm grasp of the technology behind the games themselves, DimeRocker CEO J. Joly is set to bridge the gap between traditional games and the social space. Joly explains that while game developers know how to build fantastic gaming experiences, it’s rare that they understand how to market and deploy their games across more casual high-traffic sites.

DimeRocker offers developers a centralized self-publishing platform with a suite of APIs built on top of the Unity game development engine. The site offers turn-key social publishing, leader boards and achievement tracking and will soon offer APIs for virtual goods, dual currency and in-game advertising.

Says Joly, “In addition to positioning ourselves as a solution for indy game developers, we’ve also seen an interest from larger companies who are looking to deploy light versions of their popular titles for the social web.”

If you’ve ever doubted the sophistication of MySpace and Facebook as game development platforms, you may be surprised by what DimeRocker will help make happen in the coming weeks. To check out the company visit dimerocker.com.

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In many cases it’s worse to have your investor back out on a term sheet then it is to never be offered one. Before popping the champagne bottles and celebrating what looks like an offer, it’s best to remember that VC term sheets are not legally binding. While it’s certainly a feat to be offered one, angel investor and Hunch cofounder Chris Dixon wrote a great piece reminding startup entrepreneurs what can happen if your potential investor changes his or her mind.

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In a recent blog post Dixon explains the unfortunate circumstance of one of his portfolio companies. Says Dixon, “Yesterday, one of the 40 or so startups I’ve invested in (either personally or through Founder Collective had a well-known VC back out of a term sheet for no particular reason besides that they decided they no longer liked the business concept. It’s the first time I’ve seen this happen in my career.”

Dixon explains that generally VCs only do this in extreme cases of fraud or upon finding that founders have criminal backgrounds. Because of this, any rescinded term sheet can be devastating for startup companies.

As is the case with startup CEOs, word travels fast on Sand Hill Road. In a recent presentation I watched as one founder revealed his funding from several well-established angel investors. Those in the room perked up as soon as they realized that major players were already involved in the company. The same logic can be attributed to the loss of a term sheet.

When one firm backs out of an offer, others who may have been interested will look at you under extreme scrutiny. Although Dixon’s case appears to be an anomaly, it’s important to remember that as an entrepreneur you should remain ever-diligent and avoid over-promising returns and results.

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Earlier today Venture Hacks announced the launch of the AngelList – a curated list of angel investors with an interest in early-stage funding pitches. According to a blog post by Venture Hacks cofounder Babak Nivi, legendary investors like FF Fund angel Dave McClure, Techstars’ Brad Feld and SoftTech VC’s Jeff Clavier are among the site’s first participants. ReadWriteStart caught up with Nivi to find out why he was moved to create the resource.

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“Entrepreneurs are always asking us if we know any angel investors.” He says, “It’s one of the most common questions in the startup world. So we decided to make a list of the ones we know and also open it to ones we didn’t know. We also needed a place to keep track of the angels we know for our own reference. Hence AngelList!”

Anyone who has made $25,000 dollars in investments in 2009 and plans to do the same in 2010 is eligible to apply for the list. Participating investors receive information on three vetted startups per week and a place on the Venture Hacks blog and AngelList Twitter account. While some Angels may shy from displaying their contact info to the public, the list is actually a much better way to manage the pitch process as entrepreneurs are made well aware of investor objectives and interests. Startups can browse the site for contact information, investment criteria, trusted referrers and an investor’s current portfolio.

Explains Nivi, “Entrepreneurs spend a lot of time trying to get intros to investors – even the entrepreneurs who end up raising money from Ron Conway, Fred Wilson or Sequoia. We want to make it easy for qualified entrepreneurs to get the intros.”

To check out the list, visit venturehacks.com/angellist or to make your angel financing needs known, add yourself to the VentureHacks Startup List at venturehacks.com/startuplist.

Discuss

As an entrepreneur, blogger and the investor in charge of the Founders Fund seed investment program, Dave McClure knows the importance of a proven revenue model. In a recent blog post he makes the assertion that “subscription models are the new black,” despite the fact that startup monetization has focussed heavily on cost-per-click advertising. He writes, “This Don’t-Be-Evil-AdWords-Click-Happiness..It’s made us a bunch of lazy, ad-happy, Web-Tards with crappy ROI…We have largely WASTED an entire web decade of time, energy & venture capital on extremely inefficient revenue models.” While we might not have chosen this exact phrasing, we cannot agree with McClure more.

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Nowhere is freemium model failure more obvious than in the streaming music space. Even with millions of users and licensing deals with major labels, Imeem was acquired by MySpace last year and quickly dismantled. The cost of licensing content to unpaying users was enough to put the company into serious debt. The company’s subscription service just wasn’t enough to offset the cost of the freemium business. Meanwhile, myriad music sites have come and gone, but Rhapsody’s subscription-only service has managed to survive. Having learned from its predecessors, it’s rumored that Spotify will only launch in the US with a subscription model, despite its free European offerings.

Says McClure, “There is a role for freemium, but unless you missed the TPS report the FREE part is only a loss-leader for the MEE-YUM part — it’s a test-drive before you buy something. If your users are just kicking the tires then you need to kick them to the curb eventually.”

McClure is right. It’s been a long time since eyeballs have automatically equated to dollars. If you’ve got a product that even a small number of users will pay for on a regular basis, establish that paid user base as soon as you possibly can.

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It’s Data Privacy Day and when it comes to generating privacy-related buzz in the blogosphere, there are few governments as controversial as China. From Google’s recent security issues, to blocked social media sites to the proposed Green Dan censorship program, Western netizens have always had a tenuous relationship with China. As part of our Never Mind the Valley series, ReadWriteWeb spoke to several investors and entrepreneurs to find out what it’s like to run a startup beyond what many describe as the “Great Firewall”.

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While areas like Shanghai’s Zhangjiang Hi-Tech Park and PKU-HKUST Shenzhen-Hong Kong Institution have sprung up as tech hubs, there’s no denying that Beijing’s Zhongguancun National Innovation Model Park is considered the country’s tech epicenter. Nestled in the northwest corner of the city, the region plays host to the University of Beijing, Tsinghua University and the Chinese Academy of Science. Since the early eighties, major players like Baidu, Sina and Sohu have skyrocketed to success while sharing the land with global companies like Nokia, IBM and Microsoft. Today, the region tax breaks and opportunities for large and small companies alike.

Emerging Markets

While Facebook often boasts of its 350 million users, in China alone there are 340 million netizens with the majority opting to use alternative social sites like 51.com QZone and RenRen.

Says Barrett Parkman, International Business Development Manager at Mobile Internet Great Wall Club, “Having user generated content as the core of a company here is risky business. Not to say UGC isn’t alive and well, it’s just that companies have to take strong measures to restrict it to uncontroversial topics. This is another reason that the gaming sector and virtual goods industry are growing so rapidly since they are generally uncontroversial in nature.”

Because of China’s leadership in the gaming sector, CMUNE CEO Ludovic Bodin is taking Chinese revenue models and applying them to his Western-launched products such as Paradise Paintball. Says Bodin, “China is one of the most advanced country in the world for online gaming and has strong knowledge of the sale of virtual goods as a primary business model. CMUNE is taking the best practices in China and adapting for a non-Chinese context and audience. Developing here gives us an advantage to later launch into the Chinese market. “

Plus Eight Star CEO Benjamin Joffe further addresses China’s meteoric growth in gaming and virtual goods. Joffe frequently presents emerging trends in China’s mobile, telecom and Internet markets.

Explains Joffe, “The online gaming market is still booming despite being already very large. There are nine companies listed on NASDAQ and Hong Kong stock exchanges including Tencent.” Joffe argues that while many Chinese companies began similar to their Western counterparts, founders quickly realized the need to generate revenue beyond the ad model. As the leading community portal in China, Tencent earned more than $1.5 billion dollars in revenue last year with 90% of that generated through virtual goods.

In addition to watching the social gaming space, Joffe suggests that technologists look for interesting plays from the business social networking space and from a unique matchmaking service with a hybrid call center/online component called Zhenai.

Funding

There is no shortage of venture capital firms in China. Groups such as GSR Ventures, Sequoia China and Kleiner Perkins Caufield and Byers are all present for those seeking large-scale funding. As well, Huang Shengli’s China Renaissance and a number of other firms help broker private equity deals.

On the other hand, entrepreneurs with more modest needs can find fundraising challenging. Says Richard Robinson, CEO of casual gaming site Kooky Panda, “Later stage VC funding is advanced and even frothy here in the Middle Kingdom and the early stage is still quite nascent.” Robinson goes to explain how much of the angel funding in China comes from friends, family and industry insiders. Nevertheless, that environment is improving as new groups step up with seed money and mentorship for early-stage investors.

Former president of Google China Dr. Kai-Fu Lee launched Innovation Works as a $115 million dollar venture fund for early-stage entrepreneurs. The fund focuses on web, mobile and cloud computing technologies targeted at the greater Chinese market and investors include YouTube cofounder Steve Chen and makers of Lenovo, Legend Group. Additional sources for angel funding include associations such as the Asia America MultiTechnology Association angel group, the China Business Angel Network and The Chinese Founders Fund.

Says Dr. Jovan Hsu founding partner of the Chinese Founders Fund, “There are few funds looking to invest in companies where the valuation is less than $10 million dollars and private equity firms are even higher. Early stage companies need more angel funds. The Chinese Founders Fund finds itself in a good position in the investment food chain in China. We’re providing smart money.”

Mentorship and Learning

Organizations like the Great Wall Club and China Entrepreneurs offer opportunities to network and gain mentorship, while Mobile Monday and Web Wednesday offer regular events for those looking to discuss the latest trends. Meanwhile, research firms like Analysys, iResearch and China ICT host larger conferences for annual business development opportunities.

Operations

With 35 million unique visitors per month to his site, CEO Fritz Demopoulos’ Qunar is China’s leading online travel company. Some of the advantages Demopoulos lists in keeping his business in China is the close proximity to the world’s largest internet market, the thriving startup ecosystem with professional firms and universities, and a large number of capable professionals willing to work in a startup business.

Says Demopoulos, “I’ve lived in China for many years and I’ve been involved in media and internet projects for nearly a decade. Globalization provides talent, resources, and the chance to deploy anywhere and seek returns. I’m no exception.”

Says Victor Tong, an angel investor in WebPlus and former director at Talentsoft, “China has built up a market-oriented economy and the business environment is quite free now. Meanwhile, great development in information technology provides companies a lot of support in their business operation…Doing business in China is a great experience. The 1.3 billion person consumer market is a temptation that’s too hard to resist. “

Discuss

Just because your college roommate won the university’s engineering award in 1996, does not mean he’ll perform well in a VP role now. Early-stage startup teams come in many forms and while it’s nice to showcase those founders who began with personal ties, more often than not, these teams fail. Speaking as a recent panel participant at the Girls in Tech Conference, Y Combinator cofounder Jessica Livingston revealed that early-stage companies tend to list recruitment as one of their toughest issues.

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Said Livingston, “Above all else, never hire a B player – B players hire C players and then you find yourself with a mediocre team. My best advice is to always hire someone more competent than yourself.”

Echoing Livingston’s sentiment, Fast Ignite CEO Simeon Simeonov wrote an excellent guest post for Venture Hacks entitled, When to Fire Your Co-Founders. Simeonov argues that weak teams get built when founders fail to anticipate a pivot from the original business plan or model and when they do not spend the time expanding their recruiting network. He offers ten rules for building agile founding teams including using your investor network to recruit, setting clear expectations and agreements and my personal favorite, “[hiring] generalists early and specialists later.”

We’ve all seen the early-stage company with one great founder / generalist and an entourage of childhood friends who are ill-equipped to help with anything beyond their lackluster specialities. As Simeonov points out, VC’s just think, “Shoot, this is a backable entrepreneur and the idea may have legs but the two other founders are B players and a poor fit for the company at this point…Frustrating… this could have been a good seed deal. Now it’s too complicated. I’ll pass using some polite non-reason.”

You can’t afford to miss out on funding because your uncle fancies himself a salesman or your cousin lent you money and thinks he can dictate your operations. In addition to today’s Venture Hacks post, ReadWriteWeb’s articles on hiring an A team andhiring for the company’s life cycle will help you get the info you need to make the right recruitment decisions.

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At the last Twiistup event, on a panel with diehard Los Angeles entrepreneurs and investors Yammer CEO David Sacks explained that Southern Californians wouldn’t need to have a panel on Los Angeles startups if it really did receive the same recognition and credit as Silicon Valley. This week the Bay Area is hosting two women in tech events including yesterday’s Girls in Tech Catalyst Conference and upcoming weekend event She’s Geeky. While both events feature major industry leaders, I can’t help wondering if a separate conference for women is akin to the separate panel for Southern Californians.

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As per Jolie O’Dell’s Open Thread on Women in Technology, we know that gender separation between web professionals is a controversial topic. In a tech community that often identifies as a meritocracy, we asked three event organizers why the industry needs female-centric events.

The Girls in Tech Catalyst Conference

Cassie Phillipps has helped produce a number of tech events including Failcon, San Fran MusicTech Summit and now the Girls in Tech Catalyst Conference.

When asked why she saw the need for a women’s tech conference she replied, “The opportunities for women in technology companies are still extremely sparse and our conference is one way to help women build confidence and create a platform for their ideas to be heard. By putting on this event I know we’ve identified some of the best women in the field and we’ve likely tripled the list of good female speakers for other tech conferences.”

BlogHer

Speaking as a panelist at yesterday’s conference, Elisa Camahort Page is a veteran when it comes to mobilizing women. Page started the BlogHer conference and quickly turned her popular event into a revenue-generating blogging network with more than 20 million unique visitors per month.

Says Page, “We started BlogHer in 2005 to answer a question we thought had to die, namely: ‘Where are the women bloggers?’ The truth is that women are more than half the population, more than half the voters, more than half the Internet users and about half the bloggers. Moreover, women control more than 80% of the household spending. And yet women are not represented to anywhere near that degree in *any* hall of power from industry, to politics, to the media. So until that day, we see a lot of value in our mission to shine a spotlight on the great work of women, and serve our mission of creating opportunities for women to pursue.”

She’s Geeky Unconference

Kaliya Hamlin is well-known for her work as the co-founder of the Internet Identity Workshop. ReadWriteWeb had the pleasure of working with Hamlin at the ReadWriteWeb Real-Time Summit and when she’s not facilitating our events, she’s producing and facilitating her own. Hamlin launched the 2-day long She’s Geeky unconference as a place for women in technology to network.

She suggests several reasons why women are under-represented as tech leaders including job descriptions which deter women by asking for typically male qualities and the potential isolation of being one of few women on a mostly male team. She cites Clay Shirky’s Rant About Women in suggesting that women underrate themselves and lack role models, while men proactively promote themselves. Hamlin suggests that events and in-person meetings between women in tech fill the gap for role models.

She says, “I think the world would look a lot different if half the developers were women. Information technologies are shaping the future and if women are not active participants in the product design and development, then their perspectives are not included and it won’t work for them.”

Hamlin points out that many of the first modern programmers – those working on the Electronic Numerical Integrator and Computer (ENIAC)– were women. For a look at some of today’s successful founders and technology professionals, she points to the Women 2.0 list of founder successes.

“Young girls need to be encouraged to study the basic courses that lead to careers in tech. It’s still not the “organic” choice for them or the career channel encouraged by adults.”

As part of her quest to provide positive female role models in tech, Hamlin is showcasing some of the best female technology groups at a booth at South by Southwest including DevChix, LinuxChix, Anita Borg Institute and Women 2.0. To participate your group can visit the She’s Geeky SXSW page. To purchase tickets for this weekend’s She’s Geeky event, register here.

Photo Credit: Woodley Wonderworks

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Massachusetts is home to Tim Berners-Lee and the World Wide Web Consortium, world-famous institutions like MIT and Harvard, and of course, the Boston Red Sox. In thinking about his home state, Avid Technology-founder Bill Warner created a scorecard and playbook to strengthen the state of Massachusetts’ tech companies. Although our own Chris Cameron recently featured Boston as a great tech hub, Warner’s posts aim to elevate business in Beantown via sports metaphors.

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Says Warner, “I believe we have sold too many of our great companies, and we have put our national and global leadership at risk… I propose a scorecard that helps push us towards having companies locally run. It’s a shorthand way of saying: ‘Play big.’ ‘Don’t sell out.’ It’s a way of saying ‘Lead here.’”

Warner goes on to define his scorecard with singles as any successful product launch, doubles as companies with sales over $10 million dollars, triples as companies with sales over $100 million dollars, home runs as those with a $1 billion dollar market capitalization and grand slams as any company with a $10 bilion dollar market cap. He suggests Akamai as a grand slam candidate, with established grand slams being Raytheon and EMC.

Warner argues that while Massachusetts companies are seeing decent exits, they are selling at the double and triple stage rather than reaping longer-term rewards and contributing to the local tech environment. In his second post, entitled It’s About New Behaviors: A Proposed Playbook for Massachusetts Technology Companies, he explains some ways the community can improve. He suggests investors should be willing to fund inexperienced first-time entrepreneurs, that companies should forgo non-compete clauses to open up the talent pool, and that the community should focus on mentorship, long-term planning and recruiting super angels and outsiders to rebuild the region.

Explains Warner, “I believe that we indeed need to look harder – at new ways to measure success, and at new ways to spur success. The good news is, as our behaviors change, so will our fortunes.” It will be interesting to see if the Boston tech community heeds Warner’s advice and aims for the fences.

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While business plans are a must in this environment, the startup world can hardly be considered predictable. Companies like Flickr, Seemic and Redux were all launched with different original concepts. Nevertheless, the market embraced the new products and each of these companies has done well in carving out a niche. But not every 180 degree shift can be successful, ReadWriteWeb looks at one theory on how to reduce risk while changing focus.

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VP of Diamond Consultants John Sviokla recently wrote a Harvard Business Review piece entitled, “Is This Innovation Too Disruptive for My Firm?” In it Sviokla explains how a number of large scale businesses have attempted to diversify into new markets and have failed miserably. He writes, “You need to decide whether the core business will embrace the new product or service or reject it.”

Given last year’s abysmal funding environment and the need for startups to move quickly to keep their businesses cash flow positive, a number of founders shifted product direction with positive results. One great example is when Seesmic CEO Loic Le Meur relaunched his product from a video site to a streaming social service.

In a message to users last June, Le Meur remarked, “I’m an entrepreneur trying to find growth…the context has really changed in the last year and a half and I need to make Seesmic (the company) survive.”

Meanwhile, social entertainment site Redux first launched as a music playlist site but quickly moved towards video sharing when it failed to gain traction in the music space.

Based on Alfred Chandler’s model of market strategy, Sviokla explains that companies should not stray too far from their core proficiencies. He believes that transitioning companies can best diversify their businesses if the new direction matches the current target customer, distribution channel, product/service, geography and competency.

Says Sviokla, “I believe that if the innovation your firm is considering is “close” to current practice on all five of these, it is less risky to implement. If it is different on these five dimensions, it becomes much riskier.” For the entire article visit the Harvard Business Review.

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While social media is often touted as a great lead generator and brand management tool, it can also help bad coverage spread like wildfire. Last year, two disgruntled North Carolina employees made an in-store gross-out video where they tampered with Domino’s Pizza orders. Despite the fact that the employees were fired, Domino’s was dealt a major blow as the brand was tarnished and all efforts to recover were met with criticism. Video aggregator Yubby is about to launch a solution that helps startups mitigate the risk of brand-damaging videos.

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ReadWriteWeb first covered Yubby in mid October. Similar to VodPod, the service lets you create video collections from more than 20 different content sites. From here, users merge their favorite videos into one embeddable widget. While the basic product is free, the company is launching premium packages to help companies monitor their brands and related events.

For between $2-$100 a month, startup companies can track videos on a variety of platforms from a central dashboard by specifying keywords like the brand name, slogan or related industry tags. You can also look at traffic stats across multiple sites to see which videos are receiving the most airtime. In the case of Domino’s, the gross-out video scandal could have been avoided had the company used a similar system and reprimanded employees before duplicates emerged. In the case of customer-made videos, startups can take a proactive approach and work to make amends with the consumer before a bad video goes viral. For more information on Yubby’s products visit yubby.com/pro.

Discuss

If you asked startup founders whether they would rather give away 5% equity in the company or one of their toes, many would choose the toe. CEOs like Zynga’s Mark Pincus have always argued for startup founders to “own their destiny” and maintain control and ownership of their company. That’s why it was surprising to read VC Deal Lawyer Chris McDemus’ recent article entitled If You Provide a Strategic Technology or Outsourced Service, Consider Taking Some Equity in Your Fee Structure.

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Early-stage startup companies are used to giving away equity to advisors, IP lawyers and key staff, but McDemus argues that those vendors who provide core technologies should also build an equity agreement right into their service contracts. McDemus gives the example of Mint‘s acquisition by Intuit and how if Yodlee had taken some of Mint’s equity for providing the backend of the service, the company would have made great money on the sale. While this might sound like a good idea for service providers who risk abandonment, the idea is likely to ruffle the feathers of many a startup founder.

The fantastic thing about startup companies in 2010 is that they’re iterating faster. Rather than stumbling in the dark for a few years before launching a product, many have launched in a mere six month engineering cycle. In fact, we’ve even featured companies being built in a week or a weekend. If vendors asked for cash AND equity as part of the commercial license, I wonder how this would change development.

While service providers risk abandonment after startups get acquired by bigger companies, they may also risk abandonment for pursuing the equity route. Alternatives to an equity-seeking vendor might include open source technologies, using competitors who do not demand equity, or in a worst case scenario, building the core technology from scratch.

If the bulk of your business’ technology is built in association with a commercial vendor and that vendor asked you for equity, would you give it to them? If yes, why? If no, how would you cope?

Discuss

The words “mobile entertainment” are so overused that they fail to capture any real meaning anymore, but in 1999 Mobitv was one of the only companies trying to bring video to mobile phones. Today, most consumers would recognize Mobitv as the company that brings live CBS Sports coverage and NBA games to our iPhones. What many don’t understand, is that in order to get all that great content onto our tiny devices, somebody had to convince Sprint, AT&T, US Cellular and Verizon to play along, while at the same time licensing enough high quality television content to make it a worthwhile service – President and Co-founder Paul Scanlan is that somebody.

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In addition to bringing on advisors with backgrounds in the two notoriously tough industries of telecom carriers and television, Scanlan offers some negotiation and contract advice.

Says Scanlan, “No one wants to be the only one doing something, but no one wants to miss out. You have to build contingencies into contracts so that everyone feel satisfied and like they’re taken care of.”

Scanlan explains that just as some startups have seen term sheets materialize after the first offer, telecoms and television networks were only eager to work with Mobitv after they’d learned their competitors had expressed interest. Scanlan realized that in order to get his telecom contracts signed he needed to add the contingency that big name content providers would come aboard. Meanwhile, television contracts were signed on the contingency that the product would only launch with 4 other major network deals.

Explains Scanlan, “My first piece of advice for those in business development is to endure it, because there will be days where your [potential partners] are blunt and they don’t even pretend they want to meet you. [And second], a competitive thread can hold a lot of potential.”

To check out the company built on a competitive spirit, you can purchase a $9.99 subscription or browse premium content apps through mobitv.com.

Discuss

Israel isn’t just an emerging tech hub, it’s a hotbed of activity and has been for many years. Per capita, Israel has the most startup companies and spends more on research and development than any other nation in the world. Israelis lay claim to the invention of Intel’s Pentium 4 microprocessor, CheckPoint’s firewall, Comverse’s voicemail, Amdoc’s telephone billing system and a ton of VoIP technology through companies like Audiocodes and Vocaltec. Between a value for innovation and a great funding scene, Tel Aviv and Herzliya are ripe with startup entrepreneurs. ReadWriteWeb caught up with some influencers to hear their thoughts about the country’s tech scene.

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A Culture of Learning

TechAviv founder and serial startup entrepreneur Yaron Samid launched BackWeb in Silicon Valley, Pando in New York and now CrowdSpot in Tel Aviv.

Says Samid, “Tel Aviv melds the best of both the Valley and downtown New York; a rich tech talent pool obsessed with entrepreneurship, in the heart of a 24/7 popping cosmopolitan town filled with beautiful people, artists, musicians and world travelers. Add year-round sun, outdoor cafes and beaches everywhere and you’ve got yourself geek heaven.”

For all of Samid’s reasons, Israel has given rise to a diverse range of startups including face recognition service Face.com, IM / VoIP provider Fring, web analytics service ClickTale, gift-giving platform The Gifts Project, image attribution giant PicScout, gadget guide Walyou and Q&A repair service FixYa.

Samid’s TechAviv organization is one place where leaders from these companies can meet and share advice. Since 2007, Samid’s organization has grown from a simple invite-only meeting of founders into a global network with a separate founders club, angel club and business workshop. In addition to TechAviv, Israeli entrepreneurs and technologists have the opportunity to learn from informal events like GarageGeeks and VC meet ups. The Zell Entrepreneurship Program has also proven to be an amazing resource for early-stage entrepreneurs. This formal and informal culture of shared learning is maintained by some of the countries most successful entrepreneurs.

Ariel Finkelstein, CEO of feedback analytics company Kampyle recognizes the community’s contributions. Says Finkelstein, “Other entrepreneurs helped Kampyle when we were growing and we feel strongly about supporting the new startups… It’s important for a growing team to get good advice and to understand fully the commitment and hard work that goes into launching a global company.”

In addition to sitting on several boards, mentoring at the Zell program and participating as an active TechAviv member, Avichay Nissenbaum is well known for orchestrating two lucrative exits including the sale of SmarTeam to Dassault Systemes and most recently, question and answer site Yedda to AOL.

Says Nissenbaum, “What characterizes Israeli entrepreneurs is passion and dedication, high technological skills, openness and directness, and in a formal sense – the willingness to take reasonable risk.”

While he argues that Israelis have the advantage of a global view and the creativity to solve problems under pressure, he also recognizes the challenge of many entrepreneurs targeting an American market from abroad.

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Shuly Galili, Executive Director of the California Israel Chamber of Commerce, is often approached by entrepreneurs to help in the US launch process.

Claims Galili, “In terms of mentorship, Tel Aviv lacks serious angel investors/mentors to guide entrepreneurs with their launch and market positioning. This is one critical need that is missing and is very evident to us at the California Israeli Chamber of Commerce.”

Entrepreneur Yaron Galai has found a dual-city operation works best for him. After moving his Quigo research team to New York, he found that to his dismay his team’s focus changed from innovation to basic maintenance. After selling Quigo to AOL, Galai’s new content rating company Outbrain maintains engineering, quality assurance and research in Israel, with sales, marketing and product in the US.

Galai has found a way to stay close to the company’s target market while still keeping productivity and innovation high. Says the CEO, “I think Israeli entrepreneurs should be thinking about how to mix both things: Build companies that are based in Israel, but that can operate and communicate effectively with strong global sales/product/marketing teams in its core markets.”

The State of Funding

Israel is ranked second in the world for venture funds next to the US. Although we recently reported that Israel’s funding saw a sharp descent in 2009, the dollar values raised for a country the size of New Jersey with a population of only 7.5 million citizens is indeed impressive.

A number of legendary angel investors including Dr. Yossi Vardi, Zohar Gilon and Rami Lipman hang their hats in Israel. Meanwhile, some of the notable angel resources include Israel Seed Partners, TechAviv Angels Club, AfterDox and Startup Factory. Entrepreneurs can also approach firms like Carmel Ventures, Gemini Israel Funds, Sequoia Capital and Bessemer. Another avenue is the Ministry of Industry, Trade and Labor’s Chief Scientist Program for seed funding, grants and access to 24 tech incubators.

Daniel Cohen of Gemini Israel Ventures remarks that Israel’s mandatory military service may contribute to startup leadership qualities. Cohen explains that because young people are placed in management roles at a very early age, these skills may contribute to innovation and problem solving abilities in business leaders.

Says Cohen, “The scene here is vibrant. There are hundreds of new companies that launch every year. Israelis have seen their fair share of funding and exits, Israel’s challenge is building longer lasting companies. “

Agrees Yaron Galai, “We might be starting to see the signs of change in the quick exit mentality with second time entrepreneurs coming back to the game. [They’re] free from having to focus on locking in an early sale, and really focused on building bigger, longer-term, sustainable companies. “

Photo Credit: Or Hiltch

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Savvy content publishers are celebrating the announcement of what may be a potentially lucrative revenue stream. Yesterday morning, net television provider Boxee wrote about its plans to launch an upcoming payment platform. Content partners will have a chance to offer pay-per-view and subscription media as one click purchases from the remote.

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For now, it’s natural that both Boxee and PayPal’s partnership with Philips for IPTV monetization focus on music and video content purchases as these are the materials that these mediums have traditionally yielded. However, we also know that there’s a world of possibilities for one-touch remote purchasing. As envisioned in this PayPal developer API promotion, web television can give rise to an entirely new shopping environment.

Others may laugh at the idea of a luxury purchase made via TV, but when I saw this video at the PayPal X Conference, I was floored. My first thought concerned Oprah’s Book Club. Through the sheer popularity of Oprah Winfrey, every book featured in the Harpo Book Club is already a New York Times best seller. Now imagine what the sales would look like with one-touch purchasing.

While PayPal and Boxee-based purchases are inevitable for the coming year, the future may also hold the possibility of direct-to-carrier phone purchases as more developers look to the iPhone and mobile handsets to act as TV remotes. Regardless of who owns the platform, startups may have much to gain from these new advances.

In late December we asked the question – Will 2010 be the year of net tv shopping integration? With the recent Boxee announcement, the ability to monetize from the home entertainment center is becoming even more of a reality for those who simply couldn’t close deals in traditional television. If you’re planning on getting involved in IPTV monetization, let us the route you’re taking in the comments below.

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While the iPhone is clearly the media darling of mobile devices in the US, there’s no denying that Nokia’s handsets have saturated the global market. As part of that global strategy, the company just announced free walk and drive navigation for 74 countries in 46 languages. Today’s release of the third iteration of Ovi Maps is similar to Google’s maps for Android in that the service offers free turn-by-turn voice guidance. Nevertheless, there’s one important catch – maps are cached offline for future use. ReadWriteWeb caught up with Nokia’s VP of Product and Location, Christof Hellmis, for a look at how the company is saving device owners precious battery life.

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Since 2008 Nokia has acquired at least 12 companies including location-based services like Plazes, Dopplr and Navteq. Hellmis explains that the Navteq acquisition allows Nokia to utilize hybrid vector map technology rather than the more data intensive bitmaps used by other providers.

Says Hellmis, “That’s one of the advantages of developing from a mobile device background. We’re aware of the consumer’s resources. You don’t wait to download your maps on a wireless connection and you don’t need a sim card. You’ve got the entire world in your pocket rather than on a server.”This sort of functionality is particularly useful for those who travel frequently and are used to suffering from high data connection costs and unstable network coverage. The service also includes information on safety cameras, speed warnings and pedestrian shortcuts, in addition to 6000 3D landmarks.

Ovi Maps’ voice navigation is immediately available for download on 10 handsets including the Nokia N97 mini, Nokia 5800 XpressMusic and Nokia E72 at nokia.com/maps. Additional phones will be added in the coming months. The fact that Nokia’s handsets account for 51% (83 million) of the total number of GPS-enabled devices shipped last year, means that the company may quickly be the world’s largest navigation services provider.

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While few of us are bold enough to lay claim to Nostradamus-like powers of prophecy, it’s still interesting to read industry predictions. ReadWriteWeb recently released a list of tech predictions for 2010 and as of a yesterday, Senior VP Steve Rubel and the folks at Edelman PR agency uploaded their predictions entitled Digital Visions: 10 Ideas for the New Decade.

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Writes Rubel, “The bigger opportunity for clients, we believe, is to identify the global, societal and technological trends that are reshaping how we think, act and buy – and to pivot into them early. Trends today tend to develop more slowly and are harder to see, allowing clients to take a more thoughtful, thorough and systematic approach.”

The PR company’s report certainly contains some insights; nevertheless, Edelman is likely to have come to these conclusions after suffering a number of social media-related setbacks. In the last decade Edelman employees have been featured on Wired Magazine editor Chris Anderson’s PR blacklist, lambasted by environmental bloggers and protesters for contributing to greenwashing and caught creating puppet blogs for Walmart without disclosing their affiliation.

As the new decade begins, Edelman draws on four key themes for the future including the pervasiveness of digital technologies, the move to mobile, budgeting for digital outreach and finally, social media ROI. While the essays are well-written, they’re also extremely biased and self-serving.

When I say “biased” I refer to the fact that PR agencies and tech bloggers such as myself have a special interest in making others believe their claims about social media. Ideas like social media “becoming a business driver”, knowledge of disruptive technologies being the key to survival and the “start-and-stop campaign approach” giving way to an approach “that’s on all the time” are great arguments for keeping us employed. The more you as a startup founder believe that you need to stay constantly connected to your customer, the more likely you are to read our industry blogs and hire long-term social media marketers.

However, in this soup of social media sentiment, there is some truth. Successful companies like Best Buy and Zappos are baking community engagement and social media into their operations, and services like Foursquare are giving rise to better loyalty programs. Whether or not your company has the bandwidth and budget to spend on location-based services and a full time social media strategy is up to you. Let us know your thoughts on the report in the comments below.

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It looks like the startup trends of 2009 are getting the resources they need to become lucrative businesses in 2010. Labor on demand provider Crowdflower closed a $5 million dollar Series A this morning from Trinity Ventures and Bessemer Venture Partners. ReadWriteWeb named the elastic workforce phenomenon a major trend in 2009 and we caught up with one of Crowdflower’s happy customers to see how the elastic workforce is helping startups thrive.

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Companies like Crowdflower save startups money by offering on-call labor at a fraction of the cost of on-site or contract workers. Tasks generally include data collection, content moderation and product grouping. Crowdflower’s crowning jewel is that employers only pay for tasks if they’ve been completed at a standard quality level. This quality assurance, coupled with the Crowdflower’s ability to help companies scale with its 125,000 member workforce, have allowed it to grow its business by 750% in the last year.

Skout CEO Christian Wiklund recently transformed his company from a location-based social network to a location-based dating community. While many perceive labor on demand as a low quality work, Wiklund explains otherwise.

“When we first received dating profile photos, we had two interns looking at grids of 100 photos at a time and they were still slow and couldn’t keep up with the volume. We didn’t want our users waiting 48 hours for content moderation. Crowdflower has three people look at every job and it’s a maximum of ten minutes for content review.”

Since moving content review to the cloud, Wiklund has saved 20% on staffing and is considering Crowdflower for profile verification and spam moderation.

Says Wiklund, “One of the advantages of cloud services is that you have enough workers 24/7. If someone calls in sick or doesn’t want to work that day, there’s always someone to get the job done. I’m not in the business of content moderation, I want to focus on my core content. Crowdflower does a great job of allowing you to do that.”

To inspect Crowdflower’s work visit skout.com or to try the service visit crowdflower.com.

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When New Zealand-based entrepreneur Rod Drury began researching his market he could hardly believe what he was seeing. As seen in Drury’s comments last week on the state of the online finance ecosystem, only a handful of players like Saasu and MYOB were targeting small business clients. While Drury saw that a number of cloud-based personal finance companies like Mint were gaining traction with users, small businesses had been stuck with the same tired desktop accounting software they’d been using for the last ten years. Drury built Xero with the intent to help small businesses manage their accounts in the cloud.

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When asked why the cloud is so important for accounting services he explains, “In the past small businesses rarely shared their business data with accountants as the majority of billable hours were spent simply extracting the right information.” Says Drury, “The fact that your entire business can now look at your accounts in the cloud means that the accountant can finally act as a business advisor and improve your cash flow.”

Xero also works with a number of banking institutions. This means that rather than waiting 5 business days for a bank to reconcile your accounts, they’re up-to-date with your daily transactions.

There are currently 12,000 companies working with Xero (including ReadWriteWeb) and the company recently launched integration with invoicing service FreshBooks and CRM-tool Salesforce. For between $19-39 dollars per month startups can access their accounts from anywhere and reduce the anxiety around the accounts payable and receivable process. To try it for yourself visit xero.com.

Editor’s note: This story is part of ReadWriteWeb’s Online Finance series, a weekly, three-month long look at how the Internet has transformed finance. Up until April 15, the deadline for U.S. readers to file their taxes, we’ll be looking at how finance software has evolved, analyzing top web tools and posting video of our conversations with the people who are shaping online finance. If you are interested in sponsoring the rest of this Content Series, please contact our COO Sean Ammirati.

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