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Almost everyday I read about yet another company that has raise another round which catapults the company into the billion dollar plus valuation club. The problem I have with this is that it seems like most of these startups are in the business of raising money rather than focusing on a business model or refining it to become profitable.

What would happen if these startups focused on the strategy, product, and generating revenue instead of raising money?

A recent example is Twitter that has an estimated revenue run rate of $85 according to Pascal. I recently read that Twitter was working on an $800 million dollar funding round which would yield an $8Bn valuation. There are too many similarities between professional athletes and valuations these days.

Specifically, professional athletes often care most about the press around their multi-year multi million dollar contract and becoming the highest paid. What most people and athletes don’t realize is that not all of that money is guaranteed especially if they get hurt. Similarly, startups seem to be focusing on the next round of funding instead of building a sustainable business and corresponding business model. The tragedy is that most professional athletes squander their money and a lot of startups wind up wasting the venture capital by cashing out and not focusing on building a sustainable business.Tweet

Recently appointed Head of Revenue for Twitter, Adam Bain, speaks about future plans for Twitter with Kara Swisher. He is largely tasked with opening the doors to advertisers and making it easier for brands to work with Twitter. This role is not without its challenges which include significant growth, living on a plane, listening to marketers in terms of what has worked and what has not worked in the past.

Brands have been using Twitter organically for the past 2-3 years and Twitter intends on strengthening that relationship via its current advertising products: promoted tweets, trends, and verified accounts. Additionally, next year, Twitter intends on launching a self-serve ad platform and an analytics offering is in the works.

Not all of the feedback has been positive, some marketers are struggling with the lack of information available about Twitter’s advertising products. Marketers are also faced with changing the way they conduct business. Specifically, instead of a long planning process, they need to adapt to one that is real-time and can be executed rather quickly. Bain has hired a basketball team worth of sales staff and is ramping up Twitter’s efforts to meet the demand.

Cater to Multiple Platforms/Mediums
With the growth of mobile, many startups and mature companies are starting to think mobile first, then web. Well lets turn that thought upside down and say that the API would be able to deliver the content in the pertinent format, layout etc for any of the known platforms that currently exist. This is further eased by the progress in CSS, microformats, and other technologies that simply are standard ways of delivering content for a particular medium whether it be for the iPhone or for server to server communication and consumption of content.

Foster Business Development
As Chris Dixon points out, the API is the new form of business development. He is writing from experience having co-founded Flickr and Hunch; both companies have relied on robust APIs to remain leaders in the respective spaces that they serve photos and recommendations. The key takeaway is that you need to balance the need for a business development team, having actual working examples of what the API can accomplish, and a vision for what the future holds for the company and the capabilities of the API.

Crowdsource Innovation
Many founders have the bravado to think that they have thought of everything and placed those ideas within a roadmap. Fact of the matter is that they may have thought of only a fraction of what is possible and only a fraction of those will actually be successful. With an API centric approach to your startup, you will enable the hackers combined with business side experiment with what you have built. Twitter has benefited from this approach and its API has led to innovations that have been acquired and/or the idea has been adopted into the standard feature set. One word of caution is that there needs to be a balance of acquisitions vs. adoption of ideas created by the community at large. If companies such as Twitter offer a robust API and then adopt features created by innovative developers, there will be a developer backlash. An example of this is when Twitter released Twitter Lists which didn’t within Twitter proper, rather solely within a broad range of startups such as Listorious.
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This development is significant as Twitter is finally making it far easier to connect with true friends, users with like interests, and promoting importing and locating the profiles of existing connections from other networks via the ABI. This is crucial to maintaining the high growth expectations of the media and at the same time providing utility to its user base. This will put significant pressure on sites such as Digg’s Wefollow and listorious which both focus on curation of Twitter’s user base and facilitate discovery and following of those profiles.

One disappointing component of this feature is that so many users have curated Twitter profiles via lists. It is unfortunate that the directory seems to be driven by algorithms rather that the crowdsourced approach of Wefollow and even the curated Twitter lists. I would hope that public Twitter lists of users eventually are able to appear within the directory based on a given set of criteria such as activity, # of followers etc.Tweet

If there’s one thing that is more surprising than the opportunities this competition creates, it is the initial lukewarm response from the developers who would ultimately benefit the most from it. MySpace has opened up a tremendous amount of data and realtime APIs , there are tens-of-millions of users involved, and the amount of investment in infrastructure from MySpace and their partners is significant. But since the initial December 9th announcement at LeWeb, there hasn’t been much said about it within the blogosphere and among the developer community.

Although there’s a lot to get excited about, the lack of attention among developers is somewhat understandable. The economy is leading many development shops to scale back and devote resources to one or two platforms. And with mobile, Twitter, and Facebook generating most of the hype (and funding), decision makers tend to take a “wait and see” approach to new platform opportunities. The nature of MySpace’s user base is also unique when compared to other social networks, and besides a couple social-gaming companies (e.g. Zynga, Playdom, et al) there aren’t many clear models for engaging MySpace users en masse. And to be fair, the competition is only now getting started after the holidays, and COO Mike Jones indicated on December 23rd via Twitter that the company had already begun to see submissions trickle in (although company sources tell us they haven’t yet seen a deluge of new applications, but this will likely change).

But developers we’ve spoken to are nevertheless slow to respond to this opportunity, and this reluctance is misguided for three reasons. First, there are the numbers. In the example of MySpace vs. Twitter, MySpace’s userbase is still 2-3 times larger than Twitter’s in the US. That means more potential engagement (and revenue) for applications built at this stage, which could also have huge possibilities for applications that socialize content beyond the MySpace website. Second, there’s the opportunity for substantial revenue. MySpace’s user data is still of great interest to record labels, movie studios, and blue-chip brand advertisers, all of whom might be willing to pay a little more than the .99 cent application du jour that most developers are building for iTunes. Lastly, there is simply less competition on MySpace’s platform at this time, giving early entrants a huge competitive advantage if their application catches on.

With more users, more revenue potential, and less competition, this blue ocean of an opportunity might very well be one of the best bets of the year. Developers who might have at first discounted this MySpace’s platform should take a second look and consider the opportunities.

As the competition progresses, let us know if you or anyone you know has entered the competition with an innovative idea and we’ll be sure to follow up.

Update: Here are the contest details (released this morning) via that MySpace developer blog.

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We like to eat and thought it would be great to share a list of food vendors that we’ve come across in our own travels, as well as from a couple of other sources. The list is alphabetical

Be sure to also post your reviews & experiences in the comments below. We’d like to hear about your experiences with these vendors (many of them have 1,000+ followers!)

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Brizzly, built by Jason Shellen and other Google Reader team members, provides a better user interface than Twitter. You can manage multiple Twitter accounts through one interface and easily toggle between them, save searches, and add profiles to groups. At TrendSlate, we communicate with various venture-capital firms & entrepreneurs across Southern California, and Brizzly is essential to the work we do.

ReFollow by Originate Labs, which is partially based in Los Angeles, has many features that enable users to build a larger following. It also includes features that allow users to sort followers by relationship and batch follow or unfollow others. The easy to use interface combined with powerful rules-based following or unfollowing features make this an essential tool for marketers and individuals that want to build up their follow count.

Both of these sites greatly enhance the Twitter experience and I would imagine that the increased usage may lead to them becoming acquisition targets for Twitter, especially Twitter moves closer to its monetization goals.

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But with all that’s been said about the competition, its interesting to see that there are actually times when Facebook and Google collaborate behind the scenes. One recent example is the unexpected exclusion of FriendFeed subscriber counts from FeedBurner analytics (a feature that rolled out in June). It sounds minor, but a blog that reported 10,000 RSS-feed subscribers last week woke up this morning to find that number 20-30% lower. We at TrendSlate also noticed that our RSS subscribers decreased, even though our overall traffic has grown by 3-4x. Bloggers were immediately voicing their concern over the issue on Twitter, and several “Google vs. Facebook” conspiracy theories began to grow.

Checking Google’s Feedburner blog this evening, it seems that they are aware of the issue and have worked with FriendFeed to resolve it:

Issue: We are working with FriendFeed to determine why subscriber totals from this service are not available in the most recent daily subscriber counts reported for FeedBurner feeds. We will update this post with any status changes and resolution.

Updated: We have resolved the issue with FriendFeed, and you should see updated stats from FriendFeed in the 24 hours after your feed is polled by FriendFeed.

Its good to see Google & Facebook engineers working together to solve this collaboratively. It makes you wonder about the interconnected tech community in areas like Silicon Valley, and how relationships between these developers manifest themselves to create great results throughout the product-development process.

FriendFeed Unique Visitors courtesy of Compete.com
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