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Being a services business, we’ve always been lured by the forbidden fruit of developing a SaaS product, selling it to a bunch of users, and then sitting back and watching the revenue pour in every month. Over the last few years, we’ve been approached a couple of times by people looking to have us serve as the engineering team of a company in exchange for equity which would eventually begin generating revenue. Despite this situation being relatively common, there are relatively few guidelines on how to approach receiving equity in exchange for work as a services company. With that in mind, here are some guidelines we use in these situations. Also, these suggestions are probably also equally applicable if you’re a services company looking to develop a product in house.

Treat the project or company like a billable client

An issue that we’ve repeatedly noticed is that equity or internal projects are often treated as “second class” citizens within service companies. Since they aren’t billable, companies end up doing things like leaving them off the planning schedule, pushing the work off until Fridays, or only assigning interns to the project.

One strategy to help combat these issues is to on-board the project like you would any billable project. Depending on your process, this might mean doing things like creating a Basecamp project, adding the project to your time tracking software, and holding a “kickoff meeting”. Whatever your process may be, the takeaway is to treat the non-billable project like a normal one throughout your organization.

Set a budget and stick to it

Budgets are important for any project but they’re especially important when equity is involved or it’s an internal project. When dealing with a non-billable project, you’ll want to avoid the “equity guilt” where you’re guilted into “doing just a little more” since you own a measurable % of the company as well as eventually be able to calculate an ROI for your investment. A proper budget will help you do both since you’ll be able to know when you’ve contributed your fair share and hopefully one day calculate your ROI against the budget.

Developing a budget in these situations is relatively easy, just take how you’d normally bill and decide on a number for the version one of your buildout. If you bill hourly, pick a number of hours, if you bill by the week then pick a number of weeks. Since the project is already set up as a “first class” project you should be able to just add a budget against it.

Someone needs to “own it”

One of the problems that arises in equity deals and internal project is that there isn’t really a client and subsequently there often isn’t a single person responsible for making key decisions. Having a single person that ultimately “owns” the project will mitigate “design by committee” issues and also help keep the momentum of the project going.

Fair warning though, “owning” a failed project carries a heavy emotional and psychological toll so as an executive you’ll have to be ready to support an employee that accepts this responsibility.

Clearly define responsibilities

Clearly spelling out who is responsible for what is important when a services company is being brought in for equity. Detailing responsibilities will help you avoid a situation where your team started off as the marketing team but then ended up fielding support issues and ultimately resenting the project.

Agree upon KPIs and know when to quit

Knowing what you want to track and how you’ll measure success is important when money isn’t being exchanged because it helps keep everyone accountable and prevents the project from slowly stagnating. Having a good handle on your KPIs also helps motivate the team if things are going well and they’ll ultimately be a primary factor in deciding if you should continue the project.

Unfortunately, one of the hardest aspects of any project is knowing when to quit. This decision is usually harder in equity only or internal projects since there’s no pressure of burning capital and there won’t be the finality of the money running out. Despite this, knowing when to pull the plug will help you facilitate an orderly shutdown of the project and also give everyone involved the chance to debrief.

So should you do an equity only project? Well it depends. Given the the reality of startups, chances are you’ll not going to enjoy an eight figure exit and retire a millionaire. But chances are, if your team gets involved with an interesting project they’ll get a chance to learn a lot, experiment outside their comfort zone, and maybe even leverage the project into new business. So my answer would be a “maybe” depending on where your business is and what sorts of opportunities you’re being presented with.

One of the most interesting companies in the ad:tech space right now is AppNexus. What AppNexus provides is basically the infrastructure necessary to build and run an internet display advertising business. In addition, they also provide a REST API to access the majority of the platform’s capabilities. This post will walk through how to use the AppNexus platform to setup audience retargeting.

What is retargeting?

With the rise of “real time bidding” in the display advertising space, it’s now possible for advertising choices to be made in real time at the individual user level. Basically, what that translates to is that as a web user every time you see a display ad an algorithm is transparently deciding how much to pay to serve you that ad. Using this technology then, its possible to “retarget” visitors that had been on your site as they see ads across the Internet. So with AppNexus, you’d basically be using their platform to “tag” your users and then leverage their RTB connections to show those users ads as they browse the internet.

The setup

Using the AppNexus platform to set up retargeting is relatively easy. First, you’ll need to leverage the “Get UID” call to retrieve the AppNexus id for your user. The URL is structured like:

http://ib.adnxs.com/getuid?http://www.yourdomain.com/getId?id=%24UID

The /getuid service will generate a 301 redirect to the URL you specify and replace the $UID placeholder with the user’s Appnexus id. If you’re planning to process users with a batch process, you’d want to store the id that gets returned from AppNexus so that you can target those users.

The next step is adding users to AppNexus segments which will allow you to target them across RTB exchanges. There are two ways to achieve this, you can either add users to segments in real time using an AJAX call or you can add them in bulk by uploading a file to AppNexus. Adding users in real time is straightforward, the AJAX endpoint is:

http://ib.adnxs.com/seg?member=USER_ID&add=SEGMENT_ID

Using the batch process is a bit more involved, you’ll have to generate a file with AppNexus ids and segment ids and then use the batch service to process the file.

Great, but what can I do with it?

Plugging into the AppNexus infrastructure like this opens up a lot potential applications and use cases. Some potential use cases are:

Users that are viewing handbags on your site could get added to an AppNexus in real time to re-target them with handbag advertising.
Using the batch service, you could dynamically add users to opt-in for promotions to a specific segment.
In real time, you could monitor user behavior and add users that complete specific actions to a segment so they receive targeted advertising.

Anyway, if you’re interested in building solutions on the AppNexus API we’d love to work with you so drop us a line.

With 2012 wrapping up, I thought it would be fun to make some predictions for 2013. I’m normally not a huge fan of these lists since they are usually a bit dull so I’ll try and make this one a bit scandalous. So here we go, looking at startups, technology, and a bit of everything else.

Series A Crunch

It’s over hyped but still probably worth mentioning. There was a huge uptick in angel activity in the last few years and as a result there’s a glut of start-ups looking to raise a Series A round. Unfortunately, there won’t be enough Series A deals to be had and with the general cooling in the consumer web sector VCs aren’t jumping for ways to make them happen. The net result of this situation will probably be a an increased number of “zombie” start-ups, aqui-hires, and obviously deadpooled companies. Fred Destin from Atlas has a full post discussing this, Series A Crunch, Seed Blues.

Breakout Health Company

The health and wellness vertical has been heating up for a couple of years, but we still haven’t seen a company have their “mint.com” moment in the space. I think we’ll see one in 2013 because of a combination of the penetration of smartphones and tablets, growing popularity of health data interoperability, and the federal mandate that electronic medical record keeping be implemented across the board. Deep pocketed companies like athenahealth have also hinted that they’d be open to acquiring startups in this space which should up the ante.

Meta Cloud APIs

Looking back at 2012, it could be affectionately nicknamed the “year of the outage”. Several providers were hit by downtime, but the Amazon Web Services disruptions were arguably more serious and frequent than they had been in the past. For some companies, the AWS issues highlighted the fact that relying on a single cloud provider was too risky given the potential of extended downtimes, even across regions. I think because of this, in 2013 we’ll start seeing services that make it easy to provision and configure identical environments at multiple cloud providers. This would essentially allow you to have live instances running on AWS but then have an identical setup running at Rackspace. The foundations for something like this already exist in the jclouds library.

One JS MV* To Rule Them All

There’s been an explosion in the number of Javascript MV* libraries in the last couple of years. Libraries like BackboneJS, AngularJS, and KnockoutJS are all meeting similar needs for the same group of developers. I think in 2013 we’ll see at least some consolidation in the number of libraries and maybe even the emergence of a clear favorite. Hopefully this will lead to some clear patterns for Javascript MVC development just like the paradigms used by backend frameworks like Rails or Symfony.

Google Releases a Play API

Its a bit surprising that in 2012 mobile app discovery is still a disaster. Google Now can automagically tell me my flight is delayed but Google Play can’t seem to offer up even the basic recommendations. What’s even more surprising is that there isn’t an official Google Play or iTunes app store API. It’s also a bit odd that even if I “sign in” with a Google Account on a site, I can’t automatically download apps to my phone from their site. I think Google is going to change this in 2013 and open up a wave of innovation around mobile app discovery and monetization. This should shake up the app store distribution problem and also reduce the friction to convert a web user to a mobile app one.

Second Screen Showdown

With the rising popularity of tablets, the second screen TV experience will become increasingly popular in 2013. You’ll be able to download network (Showtime, HBO, NFL, etc.) branded apps which will display enhanced content as you’re watching your favorite show or team. Look for networks will use this to boost engagement and drive revenues through sales of content related items.

Anyway, these are all a bit off the cuff but I’d love to discuss in the comments.

Last week, I was catching up with a friend of mine and we started chatting about his most recent project. As we were chatting, he made an offhand comment about how some of the business guys on the team love to refer to what they are working on as a “big data” play, even though it really wasn’t. This stuck with me, since because of the vague definitions around “big data”, it’s easy to shoe horn problems into a “big data” play. Because of this, I think its worth taking a step back and discussing what big data really is and what tools are available to work with it.

It’s all just data

At the end of the day, data is data. It doesn’t really matter if its stored in a CSV text file, a MySQL database, or a NoSQL datastore like Cassandra or MongoDB. Typically though, web applications tend to use a relational database like MySQL or Postgres to persist data. Relational databases store data in a series of tables which are in turn arranged as a series of rows and columns. As an abstraction, think of a series of Excel worksheets which can have links between the rows of each sheet.

For most applications, this works out fine, the database ends up managing say a few thousand customer accounts, each with a few hundred thousand objects associated with them and the total dataset fits conveniently into the server’s RAM. Since the dataset is relatively small, things like retrieving information, updating records, and running ad-hoc analytics queries are all easy to implement and relatively fast. But what happens if your dataset doesn’t fit into memory of even the beefiest of servers? Therein lies the “big data” problem.

Certain applications generate an enormous amount of data on a daily basis. For example, look at Mixpanel, tracking discreet user interactions is going to produce hundreds of thousands of datapoints every day even with just a few clients. With this volume of data, typical relational databases quickly start performing sluggishly and eventually stop being effective entirely. Even simple queries like counting the “# of clicks by user” start to take hours to run, effectively becoming intractable. Although specialized relational databases like Vertica and Oracle 11g do exist to help solve this problem, they’re expensive and proprietery.

Enter the elephant

One of the first companies to publicly discuss their big data strategies was Google in Bigtable: A Distributed Storage System for Structured Data which described their BigTable datastorage system. Although a proprietary solution, the research paper was used as the basis for Apache Hadoop, an open source framework for running MapReduce style jobs over large datasets.

At this point, Hadoop has distinguished itself as the most popular open source big data solution with a rich ecosystem of tools and several companies providing professional services and support including Cloudera and Hortonworks. What Hadoop provides is a low level framework for allowing computation jobs to be distributed across several servers within a cluster. This allows tools to split up very large datasets into smaller chunks, distribute computational tasks across the cluster, and finally assemble the result. So with the Hadoop framework in place, you still need specific tools built to leverage the distributed framework.

The toolbox

There are several tools that effectively leverage Hadoop but here are some of my favorites for quickly building out a cluster:

– Apache Whirr – Automates deploying, bootstrapping, and configuring a Hadoop cluster. Whirr will save you hours of time because instead of manually starting 4 EC2s and configuring them all you can kickstart a cluster with a single command.

– Apache HBase – A column store database that is similar to Google’s original BigTable system. Great for storing billions of records across a Hadoop HDFS file system.

– Apache Hive – A datawharehousing solution that allows you to run “SQL like” queries using Hadoop. It also has native support for pulling data out of MySQL, making it a convenient addition to a stack includes MySQL.

Apart from these, there are dozens of other Hadoop powered tools but its impossible to recommend a single silver bullet without knowing the details of your “big data” problem.

Early on Tuesday Bootstrap 2.2.0 was released which included a handful of improvements, a couple of bug fixes, and some documentation updates. News of the update made the front page of Hacker News and generated a heated debate surrounding the usefulness of Bootstrap itself. The top comment basically railed against Bootstrap saying it’s useless since it just introduces a load of boilerplate CSS without any added benefit. It struck me that looking through the Bootstrap documentation, there isn’t a straightforward explanation of what it really is and more importantly, when you should use it.

At a high level, Bootstrap is a “CSS framework” which contains a set of CSS classes to help you develop CSS for a project. Bootstrap wasn’t the first and isn’t the only CSS framework, projects like BlueprintCSS, 960gs, and Foundation are also competing CSS frameworks. What makes Bootstrap stand apart though, is the tight integration between “base” classes and “high level” classes along with the number of components included in the standard distribution. Using Bootstrap, you can effectively use a single toolkit to take your project from a layout grid, through styled HTML forms, and finally stylish Javascript plugins.

The next thing to consider is give your requirements and team, is Bootstrap an appropriate choice for your project. As CSS frameworks go, Bootstrap is pretty heavy and it’s going to introduce conventions and assumptions into your project that if you don’t use, you’ll end up fighting against. Given that, when is a good time to Bootstrap? In my opinion, Bootstrap will end up being the most useful when you have a fast moving, new project that needs a good “default” style for prototyping as well as a style guide for developers to follow. So concretely, a typical team of 3 engineers starting a new project will probably benefit from Bootstrap. Meanwhile, a digital agency designing a micro site for a client with exiting assets and branding probably isn’t going to. So what does Bootstrap get you?

Consistency and re-use

With a single developer using a single CSS file, its pretty easy to keep class names consistent and effectively re-use styles. However, as additional developers and additional CSS files are added to a project it becomes increasingly difficult to effectively re-use classes and often prevent near duplicate definitions. Bootstrap helps mitigate this by introducing classes for styles you’ll probably need right off the bat. Need a button? Use “btn”. Need a bordered table? Add a “table-striped”. Unfortunately, Bootstrap isn’t a silver bullet but it’s better than nothing.

Looks good out of the box

This one will be a bit controversial but it’s important for a lot of people. Out of the box, Bootstrap looks pretty good which gives you a more flexibility in rapidly developing prototypes, proof of concepts, and MVPs because you’re free to focus on the functionality instead of the design. If something ends up moving into production, you should obviously customize Bootstrap away from the stock theme. Bootstrap actually makes this significantly easier because it uses LESS to generate its CSS files. LESS introduces several pre-processors on top of CSS which makes it easy to make a cascading edit throughout the framework. Need to change the colors across your site? Just edit variables.less and re-generate the CSS.

It’s modern

As a framework, Bootstrap leverages several modern development techniques including responsive design, HTML5 data-*, and several others. Taken individually, none of these techniques are particularly notable but as part of an integrated framework they’ll help you write cleaner, more maintainable, and more compatible code.

This isn’t an exhaustive list by any means but hopefully it’ll serve as a good basis for what Bootstrap is and why you should consider using it.

Category: General

Tips: Five guidlines for exchanging services for equity