Berberian's Blog

Six-fingered Glove

Sometimes an idea fits like a six-fingered glove. It covers your hand but something is odd about it. You like it, it keeps your hand warm, it looks good at certain angles, but it has this extra finger.

I've been working on a couple of ideas for a few months. While people may say, "Cool" little do they know I've been struggling with making these ideas fit. As a storyteller (that's what you are when you're in raising money mode), I always present the angle that only shows the five fingers. Only I know about the dastardly, sixth, troublesome finger.

As I look at the companies that hit home runs, their ideas all start tight and just get better. I think it is hard lopping of fingers post launch; it's much easier to go through the sometimes-agonizing process of refinement before you really commit to an idea. That's what I'm doing now; and I'll continue doing it until I lose patience or get it right.

Most people don't know our history at Raindance, but we started out as Intellistat Media Research. We were building a company to compete with Nielsen Media – we were building a better way to track what people watch on TV. That was a six fingered glove that after eight months of refinement we decided it was time to move on to another idea. We knew very early on that we had several huge issues. Had we really thought about it, we had enough information to kill it months earlier, but we already had employees working on the concept and we just figured it would get better. It didn't.

In my experience, if I don't believe the idea is just right, then I have to keep refining before really committing. Even if I believe in an idea, it can still fail, but at least I'll think I'm wearing a nice, good looking, five-fingered glove.

The 10K from hell

Today was the Bolder Boulder.  On Friday night I started getting sick – one of those sinus infections that turns your head into a giant throbbing toe.  By Saturday I could only stare at the TV – but I was determined that if I watched enough TV, slept and took lots of meds I’d be better for the big 10K.

This morning I woke up at 6:14am – my head was throbbing but I wasn’t going to let Renee know – she would force me not to run; plus the entire family was excited to go do this race.

You know you shouldn’t be running when you start off your day with 3 extra strength Tylenol, 3 Sudafeb, a whiff of Afrin nose spray, a shot of Robitussin, and a Halls cough drop.  T-shirt, shorts, shoes, bib – I was ready to do this thing.

I ran with my brother-in-law (he had a spinal fusion 6 months ago so he wasn’t going anywhere fast) – I finished in 1 hour 13 minutes +/- (actually plus) 5 minutes.  Every second was agonizing.

My knee didn’t hurt at all – guess all I needed was something to distract me.  My head is still throbbing – I’d go to bed but it hurts too much to lay-down.  Well I did it.

Kick Ass?

So I'm catching up on some blogs and I notice a new post from my daughter (she's 12). She doesn't talk like that at home. Also notice the picture on her page – that's me cropped out. Funny stuff.

The Big 10K

Monday is the Bolder Boulder, the nation's largest 10k which every runner is timed (2^nd largest in just sheer numbers). I used to run this race almost every year before my accident in 2003. Anyhow, I signed up to run this year – I expect it will take over 80 minutes. I've increased my running to 40 minutes with minor knee pain. My challenge will be to find the perfect pace to keep the knee happy and functioning. I have this odd condition when it comes to running without a kneecap – if I run too slow the knee acts up really quickly; if I run too fast the knee is fine but I can't slow down without the knee locking up (I just can keep up a fast pace for that long). In both cases when I stop I can barely walk. It's kinda like that Kaos agent (I think Leadside) in the old Get Smart series – Maxwell Smart was looking for an agent that couldn't walk, so he naturally thought this evil doer would be confined to a wheelchair – turns out the man couldn't walk but he could run. The final scene: the Kaos agent runs into the building, sits in his wheelchair and is apprehended by Smart. On Monday, I hope I don't turn into Leadside.

I’m Stupid – I’m Lucky – I’m Alive

Anyone who knows me, knows that I fly. I have a small single engine airplane made Cirrus Design (model SR-22 if you care). It's a safe plane – it has a parachute and all the electronics to let you know where you are and what's going on around you. I love it.

I like to think I'm a conservative pilot – probably average in skills, but that mainly comes with experience. I have about 600 hours flying time and I am certified to fly in the clouds (IFR rating for you pilot types). Pilots and people die in planes primarily due to pilot error. Pilots from time to time make bad decisions. For example they decide to fly when they're too tired, or penetrate bad weather, they attempt to control the airplane beyond its aerodynamic capabilities – a whole host of bad decisions can lead to death. Typically it is three bad decisions in a row that end a life: they decide to fly when tired, then they decide to fly into questionable weather, then they try to do a 6G turn to get them out of a thunderstorm they just flew in!

Today I made three bad decisions and lived. I never thought I could be so stupid – every crash report I read (and I read a lot of them to keep be alert) I say to myself "That dude was stupid, I would never have made that decision – what was he thinking?"

In Colorado we don't get the type of weather that you can practice flying in the clouds – our clouds are either thunderstorms (really bad for flying) or contain ice (really, really bad for flying – the worst is volcanic ash BTW). Well today I take off and it is beautiful, but as I head north I see a cloud layer below us that is socking in the few airports I use to practice landings. I say to myself, "Guess I won't be doing any practice landings today." You see I'm trained to fly into clouds but I don't feel I'm up to the task – it's been a while since I had actual "in the cloud" experience. I do practice flying "as if I'm in the clouds" a lot, but it's not the same. The real deal is much more – well real. To simulate flying in the clouds you wear this visor that blocks your vision so you are forced to fly on instruments. I haven't done that for about 3 weeks. That said, I was completely legal and current when I went flying this morning – but that really doesn't matter. I like to fly about once a week to keep my skills fresh and I know when I'm rusty. Today I was rusty.

Well as I get up there I'm thinking – "It's so rare to get clouds in Colorado that aren't deadly – too bad I'm not with my instructor; we could fly around a bit and I could get some real experience." I had a safety pilot with me today – someone to say "Dude you're about to…" but he was less experienced than me so I can't blame him. We check the weather at the surface and realize the clouds go almost to the ground – no way to do an actual approach (that's flying through the clouds, descending to the airport using instruments and radio guidance, until you break out, see the runway and land). The minimum cloud ceiling for this airport is 200 feet – that's flying down until you are 200 feet above the airport, if you break out of the clouds and see the runway you can land. If you can't see the runway, you do what is called a missed approach and climb back up to say 2000 feet above the ground and enter a holding pattern. I know this is all technical but if I don't explain it you non flying types you won't get it.

Being a conservative pilot I have told myself many times, "I will NEVER attempt a landing when the ceiling is lower than 1000 feet." Why? I don't have enough experience and losing a couple of hundred feet can happen in seconds – if you're too close to the ground and lose your bearing for a second – you die!

Well here we are flying and my safety pilot says, "Want to get some actuals – how about descending and holding in the clouds?" I figure why not – we'll be plenty high, it's such a rare opportunity for some solid practice, plus if I get vertigo I can just pop up a tad and be out of the clouds. We get a clearance to descend and do a hold – but guess what, we're too high – the clouds are lower than we thought. I offer the wise suggestion, "Well why not just shoot the approach, I know we can't make it so we'll just go missed." Mistake #1. You see my personal limit is to NEVER attempt a landing below a 1000 foot ceiling – I figured I wasn't landing; I wasn't thinking a missed approach was simply a subset of an attempted landing – I should have said NO. But I didn't.

When I do practice flying by instruments, I realize it takes me a while to shake off the cobwebs before I regain my proficiency. Flying an approach in clouds requires all of your skills to be finely honed. Today I realized that my skills were rusty so I figured I'd use the autopilot for this first attempt; just so I don't get overwhelmed. If all goes well I would try another approach by hand. I also decide that I will not descend all the way to 200 feet above ground because it's dangerous, so I planned to go missed at 600 feet above the ground. Once again below my personal limit.

The autopilot was a good decision until I turned it off. Why did I turn it off; well that's what I always do when I do practice landings. Once you get within a certain distance from the airport you turn off the autopilot and land the plane by hand. So I did – but I wasn't landing. I start hand flying the plane in the clouds with plenty of cobwebs impeding my skills. Mistake #2.

Everything is going fine – I'm focusing on keeping the plane level and following my course until it is time to climb out. My plane is setup to land, flaps extended, lights on, etc… because that is what you do when you fly an approach. When you go missed and decide to climb out, you remove your flaps, give full throttle and begin your climb. When you take out your flaps, the plane will sink without adding power and pulling up on the yoke. Well about this time I decide I had enough and I wanted to go back to the happy land of daylight (elapsed time is about 90 seconds from when I entered the clouds). I take out the flaps, but then I realized that I'm not on course so I immediately turn the plane. Unfortunately this distracted me for a second and I forgot to add power! Mistake #3.

About 7 seconds later I look at my vertical speed gauge and notice I'm descending at 1000 feet per minute – 30 seconds from impact. I jam the power pull up and yelled "Oh Shit!" My safety pilot is still trying to process everything – we begin to climb and 10 seconds later we are up above the clouds. He then says, "What?" I'm totally shaken – I never thought I could make so many stupid decisions so quickly. I regain my composure and continue flying in the clear.

The only thing that saved me was realizing that I made a bad decision about two minutes into the little practice approach. Had I gotten confused for a few more seconds I wouldn't be writing this post.

Why am I sharing this – because writing about it and putting it out in the world will help crystallize the lesson I learned today. If I keep it to myself, I may forget it. Note to self, "Don't forget today – you can be stupid."

What the hell was I thinking?

SMS Social Networks – I Want to Get It, but Don’t

Text messaging or SMS is growing like crazy in the US. In Europe and Asia text messaging usage is at what is believed to be maximum penetration of 70%+. In the US it was only 17% just a couple of years ago, and I'm sure it's way up now; the numbers are moving daily. Text messaging took off in Europe and Asia primarily as a way to reduce cell phone bills – it was cheaper to send a 10 cents message rather than phone the person. SMS is limited to around 160 characters (depends on your character set – 70 for non western alphabets) and is sent over the signaling part of the telephony network – the part of the voice network that is used to direct your phone call to the desired recipient. Since it uses the phone network's "brain" access to it is tightly controlled by the carriers. Sending text messages always take the lowest priority over signaling messages – you would go crazy if it took 30 seconds to setup a phone call but text messages can sometimes take minutes to be delivered. Anyhow I say all this because I don't get text social networks like twitter. It's cool but it's not free to execute, so how are they going to make money – advertising? free to pay? Hey I'm all about build a community of a million people and then figure out how to monetize it (advertising is the most common solution) but that all supposes that the cost to add an additional user or deliver the services is miniscule compared to the number of impressions you are making. The concept here is scale. Text messaging doesn't scale in the same way as web applications. Here's why:

Text messaging is a closed network controlled by the carriers – as a result it is not free. How much does it cost? That depends on usage. I got a quote for 4 cents a message delivering around 500K+ messages a month. Granted that was not directly from the carrier or an aggregator (companies that interconnect carriers to hand off messages like the old days of the Internet – they make less than $0.005 per message handoff), it was from an application developer. That 4 cents was for MT messages (messages that terminate on the handset) - the cost to send messages inbound to a service company they waived (MO – mobile originated). Now let's assume some good negotiating skills and extremely high volume levels, I think it is reasonable to assume that you could get your costs done to maybe $0.0075 MT and $0.0025 MO or 1 cent for a two way exchange. You might be able to go lower but then you are in the realm of becoming an aggregator and your volume would be north of 50 million messages a month (a medium sized customer for a carrier ~ $500K / month). If you do get lower it's not going to be by much – some carriers still need to pay hand off fees to deliver a message to other networks.

OK so let's assume an advertising model – remember there are only 160 characters allowed per message. To deliver an ad you need two messages, one for the service result and one for the ad – that is $0.0175 to do that exchange. Multiply that by 1000 = $17.50 and that is what your CPM must be to break even. A $17.50 CPM is huge and to get that you need to be delivering some very targeted messages – seems unrealistic or very hard. You may ask "What about delivering a rich media message like an MMS." Forgetaboutit! The cost for doing one of those in measured in dimes and cross network connectivity to a service provider is not really available yet.

So why does twitter work. Well for now they are burning cash but not that much – they don't have tremendous volume (80K users from www.compete.com). They may start charging a fee using premium SMS (a service that passes the cost onto the user and shows up on your cell bill – like buying a ringtone) but I think users will balk at such a move. Their only hope is to sell to someone like Google who doesn't care about how to make money on this service. The carriers love premium SMS – they want all third party developers to go this route. Carriers take a commission for delivering your content to the end user and taking on the responsibility of collecting payment – they standard rate is around 50%! So delivering you a joke using premium SMS costs you the mobile user $0.99 – the carriers take $0.50, the aggregators get about a penny, the application providers gets 12 cents and the content providers get $0.36. Same math for ringtones, wallpapers and games. So see how this plays out – as a carrier to you want to drive providers to create premium SMS programs – the stuff like twitter is just noise for them. Companies like Google that do a free SMS information service – simply lose money to promote their brand (they may get it the SMS stuff for free as part of a total telecom deal with a carrier like Verizon but I don't think so). And even companies like Google you're not really sure what they are up to – they bought Dodgeball and let it wither on the vine.

So how does this all play out – companies that just do social text messaging go away, sell to the big boys before they run out of cash, start charging for their service that no one will really want to pay for, or convince advertisers to pay $20 CPM for 160 characters. High risk stuff.

The Kinetics 5K

Last night I asked my daughter, Marlo, if she wanted to run the 5K Kinetics race – she said yes but she didn't want me to hold her back (you know because she is young and healthy and I am old and lame). So this morning we woke up at 6:30 (uggg) and trekked over to the registration desk and starting line at the Boulder Reservoir. It was cold when we got there but warmed up over the day. The race started at 9am sharp and after my first two steps I realized I shouldn't be wearing my gloves, fleece jacket and beanie. So I managed to jam the gloves and hat into the jacket pocket and tie the jacket around my waist all without tripping over the other 999 runners. I was, however, now thoroughly uncomfortable having all that stuff bouncing around my waist (also jammed in the jacket were my wallet, cell phone and keys). Marlo decided to run ahead – she was certain she was going to beat the one knee cap man. About a mile into the run I see Marlo, huffing and puffin and I slowly catch up to her (all kids always jet out and then regret their decision). Now I had the upper hand – but she hung with me and 32 minutes and 11 seconds later we finished. No pain in the knee – Marlo did great. Not too may 12 year olds like to run in these races. Next up the Bolder Boulder (distance: 10K might be a problem).

Spinning

Yes I like spinning classes – but that is not what this is about.

We've been at it now for just about 3 months and we've made some steady progress. We've had several focus groups and zeroed in our market – pre college teenage girls that are active users of social network web sites. This is a huge accomplishment; at Raindance I don't think we ever really figured this out. We decided that the manufacturing of these has to be made part in China and part in the US – and we're still not there just yet. The formula still needs work – we have to lower the freezing temperature of the bottle so we can ship these in the winter – and my one semester as a chemistry major isn't really helping. We've created a dozen plus colors that are all very cool and much better than the original stuff I made when I was a kid. There seems to be some early buzz on the idea – we've stopped having focus groups because it feels like we might be peaking early. We started to hear of requests on how to get a bottle from people outside of our control group – this is cool but it's too early to promote Spiderman 4 – we need to know what the hell we're doing first.

The spinning part is trying to write down our strategy in a fashion that is compelling, simple and believable. I have seven executive summaries all talking about this business in some different way. They all have a common theme – a bottle tied to an online experience. So what is that online experience? Well maybe version eight we'll get it right. For now I'm afraid my Word might break soon with all the "file new" action – I feel like I'm back in college writing term papers. One thing is for certain – this gig is starting to feel real and if done right it can be huge.