Advertising on mobile phones or How to create a user-centric community - the free SMS service. Why the “How to create … ” alternative? When I think about developing a service, I think about the users of this service and I ask myself: what would be their benefit from using this service (value added), what would make them keep using it (usability), why would they tell their friends about this service? And the most important question: “Would I use this service?” I think the best way to create a great community is to give people access to things that they already use or would like to use on a daily basis, and give it away for free.

Why?

I have started exposing the idea of services that split money with the users in Advertising Industry Crossroad - why not sharing the money with the consumers? I’ve also started to describe my business plan in Advertising and Communities - Developing a Business Plan. The first step in my plan is developing a free SMS service. This might sound pretty simple or unimportant, but SMS is the second most used service by mobile phone users, voice being the first. So it has a lot of potential. Advertising on mobile phones is a pretty hot topic these days so there’s already a need for this kind of services.

How?

Telf is a service which allows the users to send SMS messages for free. They can send as many messages as they want to as many friends as they want. All they need to do is log in, and they’ll be able to type the message, type one or several phone numbers, and click Send. Remember the holidays, when you have to send a lot of messages to your friends and family? It would be very simple to do it with this service.

Registration for the service I want to avoid “SMS spammers” so the service will be available only to registered users. The users will register, they will receive an activation code on their phone and they’ll use that to activate their account. And because this concept (of giving stuff away for free) is pretty new, the users will not be able to register as they register to a normal email or other type of service. The users will be able to join only by invitation (only at the beginning, until the service is well known). I want people to hear about this service and wish they were able to access it. So I’ll send invitations to 100 users, which will be my beta testers, and then I’ll give them invitations to send to their friends, and so on. I’m pretty sure a service that looks a little exclusive is more desired than another one with free access. Remember Gmail, it was in beta version for 2 years and it was available only by invitations.

Where do the money come from? I know, I haven’t told you yet how will this service pay for the SMS messages. It will insert short ads at the end of each message. One SMS message has 160 characters length, so the users will use 120 chars and the last 40 will be used for short ads. like “visit www.sergiutruta.com” or “open your own blog at…” or “visit the new club…” and so on. Each ad message insertion will be charged the cost of the SMS message. And that’s how the service will give SMS messages for free. The ads will be related to the message, so for example to a message saying “Let’s go to that new club that just opened” will be appended a related ad: “Visit www.clubs.com” or something like that. The ads will be contextual adds, related to the message. There you go, targeted ads And of course, the users will know when they register that short ads will be inserted at the end of the messages, in order to pay for the messages.

Will the SMS message recipients agree to receive the ads? The SMS messages are not unsolicited ads messages sent by Telf.ro They are actually messages sent from friends to friends. If I send a message to a friend saying “Meet me at the coffee shop downtown”, the final message might look like this: “Meet me at the coffee shop downtown. Telf.ro: Try the new Frappucino from Starbucks!”. It might look odd to the users at the beginning, but they’ll come to accept it pretty quickly.

The last, but not least It sounds nice being able to send messages for free to your friends from a web page. But what if I’m on the move? What if I’m waiting for someone in a coffeeshop or in a park? Well, I’m also working at a simple J2ME client which will be deployed on any java enabled mobile phone. That J2ME client will have a really simple UI, with a textbox for recipient’s phone number, textbox for message and a send button. When the send button is clicked, it will send the message through GPRS to Telf.ro, which will do the rest. This means I’ll be able to send SMS messages from my mobile phone really really cheap. Imagine typing the message, then typing 10 phone numbers, and clicking send. Normally it would cost probably 40 - 50 cents, but with this solutions it will only cost 1 cent or less, for the GPRS traffic.

In How to evaluate a Startup Idea I’ve described a criteria for evaluating a startup-idea. Here’s what Telf looks like analyzed through these criteria.

What effort is necessary to implement the idea?
As you can see the first page, it’s really really simple to implement. There’s a little more work at the profile area, where the users can send invitations, the publishers (the ones paying for their ads being inserted in the SMS messages) will be able to manipulate their ads and will know all the time what messages and how many of them have been sent. Also, the admin of the entire service will be able to manipulate users, publishers and global settings. I’ve chosen Ruby On Rails and it should take like a week.

Also, for the J2ME client, a midlet doing this is a 2 hours task. So no sweat here either.

What is the initial investment?
If we don’t count web hosting, no initial investment is necessary. At the beginning I’ll support the costs for the messages sent (I’ll promote my own products, of course ), and after I make sure everything runs as planned, I’ll start inserting ads from other publishers. For 5 cents a message, 1000 messages cost 50$, so it’s not a big deal while in beta testing.

How will the new service/product attract users?
I see two reasons that will attract users: sending messages for free and sending them directly from the phone or from a web page.

How will the new service/product make money?
If the cost for a message is 5 cents, I’ll charge the publishers 6 cents for each inserted ad.

Are there any other external dependencies?
There’s one external dependency. The connection to a company like Orange, Vodafone or others. Because they make money when the SMS service is used, I don’t see any problem here.

Once your service is running, what effort will it need from your side?
Very little, admin check-ups once in a while.

I’m only developing this service for Romania, so I’ll upload the source files for both the web service and the J2ME midlet and attach them to this article as soon as they’re working.

Advertising and Communities

A lot of the successful businesses have learned how to use two very important tools: the advertising industry, and the power of communities.

These both become more and more important and more and more powerful. Google for example became one of the mostly known companies in the world by making money from advertising. On the other hand, communities become more and more important, even to the point to decide the industry evolution or to help a company grow and evolve.

The purpose of the advertising industry is simple: taking the message to as many people as possible. It can use many types of media: television, radio, printed papers, internet. No matter how it propagates, the final goal is always the same: taking the message to more and more people.
The purpose of communities is always to grow by attracting more users. As they grow, communities gain visibility, they gain power, they draw attention and start to be heard and listened to.

When someone finds out how to join the advertising industry and the communities successfully, they have a good chance to develop a great business. Let’s take (again) Google as an example. They focused on the community first, they had millions of users long before they started thinking how to make money. When they found the solution with using advertising, their users community was growing so fast that it was pretty easy to predict where they were heading.

Nowadays, a lot of people look for successful solutions from combining advertising and communities. Though each of these two has at least one fault which have to be overcome in order to create a successful business.

The problem in the advertising industry is that people pay less and less attention to the ads. No matter what the ads are (video, audio, printed, text), people are getting better at ignoring them. One reason might be that the ad campaigns become more and more aggressive, so we have to protect from them somehow. On TV, when a show is stopped for ads, people start changing the channels. They avoid (consciously or not) being fed with more and more ads, so they start changing channels. The percentage of people who really watch the ads is smaller than the people watching tv. On the web, almost every page displays ads because it’s a good and easy way to make money. But the readers develop like a 6th sense and get better and better at reading the articles between the ads, without even noticing the ads.

In order to overcome this problem, the ads campaigns have get smarter and more interesting, in order to be noticed by people. The video ads have to present a story which sticks into our minds, the printed ads have to have more color and some layout that draws attention. The text ads have less possibilities to draw attention, and probably will be replaced by video ads. Though these are not real solutions, because as they become better, we become better at ignoring them.

In communities, drawing more users is pretty easy. Most communities attract users by focusing on general topics like cars, music, movies, blogging, sports, sex, money, or more specific topics like: bmw, porche, gm, ford (cars), football, basket-ball, baseball (sports), and so on. The more general the addressed topic, the more users will want to join that community. Probably the best topics for growing communities would be the ones addressing our needs: money and sex. With money we can eat what we want, we can drink what we want, we can buy what we want, we can go in vacations wherever we want, and so on. With sex, well…you know

My suggestion to solving these two problems is giving money to the users. I’ve already exposed this idea in Advertising Industry Crossroad - why not sharing the money with the consumers?. Let’s look at this now from the Advertising and Communities point of view.

Advertising: the money for ads will be payed without doubt to the ones broadcasting/displaying/printing the ads. So the costs are already in place and this will not change too soon. What if a part of these money will be payed to the users, to the consumers. Let’s say that displaying an ad on TV costs 2 cents for each user that sees it. What if 1 cent goes into the user’s account and the other goes into the television’s account. What if clicking on a link on a web page will make money not only to the page owner, but also to the reader, the one that clicked the link? What if seeing an add on the street can make me money, or hearing some ad on radio can make me money? The money are already payed to the television/radio/web page owner, so there’s no extra expenses. This might be a solution to attract more users. For example I see an ad on TV or on the street, I call a number, I answer correctly to some question, I get payed (this is not new, but probably was not looked at from this angle). Or I click on some links, I earn some money. Or I watch some video, I get some money.

Using this idea, I’ve developed a business plan for my startup, and I’ll share it with you. I’m mostly developing services for Romania, so it’s ok if you use my ideas for your own startup.

Developing a business plan

Giving users stuff for free might sound too weird and they might run away from your services (hey, we have to work hard in life in order to get what we want, right? ). So you have to be careful and do this in really small steps. Start giving them little things, of less importance, gain visibility and trust from your users. Then take it a step further and give them something else, more important, and so on.

My plan contains at least 3 phases:

Phase 1 - SMS Free Service
I’ve started developing a Free SMS Service. The users will be able to send text messages (SMS on mobile phones) to their friends for free. The costs will be supported by inserting short ads at the end of the message.

Phase 2 - Free music & movies download Service The users will have to watch an ad, and at the end they’ll be able to download a song. If they want to download a movie, they will have to watch several ads. Here you’ll have to make sure that they are watching the ads. Otherwise they might leave the computer and come back in 5 or 30 minutes and then download what they want.

Phase 3 - On-line making Service by watching video ads
If you can pay for music or movies when your users watch ads, why not giving the money directly to your users? And maybe you’ll find an ingenious way for them to make important amounts of money by spending only one or two hours in front of the computer.

The concept is so simple that it’s easy to find a lot of other applications where you give stuff for free to your users. They’ll be happy getting it for free, and the advertisers will be happy because their message gets to the consumers.

I’ll detail each one of the three phases above into separate articles.

I have outlined here some questions that I ask myself when thinking about a Startup idea. There might be others too, you’re welcome to list them.

What effort is necessary to implement the idea?

How many people and how much time is needed for implementing this idea? This is important because the sooner you get your product’s version 1.0 released, the better chances it has to succeed. If your idea is brilliant but it will take years to implement, it’s hard to predict if it will still be successful or not.

What is the initial investment?

Do you need an initial investment for your idea? If that initial investment is over your budget, you’ll need to find some investors. What equipment do you need for your idea to run (PCs, Servers, something else)? The less money you need at the beginning, the easier it will be to launch it.

How will the new service/product attract users?

Do they have to pay for it, will they have to register, will the registration be free or based on invitations? And most of all, what will make the users register? People will not pay easily for your product. It’s a good strategy to create a service or product which is free for your users and which is also valuable to them. And still, what will attract the users?

How will the new service/product make money?

Do you need to attract investors, ad publishers or something else? Why should they publish with your service? If you give something free to your users, you must make money from something in order to cover the costs. Google makes money from advertising, you might be thinking about this too. You’ll have to talk to different companies and show them how working with you will bring benefits to their business.

Are there any other external dependencies?

Apart from your users and the companies paying you, do you have dependencies on other external services or companies? For example do you use services from other companies (publishing video to YouTube, or photos to Flickr, do you use profiles on MySpace, do you use Google Docs, will you need to interract with some external service, and so on)? There might be other external dependencies. You’ll have to be aware about them and evaluate the risks.

Once your service is running, what effort will it need from your side?

Is it growing by itself or does it need your continuous attention in order to grow? For example, a service which counts on user’s contribution (YouTube, Flickr, del.icio.us, reddit, digg, and so on) grows on it’s own. It’s a good strategy to develop something like this. Also, if it’s something that people like, they will be the ones bringing you new users, so you’ll basically need no publicity. Your users will be your PR.

The questions from above (and others) can be used when evaluating a startup idea. I will start writing ideas about new services and I will use these questions as an analysis for these new services.

My next article will be an idea for a Free SMS Service.

We hear all the time people complaining about their lack of power. “I cannot change anything at my job” or “I cannot change my personal relations” or “I cannot improve my business relations”. When you start thinking about some situation, never start with “no” or “cannot”. The “No”, stops your mind from finding solutions. If you want to be able to search for a solution, you should rephrase from “I cannot do this or that” to “How can I do this or that?”

What helps us achieve our goals is determination and perseverance. The determination when following a purpose has to be proportional with the difficulty of achieving that purpose. You have to keep thinking about where you want to get and keep visualizing yourself getting there. If the determination is strong enough than you’ll be able to keep pushing until you get where you want.

I’m sure you know Spencer Johnson’s “Who moved my cheese? ” This great story teaches us how to deal with change. If we know how to deal with change, we will be able to improve all the aspects in our lives, both career or business and personal lives. Let’s divide the discussion into achieving personal goals and achieving business or career goals.

Achieving personal goals

Personal goals might mean buying a house, or buying a car, or loosing weight, or meeting someone. A great question from “Who moved my cheese?” that stuck in my mind was: “What would you do if you weren’t afraid?” Most of us feel fear when dealing with new things or new situations. That’s because NEW brakes our balance. Or so we think. If we succeed in getting over that fear, we’re one step closer to achieving our goal. That fear makes us think like “I cannot afford buying that new house because I don’t have enough money”, “I cannot loose weight or I cannot meet someone because I’m too busy”, and so on. If we remove the fear, if we remove the NO, we will be able to think about our goal like this: “What can I do to buy that house”, “How can I make time to meet someone”. When we think like this, we’re on the right track to finding solutions. So when dealing with something new or when we want to change something in our lives, we should start looking for ways to achieve our goals instead of looking for excuses why we cannot achieve them.

Achieving business or career goals

I have experience in trying to change something in a big company. Big companies have slow processes and are not receptive to change. It doesn’t matter if the change is good or bad for the company, changes are never welcomed in big companies. It might be because there are too many management layers and your idea might be lost along the way; or it might be because there’s already in place something that does not work as it should; it’s pretty hard to make changes in a big company (unless you’re a CEO or you own that company ).

What you need to do is break the change into small steps. Start by changing something at your team level, then show to other teams what that change did for your team and for your project, and so on. Little by little, you’ll be able to do changes, but you’ll have to be patient and only take one small step at a time. And if the change is done little by little, you have a better chance to make a difference into the company. For example, in Romania most of the big companies are multi-national companies. I have written the article about Corporate Blogging for one such company, in order to make them understand what can blogging be used for. They need something to improve the communication between departments, teams, HR and employees, management and employees, so blogging seemed like a good solution. But because blogging is only at it’s beginnings in Romania, pretty few people know what it is and how it can be used. So I had to take little steps and explain one person at a time what it is and how can the company use it. With patience and one-to-one discussions, I managed to make them understand the benefits.

This is just a simple example, the idea is that you’ll be able to do changes in most of the companies, if you take little steps. If it doesn’t work, you should try another approach. Not all companies can be changed, but most of them are receptive to change if the approach is right.

How do I find the power to achieve my goals

You’re goals have to be very important to you. If they aren’t, you won’t achieve them. You should always believe in your goals and always have the confidence that you can achieve them. Never mind what the others say, you should never loose focus. For example if you want to start a startup and you think you have a brilliant idea, don’t let anyone tell you otherwise. Keep working on your idea, make it materialize and you’ll eventually get where you want.

What makes us so different? Why some of us have great careers, great businesses, great relationships and others have lousy careers, lousy or no businesses and lousy relationships? Why aren’t all the children brilliant? Why aren’t we all top performers? Why aren’t we all very good at something?

There are two important factors which help us become brilliant, top performers, very good at something, great business men: hard work and mindset. Hard work is a very important ingredient for that. And only hard work will take you there. But hard work is not enough. It helps you become very good, but not top performer. I’ve met people who were very good at something but they worked very hard, harder then the rest in order to be the best. And I’ve also met people who were not working hard but were very good at something because they really liked what they did. By combining these two ingredients we get the right recipe.

These two factors can be analyzed separately. Let’s consider the first one: working hard. This is something that most of us can do, if we’re really determined and if we really want to get somewhere, we can work hard and we don’t really depend on anyone else. We just have to set some clear goals, make a clear plan and then stick to it.

On the other hand, it’s not really easy to get in the right mindset. The mindset is an effect of motivation but it’s roots are more complex. I think this depends a lot on our education, it depends on how we were grown and taught starting from childhood.

Brilliant children and average children

All children are smart. There’s no stupid or average children. What makes the difference between a smart child and an average one is self confidence. We all believe in our own powers and potential when we’re little. Remember childhood, there was nothing impossible back in those days. We knew that we could change the world.
But as we grow up, we start loosing our self confidence. We start loosing the thought that we can do anything we want. We stop believing in our potential. Our parents are very important at teaching us self confidence; and also at loosing it. They should teach us that we can do anything we want, they should make us believe that there’s nothing impossible. Children should be taught to focus on the positive aspects of any situation (hey, a bad grade is not the end of the world) and also they should be encouraged to focus on doing what they like. Children should be helped finding their own path and having the right support will make them have faith in their own potential. Believing in your self is the right mindset for getting wherever we want and we should help our children gain (or not loose) self-confidence as they grow up.

Being good or being bad at something

When you like what you do and if you are sure that you can do it, there’s a good chance you can be really good at that; and also there’s a good chance that you’ll get where you want. Liking what you do is the right mindset for doing it right.

If you don’t like what you do, if you don’t feel motivated enough, it’s most probable that you’ll never have the right mindset and you’ll never be good at that. Change is the hardest thing to handle. Most of us continue to do jobs and tasks we don’t like just because we’re used to it. But instead of continuing being bad at something, why not start doing something we like and something we’re good at. Enjoying what you do creates the right mindset for being very good at that.

Successful businessmen

Not all of us can be business men. Some of us enjoy having a job, we enjoy having a fixed schedule, we enjoy focusing only on something like technical stuff and not worrying about sales, marketing, branding, business meetings and so on. If you like what you do and are good at that then nothing should stop you. But if you have a job and you wish having you own business, stop asking your self if you’re able or not to do it. And stop worrying about failure.

All successful business men have had at least as many failures as successes. What made them successful is their determination to succeed. It’s their mindset and their belief that nothing stands between them and their success. All we have to do is transform our failures in useful experiences and learn from them and apply what we learn. If we follow this simple guideline, we’ll succeed eventually: we might succeed from the first attempt, we might succeed from the 10th attempt or from the 100th attempt. But if we keep trying we’ll get where we want.

When having the right mindset we take every failure as a lesson and then we move on.

Earlier today, I was in a restaurant and I was reading an article in Business Week about the first Starbucks opening in Romania. The article was telling about the great experience that Starbucks is trying to offer to their customers. The idea behind the business is simple: selling coffee. How did people come to love so much the Starbucks coffee? What differentiates Starbucks from other coffee shops? What makes people get in line in order to get a coffee from them? What makes them so special? In the same context, what makes people choose Google for search over other services? Or what makes them choose iPods over other mp3 players, Amazon over other on-line book stores, Coca-Cola over other drinks, and so on. All of them use pretty simple business ideas: coffee, search, music, books, drinks. Though, something makes them different.

Starting a new business

When thinking about starting a new business we tend to think we need a great idea for that. We are most certain that if we have a great idea the business will succeed. And we keep searching and searching for that great idea. Sometimes we might find it, but most of the time we won’t. It took me a while to realize that waiting for that brilliant idea will not get me anywhere. Most of the successful businesses use simple ideas and focus on improving the experience of the consumers. Starbucks focuses on offering a unique experience, Google focuses on offering the best and most relevant search results, Apple focuses on design and experience with all of their products (I’m writing from my iMac so I had to say something about Apple ), and so on. They’ve all started from simple ideas and focused on creating a unique environment around their products. It took a while for these companies to influence our lives and experiences, but they did it eventually.

On the other hand, there are also companies which started their businesses from brilliant ideas: Microsoft (operating system), IBM (personal computers), and so on. And they are successful businesses. What these companies have in common is that they came up with something new, with something a lot different that what was available at the time. They offered a different and better experience in personal computing, OSes and they had a lot of impact on how people work right from the beginning.

So there are two roads you can take for your startup: great ideas or great experiences.

If you have a brilliant idea, you can start develop your business around that idea. You’ll know if your idea is brilliant or not by the reaction of the ones around you. If you tell them your idea and they love it, there’s a good chance that the idea has a lot of potential.

If you don’t have that brilliant idea but you still want your startup, you can start from a simple idea and then focus on offering a great and unique experience to your customers. And always do something that you’d use. If you don’t like the services you offer, you customers will also dislike your services.

What should I choose for my startup?

I don’t think one choice is better than the other. I’d rather say they are both good. It’s just that one is more accessible than the other. It’s easier to start from a simple idea and make the best of it, than waiting for a brilliant idea. And it’s always better starting your business and developing it than not doing anything.