On the list of entrepreneurs who have built up a great track record of envisioning the digital future (e.g., Jeff Bezos, etc.) I think you’d have to include Netflix CEO, Reed Hastings.   That’s why it was great reading Om Malik’s recent post about his interview with Reed about just that future.  In short, the future is more on-demand services than ever.

 Om starts the post talking about Netflix’s impressive subscriber growth from 14 million to 22 million in the last year.  He goes on to mention the company’s focus on big data in order to improve user interaction. 

 Hastings believes that the broadband era of the Internet has just begun and that experiments such as the 1Gbps Google Access Fiber project in Kansas will be a great showcase of what will be possible in the future. He also likes the way countries such as Australia, Brazil and Costa Rica have made fiber broadband to the home a top priority. 

 Finally, he said that, in about 10 years, the predominant way to watch video will be on-demand.  I think that time is actually already here for today’s youth, many of who don’t have the patience to wait to see what broadcast television decides to transmit.   He gave an interesting vision of television and televisions sets comparable to the current state of smart mobile phone platforms such as the iphone.

 It’s always interesting to gaze into the future, but it’s important for me to remind myself that more times than not, these visions turn out to be wrong.  Indeed, there are really tough issues in terms of economic stability, scarcer natural resources and others that are clouds on the horizon.

 Nevertheless, it’s definitely my view that we are much more at the beginning of a deep transformation of the way business is transacted and the way society interacts with each other.  That makes for many challenges, but also much opportunity for creating new, viable “digitally enhanced” business models and that’s one of the reasons we’re so passionate about this environment and excited about its possibilities. 

With all the noise going around about the Groupon IPO and Google Deals poping up, you’ve got to wonder how big can this space get? According to a recently released report by Local Offer Network, a daily deal aggregator, $1.1 billion in revenues were generated in the US last year from group buying.  The company estimates $2.7 billion in revenue for 2011 representing a 138 percent growth rate.  According to the report, there are 322 group-buying sites in the U.S. with 117 of these created only in the first quarter of 2011. What gives?

As author, Clay Shirky, has stated, “Group action just got easier.”  I believe that group-buying is a subset of a trend to take advantage of the fact that the tools currently exist (and are quite accessible) to organize groups of people like never before.  Group buying sites organize take advantage of this fact in order to quickly amass a large client base for product and service businesses. 

 It’s interesting to note how the industry leader, Groupon, with yearly world-wide revenues of US $4 billion, got started.  The company’s founders set out to change the world by enabling “group action” for specific causes and ideas promoted.  Kickstart does this today for creative projects.   The daily deal offering was started in Chicago practically as a side project to keep the original project going and quickly exploded in growth in terms of members, but also in terms of revenues.

Hence, when we consider the potential of group-buying, I believe it certainly has more runway left to grow before people start getting tired of this.  However, I believe this is only one instantiation of a larger disruption taking place where getting groups of people with similar beliefs, ideas or interests together can create new value and continue to change the world.

This Wednesday June 15^th, the seventh Founder Showcase was held in San Francisco.  This year, Mark Shuster, General Partner at VC Firm Greylock Partners, and Naval XXX, founder of Angelist, gave the two keynote presentations packed with valuable advice for entrepreneurs including suggestions to raise money if they can (even if they don’t need it), to be prepared for the moment when funding dries up, to focus on traction and to expand your network using tools such as Angelist.

 The winner of the showcase was a company called Kaggle focused on offering prizes to analytics professionals for solving tough business problems.  The company has already gained traction enlisting thousands of such professionals and solving a handful of complicated business problems.  The company beat out a number of contenders including an iPhone app called Nexercise offering points for excersing. 

 All in all, the event, run by Adeo Ressi, was quite a success and offered excellent networking opportunities for investors and entrepreneurs alike.  A topic that came up during Mark Shuster’s presentation (and written about in previous posts here) was whether or not we’re in a bubble and his conclusion is “duh” of course. J He mentioned a number of transactions (e.g., Color) with ridiculously high valuations. 

 Whether this constitutes a bubble (or isolated overvaluations) could be debated, but that debate would probably miss the main point that Shuster and XXX were making.  The opportunities available to digital entrepreneurs interested in creating real companies that deliver real value to their customers is not only large, but requires less capital than ever before and this event was a testament to this reality. 

Well,  I’m back from an extremely productive and fun trip to South by Southwest (SXSW), New York and other places. Incredibly, SXSW Interactive had 40% more attendees this year than last with almost 20k people. For those who didn’t go, SxSW is not just about awesome bbq and parties(although, I must admit I had the best). I was able to meet some impressive entrepreneurs and quite a few who were interested in augmenting their current programming team with the right partner just like one of our Austin based client has done for a while now.  We’ll see where things go, but I have a good feeling about some of these opportunities.

There were also some great panels.  In particular, I enjoyed the panels on lean startups by Steve Blank and Eric Ries.  Other notable news was that mobile app, GroupMe, came out on top in group messaging, winning the breakout award and beating Grouped(in). 

Also, there was a new competition called the Startup Bus, which had a number of developers making the trip from different cities in three days all the way to Austin.  During the trip, these entrepreneurs needed to create their new startup and start to market it.  Some of the new apps that came out of this initiative were WalkIn, which takes care of giving you a ticket number while waiting at a restaurant and TripMedi, a site with information about different medical tourism destinations.

This was also the first year that SXSW was hosting a multi-country Tech Summit where I participated as a panelist.  It was an extremely rewarding experience.  There were sessions for different countries (the Brazil session was particularly well attended) in Latin America.  It’s satisfying to see the growing awareness about the talent that exists globally (including in Colombia).

When thinking about the impact of digital technologies, I have the bad habit of focusing on what’s happened in vertical industries such as in music, media and retail.  In the process, I forget about how disruptive these new tools are within social and political spheres, but recent events in Egypt and the Middle East have served to remind me of this fact. 

All of this reminds me about what Clay Shirky, author of Here Comes Everybody, says when he states that “group action just got easier.”  This type of affirmation is more general and includes any area of life where groups can be coordinated (not just business).   As TechCrunch mentioned, one Egyptian father was so elated at what he perceived as the power of these new social media tools to help bring about change that he named his newborn daughter, “Facebook!”

What’s clear is that the world hasn’t known a time when global communication has been so easy, inexpensive and varied.  Dropping this capability into our laps so quickly doesn’t mean that the impact is immediately clear.  In business, every day sees copy cat players, but also completely new businesses that have found yet another way to reinvent some aspect of their industry.

More and more, business people are developing new ideas and are anxious to implement these.  Sometimes, they have strong technical talent to accompany them and other times they choose to work with companies such as ours.  Either way, as the saying goes, we are living in “interesting” times.

With the announcement last week that Borders, the second biggest bookstore chain, has filed for bankruptcy, this is yet another company couldn’t quite seem to cross the chasm, to borrow a phrase from Geoffrey Moore.  Following a long line of companies such as Blockbuster, Toys R Us and others, this seems to be one more case of companies within industries that are being transformed by new or existing players who incorporate digital tools into their business model and disrupt others in the process.

Companies such as Amazon (in the case of book selling), Netflix, Apple (with iTunes) and others are prescient enough to understand that, aside from selling digital tools, there are big returns available for companies, which employ these tools and create a disruptive business model in an established industry.  The opportunity is so big that Mark Zuckerberg, Jeff Bezos and others established a US $250 million fund to invest in startups that do just that.  As Zuckerberg said, “we think every industry needs to be rethought.”

Today, startups such as Airbnb, Square and others have been founded by people with strong technical skills (in addition to business people).  Nevertheless, as we’ve seen here at Koombea, the opportunity is so interesting that business people with unique insight about an industry or an opportunity are able to develop a disruptive action plan and execute it.  Their lack of a technical co-founder need not be an impediment.

Indeed, we ascribe much of our recent growth as a company to the fact that the current opportunity to redefine industry competitive dynamics is so large that even founders with little technical knowledge can be well-served by a team member such as Koombea, which has even served as a virtual CTO and virtual Business Development partner at times. The result are founding teams which can quickly start validating their idea and gain traction while waiting to hire a full time CTO or technical team.

Certainly, there are advantages to having a technical person on the founding team. Nevertheless, we’ve seen cases where it may make more sense for the founding team to work with a company such as Koombea and hit the ground running fast through their existing process and infrastructure. 

We’re very excited to congratulate Badgeville for winning the Audience Choice award at this year’s TechCrunch Disrupt.

Badgeville, a Koombea client, uses “game-based techniques to create highly engaging web experiences.” The company was one of seven startups to make the finals for the Disrupt grand prize (which ultimately went to Qwiki). Narrowed down from a field of 27, the finalists had to present their project and answer questions from a panel of judges. Badgeville received accolades from the judges for its concept, profitability and execution.

Earning the Audience Choice award is a fantastic honor. We extend hearty congratulations to Badgeville and look forward to what the future holds for this company.

 For more on Badgeville, check out this article at TechCrunch. 

One of the core concepts of a lean startup is the idea of Minimum Viable Product (MVP).  The idea behind Minimum Viable Product is to build just enough of the core of your product that you can get it to users to begin getting feedback—maybe even get some of them to pay you for it.

But a lot of startups have a hard time wrapping their heads around MVP.  They come to the table with a great idea and lots of thoughts on all of the features it needs to be AWESOME and they want to build everything.  As a result, it takes forever to launch.  And if it takes forever to launch, it becomes increasingly difficult to get feedback from users on what they really need from your product.

Another difficulty is deciding what features to cut.  Thinking about your MVP challenges entrepreneurs to boil their product down to the very essence of what it needs to do and then do that, and no more.  In fact, sometimes your minimum viable product won’t be a product at all.

I was at a startup dinner one night and at our table was the CEO of an enterprise software company*.  He told the story about a feature they were thinking about launching.  Instead of building it and then launching it, they simply added a link to the proposed feature in the existing product that took users to a form that asked users what they’d like to see in the feature.  It took them about 10 minutes to set up and they collected some great feedback about how to build the feature.  They launched a MVP that wasn’t even a product and got invaluable feedback that informed their product decisions moving forward.

It can be very difficult to look at a feature and determine whether it’s core.  To do this, you need to be talking to your customers, trying things out, and moving forward in small incremental steps.

There’s a great list of 10 Examples of Minimum Viable Product up over on Venture Hacks that provides some real world case studies about how real companies have developed MVPs.  Hopefully it will give you a sense of how to really cut your product down to the core features, even if that core isn’t a feature at all.

Have you built a MVP?  What was your experience?  What was the hardest part about defining what your MVP would be?  Share your thoughts in the comments.

*One of the rules of the dinner was that everything was off the record, so I’m being intentionally vague about the who and what.  But it’s a true story.  Trust me on this.

The other day, we had a potential client ask us to sign an NDA.  We declined.  And naturally, we didn’t get the business.  The experience led us to an internal discussion about NDAs which in turn led to a discussion on Twitter about NDAs and there was no consensus.  The question posed was, “If a potential client wants you to sign an NDA before telling you about their job, would you sign it?”

Here is our reasoning for saying “no thanks.”

We work on lots of projects for lots of clients.  Along the way, we learn things about their business models, their software, and their ideas.  We also have a bunch of ideas of our own that we’re working on, some public (see the Purple People Collective), some not.  Through our interactions with our clients and our own internal projects, we gain experience that benefits our future clients.  And each of our current clients benefits from the experience we’ve gained from others.

Imagine this hypothetical scenario.  Pretend we’re working on a project for a client who is revolutionizing the way that pet food is sold on the internet.  Now imagine a new potential client comes and asks us to sign an NDA.  We sign it.  They then proceed to tell us about this revolutionary new way they’re going to sell pet food over the internet.  Turns out, some of their ideas are the same ones that our current client has.  Where did the ideas come from?  Did we steal anything?  Did we violate the NDA?  It gets murky.

Big Cos usually have policies on unsolicited ideas.  They don’t accept them.  The reasoning is that they’re working on lots of stuff that nobody knows about.  Maybe even your idea.  If you send Apple an idea for a new computer that has a giant wheel instead of a keyboard, they could very well be working on something similar already.  Or planning to work on it.  Or having discussions about it.  Or brainstorming it.  Why open themselves up to future lawsuits over the idea?

When we opened up the discussion on Twitter, we did a (very small) Twitter Poll asking for people’s opinions on signing an NDA before talking to a potential client.  The results were split.  Some people said they would absolutely sign an NDA and didn’t see a downside.  Some said they’d never do it under any circumstance.  Some said, “It depends.”

I think the best compromise came from Mark McLeod (@startupcfo), a startup veteran and CFO of Tungle, in his twitter reply:  “Don’t sign.  You should not give up rights unless you are getting something known in return.  Tell them to say what they can without [giving up more than they want too].”

We believe that trust with our clients is of vital importance.  Since a big part of our business is ideas, we need to weigh that very carefully against how we approach new ideas.  We will not steal your idea.  We will not give away your secrets.  If we screw you, we know you’ll talk about it, blog about it, tweet about it, and stalk us with ALL CAPS COMMENTS on our blog.  That’s not good for our business, so we make sure it doesn’t happen.

That being said, we’re more than happy to sign a FriendDA.

Take the poll here, and let us know your thoughts on NDAs in the comments.