Don't get me wrong - there's nothing like the stability of coming in to the cubicle each day, knowing that somebody will find something for you to create or fix. Programming can be a fulfilling vocation. I look forward to creating something that could possibly add to somebody's life, increase their productivity, solve a problem uniquely or just look cool. But of course, there are barriers and we all have many criticisms about our
phbs.
So this weekend I surfed with with the intent on learning more about 'How to be an Entrepreneur.' I didn't think about buying those Business for Dummies books - the fluff that gets (re)produced about the same clichés. What follows are several summaries of what I found that appeared to be out of the ordinary regarding today's subject - aka "How can we be the bozos that others work for ?"
Of course, you will have resell an existing product/service or create a new one. If you have to change consumer behavior or ask them to adopt a new behavior, you just raised the market risk by 10x. There are other types of products/services than those I've listed here, but my main focus was on those that leverage the internet, don't require a large capital infusion and I didn't know a lot about before.
The concept of a
viral product is a product, an ebook, some software, a cute game, or maybe a screensaver that people love it so much that they pass it around. Everybody who gets their hands on this incredible product wants to share it with everyone that they know. Unfortunately, these products tend to be free and will not always make money. Seems like a great money maker if you can get it, but I don't think I will ever seek that route as the main revenue stream. From what I found, there are lot of companies out there trying to convince you to buy their viral marketing tool so you can create traffic to your website and "work less, earn more."
There isn't really any franchising opportunities in the online world, but there is the ability to
resell online services. I believe godaddy.com is the leader right now in virtual webhosting with their
reseller program. You can start your own offerings/promotion for people to get their own domain and website with forwarding, masking, parking, etc - but the underlying company is still just godaddy.com! With such low margins in the domain and webhosting market, it makes sense for godaddy.com to offer a reseller program as they will spend less on advertising and they
won't appear to have saturated the market.
Not first to market? Provide a
support service if you thought of something great but someone else thought of it too and executed it just that little bit better than you did. ShippingSupply.com and AuctionWatch were created as a result of eBay's success.
Alternatively if your idea happens to have already been implemented by multiple online businesses, perhaps consider creating a piece of
aggregating software. CheapFlights.com is a website that allows you to search many websites at once for discount travel.
Revenue and income projections just aren't that important for a start-up company. There is 100% probability that anything you come up with will be wrong. An Entrepreneur should know the key assumptions that will drive the company's economic model.
You need a
team of people who can come up with
great solutions to problems, rather than a solution to one problem. Start-ups evolve and the ability to thrive during the course of that evolution is what distinguishes great companies from mediocre ones. When a start-up's team members deeply believe in what they are building and the mission at hand, they have a big advantage over most big companies. Implementations of this concept include people wearing the company gear and generating a reputation that goes with the company's name. I personally saw the repercussions of a company being taken over and the parent company insisted that the old name be dropped. The reputation was never regained under the new name. Anyway, the key is to engage the company in some shared activity that brings them together as a group. Depending upon the team and the culture, that activity could be pretty much anything.
Both Silicon Valley and Hollywood are literally built on dreams. There are a massive number of new plans for movies and start-ups floating about and only a tiny proportion of new plans/ideas become funded businesses or movies. Most of them will die early from lack of interest and not because they are bad ideas, the projects didn't generate the belief in their potential for success. So, companies get funded in waves, just like similar movies are produced. Somebody in Hollywood produces a volcano movie, and suddenly everybody has to have a volcano movie in production. One VC invests in a social networking firm, and suddenly every major VC has to find some bet in the social networking area.
You always need to stay aware of your competition. If you perceive that your company "has no competition" - you aren't doing much diligence. Opportunities await wherever there's a slow-moving incumbent trying to sell yesterday's goods at the old prices and all companies need to constantly refine, learn from mistakes and follow a relentless path of improvement. For example, recently Blockbuster was suffering from competition from an online mail order DVD rental upstart - NetFlix. So Blockbuster became : "the only company that lets customers choose to rent their movies at the store or through the mail."
Everybody quotes Google's success - their formula is to generate powerful customer focused technology with an eye towards making money. New product decisions at Google are driven by optimizing for the user experience first and for revenue second. And by perfecting the nature of targeted ads, Google not only has created a highly effective revenue generator, it has produced what it hopes to be a better experience for its users. They are also the number one most recognized worldwide brand. Indeed, Google has become a verb : "I googled him/her." Google revealed recently that part of their competitive advantage is the utilization of customized open source implemented on servers they built from components bought directly from hardware manufacturers.
During the early stages eBay's founders were always worried that a big Internet business like AOL would realize the potential for auctions and leverage their traffic and market power to put eBay out of business. In fact, I read that eBay's initial business plan focussed on a long term goal of selling online auction software and merely use eBay as a very good showcase tool. Regardless of competitors, eBay had one clear advantage over every other auction site : a community of people that actively participated and interacted on the eBay forums.
You should focus on the long tail of the market which your competitors are ignoring. In the example I found of this theory, the author described how Excite, a popular search engine from the 90's, was handling millions of searches a day. The graph showing the frequency of those searches (the Y axis being the number of times a query was asked per day and the X axis being the actual query listed in order of frequency) showed a curve that extended with a "long tail" :
The most popular searches on the left side of the curve were vastly more popular than the 1000th most popular search. For example, “sex” was on the order of 100,000 times more popular than the 1000th most popular search (perhaps "travel"). BUT, there were a handful of extraordinarily common queries and millions of far less popular queries - the long tail.
Google, eBay, Amazon, Netflix and iTunes all work the long tail by radically changing the dynamics of their more traditional businesses. However, the long tail doesn't just apply to music and movies - there's a long tail of very custom process problems that software is supposed to help businesses solve. In the software business, the traditional focus has been on dozens of markets of millions instead of millions of markets of dozens. The traditional software model is to make software have just enough features and address enough of a homogeneous market that may buy the product. However, to take advantage of the long tail, whatever business your starting, think about how to serve millions of markets of dozens instead of dozens of markets of millions.
Never set a goal you can't measure. You should always set measurable goals, measure relative to competition. A common mistake people make is that they set absolute goals as opposed to goals relative to competition.
The
Stockdale Paradox was often quoted regarding a
startup's sustainability and adversity.
James Stockdale was a severely abused prisoner of war in vietnam. How does his experience equate to starting a business ? It doesn't really, but the moral is that you have to believe that your vision will come to pass. You've got to do everything you can to make it happen - but never let your belief and faith cloud your confrontation with reality. Entrepreneurs are wired for optimism, but in Stockdale’s story - it was the optimists who died. Stockdale's focus was to balance optimism with fact and belief with reality. If that can get someone through 8 years of being a prisoner of war, it certainly can get anyone through a (trivially compared) startup.
And finally, several articles/blogs I read agree that even with little cash there is much we can do to differentiate your product beyond just good coding. Software is increasingly becoming a commodity but
good service will always be valuable.
That's enough for today - maybe a part II will follow.
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