A founder’s guide to effectively managing your option pool

This piece was originally published in TechCrunch here.

There’s an old startup adage that goes: cash is king. I’m not sure that is true anymore.

In today’s cash rich environment, options are more valuable than cash. Founders have many guides on how to raise money, but not enough has been written about how to protect your startup’s option pool. As a founder, recruiting talent is the most important factor for success. In turn, managing your option pool may be the most effective action you can take to ensure you can recruit and retain talent.

That said, managing your option pool is no easy task. However, with some foresight and planning, it’s possible to take advantage of certain tools at your disposal and avoid common pitfalls.

In this piece, I’ll cover:

The mechanics of the option pool over multiple funding rounds.
Common pitfalls that trip up founders along the way.
What you can do to protect your option pool or to correct course if you made mistakes early on.

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A mini-case study on option pool mechanics

Let’s run through a quick case study that sets the stage before we dive deeper. In this example, there are three equal co-founders who decide to quit their jobs to become startup founders.

Since they know they need to hire talent, the trio gets going with a 10% option pool at inception. They then cobble together enough money across angel, pre-seed and seed rounds (with 25% cumulative dilution across those rounds) to achieve product-market fit (PMF). With PMF in the bag, they raise a Series A, which results in a further 25% dilution.

After hiring a few C-suite executives, they are now running low on options. So at the Series B, the company does a 5% option pool top-up pre-money — in addition to giving up 20% in equity related to the new cash injection. When the Series C and D rounds come by with dilutions of 15% and 10%, the company has hit its stride and has an imminent IPO in the works. Success!

For simplicity, I will assume a few things that don’t normally happen but will make illustrating the math here a bit easier:

No investor participates in their pro-rata after their initial investment.
Half the available pool is issued to new hires and/or used for refreshes every round.

Obviously, every situation is unique and your mileage may vary. But this is a close enough proxy to what happens to a lot of startups in practice. Here is what the available option pool will look like over time across rounds:

Note how quickly the pool thins out — especially early on. In the beginning, 10% sounds like a lot, but it’s hard to make the first few hires when you have nothing to show the world and no cash to pay salaries. In addition, early rounds don’t just dilute your equity as a founder, they dilute everyone’s — including your option pool (both allocated and unallocated). By the time the company raises its Series B, the available pool is already less than 1.5%.

While the option pool top-up (5% in this example) at the Series B helps to grow the unallocated pool, it is typically done so on a pre-money basis, meaning the new equity coming in as part of the round immediately dilutes the top-up. So, the resulting increase to the pool is closer to 4 percentage points than 5. The real dilution to everyone else on the cap table (founders, employees and investors) ends up being closer to 25% versus the 20% it would be if this was only an equity round with no top-up.

The company is again at less than 1% in available options at the Series D (two rounds after the top-up). This means further top-ups may be required, albeit at smaller amounts. The good news is that by the time of Series C and D rounds, 1% of equity can afford many more multiples of employees than 1% at the seed or Series A. Larger growth rounds also mean that cash compensation can become much more competitive, making up for smaller equity packages.

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Common pitfalls

As you can see, even in this relatively “clean” scenario where the founders had the foresight to open with a 10% option pool, raised good up rounds (with stage-appropriate dilution), and only had one top-up round along the way, they were likely still managing/hiring on close to a shoestring budget. This is not a position you want to be in, especially in today’s competitive talent market.

The reality is that things can get much messier, leading to a thinner option pool earlier on that can impair your ability to hire great people. Here are a few common traps that can pop up and wreak havoc on your option pool:

Poor planning: You simply don’t have a sizable option pool right from the outset. You underestimate hiring needs or are overly sensitive about ownership. Many first-time founders make this mistake.

Co-founder departures: Your co-founder, who has material ownership, leaves after a year or two. While they only vested a quarter or half of their shares, that can be 5%-10% of dead weight on the cap table doing little for the company.

Giving out too much to early hires: You give out too much equity to early employees who are unqualified for their role or demand too much equity even after adjusting for stage risk. They then have to be replaced a few years in with a more seasoned hire, which makes you “double pay” in equity for that role.

Hiring execs at the wrong time: A derivative of the above is hiring senior leaders too early. For example, hiring an expensive CRO at the Series A stage, when you would be better off doing founder-led sales or hiring a few AEs. The CRO hire will be more impactful to the company by the time of the Series C and likely less costly on the equity front.

Not firing quickly enough: Failing to use the one-year cliff as a forcing function to make decisions on performance. If you let poor performers linger too long, you will almost always regret the equity that could have been used for an awesome hire. This needs to be balanced carefully with maintaining a healthy work environment and positive hiring dynamic.

Not using data/benchmarks: Making an equity offer on a whim/using your gut almost always ends badly. Either you end up overpaying and giving out too much equity, or you give out too little and turn away good candidates. Using benchmarks also makes negotiating offers with candidates easier, as it lends the perception of a competitive and fair offer.

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OK, you made a mistake, but there’s still hope

If you have hit the growth/later stages and made mistakes similar to those above, you still have a few ways to correct course:

Create a bigger pool earlier on: The easiest way to ensure you don’t run out of options too quickly is simply to start with a bigger pool. As a founder, you might worry about more dilution from a bigger initial pool, and while that may be true in the short run, the flip side is that, with more options, you can hire faster and get better quality talent. That should translate to more progress, allowing you to raise competitive rounds with less dilution over time.

To use the example above: If you were to start with a 20% option pool instead of 10%, but then reduce dilution at each round by 5 percentage points, by the Series D you’d end up with higher ownership as a founder, more (and better incentivized) employees, and less heartache around pool management. Here’s a view of the end state by Series D in this scenario:

Hire slow, fire fast: Take the time to make sure you want to hire any individual. Especially early on or for senior roles, which tend to be the most expensive. And if it’s clearly not working, end the relationship as quickly as possible and certainly well before vesting starts to happen. This applies to co-founders, too.

Consider longer vest periods for founders/early employees: The co-founder departure scenario is a tough one, as founder equity tends to be significant and can result in lots of dead equity on the cap table. Consider lengthening vest periods to something beyond the standard four years, or make the vesting more back-ended — Amazon-style. If a departing co-founder has already vested equity, consider buying out their shares at a discount and put those shares back in the pool.

Hold budget/planning sessions on employee compensation each year: Forecasting key hires one or two years ahead can do wonders to help you think about the pace of option grant issuance and the trade-offs you have to make for each role/hire. At some point, usually in the mid-growth stages, it’s a good idea to establish a compensation committee, usually chaired by an independent board member, to review compensation each year and recommend decisions to the broader board.

Use benchmarking (and other) data tools to make offers: Startup compensation tools like Option Impact, Carta Total Comp and Pave are must-haves as you scale your company. They will make sure your offers are grounded in solid comps by stage, geography and title. More often than not, founders end up being too generous on the equity side. Using a compensation tool helps ground offers in data and prevents too much equity being granted too early on. You can also triangulate these benchmark tools with feedback from other founders and existing investors.

Tie refreshes and earn-outs closer to performance: As your company scales, consider tying refreshes and earn-outs closer to performance. This is particularly applicable for sales front, but can be useful even for marketing, product and GM-style roles that impact the acceleration of top-line growth. If performance leads to accelerated growth, everyone wins and such performance warrants additional equity.

Skew comp more toward cash in the later stages: As your company scales into the later stages, the risk decreases, and you have more cash to pay employees jumping on your rocket ship. 1% of equity in the later stages can be used to hire hundreds of employees; especially when you have the cash from growth rounds to pay higher bases + bonuses.

Utilize buybacks as a non-dilutive way to grow the pool: Buybacks can be used with angels, early investors and even employees, all of which may have made a nice return by the time of the Series C/D round, and may be willing to partially or fully exit, allowing you to use cash on the balance sheet to repurchase shares and put them back into the option pool.

One important concept to remember is the value of fundraising at milestones where you can minimize dilution. In the example above, we started with the notion that founders can manage to keep dilution to 25% before the Series A. However, this number often ends up closer to 30%-40% before the first major institutional round.

Future fundraises and option pool top-ups then end up diluting more, which can catch founders by surprise. Focusing on achieving clear milestones before raising capital prevents premature and heavily dilutive rounds.

Managing your option pool is key to the long-term success of your startup. In many ways, your option pool is the most important currency you have as a founder. With careful planning and some thought, you can turn your option pool into a powerful driver of growth and enterprise value.

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As always, please reach out with any thoughts or suggestions (@MrAllenMiller.) I’d also like to thank Addie Lerner (@addielerner), Alex Kurland (@atkurland), Brian Murray (@murr) and Michael Sidgmore (@michaelsidgmore) for their help in reviewing early drafts of this and providing invaluable feedback.

Core & Emerging Platforms as we Move into 2017

Innovation at the platform level (whether it be improved hardware, changes in infrastructure or new ecosystems) has always led to new opportunity at the application level for both entrepreneurs and the investors that back them. As 2016 winds down and we look ahead to 2017, it’s as good a time as any to take stock of the innovation we’ve seen at the platform level in the last few years and the trends in tech that will drive new opportunity in application software.

More specifically, I see four core and emerging trends that will continue to dictate opportunity in B2B software: (1) continued dominance of cloud, (2) acceleration of mobile enterprise, (3) increased attention to AI (more specifically machine learning) and (4) the rise of AR & VR – particularly AR in the B2B setting. The figure below provides an overview that will be explained in further detail below:

tech-platforms

(1) Continued dominance of cloud

This is an “old” one but a good one. Of the four platform trends this is the most established one and has produced the most opportunity to-date.

From a horizontal perspective, the cloud has penetrated (though not yet dominated) every function within the enterprise. Salesforce is the prevalent choice for most in the sales / CRM functions. Companies like Workday, Cornerstone and SuccessFactors have gained real traction within HR. Eloqua, ExactTarget and Marketo are widely used marketing tools. NetSuite has a strong presence in ERP while Zendesk is a strong force in customer success. And there are many other more recent horizontal SaaS companies that have made big waves: Slack, Stripe, DocuSign and DropBox are just a few of many that had big years in 2016. And there are many more opportunities remaining in relatively untouched areas like: sales ops, SMB-focused HR tools, inventory management, market intelligence and customer care analytics.

Vertical software, is still very much in its infancy. There have certainly been some early winners like Veeva (life sciences), RealPage (real estate) and Fleetmatics (fleet management), but there are many more industry cloud winners to come. Industries like manufacturing, construction, logistics, agriculture, oil and gas and others have slowly begun moving to the cloud after remaining cloud-allergic for many years. 2017 will be a big year for many of these industries and the vertical-focused, category-winners that reshape them.

(2) Acceleration of mobile enterprise

Aggregate mobile enterprise revenue in 2016 was just under $100B –pretty solid for a platform that didn’t exist 10 years ago. However, this one is also just getting started. Forecasts show this number doubling by 2020 (and I wouldn’t be surprised if the growth rate is higher than that). Part of this growth is fueled by increased vertical software opportunities. Procore is a great example of a company delivering a vertical specific solution (in construction) via mobile enterprise. Industries like education, insurance and real-estate will soon follow.

(3) Increased attention to AI

2016 really marked THE year when AI (or more accurately, machine learning) really came into focus in the startup and venture community. As seen in the figure above, deals done and investment dollars poured into the sector have grown exponentially in the last 2-3 years. In that time, AI has done a few interesting things:

It has re-opened the door in a real way to more horizontal software opportunities giving rise to the “disruption of the disruptors.” Suddenly, machine intelligence has allowed for greater insights and better products and services that opened the door to new entrants looking to enter horizontal spaces.

It has allowed for more focused solutions that really benefit from machine learning applied to large data sets to flourish. Little Bird (a market intelligence and data analytics company based out of Oregon) that was recently acquired by Sprinklr is a good example. AI powered point solutions like Little Bird, once bolted onto larger platforms (like Sprinklr’s social media management platform) can exponentially increase the utility to their enterprise customers.

It has brought back IBM’s relevance among innovators and early stage companies. Ironically, rightly or wrongly, IBM’s Watson is the most common machine associated with machine learning. Whether IBM is able to harness the potential of AI remains to be seen, but the company attempts to be mounting a bigger challenge to be a dominant presence in the space rather than giving way to the big four (Apple, Facebook, Amazon and Google) as it did with consumer devices, social, ecommerce and search.

Expect AI to be a powerful trend in 2017 and beyond, with both startups and established players getting involved, especially as the technological innovation becomes more advanced.

(4) The rise of AR & VR

AR and VR are the furthest off in terms of real platform potential and 2016 was largely a pretty big disappointment for these platforms. The biggest thing in AR/VR in 2016 was Pokémon Go, which was an entirely consumer play (and appears to largely have been a fad). I expect VR to still be a few years away from going mainstream –and even when it does, it will continue to be a consumer play.

That being said, I do think in 2017 we will see the start of some AR-based software applications that will gain traction among enterprises. And by 2020 forecasted revenues in AR will near $120B. Some of the important early verticals AR will start with will be healthcare, manufacturing, defense and architecture among others. Some of the early startups playing in these spaces, that I’ll be following in 2017 include: CrowdOptics, APX Labs and Pristine.

Revisiting EdTech: Opportunities for 2016 and Beyond

It’s been a few years since I’ve written extensively about education technology and the opportunities that exist in the space. Since my last set of posts back in December of 2012, the space has continued to be a fast growing sector with much opportunity. Back in 2012, the sector was a $4.1T industry globally. That number just topped $5T in 2015 with a 7% CAGR. Unsurprisingly, the education sector remains the second largest industry, trailing only healthcare in terms of global market size.

Likewise, venture capital investment has picked up substantially in the last 3 years. In 2012, Series B investments totaled just $159M—that number is expected to top $500M in 2015 once the final numbers are published. Similarly, deal activity across all stages has picked up. In 2012, the total number of deals across VC/PE was ~500 deals—that number will reach nearly 800 deals by end of year 2015.

Most importantly, exits have finally begun to provide some hope for returns. A scarcity of exits has long been one of the big problems for entrepreneurs and investors considering EdTech. Indeed M&A activity has historically been slow (<1% of all M&A exits from 2002-2012) and IPO showings have often been abysmal (e.g. Chegg which fell 23% during its IPO debut and now has a market cap of just ~$620M, half of its opening day valuation.)

In the last three years, however, there have been a handful of successful EdTech IPOs including companies like 2U and Instructure. Others, such as Coursera, Udacity and Edmodo, are all not far behind in the IPO pipeline. M&A activity likewise has been quite strong. In fact, U.S. EdTech companies tend to command higher revenue multiples than the average tech exit—3.2x for EdTech companies vs. 2.5x for the broader tech industry. Furthermore, M&A exits themselves over the last 5 years have been fruitful with 25 buyers spending more than $100M on U.S. EdTech companies.

Source: EdSurge

Yet despite this progress, there remain a wide array of inefficiencies and unsolved problems. Specifically, I see 6 promising near-term opportunities for entrepreneurs to take advantage of and for investors to invest in. In no particular order here are a few thoughts of what we will see beginning in 2016.

1) Cloud SaaS will finally replace on-prem at the school district and system admin level

Having spent time working at the district level in education policy, I was always amazed at how archaic many of the tools districts and school systems use at the city-wide/admin level. Software tools that track important mission-critical information such as attendance, student demographics, building information, zone data, etc. across schools within a district are still often hosted on-premise, using archaic databases and outdated software with GUIs that look like they were designed in the ‘90s. Below is an example of what the NYC DOE ATS currently looks like:

Source: NYC Department of Education

I suspect that in 2016, as much of the IaaS and PaaS layers begin/complete their moves to the cloud through services provided by the likes of AWS, Azure, SoftLayer, etc, we will begin to see more B2B SaaS applications layered on top to replace the traditional on-prem software solutions. This will bring much needed functionality, analytics and a cleaner user experience to the education world. This in turn will increase productivity for educators working at the district and administrative level across school systems.

2) Learning content will be far more personalized

Recent survey data showed that less than 50% of teachers reported having digital resources that could be used to meet teaching standards. Moreover existing technology solutions often are not tailored to individual students and their specific needs. The next generation of student-centric software tools (across grade levels and subjects) will provide high levels of granularity and insight into the specific needs of individual students allowing for an end-to-end customized experience across lesson planning/ delivery, class activities and periodic assessments. This will be even more important for special needs students in ICT, 12/6:1 or similar learning environments. Personalizing learning content will ultimately allow for a more tailored learning experience and better long-term knowledge retention.

3) K-12 teacher development will rely more heavily on software platforms and tools

As it stands today, professional development for teachers is largely untouched by software tools and applications. At the district level, spend on professional development for K-12 teachers in the U.S. is ~$3B and usually takes 1 of 4 forms: (1) periodic school-wide workshops, (2) observation of other teachers, (3) coaching (usually by a more experienced teacher) and (4) generic online research.

In 2016, we will begin to see more PD content move to the cloud as doing so makes training teachers: (a) less expensive, (b) more accessible and (c) more personalized. Horizontal HR solutions like Workday, Cornerstone OnDemand and PeopleSoft will be re-built / tailored for the education sector enabling professional development in education to be more sophisticated and effective.

4) Higher education software tools will focus more on degree completion

As the Baby boomer generations’ offspring (Gen X) move beyond the college-age window, the college enrollment growth rate will begin to slow and the focus for many higher-education institutions, from a revenue perspective, will shift away from recruitment/ matriculation and towards retention/ graduation. As of 2012, ~50% of all college students were in at least 1 remediation course.

In the years ahead, there will be a greater focus on retention and remediation of students already admitted into colleges. Software tools will increasingly be used for (1) recruiting the right type of student to admit, (2) providing BI and predictive analytics platforms for identifying and tracking high at-risk students and (3) supporting remediation instruction for at-risk students to get them back “on track.”

5) Online courses and degrees will become more relevant

While online courses (including MOOCs) and degree programs will never replace the off-line experience, these offerings will increasingly be used to supplement off-line instruction as well as provide a new delivery format to non-traditional segments (such as continuing education students). Two important trends are happening that will accelerate the pace at which this happens in 2016: (1) online courses and degrees are becoming more socially acceptable (many programs have been accredited, employers are increasingly hiring graduates from these programs, etc.) and (2) the infrastructure (managing enrollment, handling payment, providing tech support, hosting platforms, etc.) to provide these offerings is cheaper and more readily available.

As such, we will see a greater number of higher education institutions join the ranks of UNC, USC, ASU and many others that provide courses and degrees online. This trend will create a range of software opportunities across: video collaboration, course development and delivery, student / faculty services and recruitment / retention.

6) Demand for software tools that teach skill-based training will increase

As colleges increasingly charge exorbitant tuition fees while failing to equip graduates will real skills, demand for skill-based programs, vocational certifications and other alternative teaching tools will increase. In 2013, the number of vocational certificates granted was nearly 1M—up 35% from 2005. Similarly, from 2013 to 2015, the number of graduates who graduated from coding programs (such as Codecademy) increased 630%+.

In 2016, we will see an even greater emphasis on tools for skill-based training. Some of this will be purely software delivered via the cloud and some will be more hybrid: software mixed with in-person training. Companies like Lynda (acquired by LinkedIn), Udacity, General Assembly and Udemy have already made significant dents in this space. We will see much more of this in the upcoming year.

Google Glass

Since the beginning of the computing industry, it has been the case that hardware platforms produce software innovation. A single innovation in hardware can provide the base for a multitude of software applications. In the process, thousands of companies are created, millions of customers are acquired and billions of dollars in revenues are generated.

Hardware innovation in the 1970s and 1980s by IBM around the personal computer led to software innovation by now Fortune 500 companies like Microsoft, Oracle, Adobe, Symantec and SAP. In the mid 2000s, hardware innovation by Apple on the iPhone led to many of today’s rising stars: Twitter, Instagram, Flipboard and Waze are all built on mobile platforms.

It is still too early to tell whether Google Glass will be the next ubiquitously used hardware platform spurring software innovation. It looks like the product development teams have a ways to go to iron out some of the kinks and lower production costs to get the price down to what consumers would be willing to pay In fact, last week Forrester Report published survey results showing that only 12% or approximately 21.6 million U.S. online consumer would use Google Glass on an everyday basis.

Yet, if we looked back in time, I don’t think the early adoption numbers for the personal computer or iPhone would be all that different, especially pre-launch. Nonetheless here we are in 2013 and I can count on one hand how many people I know who don’t have a smartphone or a personal computer.

If Glass is able to capture broad consumer appeal, you can count on another big wave of software innovation. Already, Google has released parts of its developer API and the applications are limitless—everything from education to health to advertising. Smart entrepreneurs and VCs will already start thinking about software applications Glass could enable. It’s a great time for innovation.

Customer Acquisition Challenges for Location-based Startups

Location-based startups seem to be pretty popular these days. Some of the most successful location based startups (i.e. Foursquare, Shopkick, Yelp, etc.,) have received multiple rounds of funding, achieved nice exits and set a high bar for others to follow. Nonetheless, many location-based start-ups still face a number of challenges when it comes to growth – particularly in the area of customer acquisition. This post seeks to dig a little further into the issue of customer acquisition for location-based apps. Here are some steps startups can take to address challenges they face in acquiring new customers.

Performance Measurement: It’s important to first take a step back and reflect on the existing product and existing customers. Some questions to ask include: Who are the customers? Are there different segments? How are the current customers using the product? Are there differences in the ways various segments use the product? How is the product performing among various customer segments? An understanding of these questions will allow the portfolio company to better target its strategy—whether that is to strengthen its position in a current market or pivot a little and go after a different set of customers.

Product Differentiation: Startups looking to acquire customers should differentiate their product from the competition and make the value-add very clear. That way, from a customer’s perspective, there is a clear reason for switching to the new product. Product differentiation can build customer loyalty and allow the startup to monetize its partnerships with advertisers or other 3^rd party vendors. Mobile represents a huge opportunity to creatively differentiate across a range of platforms. Startups should find unique ways to combine location-based data with mobile platforms to provide users with useful information. Foursquare’s check-in rewards system seems to have championed this strategy.

Personalization/Segmentation: Location-based startups should also focus on personalizing as much as possible when trying to acquire new customers. This means offering a different type of service for different customer segments. LinkedIn has done a great job of this. There is a free service for the 80% of customers who only use the platform a few times a year. Another 15% of the customer segment, who use the product monthly or weekly, pay for a slight business upgrade. The final 5% who use the service daily pay for the most expensive “executive” version—with expanded product features. But personalization should move beyond product lines to also include targeted marketing and sales campaigns so that potential users are finding out about the product through channels that appeal to them most.

Focus on Branding: Location-based startups can also attract customers by building a really strong brand. Brand loyalty seems to be mostly based on three things: differentiation, relevance and emotion. Some examples: Apple has built an incredible brand around the concept of aesthetics and beautiful design. Etsy has built a brand around homemade/vintage goods. Focusing on the above 3 keys to build a really strong brand can, in turn, attract customers.

Customer Service: One way to really attract customers (and to also differentiate from the competition) is to provide strong customer service. This entails providing a high quality service or product experience, showing support for customers during and after the sales process, developing customer loyalty programs and creating a customer service team with a 100% focus on customer satisfaction.

2013: Startups on the Rise

This is definitely a bit over due, but here are my thoughts on the up-and-coming start-ups to keep an eye on in 2013. Some of these have already built quite a bit of traction, others have been lurking for a while waiting for the right time and others were started less than a year ago. I’ll have to do a follow up post at the end of the year to see how they end up doing.

Uber: This mobile app takes much of the hassle out of finding a cab to get around town in. The app allows you to request a cab at any time, let’s you know how far away the cab is, texts you when your cab has arrived and then allows you to pay for the cab using the app. It’s a very convenient way of getting around. I’m hoping the Uber team can work out some of the product kinks (in NYC for example there are many restriction around the black cabs that Uber works with), so that the service can go more mainstream as it’s currently a much-needed service. Once these challenges are resolved, I think this app can have much success in most major metropolitan hubs.

MoviePass: As a movie theater subscription service, MoviePass is building something very new to the movie industry—the ability for viewers to go see an unlimited amount of movies each month for a flat fee rather than paying for each individual movie. It’s kind of like the concept of having season tickets to a sporting event. This will be particularly useful for avid moviegoers who see multiple movies each month. Many of my friends who are movie fanatics have already signed up for beta access to MoviePass.

Fab: Many thought that e-commerce was in decline but Etsy and Fab seem to be proving that theory wrong. Of particular importance Fab, with its focus on “everyday design”, has been an innovator in social commerce—seamlessly integrating with facebook and twitter. Fab also has created better mobile apps than any other e-commerce platform making it easier to make purchases regardless of location.

2U (formerly 2tor): 2U is disrupting education by providing high quality online learning environments. 2U partners with top-tier universities to deliver rigorous, and selective graduate degree and undergraduate for-credit programs online. Some of the universities currently using the 2U platform include: USC, UNC, Georgetown and Washington University in St. Louis. As a recent college grad, former teacher and soon-to-be graduate student, 2U’s approach seems to be the future of education and is already disrupting the way in which many universities think about education technology.

Stamped: Stamped is already becoming popular in several of my various friend circles. Now acquired by Yahoo, Stamp is a mobile app that lets you recommend and share your favorite things like: movies, books and restaurants. One of the best features is the ability to receive recommendations from friends and other reliable sources (rather than anonymous online reviews). The ideas behind this could disrupt the way online reviews and recommendation systems currently operate.

Multi-weather Energy Generators

Each year millions of people are affected by weather related events like storms, blizzards and hurricanes. Among other challenges, these weather events result in wide spread power outages and damages to electrical infrastructure—requiring repair that often takes weeks to restore. It is estimated that nearly 8 million people on the east coast lost power during Hurricane Sandy and another million people faced power outages this past weekend during Winter Storm Nemo. Many of these people went days if not weeks without power.

To address this I propose the creation of multi-weather energy generators (MEGs). Similar to traditional back-up generators, MEGs would provide an alternative form of energy to power homes and commercial businesses during and in the aftermath of major storms. However, these devices would be multi-faceted and would work throughout the year to continually store and synthesize various forms of energy into some sort of battery format that could then be used on an as needed basis. During the Summer/Spring for example, MEGs would use solar panels to continually convert solar energy into stored electrical energy. During the Fall/Winter, MEGs would use wind turbines to convert and store mechanical energy into electrical energy.

For most of the year the energy created by MEGs would simply sit as stored energy in a battery format. However, during the 2-3 weeks of the year when weather sours and households faced major power outages, MEGs could be drawn on to provide much needed power until the power grid is restored. In designing these devices the focus would be on making them light-weight, low-maintenance and affordable to ensure that consumers would not incur a large cost in terms of money spent and time needed to maintain the devices.

Mobile Corner: Some Themes

Mobile has been the one of the big buzz themes in startup land for the last year or so. Companies like Foursquare, Spotify and Flipboard are pushing the limit of what our cellular devices can do and generating incredible innovation in areas like social networking, news delivery, digital entertainment, gaming and peer-to-peer communication. Yet despite these successes the market is still quite raw and much remains unknown about what makes a good mobile app successful. Even less certain is the revenue model. Should mobile startups today go with in-app or separate app freemiums? Virtual currency? Subscriptions? A 100% ad based model?

What does seem clear, however, is that, as with web 2.0, it’s all about creating traffic. If you can create a tool that provides value to users and makes something about their lives simpler or more engaging, you may have something that could garner attention in the mobile market. So here are a few of my thoughts on what might make a mobile startup successful:

1) Be light-weight and simple

I doubt that users of mobile apps are looking to get the same experience that they get on their laptop or home computer. The hours spent on facebook on your couch at home are less likely to happen when you’re up and about. When it comes to mobile, people want things that are simple, fast and easy to use. They want to be connected on the go and are focused more on 1:1 connections rather than large social interactions. Kik for example has pushed the frontier of texting, making it an incredibly fast (we’re talking real time) and light weight platform that goes cross-platforms (Phone, Android, Windows Phone 7, Symbian, and BlackBerry)

2) Consider Gaming

The great thing about mobile devices is that they can be taken anywhere. Most people spend a fair amount of time traveling each day (whether on a bus to school, train to work, etc.,) With that commute comes the time to play games on platforms like Zynga. Games have traditionally been a single player human-to-computer interaction but, increasingly it’s becoming more interactive allowing people to connect with existing friends and play peer-to-peer. There are some “gaming” apps that are a bit more serious in nature. Everest for example is a mobile platform for framing and achieving goals. The app lets you create specific goals, break them down into incremental steps and then focus on achieving these goals with the emotional support of friends. This will be an interesting startup to follow as it moves out of beta.

3) Style. Style. Style.

One of the most important keys to the success of a mobile device is its “elegance” factor. Appearances and first impressions matter in the competitive and still developing world of mobile. Apps should follow basic principles of design and usability; they should also mimic the desktop interface closely (or at the very least follow similar conventions). A thoughtfully and creatively designed product stands a much greater chance of being successful in the mobile world. Here’s a link to some mobile apps that were knockouts in terms of style in 2011:

http://mashable.com/2011/12/27/best-mobile-apps-2011/

EdTech Corner: Nilsby

I’ve been meaning to do a quick post about a start-up I’ve been advising and am really interested in promoting but just haven’t had the time to really dig into for a while. I’m afraid to say that this post isn’t going to do justice to the importance of a toolkit like Nilsby, but it’s enough to say that a community like this is much needed for the millions of families with a special needs child.

The start-up is called Nilsby and it focuses on creating an online community for special needs students, teachers and families. The site allows members of the special needs community to ask questions of each other, offer advice and provide support. The startup just got out of private beta, and they looking for people to add content and help grow the site. If your a teacher or parent with a special need student, this site is for you and I’d encourage you to check it out today.

Startup Idea: The Computer as Health & Fitness Monitor

Health and Fitness are two of the most discussed topics in modern western culture. It seems as though everyone from doctors to health gurus to gym trainers has an opinion on how to stay healthy and fit. The number of magazines, television shows, fitness products, medical appliances and health related personnel is simply mind bogging. Entire industries and political interest groups are organized around the human body and how one can preserve its physical, mental and emotional sanctity. Because of the decentralized nature of all this knowledge and information, people often spend lots of money and hours of their time simply trying to organize their lives so they can stay healthy and fit.

Let’s take for example a diabetic female who is trying to lose 20 pounds – we’ll name her Sally for simplicity. Because Sally is diabetic, she must constantly monitor her insulin level and take the appropriate quantity of the right medication at a set time each day. If she forgets to take her medication she will suffer physically from fatigue and other complications. Because Sally is on a diet, she must constantly consult with her doctor on the appropriate foods, vitamins and minerals she ought to be taking. In addition, she is probably working with a fitness trainer each week to burn fat via exercise. She is also most likely weighing herself each day and trying to chart her own progress. This weekly routine involves interacting with many different people, devices and information sources. For Sally the gap between the gulf of execution and gulf of evaluation, at each phase and collectively as a whole, is extremely wide. If there were a way to aggregate all this information into one computer operated device with strong visibility and solid feedback, Sally would be much better off.

This is where my invented Health and Fitness monitor would come into play. This device would be a ring shaped product that a user, we’ll continue with Sally, could place on her finger and wear each day. The ring would monitor and store to memory all activity within the human body. At any point in time, Sally could turn on a display mode which would pull up a 3-D visual of her body in mid-air. All action done with the device would be via interaction with this 3-D visual floating in the air:

The Health and Fitness monitor would allow Sally to view her body from a whole range of angles: the skeleton, nervous system, blood vessels and organs, muscle tissue, etc., It would also allow her to monitor her insulin levels and weight fluctuation—giving her a running analysis week by week, day by day. The monitor would send her reminders, in the form of vibrating sounds or flashing lights, when she needed to take a certain medication, go for a run or get some rest. The monitor would also be integrated with other systems including her doctor and fitness monitor’s computers, her tread mill, her digital cook book and her personal calendar allowing for Sally to take complete control of organizing and centralizing information.

The design of the Health and Fitness monitor would be intuitive in the sense that there would be a number of constraints that would make each action easy to see, complete, interpret, evaluate and reverse (if necessary). Sally would probably be most interested in using the command mode of the monitor, but for more tech savvy individuals, a direct manipulation mode with open source software would be made available. The monitor would also map the relationship between all controls and actions—in particular the touch sensitive buttons hovering in the air. The feedback from the device would utilize both sound and visual changes to ensure that Sally knows what the effects of her actions are. The ultimate goals would be to aggregate information into one centralized source and narrow the afore mentioned gap between the gulf of execution and gulf of evaluation.

From a user point of view and from a technological point of view, this would be a really great invention that could help many. However, two important factors to consider are: privacy and patient confidentiality. These topics raise a number of questions that would need to be answered if the Health and Fitness Monitor were to be produced and integrated across multiple systems, where many people would have access to personal information. But from a design perspective there are quite a few benefits.