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Olson’s Observations

Technology. Innovation. Science. VC. Media. :: by Eric Olson

Archive for January, 2008

Book Review: Six Degrees

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Six DegreesReading Time: 6 minutes 30 seconds

Do you ever wonder about Milgram’s six degrees of separation experiment? Or about the spread of disease? Or about the spread of products and marketing messages? I am sure most people reading this site have thought of one or more of these things at length at one point or another. Specifically I am sure that we have all thought about how products, mainly consumer web products, spread and attract more users.

The typical themes we run into as we delve into the idea spreading space come from books like the Tipping Point or The Influentials. These books state that it is a small group of people, Gladwell’s connectors and Keller’s influentials, that cause a product to spread virally or in other words cause a cascade (since products don’t technically spread virally most of the time but that is a whole other post).

However, none of these books take a look at the science and math behind networks. In other words, they don’t really provide any hard evidence that the theory of influentials is actually how things work.

Enter Duncan Watts and his book Six Degrees: The Science of a Connected Age. Watts, a mathematician-turned-sociologist currently on sabbatical from Columbia University and working at Yahoo! Research, was unsettled by the lack of actual testing of things like Milgram’s Six Degrees experiment and the idea of influentials and how they are the cause of viral product adoption. He was so unsettled in fact that he has spent the last decade studying the science of networks.

The last decade of his thoughts comprise the bulk of Six Degrees in which everything he has worked on is put into layman’s terms. Watts uses easy to grasp examples and personal narratives to help the reader understand the mysteries behind networks. The book is very conversational making it very approachable even for people with no science background.

That said, Watts’ findings are very interesting making this book a must read. I will speak about his findings on internet marketing here since that is what I think most of us are interested in although he does describe many more areas in which his theories apply.

What’s big revelation you ask? Well, Watts has found that influentials don’t really matter (at least in terms of starting trends - they can make trends bigger though). Yes, you read right, while more and more marketers pour dollars into targeting influentials Watts is saying that all of that may be a waste.

Unsurprisingly there are a lot of advertising industry folks who aren’t appreciative of Watts’ work but his computer models and research are pretty compelling. Even if you don’t think the models he’s built represent society in a realistic way just think about this:

All Watts is really saying is that average people are influentials at any given time in their lives. It isn’t the hyperconnected that are starting all of the trends.

Watts argues that a lot of the cases that support the influentials theory were analyzed after the fact (revisionist history). Gladwell’s Hush Puppies example is a good one. Gladwell says that Hush Puppies broke out in 1994 (5000% growth in sales) because a handful of influential Lower East Side hipsters started wearing them and spread the trend.

Watts, on the other hand, logically states that those hipsters were wearing a number of other items but the only thing that popped were the Hush Puppies. If they were influentials in the classic sense you would think more than just the Hush Puppies would have popped. So, why didn’t anything else the hipsters were wearing pop?

Watts figures that the answer to that question lies with society as a whole.

Watts says that society needs to be ready to embrace a trend and if it is anyone can tip the scales. However, if society isn’t ready no amount of influencers pushing a product can force a cascade to break.

Take a look at this excerpt from a recent article in Fast Company to get an idea of one experiment that Watts conducted. I think it will get the point across:

As Watts argues, there are a lot of ways an Influential could convert the masses. Merely talking to a friend once could infect her with an idea. Or it might take several conversations. Or maybe Influentials are so persuasive they’re like trend vampires, and each victim they bite becomes hyperpersuasive too. Depending on how you define the specific mechanics of influence, you’d get totally different types of epidemics–or maybe none at all. But gurus of the Influentials theory never directly clarify these mechanics.

“All they’ll ever say,” Watts insists, is that a) there are people who are more influential than others, and b) they are disproportionately important in getting a trend going.

That may be oversimplifying it a bit, but last year, Watts decided to put the whole idea to the test by building another Sims-like computer simulation. He programmed a group of 10,000 people, all governed by a few simple interpersonal rules. Each was able to communicate with anyone nearby. With every contact, each had a small probability of “infecting” another. And each person also paid attention to what was happening around him: If lots of other people were adopting a trend, he would be more likely to join, and vice versa. The “people” in the virtual society had varying amounts of sociability–some were more connected than others. Watts designated the top 10% most-connected as Influentials; they could affect four times as many people as the average Joe. In essence, it was a virtual society run–in a very crude fashion–according to the rules laid out by thinkers like Gladwell and Keller.

Watts set the test in motion by randomly picking one person as a trendsetter, then sat back to see if the trend would spread. He did so thousands of times in a row.

The results were deeply counterintuitive. The experiment did produce several hundred society wide infections. But in the large majority of cases, the cascade began with an average Joe (although in cases where an Influential touched off the trend, it spread much further). To stack the deck in favor of Influentials, Watts changed the simulation, making them 10 times more connected. Now they could infect 40 times more people than the average citizen (and again, when they kicked off a cascade, it was substantially larger). But the rank-and-file citizen was still far more likely to start a contagion.

Why didn’t the Influentials wield more power? With 40 times the reach of a normal person, why couldn’t they kick-start a trend every time? Watts believes this is because a trend’s success depends not on the person who starts it, but on how susceptible the society is overall to the trend–not how persuasive the early adopter is, but whether everyone else is easily persuaded. And in fact, when Watts tweaked his model to increase everyone’s odds of being infected, the number of trends skyrocketed.

Interesting isn’t it? Yet, it seems as if this is something we always knew was true but we ignored those feeling because we wanted to believe that we could simply hit a few influentials and things would pop. As we know, the world is a complex place so it stands to reason that influentials wouldn’t be the only cause for a viral outbreak (although Watts does say, and has found, that they do help make things big).

Another case for Watts’ theory that is a little closer to home is the Tech Crunch effect. Arguably the Tech Crunch crowd are the influentials in the tech space and yet, after they all try a product and add thousands of users quickly, the rush typically fades and the product fails to cross the chasm into the main stream.

Surprisingly this all leads to mass media being the best way to get a message out since, if you believe Watts, you want to touch as many people as possible and make your message easily shareable in the hopes that it will be shared and a cascade will ensue. This is, of course, counterintuitive to a lot of top marketing wisdom of the day that says you should target a small group of influentials (of course this doesn’t relate to niche products where very targeted transactional advertising makes a lot of sense - it relates more to products developed for a broad audience i.e. Nintendo Wiis, computers, consumer web apps etc.).

Well, I am afraid this book review has gone on too long. I will close by saying that anyone working in the web space, and especially those in the consumer web space, should read Six Degrees. Whether you believe Watts’ work or not the book will still help to further your thinking on the spread of ideas and products in society.

Written by Eric Olson

January 31st, 2008 at 10:22 am

Posted in Books, Web

Multitasking: Scientists Say It Hurts Our Brains

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Reading Time: 4 minutes 30 seconds

People have always given me a bit of a hard time for not being a great multitasker. In fact, my girlfriend makes fun of me here and there for not being able to carry on a conversation and read a book at the same time or about how I really zone into my work or my writing and don’t realize that she’s talking to me. (To be fair, she is super supportive and the multitasking thing is just one of the very few things she teases me about. I mean, I am honestly not sure how she puts up with me. She’s a saint.)

I used to think multitasking was something that I needed to work on but I always had this feeling that focusing on a task, one task, would result in a better end product and in me learning much more about what I was doing and how I could improve.

Well, it turns out that the scientists (Who are these people anyway? I just picture a huge lab full of guys in white lab coats with a bunch of “test subjects” sitting around with a bunch of machines and wires hooked to them. Too much sci-fi for me…) may have proven that my suspicion about multitasking not being very productive is actually a fact.

Thanks to my friend Jason I came across an article in the Atlantic that discusses the topic and has some very good insight into why multitasking is not good for us (and our brains).

Summary: our brain is, in fact, not a computer capable of doing many things at once (actually it can do many things at once but in the cases where the brain is in that mode it actually concentrates a lot on concentrating rather than the tasks it is trying to complete). It is, however, a highly advanced tool capable of solving large problems and focusing on one task at a time with complete clarity. Check out this excerpt from the Altantic article as I think it illustrates the point nicely.

Multitasking messes with the brain in several ways. At the most basic level, the mental balancing acts that it requires—the constant switching and pivoting—energize regions of the brain that specialize in visual processing and physical coordination and simultaneously appear to shortchange some of the higher areas related to memory and learning. We concentrate on the act of concentration at the expense of whatever it is that we’re supposed to be concentrating on.

What does this mean in practice? Consider a recent experiment at UCLA, where researchers asked a group of 20-somethings to sort index cards in two trials, once in silence and once while simultaneously listening for specific tones in a series of randomly presented sounds. The subjects’ brains coped with the additional task by shifting responsibility from the hippocampus—which stores and recalls information—to the striatum, which takes care of rote, repetitive activities. Thanks to this switch, the subjects managed to sort the cards just as well with the musical distraction—but they had a much harder time remembering what, exactly, they’d been sorting once the experiment was over.

Even worse, certain studies find that multitasking boosts the level of stress-related hormones such as cortisol and adrenaline and wears down our systems through biochemical friction, prematurely aging us. In the short term, the confusion, fatigue, and chaos merely hamper our ability to focus and analyze, but in the long term, they may cause it to atrophy.

Ouch! That is not good at all. What’s that you say? Not a fan of science? OK, let’s take a look at the monetary cost of multitasking. Atlantic article, show us the money!

Six hundred and fifty billion dollars [Eric's note: this is a per year figure.]. That’s what we might call our National Attention Deficit, according to Jonathan B. Spira, who’s the chief analyst at a business- research firm called Basex and has estimated the per annum cost to the economy of multitasking-induced disruptions. (He obtained the figure by surveying office workers across the country, who reported that some 28 percent of their time was wasted dealing with multitasking- related transitions and interruptions.)

Now do I have your attention? Right… you’re reading this while also trying to do yoga and e-mail people on your BlackBerry. My bad. I should have known.

With all that said I would like to note that you can in fact have a variety of activities and interests in your life and even different things to do at work (everyone that knows me well knows I do a lot of different things in and outside of work). The idea is not that you should only do one specific thing in life, the idea is that you should focus on one thing at a time.

Basically you just need to break up your day. While you are answering e-mail that is all you should be doing. While you are working on a big client proposal you shouldn’t be doing anything else (especially answering intermittent e-mails). While you are riding your bike you shouldn’t be listening to your iPod or reading e-mail on your BlackBerry (seems crazy but I have seen them both and in the latter case the guy was coming straight at me - don’t worry though, collision avoided due to my focus on the task at hand). While you are reading, just read. Don’t keep answering the e-mail that come in, don’t answer your phone (unless it may be an emergency), etc. You get the idea. It’s not about having one task or activity in life, it’s simply about focusing on one at a time.

Multitasking is really hurting the experience of life in the sense that the journey is lost in the rush to some end game. That’s truly unfortunate because the journey is what it’s all about. It’s where you learn things, grow as a person and really enjoy your life.

So, next time you are about to multitask remember that life’s all about the journey, oh, and that you don’t want to fry your brain early on in life. Frying your brain = bad.

Written by Eric Olson

January 30th, 2008 at 8:07 pm

Sweet Home Chicago

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I have been telling folks close to me and word has been moving around so I figured it was about time for me to announce publicly that I am moving back to Chicago in a few weeks.

I am really excited about coming back. I missed everyone (our conversations about business, technology, new ideas, etc.) and I missed working on building up Chicagoland/Midwest as the technology hub that it should be. Frankly, Chicago is special and I didn’t realize how special it was until I left.

As I did when I decided to come to NYC I will leave you with a FAQ to explain what’s going on with me and the move. Enjoy!

Eric Moves Back to Chicago: The FAQ

Q: What happened with BuzzFeed? Are you still working for them when you come back or have you left the company?

A: Good question. BuzzFeed is a great company with some solid technology and I see big things for them in the future. That said, the role turned out not to be right for me.

It was an amiable parting for sure and I think Jonah will find a guy who is better suited to the business (i.e. they need a killer ad sales guy with 10+ years experience in ad sales to run things there and that isn’t me).

So, yes, I have left the company and I do wish the guys at BuzzFeed the best of luck moving forward. I have no doubt they will change the world of advertising for the better.

Q: Well, what the heck are you going to do when you get to Chicago then?

A: To start, I will be consulting with a few companies in Chicago on business development, product, marketing, etc. which I am really looking forward to. It’ll give me a chance to work across different industries and pick up some new stuff as well as work on a variety of problems. If you need some consulting just shoot me a note and we can see what makes sense (eric [at] ericjohnolson.com).

I will also be focusing more time on TECH cocktail and on bringing the Chicagoland tech community together. Frank and I have some ambitious plans for TECH cocktail in 2008 so stay tuned to our site for updates.

In the long term I actually do have a gig lined up although I won’t be starting full time for a little while. Unfortunately I can’t say much more than that right now but stay tuned for an announcement to come in the future. Needless to say this gig is exactly what I should be/want to be doing and I am very excited about it. I will also be working with some great guys who I will be able to learn a lot from.

Q: So how would you characterize your NYC experience?

A: I am actually very positive on the NYC experience. I had a great time here and at BuzzFeed. I was able to meet a lot of great people and, perhaps even more importantly, learn a lot about myself.

Without getting to zen-like I would say that this stint in NYC really woke me up. It caused me to reevaluate what I wanted out of life and business. This introspection is what lead me back to Chicago and to the gig I will announce at a later date.

All in all I realize that I needed to come out to NYC and do this to take a big step forward in my career and in life.

Q: Aren’t you worried about the blip on your resume?

A: I was initially but in the end of the day using four months of time and having a blip on my resume was completely worth it to gain clarity on my career (and on life).

Q: This isn’t a joke is it? I checked the calendar is it definitely isn’t anywhere near April 1st.

A: This is not a joke at all. I truly consider Chicago home now. In fact, I never called it home until the other day when I was talking to my friend John about moving back. He noted immediately that it was the first time I had referred to Chicago as home. That was another one of those moments where it hit me that I had grown a lot over the past four months. Good stuff.

Q: When will you be back in town for good?

A: I plan on moving back over the weekend of the 16th and 17thof February. That puts me back in Chicago full time on February 18th just ahead of TECH cocktail 7.

Q: What about all the training you have been doing and the cycling race team you joined in NYC?

A: I will continue training and remain a member of NYvelocity (thankfully they wanted to continue to work with me). Those guys are great and they have really opened my eyes to the world of bike racing.

Most likely you will find me up in Evanston on Saturday and Sunday mornings riding with fellow entrepreneur/technology guy Troy Henikoff and the rest of the gang and then on the lakefront trail during the weekdays. If you’re a cyclist and want to join in just shoot me an e-mail.

Q: You know it is frickin’ cold here right?

A: Yup… can’t say I am looking forward to Chicago winters but I’ll deal!

Q: Was it the deep dish pizza that really brought you back? Or the Italian beefs?

A: I did develop a taste for deep dish pizza over the last couple years in Chicago but I still am not quite sure about Chicago’s weird pizza stance… I actually have never had an Italian beef. I need to do that.

Q: It was potbelly wasn’t it?

A: You got me. This is all potbelly related. Mmmmmm…. toasty chicken salad sandwich on wheat…. ahhhhhhhh (trying to imitate Homer Simpson with text is kind of hard).

So that about does it. I am psyched to be coming back and to see everyone (and most importantly to be back with my girl). TECH cocktail 7 will inadvertently be my re-insertion into Chicago tech so I hope to see you all there. Onward!

Written by Eric Olson

January 29th, 2008 at 1:47 pm

Posted in Chicago

DEMO Conference Update: LiquidTalk and Good2Gether

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Unfortunately I was unable to make the DEMO conference this week due to scheduling issues which is a bummer but I will be covering some of the companies I find interesting right here anyhow (with the aid of Frank Gruber who is on the scene). Without further adieu here is the first DEMO update:

LiquidTalk

I was very excited when I first heard that LiquidTalk was going to be at DEMO this year. LiquidTalk is a Chicago based company (yeah, I may be a biased because of that) that has come up with some great enterprise technology that brings new media to the corporation.

LiquidTalk’s core technology allows corporations with large distributed sales forces to easily distribute corporate knowledge to these remote individuals via podcasts. This timely and easy to consume media helps sales professionals stay up to date while they wouldn’t normally be able to be productive (i.e. driving between appointments, on a flight, etc.) which ultimately will help them close more sales.

At DEMO tomorrow LiquidTalk will show off their new BlackBerry based technology for the first time. I have no doubt it’ll be a pretty sweet demo as their prior demo of their iPod technology at TECH cocktail a while back was a lot of fun.

From all of us in Chicago - good luck guys. Make us proud!

Good2Gether

As you guys know I am a sucker for a good social venture (aren’t all social ventures good… clearly I should use a thesaurus more often) and this looks like one.

The idea behind Good2Gether is to bring together not-for-profit organizations, volunteers, the media and large corporations with what it calls a “philanthropic social networking service.”

The issues Good2Gether addresses are:

Corporations are always looking for ways to make themselves look good in the eyes of the world via supporting not-for-profits but they often have a hard time finding them (and of course the not-for-profits can use the support).

Media companies have a lot of eyeballs and not-for-profit websites do not. Media companies are also looking for good stories which they could potentially get from the not-for-profits.

Not-for-profits are always looking for volunteers and but, due to in part to poor websites, volunteers who want to help are often left out in the cold (I can say this has happened many times to me. I want to volunteer my time but find it very hard to do so.)

Good2Gether aims to alleviate all of these issues through their product which will bring together all of the groups that play in the not-for-profit space and help them find ways to interact.

Good2Gether has already landed a handful of the top media outlets in the country along with a number of large not-for-profits and corporations so it seems they are off to a great start. I am all for this application and I really hope they are able to keep up the momentum.

Just imagine seeing a news article about a natural disaster with a Good2Gether box listing opportunities for the public to help right next to it. You click an opportunity and you are brought to a page that allows you to easily apply to volunteer. Large corporations will also find it easy to donate and send employees to help and the media can even get a story out of all the people brought together via the web to help out in a disaster. Not bad at all.

Written by Eric Olson

January 28th, 2008 at 7:38 pm

World Bicycle Relief: The Power of Bicycles

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World Bicycle ReliefReading Time: 3 minutes

As most of you know I think a lot about the developing world. Most of that thinking to date has centered around microfinance. Being a finance guy by background microfinance appealed to me from day one. It is a very innovative way to empower people in developing countries to start businesses that will ultimately help them rise above the poverty line.

Teaching a man to fish. What could be better than that in terms of long term sustainability?

Recently I found my thoughts turning to the bicycle. I do think about bikes a lot in that I use one to commute to work and I also have begun to seriously train in order to race bikes. Cycling is truly a passion of mine.

So, I guess I shouldn’t say that I recently have started to think about bikes. What I meant was I have begun to think about how bikes could (and do) make a difference in two areas I am concerned about: third world development and the environment.

The environmental piece is easier to pick up on in that bikes are emission free vehicles. That said I should address the fact that it does takes energy to make bikes but the amount of energy is actually pretty low. In fact, the amount of energy it takes to produce one bike is about 1/20th of what it takes to produce a car. On top of that bikes last much longer than cars due to the lack of a problematic internal combustion engine. In fact, my commuting bike is an early 80s Fuji and it is still going strong. (Also, because bikes are powered by humans, the humans that power the bikes are also in better physical shape (goodbye obesity problem!).)

If we all started to ride bikes more there is no doubt we’d see environmental benefits (and health and happiness benefits as well) but what I really want to discuss in this piece is the impact bikes have on developing nations.

Bicycles are a much more efficient form of transportation than walking which, in most rural developing areas, is the only way people can get around. Therefore, if people in developing nations were given access to bicycles their standard of living would be improved in a number of ways due to their increased capacity.

Since pictures really are worth 1000 words (and because I love info graphics) I will use the images below to illustrate my point (info graphics courtesy of World Bicycle Relief).

———————————

Time
During a commuting day of 10 miles traveled, a bicycle saves 3 hours.

  • Walking – 2.5 miles per hour
  • Bicycling – 10 miles per hour



Capacity
Riding a bicycle increases one’s capacity by 5 times.



Effort
As time increases, effort to travel increases. Riding a bicycle requires less effort, allowing one to travel farther in less time.



Distance
Over equal units of time, one can ride a bicycle 4 times the distance as one walking.




——————————–

After seeing those stats it is clear that more bicycles would help developing nations (and even help people get the most out of their microfinance loans). Let me guess, you want to help out right? Well, I was hoping you would.

It is very easy for the average person to help get bikes to developing nations should they feel compelled to do so. Anyone can donate to World Bicycle Relief who’s mission it is to get bikes into the hands of those that need them most.

World Bicycle Relief has worked with both SRAM and Trek Bicycles to create a bike specifically for use in Africa, the first area World Bicycle Relief is working to help (although WBR has jumped into places like Sri-Lanka in times of crisis to provide aid in the form of bikes).

Each of these bikes only costs $109 which is very inexpensive. You can either donate in $109 increments to buy bikes for folks in Africa or you can donate at any dollar amount simply to help the cause.

In the future programs like World Bicycle Relief are poised to help us all remember that the bicycle is the most elegant and useful form of transportation ever created. I know I for one am looking forward to a more widespread acceptance of the bicycle especially in the U.S..

In fact, I have been thinking a lot about what an organization would look like that would get bikes to people in major cities (and large suburbs) who need them and then organize commuting groups to encourage people to commute (and do errands) by bike (safety and confidence in numbers, etc.). However, that’s a whole other post.

Written by Eric Olson

January 28th, 2008 at 6:17 pm

Posted in Social Ventures

Good Magazine is Great

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I received my first issue of Good Magazine the other day (thanks Frank!) and I absolutely loved it. In fact, I read the thing cover to cover in one sitting.

For those that don’t know, Good Magazine is an effort to provide media about people doing good in the world to hopefully offset all the bad stuff that the mainstream media likes to focus on.

One of the things that makes Good Magazine such a great read is their very innovative approach to displaying information. Along with standard articles and ads they also provide a lot of info graphics. I have begun to really enjoy info graphics, especially ones that are very nicely done, because they convey information in a very engaging and stimulating way and Good Magazine has some great ones.

The other great thing about Good is that 100% of your $20 yearly subscription price goes to a charity of your choice (you can choose from a list of 10 charities). In my case the subscription money went to one of my favorite non-profits in the world - Kiva.org.

Check out Good Magazine if you get a chance and grab a subscription for yourself (or for a friend or family member).  I am sure you’ll enjoy it.

Written by Eric Olson

January 26th, 2008 at 12:35 pm

Posted in Social Ventures

Midwest Venture Summit 2008: Business Plan Submission Underway

with one comment

I received a note from the IVCA today about the Midwest Venture Summit that is coming up and I wanted to make sure I got the info out to all of you.

The Midwest Venture Summit is a great way for entrepreneurs of Midwest based early stage* and series A+** companies looking for funding to get in front of the Midwest’s top VCs. In fact, you can get in front of over 100 of them by presenting at the summit. Not too shabby.

The Midwest, as defined by the IVCA, includes these states: IA, IL, IN, KY, MI, MN, MO, NB, ND, OH, Western PA, SD, WI. These are the areas from which the VCs and various service providers will be coming from and from which your company needs to be from in order to participate in the summit.

I would suggest submitting your business plan if you are looking for funding in the Midwest. Sure, it costs $175 but you will get far more value than that if you are selected to present.

Even if you do not end up raising any money via your presentation at the summit (although companies that presented at the past years summit have raised $222mm to date so chances are pretty good that you may land a deal) you will get great feedback from the top business and technology minds in the Midwest that will help to shape your business going forward.

The deadline for submitting plans to the Midwest Venture Summit is January 31, 2008 so make sure to submit your plan sooner rather than later.

Again, this is a great opportunity for Midwest startups and VCs alike. Events like this one will help to put the Midwest on the map as the technology hub that it is.

Disclaimer/clarification: I do not receive any money from promoting this event. I just wanted to help get the word out.

MVS Details:

Dates: March 17th & 18th, 2008

City: Chicago, IL

Venues:

Day 1 will be located at the University of Chicago Gleacher Center, 450 North Cityfront Plaza Drive, Chicago

Day 2 will be located at the Sheraton Hotel & Towers, 301 East North Water Street, Chicago

—————-

IVCA Company Stage Definitions:

* Early stage companies typically have:

  • product or service in development
  • key management in place
  • have done initial marketing or pre-sales
  • friends & family money invested in the company

**Series A+ companies typically have:

  • already received institutional/angel money
  • are seeking investments to expand working capital or marketing and sales capabilities

Written by Eric Olson

January 24th, 2008 at 1:54 pm

Posted in Business, Chicago, Technology, VC