Pitches for Facebook for Web Apps – September, 2010

Event Summary

This event will:

• Provide an overview of essential design topics for web entrepreneurs
• Provide an overview of essential design topics for web entrepreneurs
• Connect designers and startups

Panel topics:

• What are the essential web design disciplines and why is each important? – graphic/visual, interaction, information architecture, print, branding/identity, user experience, research, usability testing, etc.
• Examples of startups with successful web design. How were these design efforts staffed/resourced?
• Startup design prioritization – how to know which design tasks are essential at which point in a given startup.
• In-house vs. outsourcing design – can you find a designer to do everything? What are the costs of hiring a design firm?
• How to hire designers – recruiting founders, hiring design firms, terms.
• How to know if your web design is working. How to measure the effectiveness of web design.
• How is working at a startup different than working at a design firm?

Moderator:

• Graham Lawlor, Founder of Ultra Light Startups and CEO of BrightMap

Panelists (alphabetic order):

• Christopher Fahey, Principal, User Experience Director at Behavior Design
• Seth Giammanco, Principal, Technology Lead at Minds On Design Lab
• Dan Maccarone, Co-Founder at Hard Candy Shell
• Gloria Petron, President of the New York City Usability Professionals’ Association

Panel Video

Pitch Video

Pitch List

Presentation Slides

Main Presentation – Web Design for Startups

Blog Posts

Web Design for Startups (by 12 Months to Launch)

Panelist Bios

Christopher Fahey (@chrisfahey)
Christopher is a founding partner and user experience director at Behavior, an award-winning interaction design consultancy focused on building compelling and elegant user experiences. At Behavior, Chris leads the UXD and product design strategies for clients creating new and innovative products and services, including The National Geographic Channel, Blurb.com, Allscripts, UNICEF, HBO, BusinessWeek, The Smithsonian Institution, XM Radio, and The Onion. Chris speaks often on user experience design, and he teaches at the School of Visual Arts’ interaction design MFA program.

Seth Giammanco (@mindsondesign)
Seth is Principal and technology lead at Minds On Design Lab, a print and web design and development studio that serves education and social service organizations and startups including SEO Watch andLeaderNation. An experienced software product and project manager, Seth combines strategic vision with hands-on technology development skills. Prior to joining Minds on Design Lab, Seth served as a project/product manager for over six years for TaskStream, an educational technology company.

Dan Maccarone (@danmaccarone)
Dan created Hard Candy Shell with Kevin Kearney after the two completed the strategy and design work on Hulu. At HCS, Dan has worked with clients such as the Wall Street Journal, Saturday Night Live, FourSquare, Gilt Group, Gawker and CBS Radio. He has spent over 12 years developing online business strategies and user-centered design solutions for companies such as NBC, Fox, Universal Music, GE Capital, AOL, Sports Illustrated, Discovery, Scholastic and Chivas Regal. He also served as the Senior Producer for the Digital Club Network, the Web’s first virtual concert venue.

Gloria Petron
After two years as a user experience consultant for Weil, Gotshal & Manges, LLP, Gloria now consults for Citibank and is President of the New York City Usability Professionals’ Association (NYC UPA), an association for marketing, design, technology and research professionals to share experiences and create a forum for learning and growth. Previously, Gloria held roles as art director, lead animator, interaction designer, prototype-builder, information architect, copywriter, usability tester, and project manager for startups and large firms including iXL, HSBC Private Bank and ModemMedia.

Question: What are the most tax effective ways for founders to “Pay themselves” for efforts in a startup after the initial startup share allocation round. Is there a more effective method apart from options?

Answer: Well, option grants are a tried and true method of post-funding Founder compensation, but not all options are created equal. Option grants to Founder employees working for a funded corporation should be made under the terms of a stockholder- approved employee incentive plan (“Plan”) that permits the issuance of incentive stock options (“ISOs”). With ISOs, the tax on any increased value of the underlying shares between the dates of option grant and option exercise is deferred until the underlying shares are sold—not on option exercise. In addition, with ISOs, the tax on such increased value can be paid at the preferential long-term capital gains rates, rather than the higher ordinary income rates, depending upon how long the underlying shares are held after ISO exercise (although the paying corporation would not be entitled to any compensation deduction for the value of the gained realized on sale of the shares underlying such ISOs). This is quite a difference from non–ISO options, or non-qualified options (“NQOs”), where the holder of the NQO is required to recognize ordinary compensation income on option exercise equal to the difference between the option exercise price and the fair market value of the underlying shares on the date of option exercise itself. Any tax payable on that gain is not deferred until the underlying shares are sold—resulting in the potential for a tax payment when there are no proceeds from the sale of the underlying shares to defray the tax. Finally, with NQOs, if the NQO holder is an employee – rather than an independent contractor –the gain recognized on option exercise constitutes “wages” with respect to which the company would be subject to withholding/payroll taxes.

A Founder of a corporation can also be compensated post-funding with “restricted stock”. Restricted stock awards are made without associated payment by the Founder recipient and can be made under the same Plan as ISOs. In general, a recipient of restricted stock must recognize ordinary compensation income when such stock vests, or immediately upon grant for the portion of such stock subject to an 83(b) election. The value of the award subject to tax equals the vesting date fair market value of the portion of the restricted stock that vests (or, in the case of an 83(b) election, the grant date fair market value of the entire grant). Such fair market value could be determined by reference to a recent arms-length equity or debt funding event for the company. If the restricted stock award vests over time – and no 83(b) election is filed– then the Founder would recognize ordinary compensation income on the vesting date (and the company would have a corresponding withholding and employment tax obligation in respect of such income) equal to the fair market value of the restricted stock that vests on that vesting date. Accordingly, this can create the “perverse” situation in which the Founder’s successful efforts to increase the company’s enterprise value could have an adverse “economic” impact by causing a corresponding increase in restricted stock valuation (and, thus, a corresponding increase in taxable income liability for the Founder and an increase in withholding and employment tax liability for the company) over the vesting period. The Founder and the company could find themselves in the unenviable position of being unable to sell (or otherwise monetize) a sufficient amount of the vested shares, or otherwise be unable to raise a sufficient amount of cash from other sources, to pay the resulting income tax liability or, in the case of the company, the resulting withholding and employment tax liability.

One means of addressing this increasing enterprise valuation “problem” is for the Founder to consider making an “83(b) election” to pay immediate tax on the value of the entire restricted stock award at the time it is granted, even though the entire award may never vest. By making this election the Founder would have only a single compensation tax event in respect of the restricted stock award, with the Founder immediately recognizing ordinary compensation income equal to the fair market value of all the restricted stock subject to the award determined without regard to the vesting to which the stock is subject. The Founder and the company would have an immediate compensatory tax event as a result of the election, and would need to have sufficient cash to pay the resulting income and withholding and employment tax liabilities, as applicable, at a time when cash may be in short supply for both the Founder and the employer-company. The subsequent vesting of the restricted stock in accordance with the original terms of the award would not be a tax event and the Founder would only recognize additional income in respect of such stock upon the actual sale of the stock (to the extent of any gain above the fair market value of the shares on the date of the original award). Any resulting taxable gain from such sale would constitute preferential long-term capital gain (rather than ordinary income) if the shares are held for more than one year from the date of the award. However, the downside of making the 83(b) election for a restricted stock award includes: (a) the Founder would not be entitled to claim any loss deduction (or otherwise have any refund claim) on any of the previously-paid income tax if the shares do not vest; and (ii) the Founder may only recover any decline in value of any non-forfeited restricted stock as a capital loss (even though the Founder would have paid tax at ordinary income tax levels by making the 83(b) election).

Finally, if the Founder’s business is being conducted as a “limited liability company” (rather than as a corporation), a Founder can be compensated by being issued a “profits interest” in the limited liability company— a specially designed economic interest in a company’s profitability. Under current IRS guidance, such a “profits interest” could be issued free of income tax and withholding/employment taxes. In addition, since such a “profits interest” would constitute an interest in the limited liability company, the Founder would be taxed on, or receive a deduction equal to, his/her allocable share of the limited liability company’s income and gain or loss, as applicable. Also, except for the Founder’s share of certain assets of the limited liability company, the Founder would recognize preferential long-term capital gain if the “profits interest” was held for more than one year prior to its sale. That said, however, it should be noted that Congress is currently considering legislation that could subject certain types of “profits interests” to ordinary income treatment (e.g., carried interests in private equity funds).

Answer provided by Peter Rothberg – (website, LinkedIn @FatherR), Partner at Duane Morris, Ultra Light Startups sponsor and counsel.

Event Summary

• What is game-based marketing and how does it work?
• Examples of successful game-based marketing strategies and why they are successful (e.g. Foursquare, LinkedIn, commenting in blogs, answering Q&A questions).
• Practical advice for developing game dynamics into an existing marketing strategy. Effective methods of “gameifying” any online business.
• How to incent and motivate participation through gamification. Use points and leveling up to get people to do anything (e.g. the “completion bar” on LinkedIn).
• Quests and transaction based goals. Soloing vs group questing. Using game dynamics to promote virality (e.g. gathering testimonials).
• Hard-core vs. casual users. Why both are important, identifying them and developing satisfying experiences for both. The Bartle Player types (achievers, explorers, socializers, and killers).
• The scientific approach to measuring engagement and the value of specific user interactions.
• Balancing deprivation and overload, order and chaos, silence and noise.
• The difference between designing content and creating an experience.

Moderator:

• Graham Lawlor, Founder of Ultra Light Startups and CEO of BrightMap

Panelists (alphabetic order):

• Ty Ahmad-Taylor, CEO of FanFeedr
• Chris Sullivan, Director of Sales, Eastern Region at Bunchball
• Eric von Coelln, Vice President of OMGPOP
• Gabe Zichermann, CEO of beamME and author of Game-Based Marketing

Presentation Slides

Gabe Zichermann – Game Mechanics Basics

Main Presentation – Game Dynamics and Marketing

Blog Posts

Ultra Light Startups Panel Talks “Gameification” by NYConvergence

Game Mechanics 101 by Holly

Panel Video

Pitch Video

Video courtesy of Deeper.io

Pitch List

Panelist Bios

Ty Ahmad-Taylor (@fanfeedr)
Ty is CEO and founder of FanFeedr, a real-time personalized sports aggregator, allowing sports fans to get an ever-updated fix of sports news, videos and tweets. Before launching FanFeedr, he was SVP, Strategy and Product Development at Viacom, where he was the product lead and manager for MTV.com, VH1.com, CMT.com and LogoOnline.com (among others). Before that, he was Senior Director of Cross-Platform Applications at Comcast, and Creative Director at Excite@Home.

Eric von Coelln
Eric is VP of Marketing at OMGPOP, a free multiplayer online game site. Eric has spent over a decade in online marketing at Prodigy and DoubleClick and over the last four years has been VP of Marketing at casual and social game startups Oberon Media and PowerChallenge. Before joining OMGPOP, Eric was a frequent contributor to InsideSocialGames.com focusing on the metrics and marketing of social game startups like Zynga and Playdom.

Chris Sullivan
Chris is Director of Sales, Eastern Region for Bunchball, a social game marketing and analytics platform. Bunchball enables clients to measure and drive participation, engagement, loyalty and revenue through the various channels where content can be accessed such as mobile applications and social networks. Chris markets Bunchball to brands, publishers, media companies and interactive ad agencies including NBC, Comcast, Warner Brothers, and others. Prior to Bunchball, Chris held various sales roles at the publishing companies and start-ups such as Engage Media and Preview Travel.

Gabe Zichermann (@gzicherm)
Gabe is founder/CEO of beamME, an iPhone software startup revolutionizing business social networking. His most recent book, Game-Based Marketing examines innovators who blend the power of games with brand strategy. His next book, Funware in Action (Manning, 9/2010) is a detailed technical look at how to implement game mechanics on the web. Zichermann is also the author of Funware Blog, a board member of StartOut.org, and Facilitator for the NYC chapter of the Founder Institute.

Question:

1. Is it legal and acceptable for a start up to receive donations from fans or well wishers through its website to fund business operations? For example, having a donation section which enables fans to send donations via checks or accepts credit card payment from the website or paypal account.
2. Are there tax implications?
3. Does this impede or cause complications if the firm expects to be funded by an angel or VC in the ensuing months.
4. Is there any other question i should have asked but did not mention?

Classic Scenario: The business focuses on a particular team or sport; publishes fan content and creates a professional social media website that aggregates fans of that particular sport and it facilitates their viral communication on its platform. Examples include Lakers-Fan, Yankeestown and The Red Sox Fan Site

Donation is used fund commuting, interviews, video processing, website maintenance, hosting cost, consultants and much more.

Answer:

Although in the context of for profit businesses the concept of “donation” or “gift” –a nontaxable contribution–doesn’t usually fit, “fan” donations to your startup business  might not be taxable income to the Company. The fan donations  should be for the purpose of adding to the capital of the Company, cannot be contributed in payment for specific goods sold or services provided by the Company  and  must be employed to generate additional Company income—in other words, the donations must benefit the Company itself and not constitute some form of a quid pro quo payment.

Where you could run into trouble is if the IRS considers the donations to be “solicited “ by the Company. If they are, the dollar amount of the fan donations could be viewed as additional taxable Company income. Just having a place on your web site where fans can make a donation to the Company “in gratitude” for the Company’s pursuit of its mission, without a public campaign for such donations or your web site turning into a ”beg-a-thon” for them, may not qualify as solicitation. But a detailed legal analysis, based upon the specific facts surrounding the donations, is very important here.

If you intend these donations to constitute a significant portion of the Company’s operating funds during its startup phase, and you plan to seek venture capital or other institutional financing for the Company, I’d seek a formal memorandum from your counsel or accountants on the issue. The folks that finance your Company will want comfort that you’ve paid all applicable taxes along the way. If you don’t pay taxes on these contributions when you should have, not only will it blow your credibility with those folks, but it will leave you with an expensive bill due to the IRS and state taxing authorities—not only will you owe the back taxes that were unpaid but you’ll owe interest and penalties on top of it.

So, be careful!

Answer provided by Peter Rothberg – (website, LinkedIn Twitter), Partner at Duane Morris, Ultra Light Startups sponsor and counsel.

Question: What are the advantages and disadvantages of convertible debt vs. equity?

Answer: As we’ve discussed in previous postings, I am very much in favor of the convertible note scenario for non-institutional rounds of financing. To recap, the convertible note structure replaces the sale by early stage companies of equity securities, at a set valuation per share, with the sale of promissory notes that are convertible into Company equity in connection with the next round of equity financing by the Company (usually defined as the “first round of institutional equity financing”).

The upside to the convertible note structure is that you can get to a deal faster—without the haggling over valuation at an early stage of a company’s development when there usually isn’t a whole lot upon which to base that discussion. As a result of the transaction being a debt deal, the covenants and protective provisions with respect to Company operations are more abbreviated than those found in equity deal documentation. It is also unnecessary to spell out the detailed management and interest transfer provisions that are always found in institutional-level equity purchase documents. This translates into a transaction that allows the Company to obtain equity-like cash funding much faster and less expensively.

The downside to the convertible note structure results from the convertible note holders demanding a conversion rate for their debt that reflects too high a discount to the purchase price paid by the institutional players in the equity round. The institutional equity players are familiar with the convertible note structure and in almost all cases accept a discount of up to 15%–an acceptable cost for the “early funding” risk taken by the note holders. But when the convertible note holders demand a discount in excess of that level (and they frequently do—especially if the distance between note funding and equity round exceeds 12 months), you can run into resistance from the institutional round players. This can hold up—or kill– your equity round while the note holders and the institutional equity players have fun playing “chicken” –at your expense– over the acceptable level of discount to the purchase price.

So, be careful sports fans. It’s dangerous out there.

Answer provided by Peter Rothberg – (website, LinkedIn Twitter), Partner at Duane Morris, Ultra Light Startups sponsor and counsel.

Editor’s note: Ultra Light Startups, in collaboration with BrightMap, is creating a new Q & A series with entrepreneurs sharing their tales of how they got started and how they found people to work with. Our first interview is with Jonathan Wegener of the Exit Strategy NYC mobile app.

Tell me about Exit Strategy NYC

Exit Strategy NYC is the ultimate subway rider’s subway application.

It tells you the best route is the second car, third door and when you arrive at your destination you can be right outside the door. It can shave minutes off your trip.

The length of the platform is 600 to 800 feet, so if you’re on the complete opposite end, it’s a 2-3 min walk to the end of the platform. When you need it most are times when you’re running late to a meeting or an interview.

Is there anything like it out there? How does this compare to similar applications?

It was the first app like this in New York. Version 2 has the ultimate NYC subway map too, so it’s a different category of competition. The iPhone version has the official subway map, all five borough maps and even street maps. If you need to look up an address or cross street in the subway, you can’t do that without service on Google Maps, but with our app you can do that.

There are similar apps in other cities, like one for the Tube in London. There are also similar apps for Tokyo and Toronto.

How much does it cost?  How many users do you have?

The iPhone version is 3.99 now, but will be going up to 4.99. The Android is 2.99 and the Blackberry is 3.99.

We have 25 thousand uses across the platforms and in general it’s done pretty well.

I read about you on Silicon Alley Insider where you were listed as one of the top 100 people to watch in tech in 2009. When did you start?

Early March of 2009 was when I started seriously riding the subway to collect info and started building the product and designing it. Version 1 was released July 7, 2009. We released versions for the iPhone, BlackBerry, Android and also a Kindle eBook version. Later that year we updated to version 2.0 and will soon release version 3.0 with train schedules in it.

What amount of capital did you start with?  What did you spend that on?

The entire thing was really bootstrapped with $3000.

Half went to the graphic design like the app logo, launch screen and train diagram. Two or three different designers worked throughout the building. Some of the money went to app store fees. The BlackBerry developer was overseas and was paid with a cash and equity mix. The first iPhone developer is a friend and was paid entirely in equity.

So you have $100,000 in revenue on a $3000 investment?

A little less. Some of the apps downloaded were unpaid apps.

How did the product evolve?

The product was designed to be a true minimum viable product. The first version only did one thing, which is to show you where to stand on the train. We called it Exit Strategy. When I would show it to friends, they would always ask “can it do this or that,” like direction routing or  where the toilets are. We had a long list of feature ideas but stuck to the core vision to do one thing and do it really well.

That’s largely why it was so cheap to launch. It’s a collection of pictures and the entire interface is three screens: one asks you what line you’re taking, one asks which station and which direction, and then it shows you a picture.

The iPhone version was a big winner in terms of sales. We decided to make it into a fuller app. We now have a license with the MTA to use their maps, and have bus maps. The subway map is also interactive. We listened to what customers told us. The number one thing was the map.

What was your marketing strategy?

It was entirely press and word of mouth. I haven’t spent a penny on marketing. I was lucky to have seen this done in Toronto before, where someone published a rider efficiency guidebook that came out in 1999 and showed you where to stand. The guy got a ton of press so I had confidence this would get similar press. I reached out to my network and a reporter at the New York Times was interested to do a story on it.

The New York Times had an exclusive app before anyone else so at 7:30am the story was posted to the City Room blog, and three hours later, Wired was on phone, the New York Post was on the phone, and Thrillist did a post the next day. We launched the day of the New York Tech Meetup, so we could present in front of 700 people that night. I also prepared a kit of video demos and pictures and the media ate it up.

I’ve worked in a marketing PR position briefly for two startups, so I have a little bit of that background, but there’s nothing like learning on the job and doing it yourself.  I also had good advisors.

What was the evolution of the staff?

On a day-to-day basis, it’s really just me. The project was done with my sister (who is now back in school to be math teacher) and I.. We did the legwork riding around the subway for two months, collecting info on where to stand on the subway.

In terms of graphics, I worked with a friend in Brooklyn, to make the train icon. Another designer did the splash screen. One of my best friends and college roommate is a programmer but  wasn’t an iPhone programmer. He used the project to learn iPhone programming and have his name behind a really cool project.

The Android version was done by a developer who tinkers with Android. I found a BlackBerry developer in Germany. It was my first experience outsourcing and I was really impressed.

In Version 2, once we saw that there was a demand and the market was there, we did hire a professional.

What’s the long-term vision?

The vision is that this will be passive income so I can work on a billion dollar company. Once you kind of figure out  how to bootstrap, it’s kind of addictive. There’s a thousand things I could have spent money on. Instead, I incorporated the company by myself, without using a lawyer I think a lot of people are scared to do that, when it comes to legal stuff especially.

I learned that Delaware has an 800 number can call and get help. The government is happy to help you and you don’t necessarily need a $600-per-hour lawyer when Delaware State can be your help desk.

I wasn’t sure if I needed to talk to a lawyer. Someone recommended a lawyer who charged $550 an hour. He drilled into fear mongering, asking things like “what if there’s a virus, or someone using it falls onto the train tracks and sues you?”  I realized he’s not a startup risk-taker guy. You never ask an insurance salesman if you need insurance, and at the end of the day I realized I didn’t need any of this.

When you incorporate, you can make money off of it. Some banks will pay you. For example Chase gave me $200 for opening a checking account, and other accounts. After all was said and done, I made money off of incorporating.

What was your biggest mistake?

One of toughest things was working with family, my sister. It put a lot of strain on our relationship. We had different ideas on what it should look like. I have an advertiser in the app for ad placement on certain stations. My sister and I disagreed over whether to put advertising in what would be a paid app. My vision was this won’t harm the product and will bring in money.

There were things like legal contracts when my sister watched, as I Googled around to write the advertising contact. Was it a perfect legal contract? It doesn’t matter at the end of day because there’s trust. I think legal stuff scares a lot of people away, but it shouldn’t.

Another thing I would have done is to define equity support at the beginning. I waited until the middle half to have that conversation and it was a painful conversation to have. In some ways I’m not sure I would ever work with family again..

What worked the best?

What works really well I’d say is selling people on your vision. I had to convince iPhone and Android developers that it would be successful and would benefit them. I had the enthusiasm and vision that every New Yorker will be walking around with this product.

There are other forms of compensation besides money. The first iPhone developer owns a piece of the product but at the end of the day, he made less than market wages. Part of the reason the Android developer  was part of the project, was that he thought  it would be a success and wanted the pride in saying “I worked on something successful.” They were also both able to come up on stage at the New York Tech Meetup.

The iPhone developer was looking for job at startups but it wasn’t going so well. He wanted to get out of cubicle and when he was on stage in front of 700 techies I said he works at a bank, hates it, and for startups to please come talk to him. And right after it, seven people approached him and he’s now a developer at Gilt Group. He got an awesome new job out of this project. And the Android developer now has this on his resume.

Another thing I learned was that anytime you post for bids, you should take the time, an hour or two, and find people whose work is good. You write them a letter inviting them to join the bidding competition on your product. I looked at past iPhone splash screen designers and  wrote a love letter to one saying “I love what you did with this and would love for you to do my project. Here’s a link.” Sure enough, he did join the contest and came up with a fantastic design. Now he’s the main graphic design guy. That’s what works -  reach out instead of waiting for people who are desperate for work.

Why did you bootstrap and how do you feel about that in retrospect?

I think the amount of discipline that’s imposed on you by bootstrapping is  really valuable. Both in shipping the product and forming the way you work. I was forced to launch a minimum viable product. I didn’t have $20,000 to hire a professional development team. We built it up slowly.

I’m split on this. On one hand, when investing your own money, you never care more so you’re not gonna start paying people to do features that you have no idea if anyone will care about them. That discipline is really valuable.But it also limits innovation and makes it hard to take risks.

I don’t think it was a mistake though I think there were definitely features I would add if I had capital.

What advice would you offer to someone thinking about doing this?

Think small, start small. Start thinking about how to build your product with as little money and as much time as possible. I think there’s the moment in many entrepreneurs’ lives when at some point they’re gonna invest their own money and risk their bank account. That’s kind of a scary thought to many people.

Exit Strategy NYC: First Year Financials

Expenses:

Graphic Design  $1,500

Blackberry development $–

App store fees  $–

Legal    $0

Marketing   $0

Total Expenses  $3,000 (approx)

Revenues:

App copies sold  25,000

Revenue per app  $3.99

Total Revenues  $100,000 (approx)

Vendors Used

Benny Wong (iPhone developer)

bwong.net

Matthew Bergman (NYC based android developer)

www.mzbphoto.com

Georg Sisow (German Blackberry developer)

http://sisow.de

Jonathan Glanz (version 2.0 developer)

www.densebrain.com

Carlos Pacheco (splash screen and icon graphic design)

thecharmingrascal.deviantart.com

Meg Moorhouse (train screen illustration/design)

megmoorhouse.com

Event Summary

• What is an “lean” or “agile” startup? Do non-lean startups exist?
• What are viable options for financing a startup until you achieve profitability or fundability?
• Is “lean” a (temporary) stage of a startup or a (permanent) type of startup?
• If it’s a stage, what is the objective of the stage? What is a “product/market fit”. How do you know when you’ve achieved it?
• If it’s a type, what makes certain startups more applicable to the lean/agile approach than others? How do you finance startups not of that type?
• If you’ve already achieved a product/market mix, why would you then give away equity and control by seeking venture funding?
• What legal structures (LLC, C-Corp, S-Corp; Delaware vs. New York; etc) are most appropriate for the lean approach?
• What impact will proposed changes to angel finance regulations have on bootstrappers?
• What event should trigger a search for investment? Competition? Acceleration? Being first to market? Finding an application for a new technology? Funding development of an initial prototype? Sustaining a system with lots of users but no revenue model?
• Does ‘lean-ness’ change after financing? What should change about the way a startup spends money after a financing round?

Moderator:

• Graham Lawlor, Founder of Ultra Light Startups and CEO of BrightMap

Opening Remarks By:

• Kareem Kouddous, Co-founder & Organizer at NYC Lean Startup Meetup
• Phineas Barnes, Principal at First Round Capital

Panelists (alphabetic order):

• Murat Aktihanoglu, Founder and CEO of Centrl Inc and organizer of Entrepreneurs Roundtable
• Brad Burnham, Partner at Union Square Ventures
• Joe Chin, Co-founder and CEO of SourcePad
• Peter Rothberg, Partner at Duane Morris

Presentation Slides

Kareem Kouddous – Lean Startup in 5 Minutes

Phineas Barnes – Leanwashing

Main Presentation – Financing Lean Startups

Panel Video

Pitch Video

Video courtesy of Deeper.io

Pitch List

Panelist Bios

Murat Aktihanoglu
Murat most recently started and sold Centrl Inc, a location-based social network. Prior to founding Centrl, Murat was a technology consultant for 16 years building web, media and 3D infrastructures for SGI, Sony, Logitech, Pioneer, Panasonic and various startups, including his own previous startup TheNextWeb.com. Murat is also the organizer of Entrepreneurs Roundtable monthly meetings for entrepreneurs and investors in NYC. His book on Location-based Services is coming out this summer from Manning.

Brad Burnham
Brad is a partner at Union Square Ventures, an early stage venture capital fund focused on web services. Prior to Union Square, Brad held a variety of sales, marketing and business development positions at AT&T and Bell Laboratories and was a founder at AT&T Ventures first spin-out, Echo Logic. After Echo Logic was sold in 1993, Brad joined AT&T Ventures as an Executive in Residence and later General Partner where he was responsible for 14 investments. Brad currently serves on the boards of Indeed, Pinch Media, Tumblr, Wesabe, Adaptive Blue, SimulMedia, Tracked.com, Meetup, and Bug Labs.

Joe Chin
Joe is the Founder and CEO of SourcePad, an instant outsourcing company. Prior to SourcePad, Joe was the founding CEO of Guidester (now Searchandise Commerce) an eCommerce ad network. Joe was also the Managing Director of REOL, Internet Analyst at Laidlaw, founder/President of Diadem (a multi-player game company), and founder/principal of JEV (an import/export company). Joe is a frequent speaker and has been quoted in numerous publications such as BusinessWeek, Fortune, and Inc. Magazine. Over the course of his career, Joe has raised over $20 million in financing from both angels and VC’s.

Peter Rothberg
Peter is a partner with Duane Morris LLP, a full service law firm. He focuses on corporate securities, venture capital, mergers and acquisitions, financial transactions and digital media company representation. Peter represents both startups and venture capital funds including Village Ventures, High Peaks Ventures, Borealis Ventures and Stonehenge Capital in financing and acquisition transactions. Additionally, Peter sits on the board of the New York/Tri-State Chapter of the Keiretsu Forum, is the Lawyer in Residence for NYU Stern School of Business Entrepreneurship Program and is Legal Counsel to Ultra Light Startups.

Question: What legal language does a typical disclaimer on a website have to have? (For review websites, product or business reviews.)

Answer: The type of disclaimer to be used on a web site is a very fact sensitive issue. You must first establish the nature of the transactions taking place on the website, and then select the disclaimer that best fits that situation. Not a one size fits all.

In the case presented here, we have a web site that will publish endorsements of products and other services. There is recent guidance from the Federal Trade Commission (FTC) on the subject of endorsements and testimonials. The context of the discussion is that the FTC considers endorsements and testimonials to be a form of advertising for the product or service being discussed, and applies “Truth in Advertising” concepts to those pronouncements and discussions. As a result, when there exists a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience of the endorsement), such connection must be fully disclosed.

So, in the event that a particular “endorsement” appears on a website that a reasonable consumer might not expect to be publishing  reviews of products or services that are sponsored by providers of the subject products and services, the fact of that sponsorship  must be disclosed. That disclosure can take the form of a Disclaimer on the website that is so placed that the reasonable site visitor can find it and be able to relate it to the subject  endorsements. If all the reviews on a website are “sponsored”, then a more general Disclaimer should appear quite prominently on the website, and perhaps also in the website’s Terms of Service.  A typical Disclaimer might take the following form: “THE VIEWS EXPRESSED ABOVE BY [IDENTIFY THE ENDORSER] ARE SPONSORED BY [IDENTIFY THE SPONSOR] AND MAY NOT REFLECT EITHER THE INDEPENDENT VIEWS OF [IDENTIFY THE ENDORSER] OR AN OBJECTIVE REVIEW OF THE PRODUCTS AND SERVICES DISCUSSED.”

Answer provided by – Peter Rothberg, Partner at Duane Morris, Ultra Light Startups sponsor and counsel.

Event Summary

This event will:

• Survey of the mobile startup ecosystem. How much money has been made, by whom, on what platforms, with what types of applications?
• What differentiates a successful mobile application from an unsuccessful one?
• Designing and specifying a mobile application.
• Finding and evaluating mobile application developers (agencies, freelancers, permanent hires).
• Developing an application for the iPhone, Android, Blackberry, and Windows Mobile platforms. Building cross platform mobile applications.
• Usability testing and analytics for mobile applications.
• Submission and approval of mobile applications into app stores. App store terms.
• Effective pricing and marketing strategies for mobile applications.
• What are the opportunities for startups with the iPad and related devices as an application platform?

Moderator:

• Graham Lawlor, Founder of Ultra Light Startups and CEO of BrightMap

Panelists (alphabetic order):

• Nihal Mehta, Co-founder and CEO of buzzd
• Alex Muller, Co-founder and CEO of GPShopper
• Rachit Shukla, Co-founder and CEO of Two Toasters
• Greg Yardley, Co-founder and Vice President, Products – Ad Optimization at Flurry

Panel Video

Overview of Ultra Light Startups
(courtesy of Girls In Tech NYC)

Advice from Ultra Light Members – How to Select Technology Vendors
(courtesy of Girls In Tech NYC)

Pitch Video

Pitch List

Presentation Slides

Main Presentation – Mobile Startups

Panelist Bios

Nihal Mehta
Nihal is CEO and co-founder of buzzd, a venture backed social cityguide on the iPhone, Blackberry and Android. Prior to buzzd, Nihal founded ipsh!, one of the first full-service mobile marketing agencies in 2001, which he sold to Omnicom in 2005, and Urbangroove, an online nightlife portal. Nihal also co-chairing the innovation advisory board for Reshma for Congress, co-founded the non-profit Project Ahimsa, and co-founded the mobile seed venture fund ENIAC.

Alex Muller
Alex is CEO and co-founder of GPShopper, a mobile marketing company that helps consumers connect with local retail stores. GPShopper builds applications for clients including Best Buy, Nikon, and LG and also markets its own applications, including Slifter, local shopping application with over 2 billion local product listings. GPShopper is funded by Allen & Co and since 2005 has built mobile applications for platforms including iPhone, Android, Blackberry, J2ME and BREW. Prior to GPShopper, Alex founded and sold Evolve Living, an environmental software company.

Rachit Shukla
Rachit is CEO and co-founder of Two Toasters, a mobile development agency that merges expert mobile strategy with focused development to shepherd an app from an idea all the way to the app store. Two Toasters’ work includes iPhone, iPad, Android and Blackberry and has been featured in the NY Times, Wall Street Journal, CNN and recently in an Apple iPhone Commercial. Previously, Rachit founded a number of startups including IdeaBahn, an idea management platform.

Greg Yardley
Greg is Co-founder and Vice President, Products – Ad Optimization at Flurry, a provider of analytics, deployment and monetization tools for mobile application developers. Before Pinch Media merged with Flurry in December 2009, Greg was Pinch’s co-founder and CEO. Prior to Pinch Media, Greg led product management for next-generation ad serving platforms at Yahoo! and Right Media and held product management positions at Root Markets and NexTag.