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Alexander Torrenegra's Blog
6 minutes | Apr 30, 2014
The simplest and most useful growth hacking tool I’ve ever used
I’m the CEO of Bunny Inc., but I also work as product manager of one of our products: VoiceBunny and one of my responsibilities is to determine the effectiveness of our acquisition channels. There is a big challenge to this: How do you fairly compare the channels to each other? Two common tools are Google Analytics and Kissmetrics, however, they don’t properly measure some very important acquisition channels. First, and foremost, they don’t measure word of mouth, arguably, the most important acquisition channel for many companies. Additionally, when a user types your brand name into a search engine and clicks the link, these tools attribute the acquisition to SEO, even though these users probably learned about your company in some other way; for example, via a press article. Another tool used by some is sign up surveys. When users sign up, they are asked how they learned about the product using a drop down menu. Unfortunately, many times, visitors will pick any answer from the menu in order to quickly continue with the registration. This gathers a significant amount of false data. Additionally, the results will be biased by the list provided. You may actually have more acquisition channels than you think, but if users don’t see them in the list, they won’t ever get the credit they deserve. What to do, then? Here is the solution we have been successfully running: After our visitors register and continue using our site, we ask them this open-ended question: “How did you learn about us?” We have learned a lot of information this way and have been be able to compare apples to apples. How did you learn about us? Here’s a step-by-step guide to this process: First: Using a tool like Qualaroo or doing some basic hacking, show all registered users of your site the following question: “how did you learn about us?” Next to it, show an open field for them to submit the answer. As a reference, around 20% of VoiceBunny clients answer this question. Second: Every month, you’ll have to manually check the answers and “normalize them” in a new column in your database. For example, if the user wrote “Google,” you then type in the new column the code “SEM”. Sounds time consuming, right? Don’t worry. It takes less than three seconds to process each answer. Here is a list of some answers I’ve seen and the codes I like to use: “Google,” “Internet search,” “Yahoo!” For all of these, I use the code “SEM.” “T
0 minutes | Nov 26, 2013
1 minutes | Nov 18, 2013
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7 minutes | Nov 3, 2013
Why I turned down investor money for Bunny Inc.
“Who are your investors?” “How much have you raised?” I’m asked these questions constantly about my businesses, Bunny Inc., from other entrepreneurs, media, and most tech people I’ve met. The answers are: no one and $0. Eyebrows, and perhaps red flags, rise. I have actually pitched to VCs and had a few offers. But for now, we’ve decided not to raise capital. Yes, there is a sense of pride that comes with being an immigrant entrepreneur and being able to say I’ve come this far on my own (with the support of an amazing team, of course), but it’s not just pride or the mythical “American Dream” that keeps me bootstrapping. I’ve got five solid reasons why bootstrapping is not only possible, but is a logical decision. WE ARE CASH POSITIVE. My wife and I founded the first online voice over casting website, Voice123.com in 2003. Voice123 became the first service of what’s today Bunny Inc. Thanks to a combination of great timing, good luck, and our skills and willingness to do whatever it took to make our dreams of owning a business come true, the site was actually making a profit in only six months. For now, our steady stream of income allows us execute our plans without sacrificing speed or quality of our products. I understand that many don’t have this luxury. For example, if you or your co-founders can’t code, hiring developers is going to eat a significant amount of your money (even if you’re not a tech startup, you’re going to need web development). It’s not impossible. Companies like Valve and GitHub were able to succeed by bootstrapping. If you are in a very competitive space, you may think you need VC in order to beat others to the punch, and that may very well be the case, but remember, lots of money doesn’t always mean faster product development. Money can actually have the opposite effect, affording a feeling of safety that numbs the sense of urgency that comes with having your livelihood on the line each day. With Voice123, we knew we were first in the space and that time was probably on our side, but we never relaxed. Without VC, we were able to build Voice123 into a profitable business that has lasted 10 years and build our new product, VoiceBunny.com (which is already bringing in revenue) with our own money. VCS PROVIDE GOOD ADVICE, BUT… A WELL-BUILT BOARD OF ADVISORS CAN PROVIDE BETTER ADVICE. Many startups use VCs as way to get expert advice and connections to major players in their target industries.
8 minutes | Sep 19, 2013
Convertible royalties: An alternative to the VC model
My wife and I co-founded the Voice123 brand ten years ago. Today, it’s a successful business with 30 employees. Its success didn’t depend on angels, accelerators, or venture capitalists. In fact, had we listened to any of them, Voice123 would not exist today. There are thousands, maybe millions, of entrepreneurs like us out there. The current model made popular by Silicon Valley is suffocating many of them and killing startups that could also become successful. This article explains how and offers an alternative. The current Silicon Valley model has one major flaw – it creates an ecosystem that asks entrepreneurs to shoot for the moon rather than build a sustainable business. VCs won’t waste time working with companies that are likely to sell for less than $50 million (I don’t blame them as their business model needs such scale). Angels and accelerators exist because VCs exist. They work as a bridge between the startup and the VC. Although some angels prefer capital efficient businesses that don’t need much VC to avoid dilution, many angels won’t invest in startups that aren’t likely to scale to the $50 million valuation level because they’re afraid VCs won’t invest. Given that most accelerators follow the angel/VC/exit model too and measure their success based on the level of funding startups get, many entrepreneurs with great ideas and companies are being told to pivot to try “bigger ideas”. In fact, they don’t even consider bootstrapping, which actually works! Unfortunately, forcing first-time entrepreneurs to “dream big” and execute on $50 million ideas is no different than asking a first-time driver to compete in a Formula 1 race. It is very risky, to say the least. The concept of “Go Big or Go Home” may work for some, but it should not be a rigid mantra, especially in emerging economies. I (and many of my colleagues) am fatigued from “demo days,” that, judging by recent trends, should be renamed “PowerPoint Days,” where panelists, primarily made up of investors, tell entrepreneurs that their companies are “not good enough” simply because their firms wouldn’t invest in them. I’m tired of VCs dismissing entrepreneurs because their startup is a “lifestyle business” (as if being a VC isn’t a lifestyle business!). I don’t want to continue seeing emerging economies trying and failing to copy the Silicon Valley model, teaching entrepreneurs how to raise angel capital when there are still few succ
8 minutes | Sep 5, 2013
How I grew my business exponentially understanding Metcalfe’s Law and fragmentation
Recently, I snuck into a conference room (at a Kauffman Foundation event, the organization behind Startup Weekend) where I accidentally had the pleasure of listening to a talk given by Robert Metcalfe, the man whose law I actually built my startups upon. Metcalfe is attributed and famous for a law that we know today as the Metcalfe’s Law. The law says that the value of a telecommunications network is proportional to the square of the number of connected users of the system. What this means is that if you come up with a new phone system and only two people are using it, the value of it is X. If you have four people using it, the value is not 2X because you have twice as many people using it, but actually 4X because each person can communicate with each other and the number of unique connections possible. The more people connected to a network, the higher its value, and as the formula shows, it grows exponentially. As you can see in the image, two telephones can make only one connection, five can make 10 connections, and twelve can make 66 connections. Although initially, Metcalfe’s Law was applied to telecommunication networks, it also applies heavily to many things that we do online––like Facebook for example. So, how is Metcalfe’s Law applied to online services? If you only have two people using Facebook, the value is not going to be that high. If you only have three of your friends using Facebook, the value is higher but still not that high. However, if you can get all of your friends using Facebook, the value is immense. The more people who use a service or a product, the higher the value people get out off using it. Services or networks simultaneously disappear and thrive in all over the world depending on the number of users. What is utilized in one country, may not be in another. Orkut, the social network that became popular in Brazil, was more heavily used than Facebook, which wasn’t popular there for a long time. It took many years for Facebook to actually get in on the Brazilian market because the majority of people were already using Orkut’s ––after all, why join an online network if only a few of your friends are on it versus a network everyone you know is tapped into? In fact, I would argue that Facebook was able to get traction in Brazil just because some Brazilians had friends living overseas. Such foreign friends were only using Facebook, and that forced some Brazilians to start using Facebook. Another example of
5 minutes | Aug 29, 2013
No Reform, No Visas, No Business
I first came to the U.S. with my family in 1998 to avoid the violence in my home country, Colombia. But without any way to get visas, much of my family had to return. Fortunately, I was able to stay in America and moved to Miami, where I met many successful Hispanics who demonstrated the great opportunities for entrepreneurs in the U.S. However, since there isn’t a way for people like me to obtain visas that let us come to this country and start businesses, I struggled with how to legally remain here. My short-term solution was college — I enrolled at Miami Dade College and then at Florida International University. I knew this was not a long-term solution. In 2000, I founded my first U.S. startup with a Cuban-American citizen I met at school. Within a year, we were successful and employed six other people, but the company was still too small to act as my visa sponsor. I was stuck and losing hope. Here I was, the co-founder of a successful business and a student at an American university, and I was being told to leave. VoiceBunny CEO and co-founder Alexander Torrenegra speaks to audience of future entreprenuersI was out of options — until I met my angel, Tania. Somehow, I convinced this beautiful, talented and successful woman to marry me, and I was able to stay in the country. Eleven years later, we are still living our dreams together. I got lucky. But many other entrepreneurs do not. They want to bring their ideas and talent to the U.S. to help grow this economy, but the immigration hurdles they face are complex and slow-moving. We need change. This is why I am joining the March for Innovation, the largest-ever virtual march on Washington, with other business, tech and policy leaders including Arianna Huffington, Steve Case, Brad Feld and Carlos Gutierrez. On Wednesday and Thursday, we are marching to ensure that the comprehensive immigration bills being considered in Congress promote innovation and entrepreneurship. And we need your help. March with us by tweeting, posting and emailing Congress next week in support of immigration reform now. Despite huge immigration obstacles, the U.S. is still the primary destination for entrepreneurs. The startup environment is friendly and exciting. Setting up a business and bringing in investors is still much easier in America than in many other countries. Many foreign-born entrepreneurs living here want to keep their ideas and businesses local, but the current immigration system
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