I put together a list of interesting tech and business events taking place in the Bay Area and Silicon Valley, in July and August 2010. The focus is mostly web, internet marketing, social media, software etc.

Here’s the Google calendar in HTML and iCal format.

PS: I am not associated with, nor endorse any specific listed organization or event.

BAIA is first and foremost a community, so it comes at no surprise that BAIA Link, our online social network, has become a reference resource for BAIA members and friends. The network is on its way to reach 1,000 members early this year and all performance indicators are on the upswing. Very good.

Turns out I am not alone. In fact, about only 14% of the respondents never work on Sundays and almost half (47%) work on Sundays often (2-3 times a month!)

More interestingly, the results suggest a strong inverse correlation between the size of the company you work for and the chances that you will work on Sundays. The self-employed/startup/small biz people work harder?

Conventional wisdom around Europe and Asia is that a local parent company will keep its engineering and product development home and “open a Silicon Valley office to market the product/service/technology”. Perfect. Until you get down to assessing what resources are required. And assessing you must, least finding out later in the game that you are grossly undersized for the challenge.

I may cover legal costs, accounting, infrastructure, rent and other investments another time. Now I want to focus on talent, the scarcest of resources, even in this market.

For the sake of example say you wanted to create a Silicon Valley-based marketing team. Naturally, you may think about hiring a “director-level marketing guy/gal with specific industry experience.” Someone who can “hit the ground running.” Well, there is plenty of great talent in Silicon Valley. The next logical thought is “how much will I have to pay?”

A quick search on Salary.com (I know, not very scientific, but somewhat of a meaningful indicator) estimates the median yearly cash compensation (base salary + bonus) of a Marketing Director in San Francisco at USD ~200,000 (or EUR 135,000 at today’s exchange rate!).

That’s just the start. Such an employee will expect some standard benefits, such as medical insurance, 401k retirement plan, time off, etc. That very quickly adds up to another USD 60,000/year or 20 to 25% of total compensation.

We are not done. Additional direct employee costs need to be factored in, such as computer and IT support (~3,000/year), smartphone and cell plan to answer all those emails from the globe-trotting CEO (~2,500/year), business travel (~10,000 to infinity/year, depending on travel perks and frequency). More often than not some form of severance pay as well as equity compensation must be included in an employment contract.

In the all-too-common scenario that such a hire happened through a broker (head hunter or contingency recruiter), there is also an upfront hiring cost of 15 to 30% of the first year salary, a nifty fee up to USD 50,000 in our little case study.

And finally such a valuable asset cannot possibly do his/her work without a bare-bone team, right? Throw in a couple of “junior marketing persons“ and a “social media intern“ for starters and you need to think about a payroll which will easily burn in excess of half a million USD a year!

Oh, and we have not talked about marketing budget at all…

Bottomline: Fortunately, there are ways to lower the upfront beachhead investment and the risk of building an untested in-house team (I’ll talk about those another time.)  Entrepreneurs, think hard about your objectives, assess the true amount of required resources and weigh all your alternatives.

So, here is the log.

Thursday, Aug 27, 2009 – Day 1

7:40 am: Board Amtrak “San Joaquin” in Emeryville heading to Merced. Mostly commuters around me. Clean cars and comfortable ride, as we coast along the Bay profile and head into the Central Valley.

11:20 am: It is noticeably hotter in Merced. Fortunately YARTS bus to Yosemite is air conditioned. Riding the bus on the way to the park gives me an opportunity to look at the Californian landscape as it changes from flat to hilly and from dry to green. As we enter the Yosemite Valley along Merced river, a haze, due to a fire on Highway 120 miles away, envelops the air.

2:30 pm: After a stop at the Wilderness Center, and now armed with my permit, I head out to Happy Isles Trailhead and up the Mist Trail.

4:50 pm: It’s a tough hike to the top of Nevada Falls with a loaded pack. The sun light filters through the smoky haze produced by a large fire miles away on Highway 120. As I leave the falls trail junction headed to uncrowded Ililouette Creek, the foot traffic evaporates.

8:00 pm: I have now walked in complete solitude for several hours and reach the Ililoutte/Mono Meadow Trail junction. It is getting dark and I set up camp about a mile down, in a flat grey meadow just below a gigantic granite dome. The silence is dense in the trees, as darkness thickens and the breeze dies down. I take in some quick meal and get to sleep, exhausted.

Friday,  Aug 28, 2009 – Day 2

3:00 am: The moon has set and I wake up to a beautifully clear, star-studded sky.

6:30 am: Wake up, coffee and a solid breakfast. I pack up and head back early on the trail. It’s now in the 40s but rapidly warming up, as the sun rises over the Clark Range.

1:50 pm: After a couple of detours to higher ground to catch some vistas, I continue my slow ascend to Ottoway Lake and Red Peak pass and reach Upper Merced Pass lake. It is a perfect spot for my lunch and I take advantage of the most obvious campsite not to far from the shore. I have not seen anyone now for a good full day.

4:40 pm: For a moment I had considered overnighting at Upper Merced Pass Lake, such was the beauty of the place, but I am glad I did not. Ottoway Lake, another fairly strenuous 3 miles up the trail at 9,700 ft, is just stunning! I setup camp as close to the water as I can, on a grassy bluff just above one of the streams that flows into the lake.

6:30 pm: Happy after taking in a earthy enchilada, I survey the surroundings and spot a handful of tents around the lake. The area is so large that we hardly notice each other. Campfires at this altitude are not permitted, but I do not miss one, sipping a cup of tea by the water. A very peaceful, warm and calm evening.

Saturday,  Aug 29, 2009 – Day 3

6:45 am: It was a clear, still, starry night and now the sun is rising from behind the range. Blueberry granola and coffee taste so very good as I prepare the final push to Red Peak Pass, my trip’s highest point.  A short yoga routine by the lake shore and I am ready to go.

8:45 am: It is a tough ascent to the pass, but the views are truly rewarding as I emerge above the tree line into a lunar landscape of red rocks and granite boulders. Curious marmots get out of their burrows to check me out.

11:40 am: Top of Red Peak pass. From up here, looking North, a commanding view of the eastern park valleys and peaks opens up. Magnificent. I meet a fellow hiker from the Bay Area, C., the first real conversation in three days.

1:00 pm: After a rough, step and rocky descent leaving Red Peak to my left, I reach a small alpine lake, still above tree line and wide open under the vertical sun. Perfect spot for lunch, some rest and a dip in the chill water.

2:15 pm: As I continue my descent to Triple Fork creek, the landscape turns to picture-perfect quintessential Yosemite. Granite inclines dotted by round gigantic boulders, pools, streams, isolated junipers, pines and hemlocks, against a blue sky.

4:50 pm: After having reached the Triple Fork trail junction, I set to find a suitable camp site further downstream and east of the trail and select a most perfect spot on a tree-rimmed flat just above the river. It has been a fairly strenuous 9 miles from Ottoway Lake and I am glad I can finally pitch my tent, rest and get some dinner. C., who I crossed paths with again at the junction, pitches his on the other side of the river.

8:30 pm: It is the perfect night for a campfire, cold and dry. C. and I exchange backpacking stories in front of the crackling flames. Looks like the temperature is going to fall into the 30s during the night.

Sunday, Aug 30, 2009 – Day 4

6:15 am: The second part of my loop will be mostly flat or downhill and, with a lighter pack, I expect to move much faster, so I am in no hurry to get back on the trail. It has been a very chilly night and although I still woke up at least four or five times, I feel very well rested. Mount Florence is now clearly visible straight ahead as I sip my coffee and prepare breakfast. Plenty of time to wash socks, light a fire and toast-dry them.

9:45 am: I finally leave camp. One last look to fix in the memory the beauty of the place and off I go. Following the creek downstream and off the trail, through marshes and meadows, something one could not quite do in early Spring, I pass by waterfall after waterfall.

1:40 pm: Back on the trail for several miles now, I reach the south end of Washburn Lake. Wedged between steep, polished granite domes, it offers plenty of campsites, a shore and, a good 3 days away from the nearest road, tranquility. I coast the lake to reach the north side to find a ranger-led fishing party, there for the day. I decide to not push forward, and spend the night here. After backtracking the trail to the south shore and setting up camp, the fishermen leave. No one else would come by through the rest of the day and the following night. An entire lake, all for me. What a privilege.

6:10 pm After a swim in the freezing lake waters, a tea and some reading, I lit a fire. The sun is setting behind the west ridge, while I prepare my meal and throw the fly over my tent to protect me from the steady wind from the north. I retire early, ready for the sleeping bag by 8:30.

Monday, Aug 31, 2009 – Day 5

5:45 am Early rise and ritual breakfast. The only sound is the one of pine cones falling to the ground under the wind.

7:40 am Off to Merced Lake. It is mainly a steady slow descent from this point on, so I make very good time even as I take breaks to enjoy the scenery. I am at Merced Lake by 10 am and cross paths with several mule convoys bringing supplies up from the valley. Cumuli are forming overhead, threatening thunderstorms.

12:30 pm Brunell Cascade is a sequence of several rushing whitewater falls over and around massive granite slabs and crevices. Must be quite a spectacle earlier in the season, but still manages to produce impressive cascades this late in August.

3:15 pm Here I am at Yosemite Valley backpackers campground. I have covered 12 miles today and feel it in my feet. I take over a large site and pitch the tent. The camp has certainly a very different feel than the sites I have been stopping at for the last few days. I need to really worry about bears and squirrels adept at getting food from less than careful campers. Plenty of parties stopping for the night on the way to Half Dome or the John Muir Trail.

10:45 pm It did not rain in the end. The moon sets, giving way to the usual clear, starry night sky.

Tuesday, Sep 1, 2009 – Day 6

6:00 am Short day. I need to get back to Yosemite Valley in time to catch the early YARTS bus to Merced. A quick breakfast and I am ready to go.

8:45 am The descent to Happy Isles Trailhead is fast and I am really feeling the 6-days worth of walking in my legs now. I reach the valley before 9 and hop on the shuttle to the Visitor Center. It is a pleasure to talk with strangers. The deli BLT sandwich I get at the Visitor Center tastes absolutely delicious.

11:15 am After a whole 6 hours on bus, Amtrak and BART, I am finally back home. Filthy, tired and with a satisfied grin on my face.

UPDATE 11/10/2009

My fellow backcountry enthusiast Charles Hodgkins has done a much better job at describing the Southern Yosemite wilderness experience than I did. He is the guy I met on top of Red Peak Pass.

In aviation circles, the span of time between the two World Wars is remembered as the Golden Age. A global race to speed, range and performance records pushed the limits of technology and pegged countries and manufactures against each other.  It was a great run for Italian engineering too, culminating with the 1934 Schneider Trophy speed record that Francesco Agello established on a Macchi MC 72. His 709 km/h (440 mph) remains the fastest speed ever attained by a piston engine seaplane.

As an an aeronautical engineer, I was very excited to learn that, on June 12, 2009, Maurizio Cheli established another speed record and aviation milestone on an Italian built craft. He pushed SkySpark, a 100% electrically powered plane, to a top speed of 250 km/h (155 mph). The news from Turin echoed into  Silicon Valley.  SkySpark is a 100% Italian consortium of university, private and public resources.

And while dreams of electrically powered sub-sonic intercontinental flights are premature to say the least (energy density of Jet A-1 fule = 40MJ/Kg; energy density of hydrogen fuel cell = 1.5 MJ/Kg) this achievement demonstrates that, with little resources and brilliant engineering, you can spark true progress.

The ads send you to Logo tournament (LT), a crowdsourcing play on logo design services. It’s quite straightforward. Company needs a new logo, it submits a “contest” to LT and sets a price. Designers send in one or more designs. The best design wins and the designer gets paid.

I tried to figure out how a business model like LT’s would look like.

Revenue

LT charges designers a 15% transaction fee. Companies set the price they are willing to pay in advance, with a minimum allowed of $250. Paypal transaction fees are passed on to customers.

Note that LT will take the money from companies in “escrow” and select and pay a winner at the end of the contest even if a company does not select a winning design. That means that if a contest is listed, the money will be paid and the commission earned.

LT lists all open and closed contests at any given time. I counted about ~165 open concurrent contests with an average age of 5.1 days and ~1,800 closed contests. I sampled 100 contests at random and calculated an average prize amount of ~$315. Assuming a steady flow of contests, that means about ~1000 contests a month (i.e. 30/5.1*165=971).

With commissions at 15%, that adds up to a monthly revenue of close to $50,000. The estimate is obviously highly sensitive to the monthly contest count estimate. Here’s a back of the envelope revenue estimate (with lower and higher estimates to test for sensitivity).

Operating Expenses

To estimate how much LT is spending to run its crowdsourcing marketplace, let’s look at staffing, infrastructure, customer acquisition marketing and payment processing. For the sake of this exercise, I’ll bundle the rest (e.g. legal, accounting, office rent, insurance, travel, etc.) as a miscellaneous overhead charge. WARNING: broad, sweeping assumptions :)

Staffing

I do not personally know the LT team, but I’d suspect it to be pretty lean. Let’s assume a team of 3 full-time employees (marketing/support person, developer, designer). The company being Canada-based, depending on seniority and benefits, average cash-out monthly cost per head would be in the, say, $5,000 to $7,000 (US$) range. Let’s assume also temporary and specialized staffing needs to be met with contractors or offshore resources adding anything between 10 to 20% to the cost of payroll.

Marketing

Let’s assume that LT is primarily investing its marketing budget on CPC campaigns on Facebook and similar CPC networks. Assuming an average CPC of $1 and a conversion rate from landing page to paying contest customer of 3% (Averaging out typical eCommerce conversion rates), LT must invest $33 to acquire one customer.

Not all customers are acquired this way, though. To account for repeat business (i.e. customers running more than one contest) and the fact that some will become customers through word-of-mouth and other “pull” channels, let’s assume a word-of-mouth/viral/returning-customer factor of 1 to 1, i.e. one “free” customer every 1 customer acquired though direct-response campaigns. That reduces the effective unit acquisition cost to $17. To get to the total monthly acquisition cost, one can multiply the unit cost times the estimated number of contests per month.

Finally, let’s assume that other marketing programs and channels (e.g. social media, events, schwag…) account for an incremental 15 to 25% in marketing spend. This is a measure of the activity that is necessary to generate some pull demand for the service and promote it to the design community. With marketing programs overhead at 20%, LT should invest in marketing ~$19,400 per month.

It is easy to see how rapidly customer acquisition costs can get out of control if LT does a poor job of (a) converting customers after they click on an ad, (b) getting repeat business and (c) attracting customers through word-of-mouth.

Infrastructure

Let’s assume an average storage capacity requirement of 2MB per design submission (Submission file + JPG previews and thumbnails). Of a random sample of 100 completed contests, each contest averaged 275 submissions. Let’s assume LT archives past contest graphics for an unlimited amount of time, in which case its storage capacity needs grow over time. Assuming that LT list of ~2000 contests includes all contests ever run, its cumulative required storage capacity today would be about ~1.1TB. At an average estimated cost of $0.150/GB (Amazon AWS pricing) the total monthly storage running cost estimate is ~$165.

To estimate monthly data transfer costs, let’s look at the site traffic. Data from Compete.com estimates about 16,000 monthly uniques. Assuming 10 page views per unique and average page load of ~0.4MB, the total monthly data served adds up to ~64GB. Assuming a price of $0.17 per GB transferred per month (Amazon AWS pricing), the monthly data transfer costs are a whopping ~$11.

Even after adding another estimated $2,000 a month in hosting, database and other infrastructure costs, it seems infrastructure expenses account for a small share of overall operating costs.

Payment processing

LT passes Paypal charges on payments received to the company that submits a contest. It however pays Paypal fees on its payments to the winning designer. Let’s take the basic Paypal fee of 2.9% + $0.30 as a base. The processing fees add up to a hefty ~$7,800 per month.

Other Operating costs

To estimate additional operating costs, including rent, insurance, travel, IT, etc.), let’s assume a percent overhead related to the size of the team, ranging from 10% to 20% of payroll costs.

Bottomline

Internet businesses are hard to make work and a crowdsourcing marketplace is no exception. Below an estimated operating earnings summary.

Some considerations:

• Marketplace size is key. All things equal, if LT were able to grow its contest intake by a factor of 10, it would turn a 15% loss into a 35% profit. The trick is to be able to scale the marketplace size while at the same time keeping customer acquisition and marketing costs down.
• Marketing is key. Poor customer acquisition performance can kill a business like LT’s. Specifically, it is essential to keep conversion rates high through well targeted ads and flawless user experience when a prospect enters the conversion path. “Free” marketing is also critical. LT must be able to leverage WOM from existing customers and repeat business to keep effective customer acquisition costs in check.
• Cash from Customers. Where does LT gets its working capital from? Well, since a costumer pays into LT’s Paypal account when their contest starts, but the prize money is only paid to the winning designer after the contest is closed, one to three weeks later, customers are effectively financing LT’s business. In fact, the faster customer acquisition grows, the more cash can LT float to finance growth. Brilliant!
• Transaction costs are not trivial. Paypal fees of almost 3% on a 15% brokering commission amounts to 20% of net revenue after the designer is paid!

You can find the calculation sheet here.

Of the 57 economies ranked by IMD, the US still ranks No. 1 in 2009. Hong Kong has switched places with Singapore to gain the 2nd place and is swiftly “closing the gap” with the US. Switzerland maintains its 4th rank from last year.

Italy lost another few positions, from 46th in 2008 to 50th in 2009. Big and unexpected movements in the middle of the range, though possibly due to the different recession timing in different geographies. It will be interesting how the global recession plays into 2010 rankings:

The most spectacular movements are seen for Indonesia, rising from 51st place to 42nd and Estonia, falling 12 ranks to 35th place. Some countries suffered important reversals: Colombia (51st), Greece (52nd) and Taiwan (23rd) fell 10 places each, followed by Romania (from 45th to 54th). Other important declines include: Luxembourg (from 5th to 12th), Hungary (from 38th to 45th), Spain (from 33rd to 39th) and Ireland (from 12th to 19th). And to think that Ireland was ranked 5th in 2000!

Particularly noteworthy this year is the aptly-named, newly-reported “Stress Test on Competitiveness” ranking:

Denmark finishes in first place in the “Stress Test” rankings, an analysis of which countries are better equipped to fare through the financial crisis and improve their competitiveness in the near future. In other words, the test is future oriented – it focuses on exposure, readiness and resilience in a period of world recession.

[...] Despite finishing first in the overall 2009 World Competitiveness Yearbook rankings, the United States comes in 28th position in the Stress Test, underlining the concern of the market with the depth of the crisis and the time that it will take to solve it.

Interesting. Here’s the 2009 scoreboard (PDF file)

First, I asked respondents to self select in the A, B or C player category. 78% put themselves in the A-Player list…

Then I asked respondents to assess their coworkers. 42% said less than 1 in 100 coworkers are A-players, 77% said less than 1 in 10 are. Obviously B- and C-players don’t like to answer polls ;)

That’s right … hiring in tough economic times can actually be much harder than when times are good.   In a downturn, the amount of resumes from C-Players massively increases while the amount of resumes from A-Players probably remains the same.

I generally agree with Auren’s premise and conclusions, though I believe it is important to recognize that most companies will never have access to the A-Player pool in the first place, and explained why in my comment.

… Second, about the analysis. The article rests on a fundamental assumption that ANY company has access to A-players or at least all the available A-players in a specific domain. That is simply not true. For example, let’s consider the subset of all A-player graduates from top colleges that are interested in Management Consulting. Now, a leading firm, such as McKinsey for example, is almost guaranteed that close to 100% of those A-players’ resumes will end up in its funnel. Sure they will be buried in tons of not so good candidates. For McKinsey is then only a matter of putting in place a good process. That is simply not true of Mom&Pop Consulting Group. In fact, M&PCG is almost guaranteed that none of the A-players will apply. The difference here is the buyer’s (i.e. the company’s) brand. Now, some will say, M&PCG should simply actively seek the A-players in the hidden market. Nice, but I doubt it to be economically feasible to go find out all the A-players. Even if that were possible, most A-players would have no interest in the company.

Every CEO likes to think about his/her company as the best place to work on earth. The hard truth, that every startup founder is all to happy to ignore, is that for the vast majority of companies, the pool of realistically “reachable” A-players is close to nil. No matter the market.

In other words, while it is obviously wise to do a thorough job at selecting employees, a manager will always compromise. “We only hire the best” is ALWAYS qualified. You only have a chance to hire the best person available to you at that moment, i.e. the best person that knows about you, is willing to work for you, is on the market for a job, etc. etc. And if someone is available to you, it does not mean he/she is available to me.