We were young, enthusiastic… and highly deluded.

But as we spent the first few weeks pouring over our business plan and financial projections, I began to feel increasingly uneasy. We were speculating about sales in a business we didn’t even know would work!

Of course, that’s what most dotcoms did at that time… but it didn’t sit right with me. Somehow, I felt that spending weeks on pie-in-the-sky projections was not just misguided, but a colossal waste of time.

And then our dreams were shattered. I still remember it to this day. We had just finished the latest presentation to the investors who were considering funding our business. We had shown them a demo of our advertising-based-free-ISP idea and given them a copy of our 100 page or so business plan.

I think they asked us to go away and come up with further numbers but I read the subtext somewhat differently. It was quite clear: “your numbers don’t stack up and we’re not confident you have a real business here. We’re not giving you our money.”

Now, the sad truth is that many investors and venture capital firms that invested in dotcoms during the late 1990s never let such misgivings stop them from funding similar businesses. (One day I’ll tell you about the company I know that got $12 million in capital… never made any sales… and let all that money slip through its corporate fingers…)

After all, many VCs’ sole aim was to make money by selling their stake at an initial public offering (IPO), and the performance of IPOs at the time indicated that such an approach was quite lucrative (even if it wasn’t sustainable)!

In any case, the financiers we talked to seemed to be reluctant to invest in our idea at the time, which left us in a rather difficult situation. It was a harsh reality check: we had no jobs, no money, debt up to our eyeballs, and NO business.

It was, however, a reality check we needed. One which got us on the right track.

Funnily enough this ‘right track’ also got us into trouble. But I’m increasingly coming to the view that it’s the kind of trouble that most, if not all, successful startups almost ALWAYS go through…

I’ll reveal what that trouble was - and what the major take-out is for YOU - tomorrow. But for now, here’s today’s ‘lesson’:

Spending all your time on financial projections without knowing WHAT you can sell and IF you can sell it… is an exercise in self-delusion, as well as being a massive waste of time and opportunity.

I’m a big fan of planning… but after a certain point, planning and projecting into the future is just guesswork. The best kind of planning is based on reality and the faster you can experience reality, the more accurate and helpful your planning will be.

More on the trouble we got ourselves into tomorrow…

According to Google, you can benefit from the Search-based Keyword Tool in two main ways. Firstly, if you are running a campaign the tool will suggest keywords that are highly relevant to your website, but are not currently part of your AdWords campaign.

Secondly, even if you aren’t currently advertising in Adwords, you can use the tool to discover nuances about your target market. The tool essentially generates keywords often used in association with the keywords you have chosen to target.

Right now, the Search-based Keyword Tool is available to advertisers in the U.S. and U.K., with additional languages and countries to follow in the near future.

Check it out here: http://www.google.com/sktool

Source: Trevor Claiborne, “Announcing the Search-based Keyword Tool”, Inside AdWords, November 18, 2008

While this number constitutes less than 10 percent of total Facebook users, the growth indicates strong interest in mobile social networking.

Source: Marshall Kirkpatrick, “Facebook Mobile Sees 3X Growth to 15 Million Users This Year”, ReadWriteWeb, November 11, 2008

InLinks will look and behave exactly like words with embedded links. They will not look like - or carry any indication - of being paid for and, since they will not have nofollow tags, they will pass on Google PageRank (the main objective).

Basically, an advertiser will be able to choose the keywords it wants to target and then buy text links for those keywords. Such links will then appear whenever the given keyword appears in the content of the blogs participating in the program. Bloggers will be paid a flat rate per month per text link sold.

Sound good so far?

Think again. Paid links are against Google’s quality guidelines and the search engine will penalize blogs caught selling such links. Not disclosing paid-for links is also a rather dubious practice for bloggers to engage in. In some jurisdictions, such as here in Australia, it may well be illegal.

Darren Rowse of ProBlogger advises bloggers to proceed with caution. He recommends against participating in InLinks if you have a highly ranking blog, or if you are concerned about disclosure and transparency with your readers. He suggests that InLinks it could be something to look into if you don’t care about having your blog indexed by Google or aren’t concerned about being transparent with readers. For his part, he doesn’t sell text ads.

Michael Arrington of TechCrunch concurs:

“The reality is that accepting money to link to/promote/market for a product without disclosing that fact is a very high-risk behavior, in my opinion.”

Meanwhile, Google’s Matt Cutts has emailed TechCrunch to reiterate that selling links to pass PageRank violates Google’s quality guidelines and that bloggers who fail to disclose that they have been paid to engage in word-of-mouth marketing also potentially violate laws in the United States, the United Kingdom and Europe.

It will be interesting to see if and how InLinks works… and who participates. Not that anyone is supposed to know!

FYI, here at Kikabink News, we do not sell text links. We openly promote affiliate products, our own products, and sell advertising.

Source: Darren Rowse, “InLinks - TextLinkAds 2.0 Advertising,” ProBlogger, November 20, 2008, Michael Arrington, “Insidious New SEO Ad Product Will Be Hard For Google To Detect (Updated With Google Response)”, TechCrunch, November 19, 2008

comScore attributes the anaemic growth level to lower spending by low-to-middle income earners, with households earning less than $50,000 exhibiting negative spending growth compared to a year ago.

The slowdown comes after 6 consecutive months of slowing growth in e-commerce sales. comScore says that retail e-commerce growth rates have fallen from a height of 28 percent in August 2007 to a growth rate of just 1 percent in October 2008. October represents the sixth consecutive month this year of slowing growth rates.

Source: comScore, “U.S. Retail E-Commerce Growth Slows to 1 Percent in October as Concerns about Inflation, Jobs and the Financial Markets Cause Consumers to Curb Spending”, Press Release, November 18, 2008