Silicon Valley may be America's most famous nebula of tech startup stars, but it's getting some serious competition a short hop down California's coastline.

With a robust system of incubators and accelerators producing a flurry of new companies -- more than 1,400, according to the AngelList startup community-- Los Angeles is looking to make a name for itself as a prime destination for putting down business roots.

Better weather, more affordable rent and proximity to the entertainment industry are just a few of the factors driving the L.A. startup scene's growth. Many of the ventures in what's been called "Silicon Beach" are tapping into the power of celebrity users and investors to drive awareness.

We spoke with the founders of three hot startups in the area about their success and key lessons they have learned piloting their ventures.

Viddy's Brett O'Brien, Chris Ovitz, and JJ Aguhob

image courtesy of the company

Company: Viddy
Product: iPhone app for sharing 15-second video clips with effects
Founders: Brett O'Brien, JJ Aguhob, Chris Ovitz
Launched: April 2011

What began as an iPhone app for sharing short user-generated video clips has grown into a community of 40 million users. An array of celebrity devotees have signed up for or endorsed Viddy including Jay-Z, Justin Bieber, Will Smith, Mark Zuckerberg and Twitter co-founder Biz Stone.

"Fifteen-second Viddys are the '140 characters' of video for people in Hollywood who create, share and consume with an online community," says Viddy co-founder JJ Aguhob.

Viddy has raised $36 million so far in two rounds of funding, from investors including Battery Ventures, Greycroft Ventures, Qualcomm and Jay-Z's Roc Nation. The company's major competitor, Socialcam, was acquired by 3-D design software company Autodesk in July.

The founders say their focus is on attracting more users and improving the product. Strategies for generating revenue -- such as in-app purchases for premium video effects, celebrity-sponsored add-ons, cloud storage and uploads of longer videos -- are still being worked out.

Startup lesson: Put users first. 
"To build a business organically, it 110 percent starts with the product and an experience that people can care about and easily engage with," says co-founder Brett O'Brien. "If you treat your venture as your passion, others will take notice and be drawn to your work." 

Related: 9 Cities You Wouldn't Think Are Hubs for Tech Startups

 

Instacanv.as founders Matt Munson, Todd Emaus, Steve Bull and Kevin Fremon

image courtesy of the company

Company: Instacanv.as
Product: Allows Instagram users to sell their photos as physical canvas art
Founders: Matt Munson, Todd Emaus, Steve Bull, Kevin Fremon
Launched: February 2012

Facebook's $1 billion purchase of Instagram has excited more than just that company's options holders. Other startups see the photo-filter and sharing app as a new platform worth building an ecosystem around.

In the case of Instacanv.as, its four founders saw an opportunity to turn pictures taken with Instagram into real artwork. Instagram "artists" can easily set up an online gallery enabling sales of their creative phone photos as physical media. Products include traditional canvases, framed prints, and a unique one-inch thick acrylic glass product dubbed The Prism.

A short six months from launch, the site is powering galleries for more than 100,000 photographers in more than 30 countries, says co-founder and CEO Matt Munson.

The product began as an online education site, operating solely on seed money. The team quickly changed course, based on the founders' interest in Instagram and their desire to buy their own prints. Instacanv.as suddenly grew "way faster and more wildly than we ever anticipated," Munson says.

A graduate of L.A. accelerator MuckerLab, Instacanv.as has raised nearly $2 million from several groups, including FF Angel, First Round Capital and Bullpen Capital. The company says it has been exceeding a $1 million annual revenue rate since launch.

Startup lesson: Iterate quickly. 
The Instacanv.as founders stick to the lean startup methodology of Eric Riess and to testing and learning on the fly. "If something's not working, try iterating very quickly to find something that does work," Munson says.

Related: The Next Big Wave in Tech -- And How Young 'Treps Can Surf It

 

Norm Schifman and James Citron, founders of Mogreet

image courtesy of the company

Company: Mogreet
Product: A mobile text and video messaging platform for marketers
Founders: Norm Schifman, James Citron
Launched: August 2006

Based in Venice, Calif., Mogreet began as a mobile greeting card delivery service. The company eventually pivoted, turning its mobile media platform into a tool for marketers to deliver text and multimedia message campaigns. The company now licenses its mobile marketing services to Fortune 500 companies.

Over the past two years, the company's mobile video messaging volume has grown by 400 percent, and Mogreet expects to increase revenue by the same amount in 2013, "as consumer brands, advertisers and mobile developers look to the mobile phone as the primary screen to engage with their audience," says CEO and co-founder James Citron. The company is profitable, with revenue coming from annual brand contracts in the range of $50,000 to $500,000, monthly messaging fees and third-party developer adoption.

With total venture capital of $14.1 million, Mogreet is supported in more than 175 countries and reaches two billion consumers. Most recently, the company launched an API service that gives developers a way of delivering text and multimedia messages, in-app messaging and more in their own apps.

Startup lesson: Don't be afraid to expose your idea.
Listen to the opinions of friends, customers and others, "and use them to create breakthrough products to evolve your ideas and, ultimately, build great companies," Citron says. "Ideas are a dime a dozen. Execution is everything."

Tags: Startups, Silicon Valley, iPhone, Los Angeles, AngelList, Justin Bieber, Jay-Z, Biz Stone, Roc Nation

Have you ever worked in a group or team? How did the team function? What was the demographic makeup of the team, and how did you all get along?

Creating an effective work team is by no means a simple task, and can involve getting the right group of people together, setting appropriate goals, using the right leadership style, and more. Although not a complete solution, the following tips might help spark some ideas on creating your own effective work team.


1) Avoid over-cohesiveness

Naturally, most of us feel more comfortable with people who are similar to us. We tend to get along well with people who have similar preferences and tastes, or those who may be of similar age, race, or other demographics. However in work groups and teams, too much cohesion or lack of diversity can be detrimental and costly to the organization.

A highly cohesive team is great, but oftentimes there is a point where the team is so cohesive it impedes the organization’s performance. Instead of worrying about the company’s goals, team members strive for whatever is in the team’s best interest, which may or may not coincide with organizational goals.

For example, a team might strive to finish work early everyday so they can go out for drinks, or a team might get so caught up socializing with their peers that their work output suffers.

By composing a diverse team with varying demographics that is moderately cohesive, a broader range of ideas can be taken into perspective and quite often can lead to new solutions or ways of thinking.


2) Look at the less obvious demographic categories

Just a few decades ago, diversity in the workplace simply meant working with people of different ethnicities or racial backgrounds. Today there are many different categories that relate to diversity, such as gender, sexual preference, religion, education, ethnicity, and more,

Two of the most important yet often overlooked demographics are differences in age and differences in economic upbringing.

First, it seems that some organizations avoid hiring older individuals, or are finding ways to relieve older workers of their duties because they will likely be exiting the workforce relatively soon, and may be entitled to pensions or retirement plans.

Older individuals might not be so up to date with current trends, but their experience and knowledge can be of paramount importance; their opinions and points of view are definitely worth listening to. Similarly, young people also have unique perspectives, ideas, and ways of thinking, yet organizations are still weary of hiring people with little experience.

Second, a diverse team may also come from varying economic backgrounds. Even if a team is composed of ethnically diverse members, if they were all raised in middle class society, went to high school then directly to college, they will probably think and act similarly.

Having people from both ends of the economic spectrum will definitely provide a broader range of ideas, although there could be some trouble seeing eye to eye. Providing clear goals and leadership can be the best way to help a team reach their targets.


3) Provide clear goals and leadership
Forming or being part of a work team can be difficult, especially if clear goals are not specified. Make sure that every member of the team fully understands the goals and strategies to reach those goals. If clear-cut goals are not defined, the output may be less than expected.

Furthermore, a fitting leadership style is also necessary. Who is the team leader? Is the team going to be self-managed, or will they report to a superior? Depending on the group or team dynamics, a leader may have to be stern, compassionate, empathetic, and more. Lead by example, and let team members take ownership of their tasks and hold each other accountable for their actions.

These are just a few important items to consider when creating or managing an effective work team. Have you had experience in a work team before, or are you part of one now? What has your experience taught you? We’d love to hear your opinions.

Tags: Leadership, Organization, Diversity, Team, Team leader, Business, Management, Work

Who is Sandy Pentland?


MIT Media Lab Professor Alex ‘Sandy’ Pentland develops technology to measure, analyze and predict human behavior. Research of his own direct doing called Reality Mining uses data from cell phones and badges to understand how people communicate – the results of which companies and governments are already starting to use to improve their organizations. With sensors and cell phones, Pentland is monitoring the pulse of society.

In many respects, Pentland is also the grandfather of Google Glass , a prototype heads up display that literally makes digital data a lens through which we see society in the “real” world. The idea is to use the types of big data already gleaned from smart phones to help make real-time decisions. Some of Pentland’s former students – and present day Google X Lab employees – have helped make the Project Glass program a reality.

Pentland is also head of the MIT Media Lab Entrepreneurship program, and has co-founded or served in an advisory role to several big data analytics startups such as Ginger.io and Sense Networks. In addition to his many other roles, this gives him a unique perspective into the intersection of Big Data and entrepreneurship.

He was also named as one of the world’s most powerful data scientists on Forbes.

Pentland’s 3 Big (Data) Insights:From his MIT Media Lab office, Pentland shared three key insights about Big Data:


1) Big Data is about people.

SP: Big Data is principally about people, it’s not about RFID tags and things like that. So that immediately raises questions about privacy and data ownership.

I mean, this looks like a nightmare scenario unless there’s something that means that people are more in charge of their data and it’s not something that can be used to spy on them. Fortunately as a consequence of this discussion group at the World Economic Forum, we now have the Consumer Privacy Bill of Rights which says you control data about you. It’s not the phone company, it’s not the ad company. And interestingly what that does is it means that the data is more available because it’s more legitimate. People feel safer about using it.

2) Cell phones are one of the biggest sources of Big Data. Smart phones are becoming universal remote controls.
SP: Cell phones have a long way to go in getting smarter. As they get smarter they’re more your universal remote control. You use them for everything. You browse of course but you’re now paying bills with them, you’re using them to take the T [Boston's public transit system]. Not so much in this country but in other parts of the world, your phone is the way you interface through the entire world. And so it’s also a window into what your choices are and what you do.

We [the group] used some of the very first smart phones. Before that I ran the Wearables Experiments, where we decorated people with computers and sensors and things, before they had even cell phones. So that’s, for instance, where Google Glass came from. My students have now gone and finally built the things!

3) Big Data will be about moving past averages to understanding patterns at the individual level. Doing so will allow us to build a Periodic Table of human behavior.
SP: We’re moving past this sort of Enlightenment way of thinking in terms of markets and competition and big averages and asking, how can we make the information environment at the human level, at the individual level, work for everybody?

The way we think about our culture, our politics, our institutions, is in terms of these big aggregates that are pre Big-Data. They’re things that in the 1700s people could think about and observe out their window. Now we can look at the actual patterns of interaction, of exchange between people.

We are on this boundary between the descriptive science, pre-science, and the sort of scientific method we’re familiar with. We’ve had all of these sort of intuitions, and heuristics, and ways we’ve sort of learned to make things work, and now we suddenly have the data to begin to build the periodic table of human behavior.

And we haven’t done it yet. We don’t really know how all the pieces fit together and what the data is telling us. And that’s the sort of grand and glorious scientific effort that needs to happen before we can get to a point where we understand the building blocks of human behavior.

Tags: Big Data, MIT Media Lab, Google, World Economic Forum, Sense Networks, Pentland, Mobile phone, Forbes

SEO shouldn’t be mysterious or intimidating. These SEO expert blogs provide terrific — and easy — access points to both detailed and big picture advice.

For too many marketers, SEO is something that other people do — it’s either outsourced or perhaps relegated to an in-house specialist. That’s unfortunate because SEO should really inform your overall marketing strategy in addition to vice versa. The more informed your entire team is, the easier it will be to fully integrate your digital marketing efforts. And in this day and age that’s paramount to success.

What’s the best way to educate your team, encourage their engagement, and put them on an accelerated learning curve? Why to break down their misconceptions about SEO and remove the (largely perceived) barriers to entry, of course. And the best way to do that? Point them to resources that are not only informative, but also accessible. It certainly doesn’t hurt if they have a healthy dose of engaging personality, to boot.

These SEO experts will be the first to tell you SEO doesn’t have to be left up to the likes of them. They come from entrepreneur as well as SEO backgrounds, and they’re no stranger to having to quickly pick up and master competencies outside their areas of expertise. That’s what makes them so effective in writing to a core SEO audience and more general readers, alike.

What I love about each of these three SEO expert bloggers is their ability to get down and dirty with advanced SEO techniques in one post, while pulling back and taking on bigger-picture marketing issues in the next. They’re bloggers who should absolutely be on your must-read list for valuable SEO, marketing, and entrepreneur insight.

Rand Fishkin, Co-founder of SEOmoz and Inbound.org

Blog: Rand’s Blog

When it comes to SEO advice and news it doesn’t get much better than SEOmoz. The SEO software company serves as a model for building audience engagement, having developed a vibrant online community around its company blog and even more so with the addition of its YouMoz blog, featuring user-generated content (when your users are engaged to the point they’re creating a wellspring of high-quality content for you, you’re doing something right).

It only makes sense to include co-founder and CEO Rand Fishkin on this list then, right? The guy’s a prolific blogger and by this point, practically synonymous with SEO. But the reason his personal blog might be a bit of a stretch is that, most of the time, it’s not really about SEO. In fact, it’s more about what it’s like to start and run a company — topics include funding, scaling, branding, hiring (and sometimes having to fire) team members, and more personal subjects like work/life balance.

Why you should follow:

So, ok, not strictly a SEO blog, but a fantastic resource for founders and anyone who works at a startup/expansion-stage company. Rand’s dedication to transparency results in some invaluable insights into inner business workings and bigger-picture entrepreneur issues, and when SEO does come up, you can rest assured you’re learning from one of the best.

Favorite posts:

It’s Not Just Technical Debt; Everything Gets Painful & Slow as You Scale

What I Wish I Knew Before I Started My Company

Neil Patel, Co-founder of Crazy Egg and KISSmetrics

Blog: Quick Sprout

Neil Patel may not be the most humble (check out his Twitter bio) but he’s also got a fair deal to brag about — he was named one of the top influencers online by the Wall Street Journal and a top entrepreneur by Entrepreneur Magazine. All by the time he was 21. What I love about his blog, QuickSpout.com, though, is his no non-sense approach to breaking down SEO and online marketing topics that have the potential to be extremely complicated, and churning out posts that offer clear and practical tips you can put to use right away.

Why you should follow:

Neil has a great sense of what SEO issues marketers are really grappling with day-to-day, but in addition to the with-you-down-in-the-trenches advice he can also zoom out and speak to bigger-picture issues from the vantage point of an experienced co-founder and entrepreneur.

Every time I visit Quick Sprout I find something worth following up on and implementing. If you haven’t already, check it out to see for yourself. Just don’t try emailing him.

Favorite posts:

The Massive Guide to Getting Massive Traffic

7 Lessons My $1.8 Billion Competitor, Omniture, Taught Me Over the Last 7 Years

Jason Acidre, CEO of Xight Interactive

Blog: Kaiser the Sage

Back when I was first becoming involved with OpenView’s SEO efforts, I was searching everywhere for practical SEO advice that was the right mix of approachable and substantial. It was easy for a lot of material to go over my head, but I also wanted to dive deeper than a lot of the basic intro “You should pick and use the right keywords!” type of advice allowed. I started noticing a kind of strange name popping up in my searches and on Twitter, and once I looked into it further it wasn’t long before I was reading Jason Acidre AKA Kaiser the Sage’s blog regularly.

Why you should follow:

For me, as a non-expert looking for quick and dirty tips to help me get up to speed quickly, the Sage was and still is an invaluable resource. The focus of Jason’s blog posts is often on link building, and I can’t recommend the blog enough if you’re looking for detailed info and actionable tips on the subject. But he also zooms out to explore other topics such as user experience and inbound marketing, and does a great job of covering how they overlap and intersect with SEO.

Favorite posts:

Link Building in 2012: Scalable Link Building

How to Maximize Your Evergreen Content to Fuel Business Sales and Marketing

There are a ton of great SEO bloggers and resources out there, and this is obviously just a small sampling. Where else should marketers go to pick up accessible, actionable SEO advice? Who else is producing great SEO/online marketing content?

Tags: Search engine optimization, Rand Fishkin, SEOmoz, Marketing, Web search engine, Web Design and Development, Business, Marketing and Advertising

The Challenge: According to a study conducted by Martini Media, luxury brands have been gradually dropping TV from their multichannel marketing mix in favor of digital media. But will the move pay off in the end? Digital darling Burberry seems to think so, quickly taking the throne of luxury online marketing by creating entirely new levels of customer engagement.

While luxury marketers have traditionally trailed mass marketers in digital marketing spend, digital media has skyrocketed among luxury agencies over the past year. Context and targeting are quickly becoming the most important criteria for luxury brands, and luxury marketers are finding a need to achieve reach through the use of niche, passion-based sites.

Digital media is perceived to be more effective than offline marketing in driving favorability, as well as online and brick-and-mortar traffic. It appeals to affluent audiences on the go, who often have more money than time. And because luxury brands must deal with an extremely niche audience that is more privacy-sensitive and difficult to reach, these customers expect anengagement experience that mass marketers aren’t capable of delivering.

With its highly successful push into digital media earlier this year, Burberry has become luxury online marketing’s champion. Creative officer Christopher Bailey claims it’s become “as much a media-content company as a design company.” As proof, the company has launched its recent AW(Autumn/Winter) 2012 collectionacross 10 different social platforms, tailoring the presentations to best leverage the advantages of each site.

KEY TAKEAWAYS FROM BURBERRY

1. Use co-creation to drive brand awareness and engagement through
user-generated content.
Taking a cue from Threadless, Burberry’s Art of the Trench photo-sharing site allows consumers and fashion photographers to document how they wear the brand’s iconic trenchcoat. This unique use of user-generated content and customer engagement has generated a massive amount of brand awareness for the company.

2. Make your consumers feel exclusive by showing them exclusive content.
In its recent “Tweetwalk” event, Burberry partnered with Twitter to post backstage pictures of every look before models were sent out onto the runway, which meant that Burberry followers were seeing looks before most members of the fashion show audience.

3. Design your content to help guide your customers down the purchase path.
In a fresh twist on direct sales, Burberry live-streamed its London Fashion Week catwalk to 25 main stores as a “living catalog,” allowing existing customers to place immediate orders on upcoming collections before the looks became available to the public. Burberry also made it possible for consumers to directly purchase items by clicking through any of the image or video galleries on their social media posts.

Tags: Burberry, Luxury good, Christopher Bailey, Marketing, Digital media, User-generated content, Television, Martini Media

Felix Baumgartner broke the sound barrier today. Amazing. You’ve read or heard the stats and the many records he set jumping from the edge of space.

1. Challenge Yourself

Not in small ways, but big ways. Epic challenges don’t fit on a to-do list, but maybe better on a bucket list. This was a huge undertaking stacked with professionals and expensive gear, but the biggest challenge came when Felix had to overcome his fear. He wasn’t afraid of the height, but the suit. Felix Baumgartner struggled with claustrophobia.

Indeed, it is no small feat to free-fall over 24 miles. But tougher is sitting in a suit, which challenges your actual handle on reality, for a journey of two and a half hours to reach the edge of space. Felix taught us that having the vision, the fortitude, to focus on the result is not easy, but deeply rewarding. However, in order to do it, Felix spent a lot of time with some experts.

2. Have a Mentor

Lots of competitively-minded people sometimes fall for the myth that they have to do it on their own. That entrepreneurship is a lone wolf trade. Nonsense. Even Steve Jobs had advisors and mentors and people surrounding him, encouraging him, and even coaching him. I use Steve Jobs as an example because people often cite his genius and entrepreneurial streak to claim he did it all on his own.

Felix Baumgartner willingly went to the guy who held the previous record to mentor him in his prospective record-breaking jump. Learn from the person who has also done what you want to achieve. It took humility and wisdom to ask Joe Kittinger to help.  Kittinger talked to him through the ascent.

Furthermore, it took sports psychologist Michael Gervais’ expertise to help Felix overcome his claustrophia. At least enough to achieve the task.

3. Jump When The Time Is Right

Contrary to popular belief, mavericks and daredevils follow instruction. Joe Kittinger and an enormous Red Bull sponsored team helped guide Felix to success. In that little capsule, and suit, Felix had to accept instruction and follow it. He didn’t know when the time would be right, but he trusted his team to guide his steps. When they said jump, he jumped. Success takes a team.

Tags: Felix Baumgartner, Steve Jobs, Joseph Kittinger, Felix, Red Bull, Free fall, Kármán line, Joe Kittinger

Marketing is a big job and it’s something you have to do regularly in order to reap the rewards. You shouldn’t cut corners in your marketing, of course, but if you could find ways to get some free help with it, wouldn’t that be good?

Did you know your customers can help you with your marketing?

If you do a good job and deliver for your customers, they’ll happily go out of their way to promote your brand. Not only can their help save you time and money butword of mouth marketing can be one of the best ways for you to attract even more happy customers.

Read on for some of the ways others can help you with your marketing:

1. Reviews

Product reviews are very valuable to your small business. Many people who shop online for a product or service will read reviews to help them make a decision. Your customers’ reviews and testimonials work wonders for helping you build credibility and trust with prospects.

No matter how well you tell people that you are an expert in your field, a positive review from a customer works better to make people take a chance in buying from you.

Consider adding a testimonials section to your website, if you don’t already have one. When you receive positive feedback, ask if you can share it. Actively managing your online reputation is also wise as you can find good reviews to share. Also pay attention to any not-so-good reviews to help you learn, improve, and grow.

2. Social Media

Social proof is powerful. Building a social media presence provides great opportunities to converse with your customers. When customers and prospects converse with your business publicly, they are opening the door to possible future business opportunities.

Every time your followers hit ‘like’ or ‘re-tweet’, they’re marketing your small business.

A good social media strategy will help you reap some significant rewards. The viral effect of a brand’s community can be amazing for business growth!

3. Referrals

Word of mouth referrals are great. It costs you nothing to acquire a new customer when this happens and referrals often become repeat and long-term clients.

Encouraging referrals is a great way to get customers to help you find new customers. Incentives work great. If you can offer incentives for referrals, you’ll get the attention of happy customers who want to be rewarded for helping your company succeed.

Happy customers will also do referrals for free when they see that you go above and beyond the average call of duty. Provide an above average customer experience andbe their favorite salesperson!

Don’t be afraid to ask happy customers for referrals.

Having go-to resources for client referrals and publishing case studies can be great for business. By illustrating your success with others, you can remove the barriers to buying for those who are shopping around and looking at you as a potential supplier.

You can’t rely on customers to do all of your marketing for you but with the nature of the internet, along with offline marketing and word of mouth referrals, the right strategies could see your cost of marketing go down and your results go up. Way up!

Tags: Small business, Business, Customer, Marketing, Review, Word-of-mouth marketing, Marketing and Advertising, Social Media

Having a website for your business might seem obvious to some, but it turns out more than 50 percent of U.S. small businesses still don't have even a basic website. To many customers, your presence on the web is their first impression of your business. It should be critical to have a website that showcases who you are and what you do.

If you haven't created a website yet, these three simple tools can help you bring your business online -- where the customers are -- so you can keep doing what you do best:

1. Google's 'Get Your Business Online'
Google is making a nationwide push to encourage small-business owners to create a digital presence. The company has created an online toolkit for website creation and is holding events in cities around the country that provide free face-to-face training.

On GYBO.com you can choose a custom domain name and select a basic site design from among a host of templates, which Google says are fully customizable. Then it's just a matter of adding content, and your site is ready for its first visitor.

Who should use it: Business owners who don't have coding skills and aren't planning to hire a website developer. The templates are useful and, with Google hosting your site, you should be less prone to experiencing outages due to server issues.

Costs: Google provides website creation tools and hosts your website free for one year. After that, your domain name and hosting cost a total of $7 per month.

Related: How to Create Great Content for Your Website

2. Homestead
Homestead offers website creation, hosting and basic analytics together in a simple template-based format. Website designs are industry-specific, meaning once you've selected a design, it comes with generic images and content related to your industry baked in. From there you can either upload your own graphics -- including a logo -- or choose from Homestead's library of 250,000 images.

When you publish the website, you'll get a custom domain name and business email address. You'll also be able to track visitor statistics and make other changes whenever you want.

Who should use it: Since customization options are limited, Homestead may be best for entrepreneurs whose main purpose for having a website is to draw customers into a brick-and-mortar store rather than to keep them on the site itself.

Costs: The package is $5 per month after a 30-day free trial.

3. LaunchRock
Unlike some other tools, LaunchRock doesn't provide you with a full-on website. Instead, it can help you build an eye-catching "launching soon" page to advertise your upcoming business. You can post updates on the launch page, which integrates easily with major social media sites so you can keep everyone in your network apprised of your progress.

It also allows you to start collecting email addresses and begin sending out e-newsletters to potential customers.

Who should use it: Startups with an exciting business concept that want to launch with a substantial user base, as well as established businesses that want to generate buzz for a new product or service.

Costs: There is no cost for creating a LaunchRock page, and all the existing features are free to use. The LaunchRock team is working on paid premium add-ons.

Editor’s note: Peter Vogel is co-founder and CEO of Plink, an online-to-offline loyalty program that rewards members for dining and shopping at their favorite national restaurants and offline stores. 

Startups face an ever-changing series of challenges. Luckily for us, we don’t have to reinvent the wheel every time we face a new problem. There are lots of companies out there that we can learn from, both through their successes and failures—and Facebook’s recent experiment with Credits is a great example.

Facebook made three vital mistakes that doomed the Credits experiment and never gave it a fair chance at success.

MISTAKE #1: FACEBOOK DID NOT ENCOURAGE SHARING — IF CONSUMERS DON’T HAVE A REASON TO SHARE, THEY WON’T

Consumers purchased and used Facebook Credits in a vacuum. Consumers who bought Credits typically used them in social games. This is inherently a social activity, where sharing is encouraged (brilliantly, by Game developers like Zynga); however, the process of buying Credits was practically anti-social. Only the end result was shared: a social gamer had more virtual goods to share with their friends, had advanced to a higher level in FarmVille or now had a more elaborately decorated home in The Sims Social. But gamers’ friends didn’t know that they had bought Credits or used Credits as the currency to purchase those goods.

Facebook could have encouraged users to share Credits purchases by offering purchasers a few free Credits to give away to their friends. Imagine receiving the message “John just bought Facebook Credits and thought you might like some, too” along with 5 Free Facebook Credits. That would cost Facebook about $.35* per friend — a pretty low cost for a new customer starting to use Facebook Credits. The actual cost is probably only a fraction of that, because some of John’s friends would never redeem the Credits. (Five Credits has a value of $.50, but Facebook normally keeps 30 percent when redeemed, so they realize a cost of $.35 for every five Credits redeemed.)

Or, what if Facebook offered a Credits purchaser a 25 percent discount on their next purchase of Credits if the user shared or posted about their first purchase? These are two simple ideas, but the point is that there were plenty of missed opportunities for some innovative marketing tactics on Facebook’s part.

Facebook did experiment with a few ways to encourage adoption by giving away Credits to some users and offering a highly discounted rate on a user’s first purchase of Credits. Crucially, these efforts did not encourage sharing, but instead focused on individual adoption of Credits — getting users to use or buy Credits for the first time, not to share the process or purchase of Credits.

In addition, members are still not allowed to give Facebook Credits to their friends. Credits can only be redeemed in social games or in Facebook’s App Store, not exchanged between friends. Imagine the bounty you could rack up on your birthday if each of your friends who wished you “Happy Birthday!” also gifted you 5-10 Facebook Credits ($.50 to a $1.00). Imagine the revenue Facebook could generate if users regularly started sending each other a Credit for an especially funny comment or great shared picture. Facebook tested this concept at a few colleges in 2009, but ended the test quickly and never publicly shared the results. One can assume that students in that test didn’t care too much about giving or receiving Credits because at the time there was little one could do with them. In fact, if you didn’t play social games, there really wasn’t anything to do with Credits. This is a problem that never went away—Facebook never communicated to users how or why they could use Facebook Credits.

MISTAKE #2: FACEBOOK NEVER MADE A CASE FOR CARING ABOUT CREDITS

Facebook never made an effort or easy way for users to find places to spend Credits. Why would a user want Facebook Credits if they had no idea what to do with them? Sure, a lot of social gamers probably knew you could use Credits in games to buy virtual goods or level-up faster, but only about 25 percent of Facebook’s users play games. Why would the other 75 percent want Facebook Credits? Unfortunately, Facebook never answered that question.

And there were more ways to use Credits, but members had no central place or listing to discover these ways to “spend” Credits. In 2011 users could have streamed a Widespread Panic concert live for 70 Facebook Credits or watched a variety of movies including The Big Lebowski, Jackass, Dark Knight and several others. In January of 2012, Facebook members could have watched the 2012 International Beer Pong Championships live on Facebook at a cost of 50 Credits. Granted, these examples are not varied enough to be appealing to everyone, but Facebook could have at least provided a central place where users could have found ways to use Credits. Lack of discoverability is one of the reasons why more developers didn’t make ways for users to spend Credits (see below). Why build something if no one will ever see it?

MISTAKE #3: FACEBOOK DISCOURAGED ITS PARTNERS (DEVELOPERS) FROM SUPPORTING CREDITS 

Social gaming flourished on Facebook and became a phenomenon embraced by hundreds of millions, because Facebook provided an open platform where developers could create games and share them with Facebook members, and, as a result, the games spread virally as members played online. The games were easy to find as Facebook then had very loose sharing/posting rules — rules that have since become stricter — that easily allowed members to see what games their friends were playing.

Facebook never created a place where members could find non-gaming ways to spend Credits. They could have placed a category or heading on the user’s home page, such as “Facebook Credits,” which showed users a listing of the various ways to use Credits. Without this central location, members had no way to find ways to spend Credits, except for gaming. And with only 25 percent of users playing games, how could the use of Credits ever reach a tipping point?

A “Facebook Credits” section could also have let users easily view their Credits balance. Currently, in order to see your Credits balance, a user has to click the drop-down menu next to the word “Home,” select “Account Settings,” click on “Payments” on the next page, and your Credits Balance will be listed at the top of the page. Obviously the average Facebook member will never see their Credits balance.

Developers were also discouraged from building ways for members to use Credits by Facebook’s 30 percent tax. Every time a member redeemed a $1.00 worth of Credits for virtual goods or a game upgrade, the developer would get $.70 and Facebook would keep $.30. This model may have been financially acceptable (barely) to developers of social games who were essentially selling virtual goods with little or no actual cost to provide, but this was an unworkable model for companies with a real cost of goods. For example, it would have been great to see companies like Netflix or Spotify offer a Facebook subscription where members could watch movies or listen to music for 50 Facebook Credits a month.

But most of these digital media companies pay royalties or licensing fees to utilize the songs and movies they provide to subscribers; often, there just isn’t a 30 percent margin left over to pay Facebook. Before the IPO, Facebook made a vague announcement that it would consider lowering that 30 percent tax on certain verticals, outside of social gaming, but nothing further was announced. By never making this change or providing pricing flexibility to other verticals, Facebook had limited the use of Credits to social gaming, hamstringing the currency from ever having a chance of becoming universally appealing.

Facebook added to the problem of not encouraging users to share Credits by not educating members on what Credits could be used for, and then put the nail in the coffin by financially discouraging developers from building applications or ways for consumers to spend Credits.

Start-ups would be wise to avoid this crippling trifecta of mistakes.