The issue is how do you make sure that we get a meaningful return on our money. As entrepreneurs we dont just want to hand over some cash but rather use our skills to insure that the money we spent provide maximum value to dogs in need. So we came up with The Hugo Challenge. Its just launched to help improve the lives of our canine friends. We’ve come up with an interesting way to donate $10,000 to improving the lives of dogs in need.

While that might be a good headline, it’s hardly the best way to run a large business. Big companies should be great at being big but simultaneously leverage innovative approaches and create environments that cater to innovation. It’s in this space where large companies can learn from startups – and they do.  We (at Prehype) work with major companies like Kaplan, Verizon and Coke –  and while the big guys might not be as vocal about their innovation efforts like startups – they definitely have their eyes on using lean startup methodologies to boost their innovation efforts. 

Last week we had 10 people from Verizon Wireless in our office to help them push innovative product development. The visit was  part of an internal program called ‘Team Innovate’ that allows ‘intrapreneurs’ to suggest ideas and then give them a fast track process to make it happen. It’s lean startup methodology injected straight into the veins of a $90 billion corporation. Interestingly, Team Innovate is being managed by Tom Constabile who works in Wireless’ Business Development team, which is one of the main contact points between Verizon Wireless and the startup community. So it’s probably not  a surprise  that much of the innovation program is heavily inspired by best practices in the startup community. The week made me think of three myths about large companies that I often hear from startup entrepreneurs, but that I don’t think are true.

Myth #1
Staff at big companies lack the motivation to innovate
BJ Fogg, who runs the Persuasive Technology Lab at Stanford University, has created a great model for what causes behavior change.  It illustrates that three elements must converge at the same moment for a behavior to occur: Motivation, Ability, and Trigger. When a behavior does not occur, at least one of those three elements is missing. It seems that most of the debate about corporate innovation makes the mistake to only focus on one of these areas, namely motivation. The conversation often centers around ‘getting our staff to think outside the box’ or hiring a speaker to get people to think more creatively. Based on our work with large companies like Verizon I find that motivation is almost never the problem. The people we have met from companies like Verizon are both highly motivated and have great ideas. Based on BJ Fogg’s model, we think the main issue then is that most large companies have not created a process that gives their staff the ‘ability’ to create radical innovation. What Verizon has established is a program that gives their staff just that. And they used a ‘challenge question’ from their CMO as an internal (and powerful) trigger.  So if you are senior management at a big company I’ll bet you have a bunch of great intrapreneurs in your organization that are stuck on ‘brainstorm island‘. Stop thinking it’s a problem of them being motivated and start thinking about how you enable them to change behavior by giving them the ‘ability’ to innovate and by establishing an effective trigger. (for more ‘innovation architecture’ pre-order this book‘)

It’s somewhat ironic how many great companies are started by people who used to work in a big company. And it was not the walk across the street and down in the startup basement that suddenly made them creative and/or motivated.

Myth #2
Big companies can’t act lean, small or flexible.
Being lean, agile and ready-to-deploy are best practices du jour in startup land. It’s often an assumption that this is only doable inside a small startup and that corporations can’t act with the same flexibility.  What people miss is that this methodology is only relevant for certain types of innovation projects. Most big companies have a core business that they are scaling effectively by having a number of departments whose main function is to keep that core business on track. Departments like the branding team, the legal department and the IT group are key to keeping the wheels turning on big machinery. However, they are counter productive for building new, adjacent business or radical innovation projects. So while structures are needed for large scale operations, most need a new approach for radical innovation that can allow them to go from concepting to testing their new initiatives quickly.  The startup industry has invented smart methods to create what Vijay Govindarajan called Box 3 type of innovation quickly and cost effectively.  Verizon has identified this and are applying lean startup methodologies to the areas of innovation where it’s most appropriate — the new stuff.

Myth #3
It’s either a billion dollar idea or a small feature
One of the practices that we apply in our Prehype model is to force corporations we work with to identify a big idea but also to figure out what the minimal viable product version of that idea is. This is to get companies away from ‘portal thinking’ and to train them to think both big and small at the same time. With Verizon we have established a 100 day limit on the incubation projects we’re exploring. That allows us to think big but simultaneously identify a core idea so that we can create a real life beta and test our underlying thesis with real users. The benefit of this practice for a large company is that it backloads the risk of a project, by testing the core thesis before overspending on it. Hunter Walk speaks brilliantly about this point in his recent post:  ”Is this a billion dollar business?:” The tension between market sizing and innovation. It’s nice to see a large organization like Verizon’s accepting that big ideas can start small.

In general, companies like Verizon are indeed increasingly embracing startup methodologies where they make sense and are doing what we think is the key to increasing innovation: namely that innovating your innovation process is more important than just shouting to your staff that they should be more innovative.

And just think of this, if a company like Verizon actually acted like a little startup all the time it’d be a total mess. I trust Verizon because they are big. I don’t want them to start having 20 year old kids flying by the seat of their pants. IBM, AMEX, GE, these companies are arguably more innovative and effective in what they do than most startups – and make more money too… . But they also need to embrace new models to keep up with the pace of radical innovation that new tools and the web is facilitating. Some of them have already begun.

But first a disclaimer: just because Tisch, Reshma, and Marcelo asked me to be a mentor, doesn’t mean that I know anything at all about the business that you are about to build. My views are random reflections based on learning that I have had building products and companies, and my pattern observations on user/founder behavior.

Now here are my five tips to get the most out of your mentor:

1. Get introductions

The easiest value extraction you can get from any mentor is introductions to people who would normally not take your calls or answer your emails. Most mentors get a bit of a kick out of sounding important and will name-drop a bunch in the first few meetings with you. Be prepared by having a notepad ready to jot down the names they drop. Then after the meeting, do your research, find out which of the names you can actually use, and send an email to your mentor that they can easily forward. Your chance of getting introduced to high-level people is proportional with how little effort is required of your mentor to make them.

2. Specific learnings

Many mentors have a hard time accepting that the best direction for you might be different from their journey to success. So, I find the best way to tackle this is not to have too many open-ended feedback sessions. Don’t ask “How can I improve my UI?” but be more precise and tailor your feedback request to your mentor’s past experience,. e.g., “When you launched your company you went for an invite-only launch strategy. What were your key learnings from that?” or “In your e-commerce site, which credit card clearing providers have your tried and why did you decide on X?”

3. Staying at the top of their minds

Most of your mentors have busy lives and won’t be thinking of you if you don’t force them to do so. So make sure to write interesting, easy-to-compute, weekly updates so you at least once a week get to the top of their mind share. I find that slightly pushy entrepreneurs get more out of me, and I don’t mind them being a bit pushy if they just accept that I’ll ignore their requests if I have to too much on my plate. The smart ones also remember to talk up their mentors when they meet other people in the industry. It’s an easy way to use vanity to make your company the center of conversation.

4. Emotional support

One thing that few people tell you before you start your own company is how to manage all the anxiety you will get feel in the early days of building your company. As a founder, you will be worried about a ton of things and you will have very few people who you can vent your concerns to. You don’t want to tell your investors because you don’t want them to be worried about your business; you don’t want to be too worried in front of your staff because you probably just got them to leave great jobs and you don’t want them to feel bad about that decision; and you should not reveal all your worries to your partner, because they really are already supporting you way too much. So if you don’t have a good co-founder who you have known a long time, a good mentor can be a good emotional wingman. Pick a mentor who has actually built a company from scratch and they will be able to both sympathize with and support you when you get to the dark days of being worried about what the hell you are actually doing. (Trust me, those days will come.)

5. Pick the right mentor for the right things

Many of the mentors you will meet have never actually build built a company like yours. They will be lawyers, corporate entrepreneurs, or investors. So when you choose what mentors to work with, make a small map of where you think you are weakest and make sure you map your mentors onto that. They will all try to give you advice on your product, which is ironic as it’s often the area where their advice will be weakest (especially the ones who have never built start-up products before). Make sessions with different mentors so you can focus the conversations on problems that you will need to solve besides product brainstorming, e.g., the best way to fundraise, brainstorming about who to hire and how, short-cuts to distribution, and so on.

If we go back 200 years ago, the shift with the invention of mechanized production introduced changes at that scale, as local businesses in a range of industries from ceramics to textiles disappeared, and bigger firms figured out large scale mechanized looms, porcelain production, and global transportation of quantity goods from cheap labor markets.

Email is, besides all its flaws, still the cornerstone of the Internet. If you look at new successful services that are gaining traction, many of them are companies that use email in a smart, new way. The past couple of years, we’ve seen this from daily deals startups, like Groupon, GiltCity and Living Social. These companies take advantage of email’s ubiquity and deliver deals in your inbox. While you can view daily deals on an app (like ScoutMob or Tenka) or a browser, email is still the easiest, most inclusive and most memorable way to get discounts and save money. You get it once a day – it’s quick, digestible and habitual.

Even Twitter and Facebook  – communication channels in their own right – are heavy users of emails. Think about the email notifications you get when you have new followers, messages or events.

After all the talk about the shortcomings and impending death of email. it is still here and pretty much unchanged. Here’s why:

The inbox is where people spend most of their Internet life. 107 trillion emails were sent on the Internet in 2010, the average number of email messages a day was 294 billion. It is one of the most effective places to prompt users to do something. While we may have profiles on Twitter, Facebook, Tumblr, LinkedIn, and now Google+, it’s still people’s default communication platform for private and work use. In short, it’s where your eyeballs are most of the day. Especially now that mobile email is filling every small micro-boredom moment in the taxi, waiting by the bar and in the bathroom

2. It’s still our core identity online. 

An individual message commands more time and individual attention than most social media platforms. Whtespace  capitalizes on this fact by providing a way for people to share ideas and inspiration with more thoughtful curation. Although Facebook and Linkedin are getting very close, email is still our default form of identity on the web – particularly for real friends and professional circles. Personal email addresses are like our phone numbers only the people we care about actually know it. Furthermore, most websites anchor their interaction with you through email – it’s the way they keep you informed on changes, help if you’ve forgotten your password, etc. Because of its ubiquity, it helps consolidate and streamline communications into one channel.

Our brains are amazing when it comes to filtering out information that is not relevant. Most eye-tracking heat maps of users looking at a normal web page will tell a clear story about users’ ability to ignore not just ads, but whole areas where ads normally appear. So far, emails are equal (besides auto filters and smart inboxes). While the subject line, sender and first line will give you some clue as to the content of an email, you won’t know if the email from your client is a message giving positive feedback on your last presentation or an angry diatribe until you actually open the email. It’s a big game of emotional email lottery. You never know what will appear.  This can trigger curiosity and a higher sense of alert.

There is great book called The Singularity is Near. It discusses, among other things, the interesting fact that we as humans can only think about innovation in a linear way, when it is actually being developed exponentially. As an example, it argues that we thought it would take 10 years to map the human genome, which it would have if we had continued to make progress at the speed of year one. As it turned out, we mapped it all in just 3 years, as new developments and ways of thinking helped us to discover it in an exponential fashion.  I think we will see this same increased speed of innovation around how people will interface with computers. I realize that we have been speaking about touch, gesture, voice and brainwave interfaces before a while. However, think for a moment about how quickly we have come to see touch-screens, fingerprint door-looks and gesture games like the Wii as ‘standard’. If this kind of technology is being created and adopted exponentially, then we may be much closer to a time when talking to, waving at or thinking via your computer becomes part of mainstream use than most people are expecting.

I had a few different experiences this week which suggested to me that this new interface paradigm is much more likely to become a reality within the next 2-5 years than the next 10-15 years;

Daydreaming about Microsoft’s chances of beating Apple on Monday:

The first hint that made me think of funky new interfaces methods happend  somewhere over the Atlantic on a flight to London. I was dozing off having just read about Apple’s latest amazing financial results. Half awake and half dreaming, I, for some reason, was role-playing in my head what I would say if I worked for Microsoft and was doing a ‘Here’s what we have up our sleeves for 2012′ presentation to a skeptical looking board of directors. In my dreamy state, I was making the argument that we are heading towards a phase where people will interface with computers in a completely new way; a time where computers communicate with us on our terms instead of us having to interface with computers in a way that is easy for them. I was reminding everyone how quickly the world went from thinking ‘holy moly’ when seeing a TED talk showing the ‘pinch screens gesture’ to being both surprised and annoyed when they today encounter a non-touch screen. I was showing amazing developments and hacks of the Kinect and highlighting how gesture and voice interfacing is not a distant promise but very much a reality today. Then I was making the argument that while Apple produces amazing hardware and nice looking screen interfaces, they are behind when it comes to online services (I my dream I got happy nods when saying; ‘no one uses .me’) and might even focus too much on touch which are screen based – and if a paradigm shift to the cloud and human interfaces was imminent, then Microsoft was in a good position to reclaim this new hidden type of HAL 3000 type of OS.

Now, in reality I actually do believe that Apple is very well aware and pushing new interfaces. Having met with the Siri guys while they were still part of the Motorola Advance Tech Lab,  I am certain that Apple bought them because they also think that voice interfaces are ready for primetime. Link to story about Apple buying Siri | Evidence that voice and picture interfaces are part of OS5

Realized in a bio lab how often you need a computer but cant use a mouse/keyboard on Thurday

I was in a very inspiring meeting with a client. We were working on the best way to introduce laboratory workers to digital tools in their daily workflow (the pen and paper is still the preferred tool). While getting introduced to the amazing properties of antibodies in biology experiments lab and the issues that poor naming convention for monoculs  create, it became clear how often we could use computer assistance where a mouse and a keyboard is just not practical. Most readers of this post will be using computers to make their lives easier, but look around you and check out how many areas could be very easily become optimized if computers could assist you without you having to pull up your phone or go back to your office and look something up on your desktop.

Bragging about my new brainwave bluetooth headset to a friend on Sunday

On my way back to NYC, I had brunch with an old friend who is both a great product developer and extraordinary curious when it comes to innovation. I was telling him about a new gadget I had bought a few month back  called the ‘Neurosky‘. Its a brainwave headset which allows me to monitor my brain activity. It’s even got a nice small game called Neuroboy, which allows me to use my thoughts to manipulate my avatar in a virtual world, for example to lift a box or push a ball. Even as I write this I realize it sounds a bit science fiction. However, it’s technology which can be bought for a few hundred dollars and actually seems to work. A core part of new technology becoming mainstream is that its price level gets low enough for ‘normal’ people to afford it. These new brainwave headsets are now in a decent price level and even got nice open APIs so that nerds (like me) can try to connect them to all sorts of stuff. (My plan is to connect it to a remote controlled car so I can drive it with thoughts…. but thats for another blog post).

So maybe its just stress after a bit of daydreaming in a plane, a trip to a bio lab and nerding with a brainwave headset but I do think there are an increasing number of datapoints that suggest that we are closer to Hal 3000 than people realize. If this is true both the way we interact with computers and the companies that are world leading could change rapidly.

Releasing a new product onto the web is always a bit daunting. You know there are tons of features that you could put in; you know there’s a bunch of bugs, and you are somewhat worried that your user-flow, or even the basis premise, of your product is wrong. Don’t think I have ever gone live with a digital product that I felt was ‘ready’. However, few things are as exciting as putting your product out there and seeing what happens. It’s a product guy’s crack: the constant refreshing of your stats page, staring at the red real-time user dial on chartbeat, or seeing the comments about the product on Twitter. The days prior to release are always filled with anxiety about launching the product – often including heated discussion about postponing the release, or frustration that there are so many small UI bugs that are still outstanding. Eventually you have to declare ‘it’s showtime’. In these days of rapidly iterating lean start-ups, the whole notion of a launch is kind of outdated anyway. The product will be better after the next sprint, and even better after the sprint after that. So sometimes you just have to trust your gut that the product is ready enough…

He and the other great guys at Streetspark does this by looking at your digital trail and introduce you to people who have overlapping interests. It started out being very much centered about introductions to people who you could flirt with based on stated preferences. However, half way through development on StreetSpark we had a thought. There should be a system that looks across users’ sharing activity on social networks and works out who they should be introduced to based on what ‘shared things’ they have in common. It should show you what you both have in common right up front so you can decide if you want to meet them. Like a good host at a party.

There are people out there that hang out at the same types of places you do (and check in there), follow the same people on twitter, listen to the same music (Pandora, LastFM) and ‘like’ the same types of articles as you on blogs. They went to the same University and are in the same profession or maybe even worked for the same company (LinkedIn). And they’re sharing this stuff now as this stuff is what’s on their minds at the moment (people’s interests change all the time). All of this is recored and shared across social networks. So why not use this data that people have already shared for their own benefit?

If you were matched and introduced based on social network sharing data, it’s more likely that you’d have a good conversation with the people you’d meet. And it would open up the possibility of more serendipitous encounters – you’d see overlaps of not only interests but timings – things you’d both done around the same time. To do this used to require knowing someone who knows you both and then having them take the time to introduce you. Not any more. Your digital trail gives you away.

Turns out it takes a system that matches based on singular (1 to 1) connections and matches both sides to create a single matched ‘object’ rather than just a filtered search. This is the only way the reasons for the match (the common overlaps) can be shown up front. This is exactly the back-end system the guys at Streetspark had built. As so often happens, they just stumbled across a better use for our technology along the way.

The challenge now is to create the UX that will allow the existing user base to get full benefit from this more advanced matching – as well as allowing new users to use the app for getting introduced to like-minded people. What we are currently trying to figure out – is if we should build a separate app for users who are only interested in meeting like-minded people and leave the current app to their flirty colleagues.  Thoughts are welcome?

If you are interested to play with it – here is the link to the itunes store and their twitter account.

The fact of the matter is that most mobile apps are not inherently viral. Most apps need the publisher to push the app to other users for it to be meaningful for them (like skype, for example) and they haven’t managed to create a great narrative that makes the app into a social object. So they end up like most of the other 10,000 apps that get launched every week – forgotten in the dusty dark corners of the app store.

The good news is that a lot of people realize this is a problem and are trying to find ways to solve it. Some address it from the perspective of the users and are creating social discovery tools that allow users to find great apps. Others are making tools for the publishers to help them push their apps out to users via mobile ad networks.

I think that distribution of apps is going to be one of the biggest problems facing new app start-ups over the next few years, so I have been working with @innonate, @pippipsi, @aweissman and @roddyr2 to create a free platform that will allow app developers get free promotion. The core concept has been around since the 90s, when link exchanges allowed website owners to trade traffic and get extra SEO juice in the process. We are now taking that concept to the world of mobiles and will be performing ‘web rings’ via Allify.com. The hope is that we can band together great apps and provide them with free promotion space, as well as allowing publishers to save up promotion credits in their existing apps – so they have a bunch of free promotions for new apps they are launching.

So if you have an app in the making or one in the app store that is not getting the attention it deserves – then head over to www.allify.com and join forces with other awesome app developers. Check @allifyapps for news on the project. The project is a venture between Betaworks and Prehype

“Branding” is a pretty dirty word in the world of startups. Using it among hardcore tech-heads will pretty much guarantee eye-rolling and a body language that screams “whatever.” However, many of the elements traditionally discussed under the umbrella of “branding strategies” remain important; in fact, they are now getting a lot of focus in our digital startup world under the labels “user experience,” “company narrative,” and “user flow and virality.” The difference is that in digital companies you cannot separate product and brand in the same way that you can with a package of, say, cereal or shampoo. With standard packaged goods, the utility of the product is often fairly commoditized, so the thing that makes one shampoo different from another is how it’s packaged and promoted. The brand defines the product. Offline companies are masters of this by now. (For more, read about P&G in “Usability and Experience Are Not the Same: 3 Things Google Can Learn From Apple.”)

At Prehype, we have had the pleasure of working with Wolff Olins – the world’s leading branding company over the past eight weeks. Besides having been blown away by the creativity we saw during the internal venture competition we hosted for them, we also learned a great deal about branding, creative strategies, and design. Interestingly, their approach to reenergizing a corporate brand is very similar to best practices in the world of startups. We just use different terminology.

Besides different words, we have also identified four reasons why digital startups’ brands are extensions of their products:

1. First, few digital products are true commodities. Besides e-mail (and maybe Groupon clones , we can’t think of many digital product types where the brand is more important than the utility. Digital products are instead successful when they solve a problem and also look pretty and feel good–not the other way around. The importance of the packaging will of course change as more digital products get made and their utility becomes commoditized. But for now, the product creates the brand.

2. Digital products often have many more touch points with their users than packaged goods do. This makes it hard to keep up an appearance that is vastly different from the internal DNA of the company. This is especially true with startups, which are often just a few people. Staying “on brand” is tough if the brand is very different from the people working in your startup and someone (or a agency) need to check all those external communications. This is amplified when features change often and quickly. There is just not time to build something and then “brand it.”

3. Computers and mobile and web services are becoming a closer part of our daily lives. If you believe the experiments documented in “The Media Equation, we personalize our computers and mobile devices, treating them as though they are individuals, making the emotional impact of digital services important. With this in mind, it’s clear that you can’t create a product that acts too differently from how it looks. If you do, the user will notice, and the dissonance will feel uncomfortable.

So with that in mind,  a digital company really do need to think about a bunch of factors that traditionally are considered “branding.” The best way to do this is to build your digital product and think about the best way to articulate what problem it solves. Then extend your and your team’s best personal character and attitude into all communication between you and your users. That becomes your brand. And it will be a far more powerful than any “brand” you could retrofit onto your digital product. (except if you’re making cereals or shampoo–in which case you’re reading the wrong blog .

Thanks to Paul, head of strategy at Wolff Olins (blog|twitter) for the interesting conversation about the difference between branding packaged goods and branding services that triggered this post.