Come for the Ride…

While roaming through the numerous excellent business articles on the Wall Street Journal online, one particular nugget of gold hit me a few days ago. Did you know that the US has the second highest corporate tax rates in the world? That is, unless you’ve started a business in California, Iowa, New Jersey or Pennsylvania (among others) in which case you surpass the levels companies in Japan, the highest overall in the world. A new study from the Paris-based Organization for Economic Cooperation and Development (OECD) has confirmed that “corporate taxes are most harmful for growth, followed by personal income taxes, and then consumption taxes.” The study says “investment is adversely affected by corporate taxation,” and that the most profitable and rapidly growing companies tend to be particularly sensitive to high business tax rates.

With all the evidence pointing to high corporate taxation as a huge contributor to a slowing economy, you have to ask where this sentiment comes from? I’ll tell you, people like Senator Byron Dorgan of North Dakota who have used stastics by Government Accountability Office (GAO) such as the following: 28% of large U.S. corporations paid no income tax in 2005. He says, “It’s time for big corporations to pay their fair share.” Did anyone tell Seator Dorgan that 85% of those companies didn’t make a profit last year? The story even offers this clever quip:

American Airlines and General Motors escaped income tax for 2005 through the clever tax dodge of losing $862 million and $10.5 billion, respectively. How unpatriotic.

Are these idiots really running the show in Washington? Senator Dorgan, and the rest of the polito, need to realize that corporations aren’t a true individual like you and I. Taxing a corporation is just another form of taxing the owners and shareholders of America’s companies. More taxes don’t mean less money for companies. It means less dividends. It means lower stock prices. It means your local fireman, policeman and teacher’s IRA is X% lower because the government had to take their “fair share”.

Simply put, the tax system in the US is becoming less about generating and maximixing government revenues and more about punishing behavior and redirecting people’s labor, and that’s not right. Abolish corporate taxes all together and you’ll have such a surge of new companies, companies moving from overseas and individual startups that the US will see an economic boom such has never been seen before. And with all this extra income people will be getting, the government will get their “fair share”, not to mention we won’t be double taxed any more.

It’s going to take someone with balls to stand up for the big guy and ignore all the anti-corporate rhetoric. Corporations are amoral entities. They aren’t good. They aren’t evil. They are just a vehicle to maximize profits and when they do, EVERYONE benefits. Be it shareholders, employees, charities and other businesses, business is good for America. In a few short months there will be an election and I hope we all look at our local representatives as well as our national to remove these chains which are binding America’s corporations.

This is a follow up to one of our earlier post regarding startup PPC campaigns. If you’re a startup looking to pay for a quick boost to your traffic - realize that paying for a boost in traffic doesn’t necessarily mean a boost in sales. Many startups I’ve talked to throw money into PPC without ever testing key performance indicators. If you sell something online and you setup PPC without setting up the conversion tracking tags, then you basically just setup a FAIL campaign.

So in part one of this series, here are five things you could/should test.

Conversion tags - Before you even do anything related to setting up a paid campaign, you should already have conversion tags telling you how you’re doing.  Setting up something as simple as Goals in Google Analytics will at least tell you how many conversions you are getting a day and where the referrals generating the conversions are coming from.  Use this as a base line in figuring out what kind of goals you want to achieve with the paid campaign.

Keywords - Obviously, keywords are an important part of any pay-per-click campaign that needs extensive testing. However, you’d be surprised at how many people just buy up every single keyword related to their niche.  The thing with keywords is, you want to buy the ones that convert with a positive ROI. Your more generic words may drive the most traffic and may convert the most sales by volume, but if your product cost $39.99 and it takes you $60’s worth of clicks on that term to generate one sale, then you won’t last too long in the PPC game.

Keyword Match Types - If you are getting into pay-per-click, you should know intimately what keyword match types are. If you are unfamiliar with match types, ask around or outsource your campaign setup.  Do NOT setup a campaign without knowledge in this area.  In the tier one PPC engines, the primary match types are broad match, “phrase match” and [exact match].  You can think of broad match as massive fishing nets helping your site catch visitors you want and visitors you don’t.  Phrase match is a more specialized net/cage where you’re more likely to catch the right type of visitors with the right bait.  You end up with less overall volume, but the visitors you attract are more relevant.  Exact match is pretty much like spear fishing.  Very low volume (compared to broad match) but chances you are targeting exactly who you want to catch.

Negative Keywords - Negative keywords are gems that are often not found in amateur campaign setups.  However, these keywords will help you save a TON of money.  One easy way to spot negative keywords: do a search of a top term you want to pay for and see what results show up.  If a lot of unrelated results populate the top ten, start adding their names or related terms into your negative keyword list.  For example, if you only  want to sell “cherry coke” and nothing else, possible negative keywords for you would be pepsi, diet, classic, fanta, sucks, formula, history, merchandise, etc.

Dynamic Insertions - This is a tricky one but I wanted to include it in here cause it’s related to keyword testing in the ad. The idea behind dynamic keyword insertions is that if you show an ad with the exact phrase the user searches on, the likelihood of that user clicking on your ad will be much higher than other ads that have titles that only paraphrase the search.  eBay is a great example of a company that buys up every keyword in the dictionary and use dynamic insertions.  Can you really buy irony from eBay?  Who knows… but it was a term that used to pop an eBay ad.

Before you get into testing dynamic insertions, I would master the other four areas mentioned above.  Dynamic insertions will help you spend money (fo shure) but unless you know what your profitable words and phrases are, it’s hard to test this plus the keywords without some type of control.  Narrowing your profitable words THEN testing different ad copies will ensure you don’t pollute your results.  The next time we continue discussing PPC, I’ll go into some other areas of testing.

At the Gang of 5 meeting yesterday, a few of us entrepreneurs gathered to further discuss the chatter that’s going around the Atlanta startup scene. During the conversation, a number of possible solutions were proposed to get something going and many seem like worthy efforts. (More on that later) However, I was surprised to find a post today by Paul Freet that talked about the Hollywood Startup Model which was also something we touched on during the meeting - did you have a spy on us Paul?

Note: It seems these posts tend to step on peoples’ toes so my disclaimer is that EasyAutoSales is not looking for investment money today but may do so in the next few months. These discussions were sparked by the frustrations felt in the Atlanta early stage startups so please, don’t kill the messenger.

If you haven’t read Paul’s post, go ahead and check it out.  To put it simply, it is a great analogy, it makes perfect sense and I agree with his views completely.

On the flip side, the attraction to Hollywood today isn’t so much on the number of talented producers in the area, but more so that the movie studios (VC investors) make an active investment in the community.

As one of the Go5 members pointed out, while movie and TV studios swing for the fences and aim for two to three blockbusters a year, they also put out tons of crappy movies in the field and help produce hundreds of TV pilots each year that never see the light of day. (Many of these pilots use significant budgets and film few episodes deep!)

Why are the studios willing to make these altruistic investments into ideas that may have little chance of making it big?  My guess is they want to keep the community going, attract new talent into the area and make sure it’s not hard for existing producers and actors to get together and create something. After all, if studios only funded blockbusters like Gone with the Wind, Titanic and The Dark Knight, there’d be extremely long pauses between movie releases and generation gaps where some may not even know what a movie is. (Not to mention everyone who currently works for the studios as prop specialists, camera crew, etc. would be working full time at In-N-Out Burger and would be expense to recruit for movie projects.)

On the consumer front, if people aren’t used to going to the movies as one of their routine weekend options, would these three movies even be as successful as they were?  Most likely not.

The other benefit of the Hollywood Community Model can be seen mimicked in Silicon Valley as well.  The studios invest in the community to help not only the producers (entrepreneurs) see what will be sticky, but they also help the studios (angel or VC community) dip their toes into new types of films and learn what makes certain shows or movies stick.  The reason why Hollywood is successful and why others want to mimic it is because they fail fast and hard and get right back to work after failing and learning.  Every movie or TV pilot that gets pushed out, no matter how great or bad, becomes an educational tool and networking tool for the community. If the idea itself didn’t work, maybe an actor did something great and can be used for a different role. It’s because of these repeated investments that we now know we don’t necessarily like Rob Schnider in a leading role (The Animal), but we love him for secondary roles or one-liners in comedic films. (Someone please ask Adam Sandler how much he spent to figure THAT out.)

Our point is, if every micro investment in the Atlanta area fails in the next 24 months, that’s not to say everything is lost with nothing gained.  If micro investments do exist and are heavily publicized for the Atlanta area, there’s no reason why the early stage startup scene won’t be significantly more mature and more populated in 2 years time. (Along with greater chances of successes.)

Another key feature of the Hollywood community is its ability to spin off of partial wrecks, complete failures and remake what was once successful.  The Ang Lee version of the Hulk sucked.  However, the fact that it was made allowed a new team to come and tweak that franchise and helped boost the comic book movie industry as a whole.  The old King Kong flicks while great for its time, is probably a bit out of date for today’s audiences.  However, the fact it existed allowed for the Peter Jackson remake which I thought was amazing. (My startup EasyAutoSales is essentially retooling something that used to work but is now perceived broken by many of today’s dealers.)

One closing thought for the entrepreneurs… whether your ideas get funded, if your idea or startup fail, consider joining another startup in the area for the sake of learning and forming better teams.  We’ve been told time and time again investors invest in people and if we all refuse to get out of our own sandbox to help others, form better teams and learn something new, then no one will really grow as an entrepreneur.  If everyone fail fast, learn and regroup; it’s only a matter of time before an all star cast will form and be able to throw out crap like Ocean’s 12 and still make a ton of money.

In case you haven’t heard all the chatter, Atlanta entrepreneurs are tired of being ignored and/or forced out of the city just to get some recognition. It’s gotten so bad that we actually formed various communities determined to help each other succeed; with or without financial support from the able.

However, millions in funding aside, we (the seed stage startups) have decided what we REALLY need to keep talent in Atlanta is to foster our entrepreneurial community.  What this means TODAY is establishing a safe and ideal environment for us to co-work, learn from each other and minimize individual risks by helping each other avoid mistakes we may have already made.

So what does this mean exactly?

Well, as a group, we (the entrepreneurs) are asking someone with the $$$, the vision, and the desire to invest in the Atlanta early stage startup community to step forward, work with us and earn this t-shirt.

While we do expect our joint efforts to flourish and ultimately churn out a few home run businesses, we need investors who can meet our demands and see the value of investing in this community as more than numbers on a spreadsheet.

The questions we don’t expect to answer right now is “How will investing in this community be a profitable business in its first month?” Instead, we want to tackle questions like “What can we do to make Y-Combinator and TechStars jealous of our community and space” or “What would make Appcelerator regret leaving Atlanta?”

I know… those questions seem crazy and wayyyy too idealistic but the truth is it’s too late for Atlanta to play catch up. If we want to act and are willing to act now, we need to compete and try to out-do other established programs to attract talent to Atlanta.  It’s worked for this city before; I’ve seen it in the form of our local aquarium.  Bernie Marcus aimed to have the biggest, baddest, buck aquarium this side of the planet and look what it did for the city?  Now if someone’s willing to do the same for the entrepreneurial community, there’s no reason why we can’t be the Valley of the south east.

Will the real angel please stand up?