Name.com is doing some really sketchy stuff

PREFACE
A lot of people read this and say “I read the Terms Of Service, and it says in shady language they can do that.” I read it too — and I actually went through it carefully, line by line. The TOS does not permit 3LD DNS Hijacking. As I explain in this follow-up posting [An Open Letter to Name.com](http://www.destructuring.net/2013/02/28/an-open-letter-to-name-com/) the Name.com TOS — in very clear terms — merely permits for 2nd Level “Parked Domains” as a default activity. In no way whatsoever does Name.com’s TOS suggest that they have the right to control 3rd Level domains if you use their DNS services.


Like many other people, I got frustrated with GoDaddy.com. Aside from the founder being a jackass… there were endless upsells, constantly increasing prices, and a need to use crappy online ‘coupon’ sites whenever I renewed a domain. I decided to slowly move off them, and in the wake of their misguided SOPA/CISPA support I went with Name.com

I really regret that now. They seem to be jackasses too. They are Hijacking DNS ( aka squatting ) all 3rd level domains registered through them.

I registered a few domains with name.com for a new project. One of them is for shortened urls `clqd.in`. The following illustrates why i’m pissed.

`clqd.in` uses name.com’s nameservers (DNS), pretty standard when you use a registrar. I configured my account on Name.com to direct a handful of `A records` to specific IP addresses – which is also pretty standard.

If I `whois` the domain, I see these nameservers :


>> Name Server:NS4JPZ.NAME.COM
>> Name Server:NS2NSW.NAME.COM
>> Name Server:NS1FKL.NAME.COM
>> Name Server:NS3GMV.NAME.COM

Great. Things appear to be working.

If I want to test my DNS records, I use another tool — `dig` — and I query their nameservers directly.

If I `dig @NS4JPZ.NAME.COM clqd.in` , as expected, I get the DNS records that I’ve updated with name.com. Yay.


; <<>> DiG 9.6-ESV-R4-P3 <<>> @NS4JPZ.NAME.COM clqd.in
; (1 server found)
;; global options: +cmd
;; Got answer:
;; ->>HEADER<<- opcode: QUERY, status: NOERROR, id: 60866 ;; flags: qr aa rd; QUERY: 1, ANSWER: 1, AUTHORITY: 0, ADDITIONAL: 0 ;; WARNING: recursion requested but not available ;; QUESTION SECTION: ;clqd.in. IN A ;; ANSWER SECTION: clqd.in. 300 IN A 66.228.44.231 ;; Query time: 43 msec ;; SERVER: 184.72.222.215#53(184.72.222.215) ;; WHEN: Wed Feb 27 19:24:3

Now, this is where things get weird...

If I query a domain name that doesn't exist, I'm supposed to see a failure. The `status` above should read `NXDOMAIN` and I'd get something like when I `dig` a non-existant domain from Microsoft using `dig nodomain.microsoft.com` :


; <<>> DiG 9.6-ESV-R4-P3 <<>> nodomain.microsoft.com
;; global options: +cmd
;; Got answer:
;; ->>HEADER<<- opcode: QUERY, status: NXDOMAIN, id: 64226 ;; flags: qr rd ra; QUERY: 1, ANSWER: 0, AUTHORITY: 1, ADDITIONAL: 0 ;; QUESTION SECTION: ;nodomain.microsoft.com. IN A ;; AUTHORITY SECTION: microsoft.com. 3600 IN SOA ns1.msft.net. msnhst.microsoft.com. 2013022601 300 600 2419200 3600 ;; Query time: 521 msec ;; SERVER: 66.234.224.2#53(66.234.224.2) ;; WHEN: Wed Feb 27 19:28:26 2013 ;; MSG SIZE rcvd: 95

Now, if i `dig` a non-existant third-level domain against `clqd.in`, here is what i see ( `dig @NS4JPZ.NAME.COM nodomain.clqd.in` ):


; <<>> DiG 9.6-ESV-R4-P3 <<>> @NS4JPZ.NAME.COM nodomain.clqd.in
; (1 server found)
;; global options: +cmd
;; Got answer:
;; ->>HEADER<<- opcode: QUERY, status: NOERROR, id: 46513 ;; flags: qr aa rd; QUERY: 1, ANSWER: 1, AUTHORITY: 0, ADDITIONAL: 0 ;; WARNING: recursion requested but not available ;; QUESTION SECTION: ;nodomain.clqd.in. IN A ;; ANSWER SECTION: nodomain.clqd.in. 300 IN A 174.37.172.70 ;; Query time: 226 msec ;; SERVER: 184.72.222.215#53(184.72.222.215) ;; WHEN: Wed Feb 27 19:31:23 2013 ;; MSG SIZE rcvd: 50

Instead of returning a `NXDOMAIN` status (non-existant domain), Name.com is returning a valid status and directing the user to the ip address of "174.37.172.70" while still showing the domain name. That IP address displays a "parked domain" , managed by sedo.com and filled with a mix of advertising and search engine marketing, which one of those two parties (sedo.com or name.com) controls. I use the phrase "directing" because you are not redirectied, and the original url still appears on the browser. Name.com is telling your computer that ip address corresponds to the domain, and the Sedo site is serving the marketing material off of your domain.

Instead of saying "This domain doesn't exist" -- as expected -- Name.com has created a system where any wildcarded third-level domain name that fails a real DNS query is treated like a real domain... a real domain that I don't control, but instead they do , and are trying to monetize.

In fact, if you make a DNS query against ANY fully qualified domain name ( FQDN ) that is not entirely configured on Name.com, you are redirected to the same marketing sites. You can try querying any domain registered elsewhere -- they'll all point to 174.37.172.70 as the configured ip address for that domain. As far as Name.com is concerned, there doesn't seem to be any such thing as a non-existant domain.

I am beyond mad:

- I didn't sign up for this.
- There is no way to opt out of this on any of their screens.
- This practice actively hurts the business and brands of domain owners by associating low-value content on third-level domains with the second-level domain.
- This has serious security implications in regards to Cross-Site Scripting and how cookies are locked down into a domain.
- This violates the IETF's RFC 2308, which pretty much states "how dns should work"

I'm now looking to transfer these domain names elsewhere. I only found out about this, because of a typo.

I've put in a support request with Name.com to address this, I sure as hell don't trust them do the right thing - this is a dirty and backhanded practice that should not have existed in the first place.

As a quick addendum: this practice is called "DNS HiJacking". It's popular with a handful of ISPs who try to monetize DNS failures. I've never heard of a Registrar doing this before. You can read about it more here: http://en.wikipedia.org/wiki/DNS_hijacking

UPDATES -

After looking on Bing and Google against "Name.com" + "dns hijack", it turns out this has been going on for a LONG time

* http://nathanhammond.com/namedotcom-another-unscrupulous-registrar
* http://www.taborcg.com/2010/05/06/name-com-host-typo-hijacking/

and if you look on the GetSatisfaction site, it's filled with people complaining over the same thing : https://getsatisfaction.com/namecom

Update 2 -

Name.com reached out over twitter, and pointed to a blog posting defending this practice on technical grounds and that it's hidden in their TOS. I call bullshit. Hiding things in a TOS doesn't make it right, and there are no technical grounds to trying to generate revenue.

Update 3 -

Apologies if you had trouble reading this. WordPress Caching was not enabled, and my server failed.

Want to win? Make it easier, not harder.

In March of 2011 I represented Newsweek & The Daily Beast at the Harvard Business School / Committee of Concerned Journalists “Digital Leaders Summit”. Just about every major media property sent an executive there, and I was privileged enough to represent the newly formed NewsBeast (Newsweek+TheDailyBeast had recently merged, but have since split).

Over the course of two days, we covered a lot of concerns across the industry – analyzing who was doing things right and how/why others were making mistakes.

On the first day of the summit we looked at how Amazon was posturing itself for digital book sales – where their profits were hoping to be, where their losses were expected, and strategies for finding the optimal price structure for digital goods.

Inevitably, the conversation sidetracked to the Apple Ecosystem, which had just announced Subscriptions and their eBooks plan — consequently being their new competitor.

One of the other 30 or so people in attendance was Jeffrey Zucker from NBC, who went into his then-famous “digital pennies vs. analog dollars” diatribe. He made a compelling, intelligent, and honest argument that captivated the minds and attention of the entire room. Well, most of the room.

I vehemently disagreed with all his points and quickly spoke up to grab the attention of the floor… “apologizing” from breaking with the conventional view of this subject, and asking people to look at the situation from another point of view. Yes, it was true as Zucker stated that Apple standardized prices for digital downloads and set the pricing on their terms – not the producer’s. Yet, it was true that Apple allowed for records to be purchased “in part” and not as a whole – shifting purchase patters, and yes to a lot of other things.

And yes – Jeffrey Zucker didn’t say anything that was “wrong” – everything he said was right. But it was analyzed from the wrong perspective. Simply put, Zucker and most of the other delegates were only looking at portion of the scenario and the various mechanics at play. The prevailing wisdom in the room was way off the mark… by miles.

Apple didn’t gain dominance in online music because of their pricing system or undercutting retailers – which everyone believed. Plain and simple, Apple took control of the market because they made it fundamentally easier and faster for someone to legally buy music than to steal it. When they first launched (and still in 2012) it takes under a minute for someone to find and buy an Album or Single in the iTunes store. Let me stress that – discovery, purchase and delivery takes under a minute. Apple’s servers were relatively fast at the start as well – an entire album could be downloaded within an hour.

In contrast, to legally purchase an album in the store would take at least two hours – and at the time they first launched, encoding an album to work on an MP3 player would take another hour. To download a record at that time would be even longer: services like Napster (already dead by the iTunes launch) could take a day to download; torrent systems could take a day; while file upload sites were generally faster, they suffered from another issue that torrents and other options did as well – mislabeled and misdirected files.

Possibly the only smart thing the Media Industry has ever done to curb piracy is what I call the “I Am Spartacus” method — wherein “crap” files are mislabeled to look like Top 40 hits. For example: in expectation of a new Jay-Z record, internet filesharing sites are flooded with uploads that bear the name of the record… but contain white noise, another record, or an endless barrage of insults (ok, maybe not the last one… but they should).

I pretty much shut the room up at that point, and began a diatribe of my own – which I’ll repeat and continue here…

At the conference, Jeffrey Zucker and some other media executives tended to look at the digital economy like this: If there are 10 million Apple downloads of the new Beyonce record or the 2nd Season of “Friends”, those represent 10 million diverted sales of a $17.99 CD – or 10MM diverted sales of a $39.99 dvd. If Apple were to sell the CD for 9.99 with a 70% cut, they’re only seeing $7 in revenue for every $17.99 — 100 million times. Similarly, if 10MM people are watching Friends for $13.99 (or whatever cost) on AppleTV instead of buying $29.99 box sets, that’s about $20 lost per viewer — 10 million times.

To this point, I called bullshit.

Digital goods such as music and movies have incredibly diminished costs for incremental units, and for most of these products they are a secondary market — records tend to recoup their various costs within the first few months, and movies/tv-shows tend to have been wildly profitable on-TV / in-Theaters. The music recording costs 17.99 and the DVD 29.99 , not because of fixed costs and a value chain… but because $2 of plastic, or .02¢ of bandwidth, is believed by someone to be able to command that price.

Going back to our real-life example, 10MM downloads of “Friends” for 13.99 doesn’t equate to 10MM people who would have purchased the DVD for $39.99. While a percentage of the 10MM may have been willing to purchase the DVDs for the higher price, another — larger — percentage would not have. By lowering the price from 39.99 to 13.99, the potential market had likely changed from 1MM consumers to 10MM. Our situation is not an “apples-to-apples” comparison — while we’re generating one third the revenue, we’re moving ten times as many units and at a significantly lower cost (no warehousing, mfg, transit, buybacks, etc).

While hard copies are priced to cover the actual costs associated with manufacturing and distributing the media, digital media is flexibly priced to balance convenience with maximized revenue.

Typical retail patterns release a product at a given introductory price (e.g. $10) for promotional period, raise it to a sustained premium for an extended period of time (e.g. $17), then lower it via deep discounted promotions for holiday sales or clearance attempts (e.g. $5). Apple ignored the constant re-pricing and went for a standardized plan at simple price-points.

Apple doesn’t charge .99¢ for a song, or $1.99 for a video because of some nefarious plan to undervalue media — they came up with those prices because those numbers can generate significant revenue while being an inconsequential purchase. At .99¢ a song or $9.99 an album, consumer’s simply don’t think. We’re talking about a dollar for a song, or a ten dollar bill for a record.

Let me rephrase that, we’re talking about a fucking dollar for a song. A dollar is a magical number, because while it’s money, it’s only a dollar. People lose dollar bills all the time, and rationalize the most ridiculous of purchases away… because it’s only a dollar. It’s four quarters. You could find that in the street or in your couch. A dollar is not a barrier or a thought. You’ll note that a dollar is not far off from the price of a candy bar, which retailers incidentally realized long ago that “Hey – let’s put candy bars next to the cash registers and keep the prices relatively low, so people make impulse buys and just add it onto their carts”.

Do you know what happens when you charge a dollar for something? People just buy it. At 13.99 – 17.99 for a cd, people look at that as a significant purchase — one that competes with food, vacations, their children’s college savings. When you charge a dollar a song – or ten dollars a record – people don’t make those comparisons… they just buy.

And buy, and buy, and buy. Before you know it, people end up buying more goods — spending more money overall on media than they would have under the old model. Call me crazy, but I’d rather sell 2 items with little incremental cost at $9.99 each than 1 item at $13.99 — or even 1 item at $17.99.

Unfortunately, the current stable of media executives – for the most part – just don’t get this. They think a bunch of lawyers, lobbyists and paying off politicians for sweetheart legislations are the best solution. Maybe that worked 50 years ago, but in this day and age of transparency and immediacy, it justq doesn’t.

Today: you need to swallow you pride, realize that people are going to steal, that the ‘underground’ will always be ahead of you, and instead of wasting time + money + energy with short-term bandaids which try to remove piracy ( and need to be replaced every 18months ) — you should invest your time and resources into making it easier and cheaper to legally consume content. Piracy of goods will always exist, it is an economic and human truth. You can fight it head-on, but why? There will always be more pirates to fight; they’re motivated to free content, and they’re doubly motivated to outsmart a system. Fighting piracy is like a chinese finger trap.

Instead of spending millions of dollars chasing 100% market share that will never happen (and I can’t stress that enough, it will never happen), you could spend thousands of dollars addressing the least-likely pirates and earn 90% of the market share — in turn generating billions more in revenue each year.

Until decision makers swallow their pride and admit they simply don’t understand the economics behind a digital world, media companies are going to constantly and mindlessly waste money. Almost every ( if not EVERY ) attempt at Digital Rights Management by major media companies has been a catastrophe – with most just being a waste of money, while some have resulted in long term compliance costs. I can’t say this strongly enough: nearly the entire industry of Digital Rights Management is a complete failure and not worth addressing.

Today, the media industry is at another crossroads. Intellectual property rights holders are getting incredibly greedy , and trying to manipulate markets which they clearly don’t understand. In the past 12 hours I’ve learned how streaming rights to Whitney Houston movies were pulled from major digital services after her death to increase DVD sales [ I would have negotiated with digital companies for an incremental ‘fad’ premium, expecting the hysteria to die down before physical goods could be made ], and read a dead-on comic by The Oatmeal on how it has – once again – become easer to steal content than to legally purchase it [ http://theoatmeal.com/comics/game_of_thrones ].

As I write this (Feb 2012) it is faster to steal a high quality MP3 (or FLAC) of record than it is to either: a) rip the physical CD to the digital version or b) download the item from iTunes ( finding/buying is still under a minute ). Regional release dates for music , movies and TV are unsynchronized (on purpose!) , which ends up in the perverse scenario where people in different regions become incentivized to traffic content to one another — i.e. a paying subscriber of a premium network in Europe would illegally download an episode when it first airs on the affiliate in the United States, one month before the European date.

Digital economics aren’t rocket science, they’re drop-dead simple:

  1. If you make things fast and easy to legally purchase, people will purchase it.
  2. If you make things cheap enough, people will buy them – without question , concern, or weighing the purchase into their financial plans.
  3. If you make it hard or expensive for people to legally purchase something, they will turn to “the underground” and illegal sources.
  4. Piracy will always exist, innovators will always work to defy Digital Rights Management, and as much money as you throw at creating anti-piracy measures… there will always be a large population of brilliant people working to undermine them.

My advice is simple: pick your battles wisely. If you want to win in digital media, focus on the user experience and maximizing your revenue generating audience. If your content is good, people will either buy it or steal it – if your content is bad, they’re going somewhere else.

I’m glad to no longer be in corporate publishing. I’m glad to be back in a digital-only world, working with startups , advertising agencies, and media companies that are focused on building the future… not trying to save an ancient business model.

2016 Update

Re-reading this, I can’t help but draw the parallels to the explosion of Advertising and Ad Blocking technologies in recent years. Publishers have gotten so greedy trying to extract every last cent of Advertising revenue and including dozens of vendor/partner javascript tags, that they have driven even casual users to use Ad Blocking technologies.

And the biggest Brand mistake of the month goes to — Target.

Congratulations to Target on being the dumbest Brand of the month — possibly the year.

After the Supreme Court decision that rendered corporate campaign contributions legal and limitless, Target made a contribution to a Minnesota politician named Tom Emmer. Emmer is against gay marriage — and while I disagree with his beliefs — he does have a right to them.

Target’s contribution, however, has created a serious issue for their brand that may snowball out of control. While many politicians are smart enough to avoid hot-button issues like marriage – for both electability and contributions – Emmer embraces them. Instead of making donations to a generic candidate , who happens to oppose Gay Rights, Target stupidly entered the fray of the Gay Marriage debate by funding someone who is actively campaigning against them. Brilliant.

To make things even worse, Emmer is a supporter ( both financially and personally ) of Bradlee Dean, an unconventional minister / rock musician with some fairly extreme views on homosexuality, including the supporting the practice of executing gays and lesbians.

So Target contributed money to Emmer, Emmer said some things that are offensive to many of their customers, and then Emmer gave some money in turn to Dean who said things are beyond offensive to even more of their customers. That’s a fine mess they’re in.

Target is going to be giving tons of money to hundreds of candidates , because we live in a society where cash contributions mean political access and favors. Few people will have the foresight, or ability, to figure out which of the people they need to support to get some patronage are – for lack of a better phrase – polarizing assholes. This is a sad fact, but its unavoidable.

Anyone in PR and branding with half a brain knows that mistakes happen and people can forgive. But instead of condemning the situation, saying “This is awful – as are the comments”, backstepping out of the situation, and then making a 10x contribution to a politically related yet entirely non-offensive charity ( like a halfway house for at-risk LGBT teens ), Target said nothing. Days later they issued a statement that basically says “So what? Deal with it. We’ll contribute equally to politicians on both sides as we see fit, and this isn’t our fault.”.

Sorry, that’s not good enough. In fact this is bad, downright stupid, and will hurt the Target brand dearly. Instead of distancing themself from hate-speech and a politicized situation, Target is defending their actions. Consumers are now becoming outraged not only at the politics of the situation, but the arrogance of the corporate stance.

In a few weeks, Target will probably be forced to make amends and have a press conference where they apologize to hurting customers but they did no real wrong, and then make some sort of token goodwill gesture or contribution. It will be a touching moment that is perfectly executed after being orchestrated by a PR fix-it consultancy along with a gay lobby group that makes them realize that they can severely hurt the brand and bottom-line. Unfortunately this will be a forced moment – and one that should have come much sooner.

Making contributions to candidates is a dangerous game; your brand can become tied up in political nightmares no one should face. Most large contributers are smart enough to donate to Political Action Committees (PACS) that are rather nebulous — Save the Earth, Save the Environment, Save the Puppies, etc — then let them deal with funneling money to political campaigns. In fact, many PACs are nothing but intermediaries and shell groups designed to make political contributions to candidates with controversial stances non-offensive. Contributions like this can ensure candidates get their payoffs, and contributors get their patronage. Why Target strayed from this puzzles me.

Target injected its brand into a heated political topic, and shouldn’t have. Target had a lot of opportunities to backstep and pull out and they didn’t – in fact, they made things much worse. The subject matter of the debate is irrelevant — this could have been healthcare, sick puppies, immigration, or really anything — a mass-market brand should always come across as politically neutral.

Bruce Schneier should be Obama's CTO

Everyone likes dropping names on who Obama should hire as the ‘National CTO’. Here’s mine: Bruce Schneier should be Obama’s CTO. He’s one of the few people in the country that doesn’t just know technology, but fundamentally understand it — and more importantly, the implications.

A lot of great names have been thrown around, but they make little sense to me.

The most popular name right now is Vint Cerf. He may be the father of the internet, but his skills and qualifications are in telecommunications. While telecom is integral to Technology programs, its really just a component. I think he’d be a great national SysAdmin or tech guru, but CTO?

A lot of people say Bill Gates – while I do admire him, he’s a software person. More importantly, would he really be able to divorce himself from his allegiance and interests in Microsoft?

The same thing goes to Eric Schmidt of Google; despite my opposition to them in light of our Patent/Trademark issues, would the head of an internet company be appropriate? And could he really be neutral , in light of the massive lobbying activities Google has undergone on everything from advertising to M&A to the radio spectrum ?

Jerry Yang could probably do a great job of making people use Change.Gov every day, but is that what a CTO is about?

Fundamentally, CTO is a management position, one that seeks to ensure the technology planning and infrastructure best delivers on the business goals. A high profile CEO from a tech firm, or CTO from a web firm may not have those qualifications .

The CTO would likely be overlooking

– Long range technology planning
– The integration of national departments ( ie: information sharing between FBI, NSA, CIA, DHS etc )
– The likely digitization of medical records
– The shift to , and implications of, new energy resources
– The role of technology in education, communications, and even national defense
– the list goes on

The only person I can think of that could handle that is Bruce Schneier. He’s not famous for running a huge company, inventing a specific technology, or having his name in the news — he’s famous for being a security expert , and one that is right. Instead of being a specialist in specific areas of technology, he’s someone that understands how different pieces of technology and systems are all interwoven; how they create a grid and affect one another; and for (often) brutal attacks on bad implementations.

That’s the kind of technology leader we *need* in government; I can only hope — whomever Obama ultimately chooses — its the kind that we get.

Request for Business Plans

Rick Webb over @ The Barbarian Group just posted a company blog about “Request for Business Plans” — a growing trend where some management team comes together and tries to get a firm to build their business concept for them:

Today’s rant: RFPs that are secretly RPBs, or Request For Business Plan. Seriously. I can’t begin to tell you how many RFPs I’ve gotten that basically are asking us to start their business for them. They want to build the next Facebook or Flickr, and want to pay us something like $50,000 to build it for them. I am at a complete loss how anyone could really think this is reasonable.

Evil RBPs

Well Rick, welcome to Web Two-Point-One-Two-Five-Four-Nine, also known as “Two-point-D’Oh!”. At least these firms have had the common sense to try and get The Barbarians on board.

As you know, I’ve been busy the past few months leveraging FindMeOn’s technology and resources with a few NYC area startups while we deal with ‘those’ patent/trademark issues. By some stroke of fortune, one of these companies is working with TBG — which has kept me personally excited about the project (though it is odd to be working with old friends).

A slew of those RFBPs have been hitting my inbox and calendars as well, and I’ve been *amazed* at how ballsy and often grossly incompetent some of the teams are. Everyone has these great big ideas and great big eyes , but no one has any clue how to pull it off.

My most favorite recent meetings:

– Company A dropped 500k on development through PS firms to be “the next Facebook”, but didn’t have any in house tech or marketing or bizdev – everything was contract. They wanted my team to audit + manage tech and create a monetization strategy using our profile analytics and segmentation strategies. We didn’t think they could last 3 months and declined; they lasted four before going bankrupt.

– Company B wanted to partner with FindMeOn to build a hybrid mobile/web social network for a 110Million user cellphone carrier: they would handle the front-end clients, we would handle the platform and revenue model. After a string of meetings and auditing their software, we realized they didn’t have any capabilities to handle the project and were trying to get us to spec out the deal and their business plan. It was still a good opportunity, so I offered to put the deal together for them at-cost – never heard from them again.

– Company C wanted to do a hybrid in-store/mobile/web customer retention and marketing program – and got a 800k quote from a professional services firm that they wanted to bring down. We trimmed it down to 350k, they countered “What can we do for 40-80k?” They also mandated owning all the IP and everything be done as SaaS so they don’t have to maintain. No one in the company seemed to have technology, mobile, or marketing experience — or the common sense that their total budgets were likely the fixed costs on the hosting itself.

On the inverse of RFBPs you have teams with a defined and well-thought-out business plan that just happens to be the worst possible idea. One of these groups came my way with a plan that seemed pretty solid, and raised a good seed from various sources. They knew exactly where they wanted to go, and how they wanted to get there — except they didn’t have the know-how to make it happen.

The result was a strategy was fine – but wrong for the market. While their team is full of proven leaders and visionaries, no one had a good tech or advertising background, nor did they know how to appease the VC circuit for common-questions or due-diligence. Instead of selling their existing strengths, their plan was more about leveraging the expected hottness of an unrealized product — which seriously undervalued their key market differentiators and revenue potential, and had no safeguards for when someone else offers the same exact product.

I had to convince them not hire us to do what they wanted — I couldn’t take their money and sleep at night. Thankfully, they listened. Not only is their new approach closing in on huge round but, just as I predicted, everyone-and-their-mother is now offering the same kitcshy tech they wanted to spend their budget on. Had they stuck to the original plan, they’d be out of business unable to adapt or compete — instead they’re now poised and ready to dominate a new industry that they concepted.

This got kind of longer than I meant it to, so three quick bullet points:

1. The average amount of seed capital needed to get a v1 startup beta up to VC fundable standards: 250-750k. The average online campaign (- advertising ) spend by brands: 250-750k

2. Exactly which startups successfully exited by farming out their Business Plan and entire technology to interactive agencies or Professional Services firms? I can think of one, and it wasn’t a good exit.

3. Everyone is pushing towards WhiteLabel offerings. I recently sat down with one of the top-3 providers who said these words of wisdom “Our system delivers beyond belief if you have an existing brand, a solid social media strategy, and want to farm out some heavy lifting. If you’re looking at us or our competitors to be a turnkey solution for your entire web strategy, you seriously need to rethink your business plan.”