Portland Startup Observations Through the SplashCast Lens

March 27, 2010

I agreed to participate on an Oregon Entrepreneurs Network panel discussing the demise of my old company, SplashCast (SplashCast – What Happened?).  This morning I received a reminder email and thought that I should do a bit of prep work. As my homework I created an advice list (of sorts) for entrepreneurs in Portland. 

Here’s my list. It’s a bit loose and in no particular order.

1. In Portland, bootstrapping should be considered financing option #1. When it comes to financing your company, consider bootstrapping options first.  Very simply, it remains quite difficult to raise money in Portland (relative to Seattle, Bay Area and LA).  There has been a lot of discussion about the reasons (which gets a bit tiresome).  The reality is that it’s relatively more difficult here.

Bootstrapping usually means moving more slowly, but raising money takes tons of time and focus too.  Furthermore, the cost of launching a new product continues to decrease.  in 2010, a very small team can do a lot.

At SplashCast, we really couldn’t bootstrap, so we had to be creative.  See #3, below.

2. Start small – Target a niche market with greater potential. I very much like what Urban Airship is doing (I’m still trying to get the name…).  They are going after a niche market (making it easier for iPhone app developers to add features such as push notifications).   It’s a great revenue generating foothold opportunity.  Hopefully, the company can leverage its early success and move into higher potential areas.

At SplashCast, relatively speaking, we swung for the fence.  This wasn’t necessarily a bad decision, but we could have focused on providing marketing services, much like Portland startup Stepchange did.  At one point Stepchange and SplashCast were fairly similar companies.  Stepchange focused on helping marketers navigate the social networks while SplashCast focused on creating a media company.  Today, Stepchange is alive and thriving (not to mention has hired one of my favorite SplashCast colleagues, Kim Ramage).

In summary, in Portland, with our relative lack of resources, starting with a smaller opportunity that can be parlayed into a larger one, is a wise approach.  (In this context, Phil Knight selling Blue Ribbon brand shoes from his car trunk comes to mind.)

Who needs an exit strategy anyway?

3. If you do have to raise money in Portland, get creative. Of course, not every business can be bootstrapped.  At SplashCast, we were successful in raising a fairly large amount of money by Portland standards.  However, we actually never raised a true venture round.  Rather, we raised money from a very wide range of angel investors.  Additionally, we traveled clear to Sydney, Australia to close the largest piece of our financing (here’s a picture I took of CEO Mike Berkley on the beach in Sydney).  If you can’t the the money in Portland, or the United States…go to Australia.  We had to be creative.

Highly Adaptable SplashCast Employee

4.  Keep adapting and changing. SplashCast was very good at this.  Very good.  We initially launched with a product focused on user generated content, then moved into creating applications for music labels, later created branded applications for several top consumer brands, and finally focused on our Social TV product in partnership with Hulu.com.  There were several distinct product families all built on the same underlying video syndication technology.  Although we hit the financial wall before we found profitability, I’m very proud of our ability to change.

The SplashCast team was always up to the challenge.  Hiring team members who have been in situations requiring rapid change (not to mention lots of ambiguity) is key. Hint: a great area for interview questions.

Shopping for LA office space

5.  This is a tough one, but be certain you are ready before pulling the trigger on hiring expensive sales people. We hired a great VP of sales based in LA.  I would welcome the chance to work with again. However, we probably weren’t truly ready for what he brought to the table.  Additionally, he was, by far, the highest paid employee in the company.  We simply had too many unsolved issues in terms of product, pricing and overall approach.  We learned a lot by working with him, but we probably could have figured much of this out on our own (although it would have taken longer).   Moving from business development to true sales mode requires nailing down the basic business parameters.

Even better is to launch a business built on marketing and/or partnerships, versus direct sales (in terms of being successful in Portland).

SplashCast employee Mark Richmond recharges

6.  In Portland, it might make sense to focus on business to business rather than business to consumer. The majority of the more recent crop of Portland based startups getting traction are focused on B2B business models.  For example, ShopIgniter, JanRain, Monsoon, Urban Airship, Jive Software, Iovation and Tripwire are all B2B.  It would seem that, in Portland, relatively down to earth B2B efforts have somewhat better odds.  Sleepy is good.

At SplashCast, our success was hinged on our ability to create a very large audience (either virally or through ad buys).  We were fairly successful in doing so, but we needed a lot more. It’s difficult for a small company to create a massive audience.

As a fan of consumer focused businesses, I’d love to see more B2C companies like Second Porch in Portland.  In playing the odds, however, B2B is probably the better bet in our town.  Unfortunately, SplashCast shares its story with many B2C companies like Shizzow, Platial, etc.

SplashCast application built for Hillary Clinton campaign

7.  Online products must be simple. This seems like an obvious point, but it’s actually pretty difficult to pull off.  We struggled with this at SplashCast.  Our user generated content product was very sophisticated and we were very proud of its capabilities.  However, it was too much.  It was difficult for average users to figure out.  It’s easy to come up with great new features; it’s much more difficult to present them elegantly.  This point hit home when eROI’s Dylan Boyd described the user experience as “airline cockpit-like” (not good).

Posterous, in contrast, is a very simple publishing tool with a rapidly growing user base.  Proof that less is more.

Not owning SplashCast.com led to confusion

8. Get the dotcom version of your name. A good name is worth investing in.  If you can’t come up with a clever dotcom name, buy one.  We settled for SplashCast.net and it hurt us (well, it was at least confusing and annoying).  Go dotcom or don’t go at all.

We tried to buy the dotcom later and weren’t able to reach a reasonable deal with the owner (a long story).  By the way, something tells me he might be willing to drop his price a bit now 🙂

Aussie board member arrives straight from airport for meeting

9. Choose your board members wisely. We had a great board at SplashCast.  Although we didn’t have specific expertise in entertainment and media, the board had expertise in fundraising, advertising markets and lots of entrepreneurial business experience and wisdom.  More than anything, however, they were committed to helping the management team solve problems and determine the best way forward.  During our final months, it could have gotten ugly.  It never did.

Facebook visit

10.  Avoid being too dependent on a third party platform. SplashCast ended up being very dependent on Facebook and MySpace.  Generally, Facebook application developers are on pretty thin ice.  For mostly good reasons, Facebook regularly changes its application platform rules.  It’s a bit like living in a village next to an active volcano.

Even Zynga, the casual game giant, is working to hedge its Facebook bet.

iPhone app developers need to be wary of single platform risk as well.  We all know that Apple isn’t going to change anything, right?

Sir, please turn off your electronic devices

11. In Portland, avoid markets with a limited local presence. We focused on partnerships with companies like Sony, Hulu, Fox, and other media and entertainment companies.  Deals need to be done face to face.  Of course, travel is time consuming and expensive.  More than that, it’s difficult to develop deeper relationships with companies based in New York and Los Angeles from Portland.  Of course it can be done – and we did a pretty good job.  It’s just more challenging.  I don’t miss taking the redeye to New York.

Separately, we all love music.  Music is great.  But don’t focus on the music industry. It’s a disaster and we could never figure out how to make meaningful revenue there.

Shake off bad news...

12. External factors just might get you anyway.  Keep your humor. Although SplashCast did not go according to plan, we all learned a lot and collected some great war stories.

I’m not big on making external excuses, but we were trying to raise money during the biggest financial meltdown of our lifetimes.  VCs and angels alike were pulling back.  Our financial plan (developed months before that) called for raising money during that very time period.  Ultimately, much of the situation was simply beyond our control.

If that kind of stuff is going to give you an ulcer, don’t take the job.

The intra-office commute

Alex Williams getting it done

R.I.P. SplashCast


6 Responses to “Portland Startup Observations Through the SplashCast Lens”

  1. Kevin Says:

    Great post Tom… and thanks for the mention.

    And a corollary to your “get the .com version” rule:
    Beware of making your URL too long in the quest for the .com address. I’ve lost at least a month of my life typing, spelling and copying stepchangegroup.com over the last 3 years!

  2. Dale Says:

    It’s really good to see this kind of post-mortem and helpful information being shared.

    I do see some gray zones in #4 and #6.

    Adapt and Change is good. But, it also means that you can end up in an Industry you have no experience. Many individuals and technologies did this with “internet television.” Just because they could build it, they thought they could be in the television business (whether online, broadcast or cable, it’s all the same critter).

    Look at the VEOH folks, even with Diller on their side, pissing away $70MM. They never brought on Talent from the old television and particularly distribution industry.

    For #6, I think this is more a function of Talent than geography. PDX has very few people who have a background in consumer-facing media product. There is W&K, but, advertising experience doesn’t equate to the entertainment/television business outside of advertising (as much as ad folks desire such cross-over, it’s not in their DNA).

    It also seems that there were some odd pockets of eLearning funding in 2009 and it wasn’t as bleak as pictured. I wonder what SPLASHCAST would have become if it had remained focused on it’s original vertical, based on the interest and experience of the Team? Hitting solid-Doubles in eLearning rather than swinging for the fence with HULU?

    Hindsight isn’t as 20/20 as we’d like. But, it’s good to see this kind of evaluation and thought being shared with those who keep trying to make PDX a viable start-up environment.

    • Tom Turnbull Says:

      Great points. Thanks for the comment. Clearly, there is a fine line between agility and lack of direction. I think, on balance, we made good decisions based on the facts then known.

      You are also correct that there aren’t many people here in Portland with big time B2C internet experience (I have it, but not in entertainment). That said, I would still argue that it’s a lot easier to be located elsewhere.

      Beyond talent and location, online video has been a tough business generally. It’s hard to argue that even the biggest dogs (e.g., Hulu, YouTube) are truly successful.

  3. […] shop.  The fundraising environment was, well, kinda tough back then [understatement]. We have other excuses […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: