Even the smartest VCs still need an irrational exuberence moment to take their decision. The Financing of the Next Big Thing (NBT) is secured - but in the round (won’t be more specific in case one of them reads this) some of the VCs, though very smart and rational, still need the feeling of “we’ve got to rush to the bandwagon” before they really commit. And that means we have to waste some energy just to prove that we can scale fast really fast.

We believe that you have to finetune your Value Proposition. and make yourself sticky before you explode - or you wil get ephemereal and lose the audience you reach. That doesn’t mean being slow or defensive - it means spending as much energy on retaining customers / users as on winning new ones. Not an easy one. But probably the secret to success.

Now customer retention is probably achieved by the basics:

- compelling, understandable value proposition
- swift, perfect service delivery (including technology)
- simple mantra (see Guy Kawasaki on that) that’ll be told at every party

In short: gain not only a lot of contacts, but a relevant portion of mind share as well.

I’ll report more on this, because we have devised a nice little strategy to comply without wasting marketing reach. There is Gold there.

Some of you who know me already know this, but I’ve been back in hands-on business with the Next Big Thing for the past couple of weeks. Can’t say too much about it now, but I’ll share with you - those of you who know the feeling - the sense of excitement at building an exponential-growth company. We’ll be stealthing some more the next couple of months. As soon as we have the technology in place, our company will kawham! - At least, that’s we’re fighting for.

My life as an Investor will continue, but I’ll focus on the Angel & advisory part and have increased staff on dw capital to do the operatives of our Seed Funding. That gives the Startups more worth (and more professionalism, too). It leverages the dw capital positioning as “Founder friendly like an Angel and professional like a VC“. Plus I gain more insights on an operative level, which will decrease the half-life of my know-how. Growth must always become institutional if it is to prevail!

I promised to blog my reflections on the 18-hour stint - well, here goes:

1) Provided you can choose from equal VC quality, choose a VC with an Office in your country -

2) or calculate three extra weeks on legal hassle because they just won’t understand your legal system (unless, of course, you share legal systems)

3) Be ready to bypass the lawyer of your VC at any moment (incl. @ 03h00 AM - myke sure you have a contact who will comply) - remember there may be a Principal-Agent-Problem between Vc and his Lawyer - the VC wants the deal @ good terms and low cost, but he wants the deal. A Bad Lawyer often raises his profile by being excruciating and blaming a bummed deal on you.

4) Align your Business Angels, if you have any, into your interest. If need be, point out that you can always gang up with the VC. But it is best if you don’t have to go there - that depends on the mentality of your BAs. I’ve seen both.

5) Don’t succomb to the enticements of the new. The nice great VCs who now are a tremendous success may just be your worst nightmare two years down the road, so remember to balance control power in your company. In the best of all worlds, as an entrepreneur, you get to pick who you work with on which issue because you gang up with the Business Angels if the VCs get unreasonable and you gang up with the VCs if the BAs get unprofessional or greedy. Make it clear that, while alle share the risk, you are the entrepreneur who is going to make it happen - or not.

6) Don’t overestimate yourself and consider - in your inner fort - the scenario if the company outgrows you or you get boreed. Few Entrepreneurs are as good in the 0 - 100 employees periods as the are in the 100 - 1000 or beyond periods. That was not an issue in my recent experience, but it is always worth remembering.

7) Don’t bind yourself to milestones. Business Plans are a process, not a bible. Focus on the metrics and never tie your investment capital to that. There is only one 100% sure fact about your business plan: it is not going to happen. The story will always be different, for better or for worse. So while building the structure of the company for the VC phase, make sure you have a tight-knit communication, frequent consultation infrastructure (Board) - share decision responsability. Stop selling your venture the minute the money is in the bank and all covenants are through (that’s why milestones are unwise for a VC too, because then reporting focuses on showing how milestones are met, not on the actual problems and necessary adjustments of and to the business model). Make sure you have VCs you are comfortable sharing your worse problems with.

In this sense, there is no real “stupid money” - you should always keep that communication line open so noone will feel thumped and try to get back at you (of that, the stupidest money sources are always capable). And sometimes even the worst moron will see something that you, in the Hamster wheel, won’t.

That’s a first - discussions welcome.

I Just emerged (at 04h00 in the morning) from an 18 - hour (!!!!) - bit of negotiation with two international VCs in one of the startups dw capital is invested in. We had the full program:

- the Lawyer pissing contest (pardon my french)
- the last-minute deal restructuring
- the last-minute battle over terms
- the nerve game on who gets to leave the table first (well not quite, but we did have a little theatre play)
- we used three rooms and a hallway to do all telcoing back to the principals

But now come the differences:

- a savvy founder who kept his nerve and outplayed the lawyers well (it always helps to just call the principal of the VC)
- and a really easy-going notary, funny on top of it

So it all ended

a) succesfully
b) even on friendly terms
c) and with two bottles of champagne….

I’ll get back to the audience on my findings out of the process. Still a lot to be learned, or remembered again at the very least.

Cheers!

The past weeks have been incredibly busy. Sevenload, Qype, Oneview, and itravel are achieving their respective crests.

http://www.sevenload.de has an exploding user base, has just won nicole da silva and a number of young stars had their start on the platform. It is now by far the most used German Video and Photo Platform. myvideo is raising a stink and faking their user numbers (check by looking up a user beyond # 800), but have little to now recognition in the relevant crowd. Remember “the Tipping Point” and you’ll know why that’s relevant. Ibo’s Team is just the better team.

http://www.qype.de is growing fast, getting really useful, and closing a new financing round (no details, it’s all NDA’d) - but just this much: Qype is going to be the dominant player. Stephan is an incredible guy and has a great team.

http://www.oneview.de are preparing their gamma, and it will rock. Full google-kicking potential. We will get our revenge for having been the first social networking/bookmarking site (1998) and not getting the recognition because the business model had no market yet in 2000. Great team there too, with two additions to the developer team.

http://www.itravel.de - stay tuned for the first real long tail social commerce site, you’ll see more and more of the community in the next three months. In cooperation with Sevenload!

I’m really excited as we are preparing Upload! 2006, which we hope to become the coolest web 2.0 / social commerce / next big thing event of this and coming years.

BTW: we are desperately looking for developers, marketers, tecchies, pr guys/gals, project managers, business developers, sales guys etc etc etc…. contact me, or denkwerk @ http://www.denkwerk.com

Hi, I’m back @ reading the basics, which i can only recommend:

1. The Cluetrain Manifesto - the bible for “power to the customer” revolutionaries

2. The Tipping Point - winning the multiplyers is the real model for building a community / social network

3. The Long Tail Parts I and II - that’s where it’s going, folks - you can’t think enough about the implications

4. Blue Ocean Strategy - THE method for innovation

Read it. Apply it.

Cheers

R0cketrabbit