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Crowdfunding is not marketing

By Francis Morancrowdfunding1

The first time I heard a company suggest that they were going to do a crowdfunding campaign not to raise money but to raise awareness, I thought it was one of the stupidest things I had heard in a long time. Since then I’ve heard it often enough to confirm that stupidity is one of the most contagious phenomena out there. And just because a lot of people think it’s a good idea doesn’t make it so.

Viewing crowdfunding as a substitute for marketing, or even as an effective marketing channel, ranks right up there with “We’ll do a viral video” in its betrayal of a complete lack of understanding of how marketing works.

Screen Shot 2013-12-04 at 12.51.57 PMNow, don’t get me wrong. Some crowdfunding campaigns have generated enormous attention for their sponsors. A Kickstarter campaign that broke all records was the Gangnam-calibre equivalent of a viral video for Waterloo entrepreneur Eric Migicovsky and his Pebble watch. (Although, as I recently tweeted, crowdfunding advocates — and people who think crowdfunding = marketing — really need to stop citing Pebble as an example. Nobody was more surprised than Migicovsky when his campaign, with its original target of just $100,000, ended up reeling in more than $10-million.) His fame has grown to the point that he is literally the poster child for wearable computers.

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Is your job as social media expert about to become obsolete?

By Francis Moranold radio

When radio first came on the scene, getting the little box with its seemingly-magical mechanisms that plucked sound waves out of the air to actually make noise required users to know how radio worked. For most early radio adopters, it actually required them to build their own radio sets. As time went on, though, knowing how to operate a radio became common knowledge, and nobody had to be taught how to do it. That didn’t mean that the builders of radios and the programmers of good radio content became obsolete; it just meant that pretty much everybody knew how to use the tool while others, the experts, were still valued for their ability to build the tool and make it useful.

I used that analogy in a Facebook conversation yesterday that was prompted by my posting a link to an article that suggested that the job of social media expert will become obsolete as “youngsters (who) are already immersed in platforms such as Twitter and Facebook … enter the job market familiar with social media.” The article quoted Workopolis vice-president of human resources Tara Talbot, “People will need to be even more literate with social media just to get in the door and it will no longer be something that absolutely differentiates folks.”

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‘They didn’t do any marketing. They just went to SXSW’

By Francis MoranBell Curve

I’d be a semi-rich man if I had a dollar for every time I’ve heard someone point to one of the spectacularly successful companies that have exploded onto the marketplace over the last few years and say, “They didn’t do any marketing. They just …” and then fill in the blank with some seemingly trivial thing, like “They just went to South by Southwest,” or “They just did social media.”

I heard it again just last week when I guest lectured to a University of Ottawa MBA class, with Twitter and Facebook held up as the examples of companies that “didn’t do any marketing.” As I told the students, Twitter and Facebook are no more examples of predictable startup success than buying a lottery ticket is an example of sensible retirement planning. I drew a bell curve in the air and said that if that bell curve described the distribution of success for a given collection of technology startups, then Twitter and Facebook — and here I moved several meters to the right and stretched my right arm out — are way over here. They’re not even outliers; they’re in a completely different orbit.

And still the mythology persists. I can understand it. Twitter, Facebook, Instagram and Snapchat are all wildly successful companies, and who wouldn’t want to emulate them. The truth is, though, that most who do, fail. We hear about the (very) odd one that succeeds but, by definition, we hear nothing about the failures, of which there are countless.

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Angel investors can’t sit on crowdfunding sidelines

Screen Shot 2013-11-14 at 11.43.11 AMBy Francis Moran

The biggest mistake Canadian angel investors could make if and when equity crowdfunding is made more widely available in Canada “is to sit on the sidelines and do nothing and let crowdfunding pass them by,” says one of this country’s leading legal experts on the subject.

Lawyer Brian Koscak, who will be part of a crowdfunding panel discussion at next week’s National Angel Capital Organization national summit in Banff, said in an interview that the potential broadening of equity crowdfunding in parts of Canada “is a wonderful opportunity for angels to step up and show what they’ve got.” Angels, he said, have a wealth of expertise both in the specific sectors in which they invest and in the investment process itself, making them invaluable participants in any crowdfunding portals that are established.

Angel investors are often the first external source of funding that startups and young companies receive. (A survey of 20 out of NACO’s 24 angel group members reported that angels made 139 investments worth $40.5-million in 2012.) In Canada, as in most other countries, angels must have a minimum income or net worth before being allowed to invest, criteria that shuts out most investors. Securities regulators in Ontario and Saskatchewan have proposed expanding the opportunity for early-stage private investment by allowing companies to solicit small investments from larger pools of individual investors. Even if these proposals never become law, ordinary investors can already, under certain circumstances, participate in early-stage investing everywhere in Canada except Ontario.

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Join Startup Canada for an entrepreneurial invasion of Parliament Hill

HillDay-communities-300x250-White(1)By Francis Moran

In a just over a week, the largest-ever contingent of Canadian entrepreneurs will congregate at the seat of Canada’s government, on Ottawa’s Parliament Hill, to engage in a national celebration of Canadian entrepreneurship.

I’ve been proud to be associated with Startup Canada since its genesis more than 18 months ago and I love the idea of Startup Canada Day on the Hill, a milestone event that will manifest the momentum, impact and scale of the grassroots start-up movement in Canada. The day will also advance discussion on the crucial role  played by partnerships between entrepreneurs, independent organizations and government in maximizing entrepreneurial success.

When you look at the numbers, there is no doubt entrepreneurship benefits all Canadians. Small businesses represent a huge part of Canada’s work force, and they created more than three-quarters of all private-sector  jobs from 2002 to 2012, according to Industry Canada statistics.

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