1.2 Companies on the Move:

CLICK HERE FOR COMPANIES ON THE MOVE

For the past 4 years, we've published information about companies on the move in our monthly report.  No more.  Now you can publish and view that information instantly on our web log (blog)!  To view, click on http://netsudsannounce.blogspot.com/.

Why email only to your small email list of associates when you can post this information on the blog and have 5100+ NetSudsers view it.  To publish to the blog send me an email requesting permission.  You may have to create your blog account at www.blogger.com.  After you have an account, you can post to the blog as much as you want.  You need only follow some common sense guidelines, e.g. don't post every press release, don't post sales information, don't post defamatory statements, etc.  If you "spam" the blog, you will be removed.

If you'd rather have me to post your information to the blog, just email me at cotm@netsuds.com.  You can report (1) the formation of a new start-up, (2) momentum change at an existing company, (3) addition of key hires, or (4) a funding event.  We do not accept press release changes from third parties.  We must hear directly from an executive at the company which is 'on the move'.

4.1 NetSuds on Tour

NetSuds loves on-site tours!  Email me if you want to show off your company.  I can be reached at matt@netsuds.com. 

4.1.1  Optical Solutions

I toured Optical Solutions (OSI) - www.opticalsolutions.com - in December as a guest of CEO Darryl Ponder, dponder@opticalsolutions.com.  OSI is a great tour because they are a hardware/software company with products every consumer can relate with.  Besides an extensive R&D lab with the requisite 'units under test', test gear and development systems, they have a dedicated demo room where high-speed data, video and telephony can be demonstrated.  The video component of their system is both broadcast and video-on-demand.  What is unique is that the video is delivered over the local loop (optical) plant on IP (Internet Protocol) rather than analog RF.  Digital content has major ramifications which will not be discussed here.  The data portion of their network is much higher bandwidth than DSL or cable data.  Better yet, it is symmetrical high-speed data.  For more information, read about the next tour.

4.1.2  FTTH Communications

I toured a large FTTH Communications - www.ftthcom.com - deployment in Rosemount known as the Evermoor deployment - http://www.mn-evermoor.com/fiber.html.  FTTH Communications is a wholly owned subsidiary of Contractor Property Developers Corporation (CPDC), a leading developer of residential communities that also happens to be developing Evermoor.  For a nice pictorial tour of Evermoor, visit http://www.opticalsolutions.com/why_live_ever.html.  My tour host was John Schultz, jschultz@ftthcom.com, GM of FTTH Communications.

The Evermoor deployment is a fairly large new housing development where each homeowner has access to a fiber optic network and community Intranet.  The Intranet is a work in progress but the promise of broadband is significantly realized by the innovative network created by FTTH Communications using OSI equipment.  From a single equipment "shed" in the Evermoor development, FTTH Communications launches itself as an ISP, telcom and CATV provider.  Satellite dishes outside the "shed" (actually a very nice looking building aesthically blended in to the development) feed the cable signal to a bank of RF-to-digital converters.  The digital streams are then packetized in to IP streams and routed alongside Internet data to the passive optical network which connects the homes in Evermoor to their head-end "shed".  Before heading out on the optical network, the data and video data is combined with voice lines via a GR-303 interface to a local Focal switch.  FTTH Communications is out-sourcing the Class 5 switch to Focal and will probably do so until they are in a position to operate in their own "class 5 equivalent" switch.  Surprisingly, the data routing equipment employed in the "shed" is fairly minimal.  The majority of gear are the video converters.

While I didn't speak with any customers (homeowners) in the Evermoor development, the concept and implementation appear solid.  The business model is sound as people are more than happy to pay for a network service of high quality.  

The challenge for FTTH Communications is to scale their business model and provide a level of customer service which outstrips the competition.  Given the horrible customer service experiences with telcos, ISPs and cable companies, FTTH Communications should have no problem provided they can staff their customer service centers with competent people who answer the phone and solve problems (seems basic, right!).

FTTH Communications is developing expertise at being a true integrated communications provider and not just a telco, ISP or cableco.  Watch for good things from this company as they turn up more and more fiber communities.

4.2  Email Advertising

The NetSuds and MedicalSuds email lists reach 7400+.  The NetSuds email lists are double-opt-in and concentrated on professionals in the communications, IT and Internet markets.  The MedicalSuds email lists are double-opt-in and concentrated on professionals in the medtech, biotech and life sciences markets.  So, rather than spend your advertising dollars on any other email lists in the Twin Cities, consider the NetSuds and MedicalSuds lists.  Contact matt@netsuds.com or 612.605.5252.  For current ad rates, visit www.netsuds.com/adrates.htm.

6.0  Six Ways to Increase Marketing ROI

by NetSudser Marcia Jedd, 612.805.1425, www.marciajedd.com.

Growing companies need to concentrate on what they do best. Typically this isn’t marketing. Worse yet, paid advertising, direct mail, publicity and event sponsorships are only a few of the venues vying for your marketing dollar. Today’s information explosion and proliferation of media outlets exacerbates the squeeze on marketing budgets. Taking cues from consumer marketing and tested marketing strategies, consider these six ways to increase your marketing return on investment (ROI):

1. Planning.  A good marketing plan is the cost of entry to reap marketing ROI. The plan needs to incorporate your company’s mission and include objectives from both the sales and marketing sides. The plan should include profiles your markets and target audiences as well as identify your marketing tactics. Marketing tactics are the individual marketing channels, types of advertising as well as publicity and marketing initiatives which will best convey your messages to your markets, achieve sales goals and maintain brand awareness.

2.  Making a market.  What new markets can you create for your brand, product or service?  What processes do you have in place to stay ahead of your markets? Sometimes new products or services happen spontaneously. Consider the 1999 movie “Office Space,”  where Milton, a harassed office worker, is bothered by co-workers pilfering his bright red stapler. Swingline had ironically turned down a movie tie-in offer by the film’s producers as it didn’t make such a stapler and wasn’t convinced of the demand. Three years later, out of sheer demand, Swingline put its Rio Red Stapler on the market.

5. Web marketing.  How robust is your web site and web marketing plan? Opt-in e-mail newsletters, blogging and other web marketing initiatives can overtly or covertly sell your product or service on the web. The good news is that the cost of web development  has come down. Dynamic web sites with predictive features or an e-commerce Web site with data capture capability isn’t only for large companies with big budgets. Content management software systems are affordable and user friendly. Web-based marketing techniques such as using embedded HTML tracking in e-mails and newsletters shows what happens to your messages.  

You are only as good as today’s Google search on the web where holders of the top non-paid keyword placement can change by the minute. Feature content on your site and resultant keywords in source code which most accurately reflects your business. 

6. Measuring. Are you measuring your marketing programs? Can you determine that your direct mail campaign increased sales by a certain percentage or the number of leads generated by a specific marketing program? The ability to track and measure your results matters to your bottom line and the success of your marketing efforts. Determine what procedures or processes you need to establish so you can measure results. This counts for failures too. If you marketed to 5,000 and you only received one sale, why? Low quality lists, poorly developed Web sites and other haphazard marketing communications efforts only achieve great results for the lucky. Top marketing vehicles for measurement include Web sites, lead generation programs, events/tradeshows/seminars, and print advertising. 

Fine tune your plan periodically based on your results to achieve better response rates and returns next time.

When you employ these six strategies, you stand to maximize marketing ROI. What’s in your marketing game plan?

7.0  Going to Great Lengths for Financing

by Matt Noah with contributions from NetSudser Harlan Jacobs, TedGenesis@aol.com

Cima Nanotech recently concluded a venture round with Japanese investors. Now that's great news for its shareholders, its management team, and the various other stakeholders in the company. The other side of the story, often ignored in the mainstream media, is the curious and problematic lack of local interest from the local venture capital community in companies like Cima Nanotech.

"Local venture capital companies have not been supportive of the early stage high tech companies  in general and have  not been supportive of the materials sciences companies in particular", said Harlan Jacobs of Genesis Business Centers ( a Minnesota based high tech incubator/seed capital program for start up companies).  Jacobs should know as he was responsible for the critical introductions that led to the financing of Cymbet Corporation ( $4.5 million from Finnish and Israeli investors) and Cima Nanotech ( a merger with an Israeli company that led to the Japanese financing).

Both of these companies are involved in the commercialization of advanced materials. Cymbet makes state of the art lithium ion polymer batteries while Cima Nanotech makes nano-metal particles for conductive inks that are used in printing smart cards and sophisticated electronic circuitry.

The problem locally here in Minnesota is that no one has ever made significant sums of money in the field of advanced materials. Without a precedent, it's hard to  mobilize the institutional sources of venture capital here. Comparable to the herd instinct that is all too common and well understood when the excesses of Wall Street are chronicled in  newspapers and magazines, there is a herd instinct at work here in Minnesota in respect of how venture capital is invested.

Whenever venture funds have made money investing in implantable medical devices such as heart valves and pacemakers, money tends to flow into these same fields with relative ease over and over again over the last two decades. The same can be said  for servers and storage devices as well as software and systems in the information technology field.

Sadly, no one has made significant capital gains in materials sciences or biotech or bioinformatics and any number of other fields in which centers of excellence exist right here in Minnesota. What's lacking are the comparable centers of excellence with respect to the formation and allocation of early stage risk capital.

In the case of both Cymbet and Cima, Genesis helped with the initial funding by organizing bridge loans that provide warrants and attractive conversion features to the early stage investors.  The investment funds in both of these cases were largely provided by business angels and in both cases one of the first olives out of the jar was the Anoka Sherburne County Capital Fund and Anoka Investors,LLC ( a business angel group). Genesis further assisted with introductions to institutional investors in Finland and Israel where the venture fund managers have no problem investing from a distance of four to six thousand miles.

This is a refreshing contrast to the typical west coast venture capital fund that makes a point of insisting that it will not invest in a company that is more than a one hour drive away from its office on Sand Hill Road in Palo Alto. It's also encouraging that these foreign based funds made their investment despite the lack of a local lead investor here in Minnesota.

Until such time as the local venture capital funds get more funds under management and regain their nerve especially in respect of making investments in uncharted territories such as biotech and materials sciences, the local companies here in Minnesota are at a growing risk of having to take flight to the west coast. Recently, FireVue received funding from Sequoia Capital and announced its decision to move to California. That's a good number of taxpayers that won't be here to help pay for the roads and services that the rest of us will have to fund.

When will this change? When the limited partners in the local funds read about the ones that got away and either change the charter or change the management teams at these local venture capital funds, then capital will again flow to start up companies here in Minnesota. Until that happens, we'll just have to cobble together the resources that business angels and community based seed capital programs provide along with a few good overseas institutional investors.

8.0   Public Safety and VoIP Leaders Connect on 911

from The Pulver Report(TM), The December 8, 2003 Issue:  TO SUBSCRIBE, VISIT: http://pulver.com/reports/subscribe.html

9.0  Guest Writers for This Report

I have opened up the Monthly NetSuds Report to guest writers. If you have a passion for a topic, and you can write (at least no worse than me), send an email to me matt@netsuds.com.  You can even send copies of your work.  It needs to be on "com and .com" topics and can include entrepreneur/investor activities.  Good information from our    service providers and vendors is also welcome so long as it is not a "commercial" for any one company or individual.

We will consider both sponsored and unsponsored columnists and guest writers.

If you are aware of others who would like to receive the NetSuds Report, ask them to visit http://www.netsuds.net/mail.htm to subscribe or unsubscribe.

Please send your comments and feedback regarding this issue of the NetSuds Report to matt@netsuds.com.

Matt Noah

980 Lake Susan Hills Drive
Chanhassen, MN  55317

612.605.5252
fax:  612.677.3934
matt@netsuds.com

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