The Landscape of startups

With DEMO US in town, featuring 70 early stage startups, as well as Rembrandt Venture Partners Summer Fiesta and an evening at BlackBox’s (startup genome project) Mansion, I’ve met over 100 startups this past week. I thought this would be a good sample to analyze and give a snapshot of the startup landscape these days, as well as some other observations.

To those who presented DEMO or plan to present at DEMO or similar conferences – next week I will publish lessons learned from the startup presentations. Stay tuned. You would want to read that !

Emerging sectors in the startup landscape

–          Enterprise consumerization – With mobility (smartphones, tablets etc.) penetrating enterprises and online consumer practices being replicated to workplaces, dashboards, social network & collaboration and online marketing tools are on fire. Asana and Whodini are examples of social networks and collaboration tools for enterprises. I’ve also seen numerous startups this week, trying to make sense of all the data enterprises have and present that in nice & clean dashboards. Moprise, a Flipboard for enterprise, is a solid representative in that sector.

–          Hiring & job seeking – with unemployment rate exceeding 9% in the US and hundreds of candidates competing for every open position, many startups are trying to address the need for enterprises to quickly screen candidates and for candidates to standout. Examples include JobOn, an interactive platform that allows candidates to submit short videos, addressing employer’s questions, and Unrabble, which allows to quickly & automatically screen candidates.

–          Content discovery – This sector includes companies around filtering and discovering relevant content or activities online. Close to ten companies presented apps recommending content (e.g Pinevio), events (e.g uTemporis,Conferize)  wine (e.g TasteJive, WinoBot) & other activities (e.g Lifecrowd).

–          Small business’ marketing & optimization tools – With so many small businesses out there, many companies are offering simple tools for local business owners to market their services online, analyze their online presence and offer their services at discounts. Daily deals, Twitter analytics, lead generation and loyalty programs are the most common subsets of that. Schedulicity, for example, enables small businesses like hair-stylists and saloons the use of social media to advertise open slots in the calendar, in order to minimize free timeslots and maximize booking.

–          Data mining – This sector has been in the spot lights for a while now. With Hadoop and other tools to analyze big data sets, many startups are trying to find ways to drive analytics from those data arrays. VoyUrl, for example, is trying to analyze online users browsing behavior and recommend new content based on tens of thousands of browsing entries gathered.

–          Video & picture editing & publishing – with so many videos available online, discovery serves one need. Quick editing is another need.  Stroome, for example, excited the DEMO audience with a quick tool to edit and mix different clips into a single video. DragOnTape & WeVideo offer similar services as well.

–          Last but not least, a number of companies presented different services involving augmented reality. Aurasma wowed the audience by turning an old newspaper into a 3D interactive up-to-date newspaper, and a billboard into a shining 3D videoclip. Fitting Reality used Kinect to try on different dresses in seconds. The audience was fascinated by the experience and cheered these companies, but my take is that the market is still relatively immature and we are still missing the business models and the right use cases to drive AR into the early adopters.

We still see some daily deals type of companies but it feels like most consumers are not interested in another deal aggregator.

Many Startups are Premature & lack technological and/or To-Go-Market

Unfortunately a large percentage of the companies, who presented at DEMO, launched their products too early. Some didn’t have a working product and so they spent time overwhelming the audience, getting them to buy into the experience and then….you discover they are 1-2 months away from a GA product. With so many services launching every day, I doubt if most people will remember them in 1-2 days ! Consumers today have a short attention and a tendency to fulfill their needs here and now.

Some other common flaws, you might want to avoid:

–          No social proof or validation – It felt like a number of the companies decided to launch their product at DEMO without much validation, A/B testing or any sort of user testing. If you are presenting a new product in front of hundreds of consumers, VCs & reporters, you want to make sure you had enough pivoting based on user feedback.

–          Changing consumer behavior – Some of the companies were relying on changing consumer behavior, in order to adopt their service. Such examples include adopting a new site, downloading  new software or using a new currency to buy goods. Changing consumers’ behavior is not trivial. Many companies have failed doing that (including Google & Apple). If you are trying to change consumer behavior, you better have a plan and some initial validation that it might actually work.

–          No Go-To-Market – An overwhelming number of the startups, didn’t have any Go-To-Market planning what-so-ever. A GTM plans, is a plan for how the company will scale and reach a sizeable amount of consumers. Going viral or even having a well connected co-founder is not a way to scale in most businesses. Focusing on a sub-segment, where your product/service brings the most value or sub-segments that, for some reason, are easier to tap into (a partnership with a large distribution channel, a targeted segment that uses a single channel etc.) are viable GTM plans.

–          Though this item is last it is probably the most common one – Many of the startups presented a nice feature,  that, if successful, can be replicated in a matter of days by the incumbents, but definitely not a product or a service. Again, we are overwhelmed by new apps and online services in every given day and we spend maybe a minute testing the ones that we think bring us true value. Anything that saves significant amounts of time or money, for example, is included in that category for most people. Without mentioning specific companies that launched at DEMO, another app that allows you to manipulate pictures or meet new people or even give you recommendations about products in a niche market, are nice features within Yelp or Facebook, but rarely survive as a standalone product. The barriers to replicating such features are low and, unless there is some technology behind it, would serve as a nice feature within an existing service.

A New Breeze

To finish this post, I would like to mention two sectors in which are starting to show some nice traction: Health and education. Zero2one presented Lumoback, an app that helps us keep our back health. MeMeTales, presented a tablet app that helps us drive our kids to read & enjoy books (and who wouldn’t pay a couple of bucks so his kids would love to read).

That’s all for today folks.

Next week I’ll talk some more about the presentation styles of some of the participants. Stay tuned !

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About shanishoham

After 14 years of General Management and incubating/scaling new businesses & organizations for enterprises (established a $55M mobile business and a $100M/400 employees global division), I became an investor Today I’m a board member/mentor with 5 incubators & micro-VCs and involved with many other private & public incubators around the world. I also founded a VC firm named 2020 and I'm a member with a number of angel groups so i get to see & work with many startups, innovation centers and other parties across the ecosystem. I’m an alumnus of the Stanford Graduate School of business - Sloan Master in Management program, a 10 months intensive program for 57 carefully selected experienced Executives and leaders from all around the world.

4 comments

  1. Pingback: Think Before You Pitch – DEMO US Takeaways – Part II « Shani's Business Review (SBR)

  2. Andrew

    Very interesting. Regarding the not quite ready ventures… Would it be better for the incubator/accelerator to hold presenting the demo for another 3 months while customers are sought/technology finished/product is ready for general audiences, etc?

    Just curious… Seems most want to capture the VC crown as soon as possible. I can understand why, but I can also see (from your post) how it could hurt the company. Is there a middle ground where the presentation states that open and honest up front targets and dates?

    Thanks
    Andrew

    • Andrew,

      incubators are structured programs and that works very well. With incubators that are less strict about their timeline, i’ve seen companies who just hand around there for months and years with no potential of raising money or launching/changing their business.

      Having said that, not all startups are equal and some need more time to reach certain milestones. One can always present just to create interest and start engaging with investors but if you present in forums like DEMO in front of hundreds of people, you want to make sure you’ve got the right product first and it is GA.

      The middle-ground is a trade-off between the forums you present in, your purpose and the stage you are at.

      Shani

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