The ab|inventio Gazette

One of our early investors was happy enough with what we are doing that he sextupled his investment in the abInventio fund. Thanks!

David Thomson, an intense former technology executive and management consultant, has spent the past three years figuring out exactly what it takes for a startup company to reach that magic revenue threshold of a billion dollars. He lays out his findings in a new book called Blueprint to a Billion (for more information, see blueprinttoabillion.com).

After interviewing dozens of executives at billion-dollar firms, Thomson boiled down their management practices to what he calls the Seven Essentials.

The key: Each Blueprint company operated in a market big enough and fast growing enough to support at least one billion-dollar firm. Thomson doesn’t tell you how to find that killer idea, although he does suggest where the next set of billion-dollar opportunities in the U.S. might lie. Among his answers: Our increasingly harried society is likely to embrace any time-saving product or service. A bet on QLess, perhaps? On 1ofthese’s ability to save buyers and sellers time matching with each other? Or on the faster search experience provided by Whozat or REPcloud? Or on the faster marketing answers provided by PREPROVE?

Some of the essentials identified by Thomson are strategic: Create a killer value proposition. Some are operational: Manage for positive cash flow from the start. And some involve leadership: Hire a second-in-command who can take care of the day-to-day while you think big picture. (ab inventio is hiring! COO candidates invited to apply.)

It has long been a business school staple that successful companies sell emotional benefits, not just products. (QLess can extend your productive life by 2-3 years) Yet few entrepreneurs can explain why their business proposition is any better than the competition’s. Not so with our Blueprint companies.

Most Blueprint companies operate in markets large enough to accommodate several new billion-dollar businesses.

In their early days Blueprint companies attracted what Thomson calls a “marquee customer,” whose high profile and reputation opened doors to new markets. Landing that whale requires more than just salesmanship, however: The trick is to find one who effectively takes you on as a partner to help transform your organization. Says Thomson: “You need to find a client who is willing to take risks and innovate with you on your journey.” A customer like Fox or Korn Ferry?

Thomson found that Blueprint companies tend to finance their early growth from operations (the classic example is eBay, which was profitable from nearly its first day in business). There are exceptions, notably in industries such as biotech and telecommunications that require large upfront capital investments to get a business off the ground. But most Blueprint companies are the exact opposite of all those tech startups that flamed out back in the bubble days. “The customers finance the business,” says VC McNamee. “There are just too many people who believe that the path to success is, Get a pile of press, then get a pile of venture capital money, and then get a pile of customers. That’s exactly backwards.”

Corollary: Blueprint companies get extraordinary value from their boards. Most startups populate their boards with insiders or with investors who want to keep an eye on their money. But because Blueprint companies tend to finance their own growth, they are able to stack their boards with successful CEOs and industry experts who offer deep experience and contacts, help bring in business, and give shrewd advice.

Summarized from an article on CNN Money by Richard McGill Murphy.

Our team converged on Burbank last night from our offices in Altadena, Burbank, San Diego, San Jose and New York for a night of Marzia’s famous Italian pasta, Jim’s famous burgers, games and plenty of conversation. Seeing people voluntarily drive and fly for hours just to spend a few hours with their teammates is very encouraging, and says a lot about the team we’re building at ab|inventio.

Dear all, 

• We moved into our new offices! I am told they bear a striking resemblance to the early offices of HP, Apple and Google. Amenities include a swimming pool, a hot tub, free Coke and donuts, lots of books and computers, 24-hour access and a couple of swings.
• We received three new investments this week. Thanks for your vision and support, we could not be doing it without you. There is very little time left to invest in the ab|inventio fund at the current best-ever valuation!
• We have received a number of job applications, thanks in part to Greg Buechler, our terrific recruiter. Of particular interest is that of executives of the largest company making some of the products we think QLess will replace. It sure is exciting when executives at a big competitor want to leave their job to join you because they thinks your product will take over their market.
• 1ofthese has moved into our production server!
• Whozat now works from your cell phone! Watch out for a new logo coming soon, too.
• The statistics for Whozat usage show that users are using our unique interactive features to refine search more than once per visit on average. This is much more than we could have hoped for, and suggests that one of the innovations that makes Whozat unique is really useful to people. Paraphrasing our advisor Alex Moulle-Berteaux, who generously spent 3 hours of his time with me last week in NY, Whozat is the only search engine that actually establishes an interactive dialog with the searcher rather than blindly spitting something back. Furthermore, the average stay in Whozat is over 9 minutes, which is almost twice the average time on Google and 4 times the average stay on our main competitor, according to Compete.com. Interestingly, visitors spend that greater time in Whozat viewing 50% fewer pages per visit than on Google, which suggests that perhaps they are finding what they are looking sooner but spending more time absorbing it, as Whozat actually gives information right on its search results pages rather than just being a portal to information.
• The launch of ab|inventio’s blog has multiplied the average daily visits to our site by many-fold, and they keep growing every day. You may subscribe to it at http://blog.abinventio.com/feed .

Cheers,

Alex

ab|inventio is growing, and hiring!

We are looking for:

* Search Engine Marketing/PPC Specialist. Whether you are an SEM expert already or looking to become one, The SEM Experts is looking for smart and motivated people with a desire to work with industry leaders and help some of the world’s best products reach more customers.

* Sales Guru. Our companies have innovative products unlike any in the industry, and are young enough that the whole marketplace is still open. It doesn’t get any better for a savvy sales guru to start and grow a winning team!

* Operations Meister. Are you an expert at getting things done? Capable of keeping a dozen plates up in the air? Enjoy wearing many hats? Have experience keeping a business running? We want you!

* Business Development GrandMaster. Can you ideate and strike strategic partnerships to drive revenues? Are you well connected or really persuasive? Do you have what it takes to put great products in the hands of millions of users? Come talk to us!

* Website Designer. Do you have experience building websites that rock? Do you know how to engage a visitor? Are you an entrepreneur at heart? Come show us!

* Software Engineer. Do you speak AJAX in your dreams? Code in your pajamas? Wrote computer games when you were 9? Like to make intelligent machines for the fun of it? Enjoy the feeling of shipping a product? You may belong here.

* CEO. As our companies mature, we look for world-class leadership to take them out of the crib. If you have what it takes to nurture a market leader, we want to hear from you.

Inquire within by emailing careers { at } abinventio.com .

Adapted from recent correspondence with Marc Andreessen:

Mike just pointed me to Marc Andreessen’s post on The Pmarca Guide to Startups: The only thing that matters (the market), which I recommend. I agree that the market is an essential element of the success of a start-up. Google’s (and Yahoo’s) success can be attributed in large part to the explosion of content on the WWW at the same time, which made almost any search miraculously yield something of some relevance (of course this does not explain why others like Altavista floundered). MySpace’s success can be attributed in large part to the explosion of young people on the WWW. iPod’s on the explosion of digital music. And YouTube’s on the sudden ubiquitous nature of digital video.

That begs the question: what will the next explosive markets be? I think Marc’s bet with Ning is a reasonable one: what could be more leveraged than creating a site to help people create multiple social networks? My own bets right now are on the following:

1. Finding a way to leverage the opinions of the millions of users who have started to express their view on anything under the Sun on the WWW.
2. Finding a way to find regular (i.e. not famous) people on the WWW –traditional search engine algorithms like PageRank were designed to find important webpages, and most people don’t have one.
3. Using the massive amount of digital data to personalize everything –the next decade will be one where cookie-cutter solutions won’t make the cut.
4. Using the ubiquitous nature of cell phones to solve the multitude of problems and waste (including waste of time) derived from lack of communication –automatic communication everywhere everytime will be the norm going forward.
5. Easy and inexpensive access to data and testing will eliminate arbitrary and/or irrational business decisions in favor of automatically tested strategies.
6. The commoditization of everything non-unique: The Internet has enabled the global supply of most any good to satisfy demand most anywhere on the Planet, meaning consumers no longer have to choose one seller: they can choose a good or an equivalence class, name a price, and let sellers compete to provide it.
7. (added by our own Mike Yudin): The web started as a very global media, it is now spreading to the local level. People expect to find information about their local community and interact with it online. Doctors and lawyers, car dealers, diners, plumbers, florists, community groups, schools, etc…

ab|inventio seeks to capitalize on these market trends. We have a number of teams working on solutions to each of the problems above: #1 is addressed by REPcloud (in stealth). #2 by Whozat. #3 by 2 start-ups we are working on that will personalize news and entertainment, both in stealth. Our first pass at #4 is QLess (www.waitinginlinesucks.com) , recently a finalist of TechCrunch Supernova. #5 we’re only just beginning to tackle, but www.PREPROVE.com will tackle one aspect. www.1ofthese.com will soon address #6. #7 we’re combining w/#3 in one of those companies in stealth.

Care to join us in the adventure? We’re hiring!

eBay Live 2007, the biggest trade show in the eBay ecosystem, started on Thursday morning. 1ofthese, an ab|inventio company that can convert every bidder into a winner/buyer by finding equivalent items for losing bidders, had a booth to introduce its services to big eBay sellers. It was the night before the show, and our booth sign had not been delivered. Our software still had a critical bug. Our impact movie had not been received. Our company T-shirts had not been received, and the girl who was supposed to wear one of them had not confirmed her presence. And the FEDEX package with the mind-reading headsets that we would use for our contest, prizing the contestant who got the highest attention score when concentrating on “I want more sales” was late.

But we did not give up, and thanks to diligent work by Susanne Sandsberg, Umesh Lalwani, Kartik Sehgal, Harender Kumar and team (and the fact that the Sun never sets on the ab|inventio empire), by the following morning, every one of those had been solved. With Mike Yudin (whose assistance was invaluable) and I manning our booth, we went on to collect hundreds of leads from eBay sellers interested in using our services, with many of them signing up right there on the spot. Prospective customers told us such things as “It’s a no-brainer to sign up for this!”, “This is a great idea!” (repeatedly) and “This is much better than eBay’s method”. We received visits by print and radio journalists, by an analyst intent on writing about us, and repeated visits by eBay executives, including Rob Cross, Sr. Manager of the Developers Program, and the top gun at Prostores, an eBay company which, in his words, has little to do with 1ofthese (eBay wouldn’t be spying on us via their companies, would they now?), . The keynote speech by eBay’s President North-America focused on eBay’s intent to increase “windorphins”, a term they recently coined for the feeling of winning an auction on eBay, which was practically an ad for us, given that 1ofthese is designed to help convert every bidder into a winner. We had a visit by a big potential bus dev partner, and by people intent on distributing our software in Europe. We had several visits by eBay educators who teach and train other eBay sellers. We had visits by Titanium sellers (the top of eBay’s tiers of sellers). And we had lots of useful feedback for future product development. I even got a chance to briefly meet Meg Whitman, eBay’s CEO. In sum, it was a thoroughly successful debut show. All with an investment in the smallest booth size available.

In the meantime, the Whozat team made several exciting improvements: a new UI, improved relevance, new interfaces to allow for comparisons of search quality, and two new internal UIs to test relevance improvements.

The SEM Experts grew its client base again.

And we came up with several new inventions for times to come.

All this in just a few days. Which brings me to how you can help. We are looking for a sales person and/or a biz dev. guru for QLess’s several verticals (restaurants, theme parks, hotel/casinos, supermarkets and retail, clinics and pharmacies) as well as one for Whozat HR and another to sell our Community-powered Corporate News Site to Fortune 500 companies who like to stay abreast of what their employees are reading and talking about. And if we find the right person, we may hire a Chief Revenue Officer as well for ab|inventio –someone with the experience to strike strategic partnerships and drive revenue across all our daughter companies. Referrals of exceptional people appreciated. And as always, we are always thankful for customer referrals, or for a word of advice.

We have also received investments by Assigncorp and Tom Mitchell, of Heidrick and Struggles fame and the co-founder of True Data Partners and several other successful ventures.

Thanks for your ongoing support. Thanks for helping us invent a better future.

Alex