Category Archives: Startups

Introduction to A/B Testing

Don’t know what A/B testing is? It’s when companies test a hypothesis, for example, by randomly displaying two versions of a home page and testing to which results in a higher sign-up rate, or a conversion rate.

To understand how A/B testing works, take a look at this article, a single case study of how Bettingexpert.com increased their conversion rate 31.54% by making a small change in their Call to Action. The video embedded in this article will introduce you to the basic mathematical concepts of confidence level, conversion range, and sample size.

For some simple tips on A/B testing correctly, this article is a quick read. Long story short, test one hypothesis at a time, and make sure you test enough. This article gives you a rule of thumb of 50% confidence level before accepting any result, but remember that the confidence level given to you by these A/B testing tools aren’t perfect.

For a great article on determining your sample size, read this article from 37 signals blog. It gets a little mathy toward the latter half, but it still read surprisingly easily, even for those who don’t understand the math. Want an article that’s really mathy? Here you go.

Not just specific to A/B testing, but you need a good landing page to get going. Make sure you’ve checked out this infographic by Kissmetrics before designing any landing page (I’ve embedded it below). And for extra credit, read comments and critiques on existing landing pages here and here.

landing-page-design-infographic

Cost of Online Ads

Average cost of pay-per-click ads over time (source: Hochman Consultants)

Screen Shot 2013-03-20 at 10.57.08 AM

Global Average Cost per Click data by Industry (source: SEOmoz)

  1. Finance    —     $3.09
  2. Jobs & Education   —  $1.80
  3. Business & Industrial —  $1.67
  4. Computers & Electronics  —  $1.39
  5. Internet & Telecom  —  $1.11
  6. Beauty & Fitness   — $1.11
  7. Autos & Vehicles  —  $0.97
  8. Home & Garden   — $0.76
  9. Travel —   $0.29
  10. Shopping  —  $0.25

Cost of Other Online Ads (source: Digiday)

  • Yahoo homepage takeover = $450,000
  • Youtube homepage takeover = $400,000
  • Facebook log-out screen ad = $100,000
  • Twitter promoted trending topic = $120,000
  • Hulu in-stream ads = $30 CPM
  • Foursquare actions = 40 cents
  • BuzzFeed sponsored article = $20,000
  • AOL homepage takeover = $400,000
  • Branded mobile app = $125,000

 

Making Life Better

My girlfriend was feeling a little down today, so I drew her this notecard and explained to her how even when you’re doing everything just right, you can still sometimes be in a bad mood.

Making life better, isn’t that all we want? We might disagree on what we consider a better life, but let’s assume life is actually something that can be better. If there wasn’t, well, life seems a little less purposeful. For sake of argument, we’ll say life can be better.

Especially when we’re feeling down, we tend to get in the mindset of “what am I doing wrong?” We start questioning the choices we’ve been making, worried that we’ve made some wrong ones, or that we’re about to. We start questioning the things we’ve believed for a long time, or the beliefs we’ve recently picked up. What can we do?

makinglifebetter1

Well, there are definitely things we can do to make our lives better. Like being healthy, surrounding ourselves with friends, and smiling. We’ll call these factors, A, B, C, D, E, F, and so on. Because there are actually an infinite number of factors that affect how good our life is. As a matter of fact, some of them may contradict each other, like having another glass of wine. That choice can be both good and detrimental to having a better life, and that balance is somewhat different for every glass of wine we drink.

makinglifebetter2

Well, let’s add these infinite factors together and fit it on a scale from 0 to 100. 0 being we’re doing absolutely everything against having a better life. 100 being we’re doing absolutely everything just right to have the perfect life. Truth is, we’re never on either end at any point, but somewhere in between.

Now, let’s put that scale from 0 to 100 on the X axis, and the Y axis will represent how good our life is. Draw a diagonal line up the middle (X=Y), and that shows us how a combination of our choices can make our life better or worse.

makinglifebetter3

This line, however, only represents the average of an infinite number of data points. When we’re making the “right” choices, we only tend to have a better life. Even if most of the dots are near the line, there are always outliers.

Sometimes, we can be doing everything just right, but life still sucks. Some days, we’re not doing anything good for ourselves, and life seems to work out just right.

Every moment in your life is a data point. We’re just trying to make sense of this infinite amount of data, trying to figure out what our A, B, C, and so on are. The more data points you have, the more confident you’ll be of the equation for a better life.

So appreciate every moment of your life, because it’s a new data point.

 

LEEAP: Los Angeles Startup Ecosystem [Video]

My friend Simon Walker is doing a project called LEEAP where he travels the world’s top 10 startup ecosystems and interviewing prominent individuals to get a sense of how the cities differ from each other. He stopped by LA a few weekends ago and put together this 20 minute video for us:

*featuring yours truly for a few seconds at 10:46

Interesting Fact: Of the 11 total people in this video, 3 of them are Claremont McKenna College alumni. Can you figure out which ones?

These insights on the LA startup scene are brought to you by:

Jason Calacanis, Founder, CEO at Mahalo
Mike Jones, CEO at Science
Sean Ellis, CEO of Qualaroo
Kevin Winston, Founder of Digital LA
Shirin Salmnia, Founder of Pley Werks
Anneke Jong, VP of Business Development at Bre.ad
Rob Lambert, Co-founder of SiliconBeachLA.com
Dan Dato, Co-founder of Cross Campus
Yohei Nakajima, Program Director at Coloft Academy

Coloft Academy

For those of you who don’t know this yet, I joined the Coloft team as their Academy Program Director just over a month ago. My day-to-day job is to identify and connect with amazing individuals who have the desire to share the knowledge they’ve accumulated with the tech startup community of Los Angeles. We host classes and workshops at Coloft, inviting both members and non-members to acquire knowledge that will help them build successful companies.

Coloft Academy is an important part of a larger eco-system. Los Angeles recently ranked third in the Startup Genome report, following San Francisco and Tel Aviv. Where we fall behind is in the Support Index and the Mindset Index, two things Coloft Academy is well positioned to change. From the report itself:

The mindset index measures how well the population of founders in a given ecosystem think like great entrepreneurs, where great entrepreneurs are visionary, resilient, have a high appetite for risk, a strong work ethic and an ability to overcome the typical challenges startups face.

The support index measures the quality of the startup ecosystem’s support network, including the prevalence of mentorship, service providers and types of funding sources.

Coloft Academy makes great advice affordable to new entrepreneurs. I used to consult for early stage startups, offering a wide-range of services including business development, marketing strategy, social media, pr, graphic design, and more. Being a jack-of-all-trade, I was cheaper than, but less knowledgable than a specialist in almost every topic. Why did they come to me then? Because early stage startups can’t afford one-on-one help from specialists. With Coloft Academy, I can make great advice affordable, by allowing new entrepreneurs to share the cost of a specialist.

Coloft Academy is a platform for knowledge sharing. Tech companies and their service providers have an incentive to increase the average talent-level of all people in our ecosystem. Better talent means better recruits. More successful companies mean more funding that will become available. Unfortunately, the experts in our ecosystem are very busy people. By providing the space and marketing efforts, Coloft Academy lowers the hurdle for experts who have a desire to share their knowledge with the community.

Participating in workshops is the best way for entrepreneurs to build lasting relationships with other entrepreneurs. A workshop is a collaborative and hands-on classroom that allows entrepreneurs to not only take in information, but actually walk away with a deliverable they can continue to work on. When entrepreneurs work in parallel with each other on similar problems, they not only benefit from getting a deeper understanding of the topic at hand, but also from joining a network of entrepreneurs who understand each others business.

Starting a business is difficult. As the startup ecosystem continues to grow in Los Angeles, there will surely be an increasing number of new entrepreneurs embarking on this journey without the knowledge and support necessary. However, the success of our ecosystem relies on these new entrepreneurs. To all experts in our community, I urge you to consider sharing the knowledge you’ve accumulated, and to help grow this collaborative environment that makes LA a great place to start a company.

If you’re interested in taking classes or workshops at Coloft Academy, sign-up for our newsletter. If you or anybody you know is interested in becoming an instructor, don’t hesitate to reach out to me at yohei(at)coloft.com. I’m happy to answer any questions you may have.

Chicken or the Egg? Team or Idea?

Which comes first, the team or the idea?
A person with an idea, passion, and determination,
can collect a team, then rock out, yeah?

But as the seasons change, so does the idea,
and the path of the idea is set by the team.

But the team is also shaped by the idea,
because the team and the idea become one or perish.

When the idea is looking poor,
the team is there to adjust it’s course.

When the team is down,
the idea is there to keep them together.

And by idea, I mean vision, maybe. I don’t know.

Artificial Intelligence, How Prevalent Is It?

It’s out there, but not everywhere. Within 10 years, we’ll see it applied to most businesses.

Want to see if it’ll apply to your business? Hit up Instadat, an Artificial Intelligence startup in Los Angeles. Yeah, you heard that right.

Letting the Machines Decide (Wall Street Journal) – New wave of investment firms look to ‘Artificial Intelligence’ in trade decisions. [July 13, 2010]

Artificial Intelligence Goes Mobile (Business Week) – Companies working on AI include IBM, Intel, Hewlett-Packard, Google, Apple, AT&T, and Spring Nextel. [Sept 10, 2010]

Artificial Intelligence is the Next Step in Search, and Everything Else (Forbes) [June 20, 2012]

Navy eyes artificial intelligence to automate decision making on ships, sensors, and weapons (Military Aerospace) [June 22, 2012]

Man or Machine? (Wall Street Journal) – Ray Kurzweil on how long it will be before computers can do everything the brain can do [June 29, 2012]

Aromatherapy for Entrepreneurs

Need to focus, concentrate, or memorize things? Surround yourself with Rosemary.

Want to get a room to start thinking creatively? Use Clove Oil, which stimulates the mind, and combine it with citrus aromas, which elevates mood.

While there doesn’t seem to be many large scale studies that “prove” the effectiveness of aromatherapy, we do know a few things about how it might work.

Your nose is part of what’s called the Olfactory system, which translates the activation of receptors in your nose (which happens when you smell things), and converts them into electrical signals.

What we do know is that this system sends these signals to parts of your brain often associated with social interaction and emotional learning (Amygdala), and memory formation, consolidation, and optimization (Entorhinal Cortex).

Regardless of how different aromas might affect the brain, it seems to make sense (based on what we know about how the brain is wired) that the activation of smell receptors in our nose increases activity in parts of the brain that are responsible for memory, which would, during that time, increase our ability to memorize things efficiently. Following this logic, it seems safe to assume that being surrounded by good smells make us better at social interactions.

Since we know Placebo’s are effective, it’s only logical to surround ourselves with great aromas, notice when it’s positively affecting us, and ignoring it when it doesn’t.

Overtime, surrounding yourself with good aromas will both increase your memory and comfort in social interactions.

I rubbed some Bergamot oil on my hands about an hour ago. It smells like tangerines.

A Few Thoughts on Crowdsourcing

Crowdsourcing is such a vast and interesting topic! Where to start…

Crowdsourcing is basically asking people to help you do something. You could say barn-raising is crowdsourced construction.

Wikipedia is my favorite example of a crowdsourced knowledge base.

99 Designs is one of the bigger websites where you can crowdsource design work.

Crowdfunding is another example of sourcing money from others. Started with IndieGoGo and blew up with KickStarter. Now there’sStartSomeGood and ThrdPlace, to name a few more (because they happen to be LA companies).

And now there’s Crowdfinancing, which sources investments from the public to start companies. This is coming into play soon, with sites like Crowdfunder preparing for the big day the switch is flicked. (another LA company)

For anyone who wants to get after it, Wikinomics is supposedly a fascinating book.

MicroVentures is a Securities Broker and Crowdfunding Platform

The crowdfunding law was just passed, but MicroVentures has been raising money for startups through a similar process for over a year. They’ve successfully raised money for funds that invest in larger tech startups on secondary markets. For example, they raised $300,000 for Facebook last year. Other portfolio companies include Yelp, 500 Startups, and Tech Stars.

It’ll be interesting to see what kind of new services they offer after the new crowdfunding law passes.

The secondary market for startup equity is also growing. Last year, Private stock transaction dollars amount grew 73% on SecondMarket, only one of a few platforms that offer this sort of service.

I believe the growing interest in incubators and accelerators, crowdfunding platforms, and secondary markets signify the maturing of an investment field that has until recently been very decentralized and private.