Tag: business model

Mid-Afternoon Holiday Reading

Like a linkfest link barrage, only post-nap

  • George Soros says it’s an oil bubble; he could have been nice enough to comment here, instead of going straight to the mainstream media. Still, speculation is rampant.
  • Jerome Kerviel didn’t act alone? Once again, no surprise here.
  • Giving away your product, while praying, should not be part of your business plan’s executive summary. If that’s your strategy, then bury the praying part in notes to the projections (nobody ever looks at those).

It’s cloudy/gloomy out…good weather for more napping.

UPDATE: If you decided to sleep too, there’s now more on the oil speculation bit here.

Is “Free” A Danger?

Most internet business models are advertising supported. I find it amusing – Alex Isgold thinks it’s downright dangerous. Could be. Read the whole thing.

One point of contention

Alex noted…“Of course, we all prefer the light Google Docs to Microsoft’s heavy desktop software.” I am not sure who “we” is – most of the folks I interact with say: 1) Google Docs, with particular emphasis on the spreadsheet, is useless beyond adding a column of numbers which they can do just as readily with a desktop calculator; and 2) that their initial impression ensures that they will never try using the apps again. I tend to agree on both accounts.

Another example worth pondering

Fred Wilson calls the concept of creating a Facebook widget, the sole purpose of which is to garner a user base for other Facebook widgets, a valid business model. An incredulous software engineer calls it a pyramid scheme. Which is it?

I’m quitting, since I’m over 30

Fred Wilson of Union Square Ventures touched a nerve when he cranked out this post debating the prime age for being an internet entrepreneur.

Dave Winer, the creator of RSS, was ticked off. Steven Hodson had this to say – “kiss my ass.” And Fred wound up having to defend his position.

A good ol’ fashioned pissing contest. Fortunately, Fred pointedly qualified the discussion right up front:

  • Now don’t get me wrong. We’ve only funded one of these net natives out of close to fifteen portfolio companies. We’ll certainly fund more. There’s a lot more we look for in an investment than a 23 year old design whiz.

And even more fortunately, some folks did get him wrong – the ensuing “debate” would have never happened otherwise. Scattered amongst this interaction were some points I found interesting – I’ve grouped them together as a way of scalping away the noise:

On VC intent and business models…

  • I really don’t want to be the guy who made it harder for anyone older than 30 to get funded in the web services market. – Fred Wilson
  • The thing is that VC’s don’t want to deal with experience and knowledge because it is too expensive. It is cheaper to latch onto the 15 year olds, the 20 something’s because they don’t truly understand the value of knowledge. VC’s don’t want paradigm shifts because in the end it might threaten their business models. – Steven Hodson

Pretty self-explanatory, and Fred was certainly cognizant of the potential repercussions. I’m just curious as to what other think about this.

Where’s the “paradigm” shift…?

  • The Internet is their medium and they are showing us how it needs to be used. – Fred Wilson
  • Paradigm shifts come from knowledge of the past, the vision of the future and the ability to bring them together. Twenty something’s might be hot to trot and they might be able to JavaScript into the wee hours of the morning but they haven’t produced any paradigm shifts. – Steven Hodson

I’m going to chime in here. Creating a web full of widgets tied to other services tied to other widgets tied to Google Adsense isn’t exactly a paradigm shift, and this will become extremely clear the moment the money runs out.

If launching a blog and filling it up with tons of widgets is the path to embracing this groundbreaking new web, I guess I’m missing something.

The only option I see is to quit now (right after I turn off my browser’s Javascript). But I won’t be blaming Fred Wilson for the decision.

UPDATE: Wilson concurs that the discussion was “the beginning of something”, although what “that” constitutes is still undecided.

UPDATE 2: The money isn’t even there for some.

Unique occurences they were not

CNET recently published a list of the top 10 dot-com flops, and after reading through the list, I could only think the list was contributed to by the folks at Fucked Company. Simply put, nobody seemed to herald any part of the ideas, and I believed some of the companies actually had some merit.

Read through the list, and ponder these points:

– What is not hot right now could very well be hot a few years later – trends matter
– Business models are often remade for changing times, much the same as major motion pictures are
– Getting the word out is hardly ever a bad thing
– Technology breeds efficiencies, despite what your IT director says about that ERP implementation
– Being spendthrift almost always causes pain down the road

Big failures should lead to learning, or does the free flow of capital simply dumb people down? Certainly, all of CNET’s top ten suffered from one “ailment” – an awful lot of money.

Douglas Adams said “Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so.”

I wonder what the next list of flops will look like, and who will make the next billion off of someone else’s “failed” idea.

Too Much Noise

A colleague and I have been jostling around start-up ideas for the last six months. We have worked well together in the past, and would likely make a very productive team going forward. It was desire, looking for an idea to quench itself.

A few days ago, upon letting me know he was putting the last iteration of the idea on the back burner (I had actually been forced to bow out a few weeks prior, as a new client absorbed my waking hours), he said something that will stick in my mind for a long time to come:

“I reserve the right to vacillate on the idea a little longer.”

At first, one might think this guy had gotten cold feet, and was trying to bow out gracefully. My impression was something quite different. Not only do I respect this person’s highly refined business saavy, but I didn’t think the idea was a full-blown go either. This statement reflects not a lack of gusto, but a concept stuck up on a shelf, in plain view, for a little more pondering.

The lesson here – don’t give up, just know when to take a break.

Too many ideas hit the ground running, and never see the light at the end of the tunnel. Rarely is it a lack of enthusiasm that makes the concept slip fluidly into the gutter. More so, it is selectively ignoring basic risk reward relationships – economics and personal, that are so critical to turning an executive summary into a “living, breathing” entity with a better than outside shot at being called a going concern.

What made the approach we were taking so arduous was not so much that we couldn’t come up with good ideas, or that we found too many others doing something similar. Our search spanned the “flavors-of-the-day”, as well as some esoteric meanderings that raised more than a few eyebrows. No, our trouble stemmed from actually looking at ideas in a practical light, dissecting how System A competed with Product B, and how Software X enhanced Service Y and Z.

Rather than continue to expound upon this idea indefinitely, I decided to get scientific about what is going on in the tech marketplace. I have constructed a mathematical model which accurately reflects my most recent discoveries. I believe this model solves for actual value creation, using easily obtainable data from the present day software/internet realm:

$ to be made this moment in technology = (∆ (email ↔ webmail)ⁿ / (1*√(DATE)bloggingsitecount))ⁿ – (allsocialnetworkingsites * initialinvestmentoffirstsocialnetworkingsite)ⁿ + (savingsfromopensourcesoftwareuse)ⁿ – (savingsfromopensourcesoftwareuse)ⁿ + (advancementsinpersonaldatabasedevelopment / ∑ timeforindividualstolearnanewscriptinglanguage)ⁿ, where n = ((∞∩∂Ω™ + (every₤earnedfromRSSfeeds * thenumberoffeedssentbackandforthbetweenthesametwosites)) – all existing $ going to Google)

Make sense? No wonder we couldn’t figure out a concept/profitable business model combination up until now!