Jack Lang is the entrepreneur-in-residence at the University of Cambridge’s business school. He has worked with a number of entrepreneurs and advises them to focus on understanding their customer. Here is his quick tip for entrepreneurs:
Mehdi Maghsoodnia, angel investor and prominent figure in the high tech industry, has been named the CEO of BookRenter.com Inc. Mr. Maghsoodnia has served on the board of several Silicon Valley start ups such as BlueTweet.com and NatureAir. His most recent management position was as vice president of products for CafePress.
Mehdi Maghsoodnia will be replacing BookRenter’s founder Colin Barceloux, who is moving to the role of vice president of business development. BookRenter offers customers the opportunity to rent books rather than purchasing.
“Mehdi is exactly the right leader for BookRenter,” said Barceloux. “His extensive technology background and vision will help us deliver on what we think is the mission of our company, making textbooks affordable and accessible. His strong management experience will help us build a world-class team as we scale rapidly.” (BizJournal)
Technology is one of most popular angel investment areas. Social media networks like Twitter and Facebook are websites that may have seemed ordinary to the untrained eye but with some capital from angel investors companies like those can grow immensely. It’s every angel’s dream to get in on the ground floor of a company like Facebook which is why it’s so exciting to hear from someone like Ron Conway. He sits on the advisory board for Twitter, Facebook and Digg–all highly successful social media technology companies.
The following video is a forum conversation with Ron Conway in which he discusses the current IPO Market, what defines a successful entrepreneur and what the opportunities are in websites like Twitter and Facebook.
Social media is a rapidly expanding industry and could be a great chance for angel investors. John Ryan has an interesting post on the opportunities for angel investors in social media. The decline in operational costs for running social media is an important factor for attracting angel investors, as the expenses for storage, processing power and web-based computing continue to lower. Significantly, social media allows start-ups to actively test new products and ideas with users throughout.
Social media, by design, requires little marketing or branding effort because users do most of this work for the start-up through word-of-mouth. It is distinctly hit-or-miss, users won’t put up with a social media product that they don’t like, there are too many alternatives. But the versatility of social media allows a smart start-up to keep trying new ideas until one sticks.
Expansion is only necessary if the product is useful and this is easy enough to find out. If your friends don’t use the product, it probably isn’t compelling enough to warrant expanding to other users. So, entrepreneurs can test the design on their friends, gather feedback and only branch out once they have a worthwhile product. This should be attractive to angel investors who want a well-tested product before they commit too much capital.
Social media may eventually require a large capital input, like Facebook needed to reach its current size. But in the early stages of angel investment, most social media products just need a minor investment to get up and running.
This is not to say that there’s no risk, as the dot-com bubble proved, no start-up niche is invincable. So, working with a team of seasoned angel investors and entrepreneurs is key so that no one becomes dillusional about the possibility of failure. Angel investors, therefore, must contribute more than just capital. Young social media entrepreneurs have to keep their business senses and make sure the model is sound.