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My Review on February 2011 Seattle CrowdPitch

February 17, 2011

Today, FundingUniverse (now called Lendio) held what will perhaps be the last CrowdPitch; an event which I’ve blogged about a few times in the past that allows startups to pitch their ideas in front of a live audience.  Since the company is pivoting to take on a role in business lending and minimize their involvement in equity investments, events such as CrowdPitch most likely don’t really fit in with their new direction.  This is sad because CrowdPitch has been one of my favorite entrepreneurial events.  Hopefully other events will spring up to offer a similar environment where startups can pitch their ideas in front of a panel of judges and get this sort of valuable feedback.

As usual, I’ll go through the six presenters and share my notes on what I thought of their presentations.

Community Technology Group, Inc

To be honest with you, I have almost no idea what this company does.  The presenter covered the problem, something about there being too many social networking avenues for advertisers to connect with potential customers, so quickly that I was unable to take notes and really grasp what the overall vision was.  However, this company seems to be geared around pushing targeted ads to people based on private data it has access to.  What was interesting (or scary) about this particular startup was they’re using a hardware component to connect with customers at the place of business.  For example, a restaurant or bar could have these touch-screen panels that would be Internet connected and run a Flash based application to allow customers to interact with other customers as well as social networking sites.  This would integrate with Facebook Places and Foursquare, and apparently tie into other data living on the Internet.  I guess the only way I can really grok this is to think of it as a more interactive advertising kiosk.

In my opinion, the pitch needs a lot of work to really convey what they’re doing and to illustrate the scenario that they’re going after.  What happens when I walk into a bar with one of these devices?  Can I check in?  Can I see if my friends are here?  Does it tell me about drink specials I might like based on information it’s collected about me?  I want to be painted a picture.  I also see this as a massively difficult business to get involved with, mostly because anything advertising related is extremely competitive and execution is far more important than ideas.  It’s also unclear to me whether people might want or use this, and if bars and restaurants would want this in their places of business.

Panel: The panel feedback was mostly positive (they, perhaps, understood the pitch better than I did) as well as constructive.  One panel judge questioned if this idea would actually scale, since it would require a huge sales force traveling all over the country to sell these devices to bars and restaurants, as well as deal with manufacturers to advertise their products through this advertising network.  Building a merchant pipeline is extremely difficult to do, and there needed to be a reliable way to measure the ROI on this sort of advertising vehicle.  As for the users, they really wanted to see a market demand (do people in bars want to connect with strangers?) and what exactly is the killer app for this platform?  What is the primary use case?

Though I was not too into the pitch itself, I think the company could go places if executed correctly.  But as I said before, advertising is such a huge business there’s already Internet giants that have the muscle to drown these guys if they wanted to.

Info Ark Data Technologies

Info Ark offers optical data archival by combining a carbon metal disc (M-Disc™) with a searching and indexing algorithm that allows you to quickly search the contents of that disc.  The typical scenario would be I would logon to their site, upload a bunch of data, then for $40 bucks they mail me one of these apparently indestructible discs that I can save in my underground vault.  Rather than burning my data onto DVD myself, I would then have a much more reliable media and be able to search through it very quickly.

I absolutely hated both the pitch and the idea.  I’ll start with the pitch.  The presenter was far, far too aggressive and reminded me of an insurance salesman.  He also made claims that were completely unfounded and not backed up with any data.  For example, he claimed this was a better solution than storing your data in the cloud, since it offered more reliability and would be easier to search your data.  Well, the cloud file hosting solutions I know replicate your data redundantly and can even store it in several places around the planet, ensuring not even a nuclear bomb will disrupt a single bit of your precious data.  He claimed you could only search by filename using these hosted solutions as well, something I also have a hard time believing.  Even GMail gives me fulltext searching across gigs of email in milliseconds.  He also claimed his search algorithm was the best thing since sliced bread, and was 10x faster than Oracle.  I’ve done enough DB work to know that data indexing speeds are almost impossible to reliably measure, plus any modern algorithm can easily search across gigabytes of data in a matter of milliseconds.

The reason I don’t really like the product is because I don’t see any value in it.  A searchable CD?  Big deal; if data backup is the scenario, I can restore the data and then index it in any way I feel like.  A backup or data archival solution that is truly failsafe must employ multiple strategies.  For example, I create daily backups of the KitchenPC database using Rackspace CloudFiles.  I trust them enough to know those backups are replicated and the chances of that data being wiped out is extremely minuscule.  At home, I host my KitchenPC source code on servers with RAID-5 arrays and backup to a NAS with 4 redundant hard drives.  At least weekly, I burn the super important KitchenPC data (mainly source code and a database dump) to a DVD and keep it in a fireproof safe.  If any one of these things failed, I’d still be fine.  In fact, one of the four hard drives on my NAS died a few months ago and I lost no data and it was a breeze to replace.  Perhaps some companies might find a use case for this product, but I would definitely not pay $40 bucks to backup a few gigs of data and have it mailed to me.

Panel: The panel echoed a lot of my impressions as well.  Do people really use optical storage?  There was almost no explanation of this “super fast searchable index”.  Can it index only text documents?  Can I index video or images, or embed metadata into my content?  The judge from AWS really called him on his aggressive “salesman” tactics, saying that his pitch didn’t “feel credible” to a technical audience.  His advice was to “detune some of this aggressiveness.”  Another judge pointed out a flaw with the claim that these carbon metal discs can last 100 years or more.  Even in 20 years, will there be hardware around to read optical discs?  You can’t even read a 5 ¼” disk anymore.  Will the searching software even run on future computer hardware?  With cloud storage, these would not be problems because the data would be abstracted from the physical storage medium.

Montavo

Montavo is yet another advertising startup (yes, it’s a hot space these days) that allows users to find great deals using their mobile phones.  They handle both push advertising (“You should buy our shoes”) and pull advertising (“I need shoes, where can I go around here?”).  Their main value proposition is an ability to close the loop on advertising effectiveness.  It was once said that you’ll waste 50% of your advertising budget, but you don’t know which 50% that is.  If I see a TV commercial for a website, and then go to that website, they don’t really know that I went there because of that specific TV commercial (unless they ask me, which would be annoying).  The idea behind this company is to be able to tell advertisers exactly how effective their ads are, without requiring any interaction between the customer and the store.  However, they didn’t really convince me how they could reliably do this.

From what I understand, the scenario is this: I might load up their mobile application and say “Find me a good deal on dress pants around here.”  I could browse various categories depending on what I’m shopping for, and then find a sale on pants at a local Nordstrom.  I then go to the store, and buy the pants and somehow the app notices I went to Nordstrom and their sales computer tells their backend that I bought those pants.  However, what I was unclear on is how the app really knows for sure that I walked into a Nordstrom.  I can’t even get Yelp to figure out where I am unless I pick from a list of nearby locations.  The GPS data on phones simply isn’t reliable enough to track someone down to the store level.  Perhaps they’re putting WiFi tags in these stores that the app can pick up on, but in a crowded area this could still be ambiguous.  I see no way of really doing this without the customer reporting back their purchases to the app.

The value they give these businesses is very accurate sales trends and graphs showing how effective a certain ad or sale was and how much money they’ve made based on their margins.  I can see this as being useful, but an almost impossible business to get off the ground.  This is another of what I call “chicken and egg” businesses.  Sure, the data might be valuable to the advertiser if there was enough of it; if half the people walking into your store were using this app, you might be able to mine some great data out of it.  However, users probably won’t start using this app until there’s a good deal of content available in their area, and advertisers aren’t going to “pay” for this data unless it’s statically relevant (represents a large percentage of their customers).  This is yet another business idea where step 1 is “Get everyone to use this app.”  It seems to me that I’ve heard of this idea many times, but I’ve still yet to see any attempt cross the chasm into mainstream.

Panel: One judge says there were many interesting claims, but they need to show more about what’s going on under the hood.  This was probably a reference to the same curiosity I had about how the app tracks what stores you’re going to without any user/store interaction.  The fact that this company has a patent pending should give them the freedom to provide all sorts of details about how the system works under the covers.  Like the previous advertising company, it was once again pointed out that advertising networks are extremely difficult to build and requires many people involved.  This space is exploding which means they’re competing with other very well positioned companies.  It was also pointed out that the problem doesn’t really need to be sold, people have been trying to solve this for ages; the company should focus on why they’re in the best position to execute.

Neuwaukum Industries, Inc.

This company is addressing the problem of worker fatalities on job sites.  Every year, there’s an average of 292 fatalities due to workers not being able to see around them and not being alert.  Most of these fatalities are caused by being backed into and run over my trucks that are going under 5MPH.  Their solution is to mount mirrors onto hard hats that allow the wearer to see behind them.  If adjusted correctly, this will not distract the worker from performing other tasks, but will simply widen the view of their peripheral vision that the brain already monitors subconsciously.

They already have thousands of these devices in use today, and there’s never been an accident with a worker who has been wearing one.  There’s also a UW Engineering study showing the effectiveness of this system.  They are the primary manufacturer of these devices (there was one other competing manufacturer that has since gone out of business) and they have connections to all the distributors.  Their goal is to lobby the government to make wearing these a law, and it seems they are making progress in this area.  They did claim they will be unable to meet their sales goals without these new laws.

Panel: One judge asked for more details about why their competitor went out of business.  They should have provided more detail about that, and explained why that situation doesn’t apply to them.  It was also pointed out that angel investors hate regulated industries which means they might have issues raising capital.  The idea that their business model might not be viable unless these devices were required by law was also a huge red flag, and it was suggested the company work on a way to succeed without any new laws.

SittingAround

SittingAround aims to revolutionize baby sitting in America by allowing parents to form “babysitting cooperatives”.  The problem is babysitting is expensive.  This website allows people to “trade” baby sitting duties with other parents.  The benefit of this would be that your children would be supervised by other parents (not, say, some random high school student) and also provide built in “play-dates” with other children.  One thing I liked about this company was it wasn’t trying to be a new social network.  They recognized immediately that no one wants to be “matched” or linked up with other parents on the Internet, and would rather interact with parents they already know.  However, then what does the site actually do?  From what I gathered, it would provide tools for these “babysitting cooperatives” to manage schedules and provides easy to use software for things related to these functions.  It was really unclear to me what this site would provide that people couldn’t just setup on their own using a document sharing site or a wiki.

I think the strengths of the founders are more in marketing (the presenter had a BA from Harvard in Marketing, so I trust she knows what she’s doing) which would hopefully aid in getting this sort of business off the ground.  I think it will really depend on listening to customers and being able to build a tool that they would want to pay $15/yr for.  There’s definitely a huge market for this though.  Around a quarter of parents have at least heard of babysitting cooperatives and two thirds of those asked were interested in this idea.  The marketing strategy was also interesting.  Any blog that writes about them gets a year free (I guess this includes me now?) and they also wrote a book on the subject which ties into their website.  There’s 10 million families in this market, and they seek to charge $15/yr for their website.  They’re looking for $200,000 in funding; 60% will be used for marketing, 30% for development, and 10% for legal and administrative costs.

I thought this pitch was the best from the group, it was well structured and organized.  The presenter was friendly and likable.  I wish she would have gone into more detail about the actual features of the site and what value they’re giving to parents.  I’d have liked to see a small demo or at least some screen captures of their site.  Right now, their site SittingAround.com appears to be a place holder or a private beta.

Panel: One judge wanted to see more data around whether parents are really interested in this model, and wanted to see more use cases for how this site could really be used.  Their plan seems to be starting local and then building out nationally later this year, which is extremely aggressive.  Doing local, then multi-local, then national might be a more realistic goal.  I think overall, the judges wanted to see more information on the product and what it actually provides as a service.

TonightsOutfit

Well, to be fair I ran into the presenter at the launch party for OnCompare a week or so ago so I already had a lot more details about the company than probably anyone else in the room.  Tonight’s Outfit is attempting to tackle the problem of what to wear.  People that are trying to decide what to wear (for a date, job interview, going to a club, etc) could post several photos of various outfits on Facebook and have their friends vote on which one they like the best.  Users can also just browse the site if they like “looking at people” and vote on what they like the best as well.

They have some interesting ideas on how to monetize this, such as providing links to the apparel companies or stores, and also providing sponsored polls with professional models.  There could also be consulting services to help people improve their wardrobe or learn how to dress better.  Having used the site a bit myself, I do like the idea since I know it’s pretty addictive to look at strangers and vote on what they’re wearing (same reason HotOrNot was such an overnight success).  However, to me this just seems like a trendy website with a monetization model hacked onto it with absolutely no research showing this site could make any money at all.  These guys might build some trendy new site that gets a million hits, but I have absolutely no reason to trust them to come up with a monetization model that would work.  At the very least, I think they’ll create a fun site that a lot of people will waste a lot of time on.

Panel: The pitch didn’t really come across as well put together.  Since the pitch is only 5 minutes, there’s no reason why the presenter can’t practice the pitch over and over again for an hour until it really flows smoothly.  The slide deck did have a screen shot of the site, which was criticized for needing quite a bit of core template work.  It was also pointed out that the presenter put a lot of the interesting data too far back in the slide deck and should start with these sorts of interesting numbers and perhaps a screen shot of the site.  Another judge mirrored my thoughts exactly, saying this is a fun idea but it wasn’t clear there’s a business here.  He did point out that there’s absolutely nothing wrong with building a fun product and seeing where it takes you.  A better route might be to convince potential investors that the team is capable of building an awesome product, and not focusing on the business itself so much.

Results

My money went to SittingAround, since I thought the pitch was the best and I trusted the team’s marketing background to really develop a product like that.  I also gave some money to TonightsOutfit just because I’ve actually used the site a bit and think they have a shot at being some random Internet craze (though I doubt they’ll strike marketing deals without bringing in some experts.)

The winner turned out to be SittingAround, which I’d have to agree was the best overall pitch even though it’s not a business idea I can completely connect with since I’m not a parent.

Hopefully there will be more CrowdPitch events, or other events like it in the future, and I look forward to blogging about them too.  Thanks for reading!

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From → Business

One Comment
  1. Great to see you there! Love your detailed review. Thanks a lot for sharing.

    As an FYI – we are doing many CrowdPitch events all around the country and will be working to come back to Seattle with the right partners. Again, great to see you and glad you like it. Look forward to next time.

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