Does your consumer startup pass the alpha test?

A perspective on alpha from Ryan Hoover, as shared by Jason Yeh:

I once heard Ryan Hoover, the founder of ProductHunt and General Partner at the Weekend Fund, describe his outlook on founder pitches. He said for a company he’d consider investing in, he doesn’t think he should ever fully understand the business on his own. He essentially said the core essence of a company or the unique insights they possess should be something the founder needs to teach him.

In so many words, this difference between what the efficient market (Ryan) knows and what a backable founder possesses is what produces alpha in startups. Everything Ryan easily understands, even as a hyper-intelligent operator / investor, is already baked into the current market and doesn’t represent a true opportunity for venture returns.

The consumer space, he argued, was so hard to win in because the bar for understanding any problem is so low that almost anyone can work on them. Because of this, tons of smart people have been iterating, testing, failing, and competing in almost any consumer opportunity you can think of. He was essentially describing the dynamics of an especially efficient startup market.


Platform aggregators and monopoly power, oh my

What’s your take on online platforms like Amazon marketplace, AirBnB, Uber, Orbitz, and countless others?

Wired has an article about Spotify suing Apple for abusing its platform power (specifically, crippling their ability to interact with their own customers if Spotify declines to use Apple’s in-app purchase system.

The Swedish audio-streaming giant lodged a complaint against Apple with the European Commission on Wednesday, accusing the company of abusing its position as owner of the App Store to stifle competition. Specifically, Spotify says that by charging a 30 percent tax on in-app purchases, Apple forces app developers to make an impossible choice: Either pass those costs on to consumers, or refuse to pay the commission and face a litany of technical hurdles imposed by Apple. Spotify, which competes directly with Apple Music, argues that this constitutes an unfair advantage for Apple.

Read up on it here:

A key quote from Spotify’s concern:

Ek also points out specific ways that Apple’s behavior could result in increased prices for consumers. If Spotify were to pay Apple’s commission, he says, it “would force us to artificially inflate the price of our Premium membership well above the price of Apple Music.” That’s important because antitrust law in the United States places a major emphasis on how competition affects consumer pricing.

Apple has already been fined for using it monopoly power to affect pricing:

Apple has faced antitrust enforcement action in the past over its impact on market costs. In 2012, the Department of Justice accused Apple of conspiring with publishers to raise the prices on their ebooks and withhold books from Amazon’s Kindle platform, which had imposed a $9.99 flat rate on ebooks. Apple fought the charges, but ended up paying $450 million in fines after losing in the Supreme Court.

Some criticism has been lodged against some politician’s policy proposals to divorce platform creators from selling on their own platforms (e.g. Apple Music competing on its own App Store with Spotify).

That suggestion elicited swift criticism, including from Stratechery’s Ben Thompson. “Is Senator Warren seriously proposing that smartphone be sold with no apps at all? Was Apple breaking the law when they shipped the first iPhone with only first-party apps?” Thompson wrote. “At what point did delivering an acceptable consumer experience out-of-the-box cross the line into abusing a dominant position? This argument may make sense in theory but it makes zero sense in reality.”

Reading Stratechery’s aggregator theory work is fascinating, and while I disagree with his criticism above —the market-creating behavior of Apple years ago on its then-nascent platform is to be judged differently than it’s competition-stifling behavior now on its fully mature platform—Ben is otherwise  astute in his analysis of intermediaries and risks of aggregation.

Read more about the collateral damage in these “platform wars” in this blog post over at Make/Grow Local’s  blog, here:


In the slow lane: the state of Fiber Broadband in Maine

Maine has a three-part internet access problem that is affecting our collective economic prospects. Scarce rural access, slow internet speeds and expensive  data plans are causing us Mainers (and our companies) to not gain the full benefits of modern cloud-computing services and infrastructure—and we are actually overpaying for connectivity, relative to other cities in the USA and even across the world. (Sources.)

However, Maine is also one of the rare states with an advanced fiber-optic network, called the Three-Ring Binder, strung throughout its territory, connecting (some) rural areas to (some) population centers.

Learn more about its genesis (from both private and federal investment dollars) at Maine Fiber Company:

Maine Fiber Company owns and operates an extensive high-capacity dark fiber network in the northeastern US. The network is largely an open-access middle-mile infrastructure and is available to all carriers and service providers on a non-discriminatory basis.

So that’s the good news; we have a solid foundation. But there are many barriers to broadband expansion and competition in Maine, including geographical barriers (rural sparsely-populated areas) that discourage commercial profit-driven development, and also opposition from  incumbent telecom companies who strive to make pole attachment difficult and lobby (and litigate) against community-owned networks.

Where market forces have failed to provide choice, quality of service, and modern speeds, a feasible solution is for communities to build their own networks, as Rockport did (see news story). Maine, with its Three-Ring Binder network, has the necessary “dark fiber” to allow communities and local service providers to connect and offer very fast speeds at lower prices than the incumbents.

Check these informative resources to learn more about the national movement for community-owned broadband.


As a software company owner and resident, my vision for Maine in the 21st century is for us to become a State with the highest percentage of its population connected via Gigabit Fiber networks —to each other, and to the world.

Why “Gigabit”? It’s all about the speed of getting things done.

Many professional services will benefit from faster downloads and uploads, including:

  • remote medical imaging/diagnostics (aka telehealth)
  • video production
  • consumer cloud services like offsite hard-drive backups
  • sharing big data with AI computing engines for business analysis
  • streaming virtual reality data for field-augmented holographic vision
  • video conferencing
  • smart building controls

We especially need improvements to our upload speeds, where the lopsided difference is indefensible by existing providers (it’s about economics, not physics).

Quick quiz: do you know why your office downloads are (somewhat) fast, but upload speeds are slow, at around 5Mb or 10Mb? Short answer: internet providers built out their networks as if the internet was passive TV; we can consume data but we can’t easily “broadcast” or publish anything ourselves.


21st Century states need Gigabit speed, which is 1,000 Mbps. To compare: currently most of us with Cable internet access in Maine have a top speed of 50Mb for downloads / 5Mb for uploads. (Note again the huge disparity between upload and download speed.)

To understand how measurements are made, learn this simple rule:  Bytes are for storage, bits are for data”  and the ratio of:  1 Byte = 8 bits.

So this means you could describe speeds or file sizes interchangeably, by converting “bits-to-bytes” but it’s best to stick with the B (storage)or b (data) as appropriate.

e.g.  8Gb (speed) = 1GB (file size), and 1Gb (speed) = 125MB (file size).
You’ll note that 125 x 8 = 1,000

Here’s a chart with common examples of file sizes versus the data transfer speeds it would take to download:

Chart courtesy of FastMetrics.


Let’s study a particular use case: online (cloud) backups, for personal or corporate archiving. Let’s say you have a small 500gb hard drive that needs continuous, offsite backups… here’s how long it would take to do the initial upload to a cloud backup service over 3 different upload speeds.

Typical: 5 Mbps Upload speed

That’s over 9 days to do a first-time sync. Ever completing that transfer is highly unrealistic, especially if its with a laptop that you need to take from office to home and back, interrupting the progress.

Better speed: 200 Mbps upload rate:

A 5 hour transfer time is much more reasonable; set it in motion before bed and by the morning it will be complete.

Dream speed: with a 1 Gbps upload rate:

1gb transfer speed

Just think of how productive we could be with video uploading and sharing projects (like uploading your marketing videos to Youtube); with transferring gigabyte datasets across corporate locations; streaming Virtual Reality data in real-time; and many more business activities—and I am purposefully not mentioning the benefits to all the myriad entertainment services available, since such “non-critical” uses (download 40 music files per hour! watch 5 different movies at home!) can be used to detract from the urgent necessity of better speeds for actual business or professional applications.


From the linked Akamai report, and according to PCMag:

…better government planning in South Korea has improved internet connection speeds across the country dramatically. Additionally, a competitive Korean ISP market has led to exceptional service levels for end users. In the city of Cheongju, average internet speeds to citizens of 124.5Mbps are standard. Further, 1Gbps internet plans are available in South Korea for just $20 USD.

Maine’s ConnectME defines broadband as:

The ConnectME Authority Board currently defines effective broadband as 10 Mbps/10 Mbps – 10 megabits down and 10 megabits up. Areas that have maximum available broadband speeds of at least 10 Mbps/10 Mbps are considered served. Areas with available broadband speeds that are lower than 1.5 Mbps download are considered unserved. Areas where the maximum available service is between 1.5Mbps download and 10Mbps/10Mbps are considered underserved.

My office currently pays $75/mo for a 30Mb/5Mb plan. Here’s what a widely-used speed test shows I am getting at this moment:
This is a shared cable network, so when other users nearby are using the internet, speeds will slow. But 6Mb upload is not acceptable in today’s world, and according to Maine’s standards. What can be done?


So let’s join together to create better connectivity options in our state! Here’s how, specifically:
  1. Ask your ISP for faster upload speeds. When they tell you it’s impossible or will cost $500–$1,000 per month for a “business plan”, go to steps 2–7.
  2. Join the Maine Broadband Coalition (visit their website) and track the latest issues concerning our state.
  3. Ask your State Rep or Senator (find them here) for help in encouraging any state-level initiatives to help Maine advance the cause of 21st century connectivity.
  4. Ask your town to join Next Century Cities; we have 6 in Maine so far!
  5. Follow Maine’s ConnectME agency (charged with community broadband development) and speak out;
  6. Buy your service from an ISP (internet service provider) who offers better packages than the bigger brand names.
  7. Ask your town if they have plans to create a municipally-owned or managed “internet utility” to fill voids left by the private sector.

SAAS revenue models and slow ramp

Good read: 8 tips from Dave Cancel


If an investor tells you that you can’t build a real business on $20/month, direct them to Constant Contact.

Their average selling price is $37/month, they have 375k customers, they are on target to do $170 million+ in revenue this year, and they are a publicly traded company (AKA liquidity event).

SAAS (Software as a Service) startups need to focus on getting on past what Gail calls the slow ramp of death. When selling low-priced subscriptions you make your money in subsequent years — not up front.

The slow ramp of death is even harder to get past at an average selling price of $37/month; 1000 customers at that price brings in enough revenue to pay a small handful of employees.

FOAP is a new way to get paid for your photos

Friend and colleague Bob Manley let me know about FOAP, a web service that is building a market for photographers to sell their local, real-live photos to companies looking for stock photography.



The idea seems interesting; take a photo, achieve a minimum score of community votes, then its eligible for sale in the marketplace. You get $5 out of the $10 selling price.

Their website also has a good summary of Commercial vs Editorial license rules concerning people’s faces.’s Bezos is buying The Washington Post

Amazon founder Jeff P. Bezos is buying The Washington Post.

Six years ago, Mr. Holovaty held the title “editor for editorial innovation” at The Post, but left in 2007. The co-creator of the popular Web framework Django, he thinks Mr. Bezos will bring “fresh, baggage-less thinking.”

No baggage — and deep pockets — means room to try new things. Might Mr. Bezos apply tech industry concepts like frictionless payments, e-commerce integration, recommendation engines, data analytics or improved concepts for mobile reading?

Building your big idea

Great essay from Paul Graham…

Empirically, the way to do really big things seems to be to start with deceptively small things. Want to dominate microcomputer software? Start by writing a Basic interpreter for a machine with a few thousand users. Want to make the universal web site? Start by building a site for Harvard undergrads to stalk one another.

Empirically, it’s not just for other people that you need to start small. You need to for your own sake. Neither Bill Gates nor Mark Zuckerberg knew at first how big their companies were going to get. All they knew was that they were onto something. Maybe it’s a bad idea to have really big ambitions initially, because the bigger your ambition, the longer it’s going to take, and the further you project into the future, the more likely you’ll get it wrong.

I think the way to use these big ideas is not to try to identify a precise point in the future and then ask yourself how to get from here to there, like the popular image of a visionary. You’ll be better off if you operate like Columbus and just head in a general westerly direction. Don’t try to construct the future like a building, because your current blueprint is almost certainly mistaken. Start with something you know works, and when you expand, expand westward.

The popular image of the visionary is someone with a clear view of the future, but empirically it may be better to have a blurry one.

(Emphasis mine.)


You need a shopping cart; here’s what to do

Here is a quick summary of the options available to you, and the decisions you need to make before a development cost can be established:

There are dozens of good solutions, and which to choose depends on a multitude of factors… do you have a site already with a CMS ? do you mind offloading visitors to a 3rd party “hosted storefront” like Shopify, which is a great service…  or do you prefer to keep them on your site throughout the checkout flow?

Is your site running as a self-hosted WP blog, and thus could use an on-site ecomm plugin instead? There are a few popular plugin options for this scenario.

Further, if you already use PayPal, do you want to simply add a Paypal checkout button?

See a site that does this:
You can do this method on both a website or a blogging system.

If yes to Paypal, do you want to continue using PayPal but need a true cart, and want a seamless, integrated checkout flow where the user never leaves your site? Then, we use the PayPal Pro api to make any type of cart system. See my site and go to the online store.

Or, you might want a full-featured shopping cart using a different payment processor, like, and you want it hosted on your own site… ?
or  even

And lastly, how do you handle the backend accounting and inventory management, if at all? Do you need QB integration? (troublesome!)  They need a store like bigcommerce that can send all sales data to QB on a synced basic. But setting up this scenario requires a true QB expert on hand.

The options go on!

In some cases, you may not want to use Paypal, and already have a 3rd-party gateway and merchant service. Therefore, you need a very simple “cart” that does only what you want, that talks to the API (interface) of the gateway.  A common gateway is It has APIs with which you talk to their systems.

Or, you may not have a merchant account yet. In that case, you could use an all-in-one procider like:

And now, we get to the technologies with which your site is coded… php? asp? jsp? python? ruby? We here at PDG&Associates use only php and sometimes python.

For php, there are lots of choices.

For a simple and free one, here’s:
You could modify it as needed to make it work, and a programmer could use it as the basis for a custom solution. And there are probably 100 more carts like it this.

Or with custom programming, we could simply build a tailored solution. Give us a call to make sense of the options!

Yahoo – asking the wrong questions about its future

From a comment by the new CEO of Yahoo, Marissa Mayer:

Ms. Mayer may have the hardest time taking Yahoo into the mobile advertising arena, a market dominated by her former employer. Unlike Yahoo, Google and Apple dominate the mobile advertising space with hardware and software options.

And that’s where it runs headlong into its identity problem. “Yahoo is still mainly a media company. It doesn’t have an operating system. It doesn’t have the devices,” Mr. Hallerman, of eMarketer, said. “I don’t know if there’s room in the market for a fourth mobile platform.”

Asked whether she plans to run Yahoo as a media company or a technology company, Ms. Mayer said, “It’s not the right question. The most important thing is to give end users something valuable, inspiring and delightful that makes them want to come to Yahoo every day.”

Marissa Mayer is just 37 years old and has uncommon wisdom among the tech analysts and elite. Best of success to her!