Choosing the Right Vendor

When it comes to the topic of building and designing a web application, I can really say that I've been on both sides of the fence.

I've owned and operated a development studio before and now that I've gone through the tedious process of finding the right people to help build my own web property, I feel that I have a unique perspective on this (possibly) tortuous process. So, I wanted to impart my knowledge (or lack thereof) upon you and hopefully it'll be helpful as you go forth and try to take over the world.

I. Define The Scope and Goals

The first mistake that many people make when hiring a new development or design firm is that they fail to accurately convey the scope and goals of their project.

It's easy to say "I want this feature and that feature" - and I'm sure many out there have fallen victim to the "Design by Metaphor" (e.g. "I'm creating a MySpace for rock collectors") trap. Thinking the project through, from how it will function all the way to how the end-user will actually interact with it, is where the first step in a successful project begins.

For example, on my latest application I wanted there to be a notification system on the site to tell users when new content specific to them appeared. So instead of trying to describe the feature or relate it to something I saw on another site, I busted out my yellow legal pad and sketched it out, then I scanned it and pasted it right into the RFP (Request For Proposal). My developer literally thanked me and we haven't had to go through the usual "back and forth" on that feature once.

The other thing that's very helpful is to define end goals for the application. Right at the beginning set up success metrics for the app. This is easier to do if you're enhancing or redesigning an existing web site because you'll actually have benchmark metrics to compare it to, but even if you're building something from scratch try to conceptually think about what would define a "successful project." Then pass those goals onto your developer or designer - they'll now know what they need to do in order to make you a happy customer.

What this all really boils down to is expectation management -- if you expect one thing and get another you won't be satisfied. And when you're not satisfied it leads to a vicious cycle: you pass revisions back to the developer, they try to fix it, you're still not happy and now the project is late and you're getting angry and impatient. But now the developer is going over budget and they are getting angry and impatient and before you know it you're in their offices about to punch the project manager in the face...ok fine, maybe that was just me and it was only once, but you get the point.

Plan properly and set goals - that's the bottom line.

II. Finding Firms

This is probably one of the most difficult parts of the whole process. There are several ways to go about finding a firm to build and design your web application, some more effective than others. So for those of you who don't have a friend in the business or have never worked with anybody before, I'll go over some helpful ways to find a number of firms to send your RFP to.

1. Personal Referrals

This is by far and away the most effective way to find a quality design and development partner. If someone you personally know is willing to recommend a firm, then chances are they do quality work. Think about it, why would someone risk the screaming match you'd get into afterwards if the firm they recommended to build your "dream" sucked?

So before trying the next few options, tap your personal network first. Ask why they liked the person(s), what level of service was provided post-launch, etc. I've found designers and developers 8 years ago that I still work with to this very day by going through my personal network of contacts.

2. Favorite Sites

This one is a little harder, but also very effective. If you have web sites that you absolutely love then you should check out their "About Us" section - they sometimes list their development and design vendors there.

If they don't, your best bet is to Google the site along with terms like, "Clients", "Portfolio", "Design", etc. That'll help you nail down the firm(s) that they worked with to get their site built. You can even e-mail somebody at the company, if they worked with an outside firm they usually don't mind referring business to them.

3. Blogs

Once you find a few design firms you like (either through your network or via Google) you might want to check and see if any of the head designers, developers or owners have their own blog. This can be one of the biggest assets you have in selecting a firm - you get to take a peek inside the mind of the people that might be building your web application in a few months. You'll immediately know if they share the same values as you, if they have a similar personality, etc.

It's very good for filtering out the good from the bad.

Case in point: We recently contracted with BlueFlavor.com to design the user interaction and information architecture for our upcoming application. How did I find BlueFlavor you might ask...through their blog!

I read through a ton of posts from every employee there and just knew that these guys were a quality shop.

The other thing that you can gain from a blog is access to other people in a firm's field. If they have a fairly popular blog then there's a good chance other developers and designers comment or post on it as well. I can't tell you how many other firms I found by bouncing around the comments section on some of these blogs.

The bottom line: Do as much research on a firm you're considering before you ever contact them. It'll save you a lot more time and heart ache in the long run -- and even if you don't like the firm, they might lead you to a firm that you love.

III. Make Sure the Shop is "Suitable"

It's very easy to say, "I want to find a great developer and a great designer", but what's "great" for one client might not be great for you. So you really need to find a company or person that shares the same vision and principles as you do.

I'll bring this back to my current venture to illustrate my point.

I have this big belief in minimalism in design - I think it's easy to make complex functions on web sites. On the other hand, I think it's very difficult to make a complex function appear to be a simple one. And that's the beauty behind many successful web applications, they make the complex appear to be easy. So that was the first thing I wanted to make sure my design shop was focused on: minimalism and simplicity.

So when I was going through various portfolios I would tend to get a knot in my stomach when all I saw were Flash sites or pages with crazy colors and graphics everywhere. On the other hand, if I saw a portfolio that was filled with sites that had a lot of white space, small logos, were quick loading and yet had a high degree of interactivity, I'd be very pleased.

What helped me the most was sitting down with my partners and actually writing those principles down. It really helped us and our design/development firms decide if we'd be a good fit - or "suitable" - for one another.

IV. The BIG Decision

Ok, so now you've put together a tight RFP: it outlines the features, how the user will interact with them, the goals for the site and what your core principles and values are.

Then you went out and found a handful of quality shops that you sent your RFP out to. They all came back with bids and now you have to make the BIG decision - which firm do you go with?

They've all demonstrated an understanding of your application, you know they have the right experience and principles and after a couple of phone calls you should know which people you get along with on a personal level (very important as well by the way).

So now how in the world do you choose one proposal from another?

This can be gut wrenching - you're about to drop a substantial chunk of change on a single firm...it's like betting on "Red17" at the roulette table and crossing your fingers -- but it doesn't have to be. If you come up with a strict set of selection criteria beforehand, then you'll find it easy to choose the right firm. For me, I find that the following criteria really helps me narrow down my choices:

1. References - If a firm can't provide me with several quality references then I can't do business with them. With that being said let me make something else very clear, a firm will obviously only give you access to people who will say good things about them. However, you can tell from the quality of those references whether or not to take them seriously.

For example, if they give you the number of the CEO of XYZ Company, and XYZ's website is hard to use and gets no traffic then I'd take that less seriously than if they used Digg.com as a reference. Maybe it wasn't the design/development firm's fault the site wasn't successful, but why take any chances?

2. Transparency - If a firm can't clearly tell me why they're charging what they're charging then I won't use them. I'm a numbers guys and I break my time down to the minute each day - I expect vendors I work with to do the same.

So when a firm says that they can't tell me what their hourly rate is because they work on a "per project" schedule then I automatically assume they're trying to hide something. At the end of the day they may work on a per-project schedule, but they must use some type of time-based calculation to come up with their estimates. If they say they don't then they're either stupid or lying, either way I wouldn't want to work with somebody like that.

For me transparency is equivalent to honesty - and when it comes to honesty in business, I'd pay a premium for it!

3. Accountability - A firm that is willing to be accountable for their work is a firm I want to do business with.

For instance, we used an overseas development shop to write the core code for our latest application. In the agreement we put together with them they were the ones who added the "financial penalties" section - so if they were X days late on a particular milestone, the final cost dropped by Y%.

I can't even begin to describe the warm and fuzzy feeling I got in my stomach when I saw that.

Happy Hunting!

So in conclusion I wanted to wish you happy hunting in your quest for a quality developer and designer. It's a tough decision to make and it's arguably one of the most important ones.

If you work with someone good then you can focus on building a business and not playing "baby sitter." You also get your product out the door on time and it'll work and look how you wanted it to. Also when you feel comfortable with your site you'll be able to go out there and be confident when pitching customers, partners and investors. That's why some of the suggestions I've made may seem time consuming and tedious, but in the end the upfront time investment will pay off in spades down the road.

Good luck!

Random Thoughts...

I've been trying to come up with a really good topic for my next blog post - the last few were just sort of ramblings about current news - but I can't seem to think of anything that is "entertaining, enlightening and informative. " There's a ton of stuff coming out in the news these days about mergers, rounds of funding, new gadgets, etc., etc. But with all the other blogs out there covering this stuff in depth why should my take on the situation matter so much?

The real question that's been racking my brain is, "how do I differentiate myself from the millions (ok maybe not millions) of other blogs covering the EXACT same topics?"

I'm not quite sure of the answer yet but I have a few ideas in mind.

What I'll do for the time being is simply jot down a few of the memes that have been popping up on my radar as of late.

I. Wall Street Journal: To Fee or not to Fee

There are a number of VC's/Bloggers/Entrepreneurs that I really admire who have been talking about the reasons for WSJ.com to go for a free model . BusinessWeek writes one of the most interesting pieces for why it may or may not make sense for WSJ.com to go free. Fred Wilson over at Union Square Ventures has also been writing about this topic since the News Corp./Down Jones merger was announced.

In the end this is going to boil down to a math equation on Mr. Murdoch's desk that will look something like this:

$65million = Annual subscription revenue from WSJ.com online

So the question becomes: At a $30 CPM rate (WSJ could probably get more but we'll be conservative) how many page views would it take to make up for the lost subscription revenue?

Well, let's do the math...

$30 * X CPM's = $65 million
X = 2,166,666 CPM's

Which translates into 2,166,666,000 page views (2.16 billion for those who have a hard time processing that many zero's).

Over the course of 12 months, WSJ will have to serve up 180.5 million pages per month in order to hit that mark. FYI: Compared to some of the larger social networks out there, 180 million page views isn't a lot.

WSJ currently does 1.5 million unique visitors per month - that's a joke when we compare it to some of the larger online financial sites. According to comScore, the top financial sites had the following unique visitors and page views during the month of June:

MSN Money: 12.7 million uniques and 180 million pages viewed
Yahoo! Finance: 10.4 million uniques and 327 million pages viewed
AOL Money: 10.5 million uniques and 206 million pages viewed
CNN Money: 5.4 million unqiues and 50 million pages viewed

Based on this data it's clear that WSJ stands a good chance of replacing its lost subscription revenue with advertising dollars. But, it's still not as "safe" as sticking with a subscription model. The thing that none of these bloggers/magazines have taken into account is the nature of investors.

I was a broker for a number of years and I know from firsthand experience that investors don't mind paying out the nose for good information. And WSJ undoubtedly has some of the best financial editorial on the planet. And with subscription revenue you don't have the ups and downs of ad-based revenue - it's like a utility company, you can reasonably predict how much revenue you'll do each year...that's very comforting for company owners.

Now, that isn't to say that WSJ.com shouldn't begin giving some of its content away for free - I mean, it's pretty obvious that there's going to be a dramatic shift in the investing demographic. As the baby boomers get older, stop investing aggressively (and sadly, begin passing away), this whole web-savvy demographic will take their places as the "investing demographic". This audience won't have a tough time navigating a web site and will be used to getting free access to content.

So to preempt this shift and gain tomorrow's investing audience today, I think WSJ should begin giving free access to some of its content.

Which content should it be? I'm not quite sure.

At the end of the day, yesterday's news is less valuable than today's so maybe giving away older articles would be helpful. It'll allow them to maintain the subscription revenue for those who want their information in a timely manner while still allowing bloggers and those in the non-mainstream press to openly cite and link to WSJ content (which will be very important for building loyalty, brand and traffic).

II. The State of the Web

There has been a ton of talk on this topic...Everybody from Mavericks owner Mark Cuban to the guys over at Read/Write Web have been talking about where we are in the evolution of the web as both a technology and a media platform.

They both raise interesting issues - Read/Write Web focuses more on where we are in the "technology cycle" and Cuban focuses more the entertainment value of the web with respect to its current infrastructure.

The argument that Read/Write Web puts forth is interesting in that they try to map the standard "business cycle" to an underlying phenomenon they view as a "technology cycle". Joseph Schumpeter and other Austrian economists would definitely find this to be a compelling case for their theories with respect to business cycles and economic fluctuations.

Cuban looks even deeper into the technology by arguing that it's not the software that needs innovating but rather the infrastructure (or internet access speeds into the home) is what needs to be upgraded before we'll see another wave of innovation on the web.

I'm not sure who (if any) I agree with yet. I'm still pondering these issues myself but it's definitely forcing my brain to think in a different direction (which I always enjoy).

That's about it for me today, but expect more posts about the "state of the web" throughout the rest of this week/month/year. :)

Playboy Goes Social

Just saw a TechCrunch post about Playboy launching a social network - smart move Hef!

Here's why:

1. The way most adult content sites work is through a network model. They'll start with one site, build others and use them all to cross promote the other. It's what enables the smart companies to earn 30%+ margins and the dumb companies to earn under 10%.

Building a social network around a brand will allow Playboy to create a great funnel effect to their "pay for" services and sites.

2. On top of a reality show (which they already have) a social network is the next logical step for Playboy to hit the mainstream audience that might not otherwise get exposed to the Playboy brand or content. This is primarily due to the fact that as a paper magazine Playboy has lost a bit of its luster amongst the millions of online destinations that offer more raw, real and free content.

I think this puts them right back in the game.

3. They now have a HUGE talent pool to scout from.

Before, young girls aspiring to visual "deposits" in many a young man's "spank bank", had to submit photos and ID information directly to the magazine in order to be accepted for consideration.

Now they just post a few provocative profile pictures and their on their way!

To what? I don't know - as long as it's not my daughter or girlfriend I could care less.

All in all, well done Hef -- you've combined two of my favorite topics into one: Tech and Porn!

Gotta love a guy that can date 5 women at once while in his 80's.

Where did Friendster go wrong?

In my personal opinion - which, in the grand scheme of things, doesn't amount to much - one of the most important things one can do as an entrepreneur is to learn from past mistakes. Not mistakes of one's own doing, but rather from the mistakes of the countless entrepreneurs that came before us.

"Standing on the shoulders of giants" is a phrase that comes to mind.

Now we all know of the well documented technology problems over at Friendster, along with the internal VC and management conflicts - lessons to be learned from those two issues alone but we need to dig deeper here.

Here was one of the very first large scale social networks - this company had the world in the palm of its hands but somehow watched it all slip away (like my shot at becoming a professional basketball player when I never grew taller than 5'11'').

And while this company is starting to pick itself up by its boot straps it still has never manged to "get it right" -- what are they doing wrong?

Here are some of my thoughts:

1. Poor Information Architecture and Usability

I've brought this up to a number of people and while some agreed, there were many who didn't. But I really stand behind this one and I'll talk about why.

First off, why do ads take up almost a third of the profile screen? They have a massive leader board at the very top and then two big boxes on the right. I can see how that may benefit the bottom line but how does it add value to a user's social networking experience?

And have you ever tried using Friendster's photo feature? Forget the fact that you still can't tag other people in photos, click on a photo to go to the next one, etc... those things are annoying enough, but have you ever noticed this:

If you hit the back button in your browser while looking at an individual photo it'll take you right back to the gallery view of all of the photos (usually causing me to lose my place, say "Oh fuck it" and go elsewhere). The site is essentially forcing us to go against conventional wisdom in favor of Friendster's desire to use AJAX in their code - sorry guys, big "no no".

The list goes on but I'll stop here.

2. Day Late and a Dollar Short

Contrary to popular belief, Facebook didn't originate the idea of a news feed in a social network. The originator of social networks did - that's right, in case you forgot, Friendster was the first to offer users a peek at what their contacts had been up to on the site.

However, until recently the social news feed wasn't very "social". Let me explain...

When Friendster first released this feature it would simply tell me that one of my friends added a new friend, but it wouldn't say who. It would tell me my friend added a new photo, but it wouldn't show it to me. It would tell me they got a new comment but not tell who wrote it and what it said.

Essentially, the system was designed to promote click-throughs, page views and revenue. It wasn't designed to increase the utility of the site - again, another big "no no".

They did finally started to head in the right direction recently - now I can at least see who my friends are becoming friends with - the comments and photos are still off the mark though.

By releasing a half-assed feature that was meant to increase revenue and not utility, Friendster was once again passed over and Facebook reaped all the glory and benefits of the social news feed.

3. No Platform, No Traction

My friends are probably sick of hearing this one but history has proven that the companies who help other companies make money are dramatically more likely to succeed than those who don't.

Microsoft, Wal-Mart, Google, MySpace, Facebook - what do they have in common?

They all created a platform that allowed other individuals and companies to make money.

Microsoft allowed software vendors to create software that could be marketed and sold to millions of users on a standard operating system.

Wal-Mart made it so people from all walks of life could afford to buy DVD players and TV sets.

Google helped start-ups monetize their traffic and gave marketers the ability to advertise in every corner of the web.

MySpace and Facebook both allowed application developers to piggy-back their networks and market their wares in a viral manner - Facebook is unarguably doing a better job at this than MySpace which is why I think they'll eventually "win" but I'll save this argument for another time.

Friendster just hasn't caught onto this concept - they're operating a closed social network (which is mediocre at best) and not allowing for the third "C" in Hagel's "3 C's" of the web. They have the Content, they have the Community but they just don't have the Commerce!

Lessons

And the moral of the story kids: Don't be a "Friendster"... j/k ;)

But in all seriousness, these are the things that go through my head as I toil away in my crappy office space building my latest company.

How can I make my web application as easy to use as possible? How can I reduce friction, clutter, excess, etc.? How can I make this site as elegant as the iPod?

How can I use the technology I'm building to solve a real problem for people - how can it become a utility for my target audience?

How can I give other people the opportunity to benefit from this service monetarily?

Tough questions - but I think if we keep them in mind we'll at least avoid many of the mistakes made by those that came before us.

And those are my two pennies for the day!

Welcome to my World

I've always done "corporate blogging" and while it was fun - it always had a purpose or agenda behind it. I never felt like I gained anything from doing it and therefore it was ineffective as both a creative outlet and as a "corporate communications platform".

So I said to "hell with it"...from now on, when I blog, I'm blogging for me and for me alone.

Well, obviously not "alone" - I do hope people read what I write and gain something from it.

I've been in the tech space since I was 15 years old - definitely not a "seasoned veteran" but I have my share of battle scars...

Did the whole 90's dot-bomb thing - started a web consultancy, raised money, went outta business...yeah, you know the story.

Then for some strange reason I decided to work on Wall Street - my timing couldn't have been worse. Trade center went down 2 days after I started and I was on the phone pitching people to open new stock trading accounts.

Wanna talk about beating you head against a wall?

But I did learn a thing or two about a thing or two. And I finally smartened up and went back to school.

Now, I'm a Columbia University graduate and instead of doing the "safe, smart thing" like my parents hoped, I'm back in tech business!

I'm grinding it out on a new start-up here in my hometown of New York City. I'm having the time of my life and I'm really enjoying this new wave of web based businesses cropping up. I really dislike the term "Web 2.0", especially when applied to social media, but for the sake of simplicity and continuity you'll hear me use the term quite often.

So that's my first post....most of my writing will have to do with technology, finance, the current state of hip hop music, my favorite adult actress of the moment and whatever else enters into my head at any given moment.

So I hope you read, enjoy, discuss and give me honest and candid feedback whenever possible.