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Archive for November 14th, 2007

Web 2.0 was NEVER a Business Strategy(con’t)

I came across this post in David Dalka’s blog today and was really impressed with this individuals response to Davids’ post: I’m enclosing the link but here is the gist:
You saw the craze. People built up Web 2.0. It’s frequently a term that people used to avoid business principles and focus entirely on technology without any end goal. I have always disdain it. Many folks surprisingly jumped in with funding for some of these ideas, likely more due to existing dot bomb relationships that business principle.

Yet Internet startups who focus on the following business issues closely will always have a good chance at succeeding:

1. Have a clear value proposition that meets some area of unmet need: Something that says, “We provide a first in industry solution to the problem of blah, blah, blah”. Not “This is kinda like part Digg, Youtube with a bit of Facebook – just way better”. I meet lots of people that say this stuff in the second category, I cringe when I hear it.

2. Realize that Internet companies are marketing companies first and technology companies second: I can’t tell you how many startups I see who hire a programmer, program something and then go hire a salesperson. They go through the whole process without a well crafted, customer focused value proposition.

3 . Have a clear data model that focuses on data integrity and creating a monetizable store of value:
Does your Internet startup attempt to focus on data integrity issues? Will it eventually create a monetizable store of value? I ask this question in the startups that I’ve assisted. It comes from my background in financial services where not having accurate information can cost you millions in an instant, the true Internet time.

4. Have a business model for the company as a stand alone entity. Key partners invested in your outcome? Good.

5. Have people that have worked in high performance startup cultures on your team who understand that real-time iteration of your offerings are critical to your success!

6. Look at and study the history of business and technology innovation. Then use it in your transactions and execution.

These are the five that are most critical, though I’m sure you can think of more critical drivers. Please join the conversation. I can also think of several blogs that focus on buzzwords instead of business principles that are now more than a bit obsolete. It’s time to focus on business success principles at the party. it’s a smaller party, but one that will drive hundreds of new Internet startups for years and years.”

Now here is Rod’s response:

It’s [web 2.0] frequently a term that people used [sic] to avoid business principles and focus entirely on technology without any end goal.

By “technology” here you imply “product.” Would that belief then also apply to financial institutions? Organizations that “… focus entirely on (finance) without any end goal.” The bigger question is what is the “end goal” of a business? Web 2.0 has nothing to do with it whatsoever. The principles are universal or not. In fact, you too are using Web 2.0 as a buzz word. What I assume you are really suggesting here is that the end goal of a business is some type of increased profitability. Put another way, it’s about revenue. If not, perhaps you could define what is the proper “end goal” of a business. Would your theory hold to the political enterprise of Ron Paul, or Steve Jobs’ initial Apple start-up, or even something more basic as WordPress?

How would your argument apply to the arts or arts as a business? Whatever that might mean. Is profitability the end goal of artists or even a museum? Almost never. They are almost always subsidized. This is a struggle that artists have faced for generations. Is it always necessary to have such an end goal? For some, it is “intrinsically” valuable to simply create even at a loss. Do not free-ware an open source developers do this every day? My experience is that many in the Web 2.0 space are moved by artistic, creative, innovative and utilitarian expressions often beyond their desire for wealth or sustainability. For many, their “product” may reap only minor profits and non-sustainable ones and they are more than happy to accept that outcome.

Some theorists emphasize sustainability or longevity as the end goal measurement (Jim Collins). Tom Peters has been stressing the role of design as the ultimate competitive advantage and has little interest in sustainability, but instead nimble businesses that grow and die intentionally and predictably. Still, others like Stephen Covey believe that businesses exist to increase all stake-holders value (i.e. community, employees, shareholders and customers). Each hold the end goal differently. Consequently, each emphasize different measurements as well. It is possible that each may be correct when applied to the proper context.

To your second point:

Realize that Internet companies are marketing companies first and technology companies second.

Are you actually arguing that a company that has this “elusive” “undefined” “end goal” hire sales people before they develop a product or service? This is putting the cart before the horse don’t you think? When Peter Drucker argued that businesses have two major “functions” being marketing and innovation he was not suggesting that they were the end goal or the “purpose” of a business. Instead, they were the means by which a business served its product or service. The end goal as defined by Drucker is what the benefit obtained from the product, service or technology is! That he understood this so well is what allowed him to be such a powerful voice in the non-profit sector. Facebook, Digg, YouTube, WordPress and the like have created value for consumers even if their “end goal” is not clearly understood, defined or even sustainable. If marketing people came first, there often would be no technology nor the product.

Again, by “marketing” you meant no doubt sales. By which you imply again “some type of sustained revenue.” Yet, marketing, technically, is not sales and so you confuse the two. Nevertheless, one can neither market nor sell what doesn’t exist. I suspect Dave you are tying to argue that the marketing function is to demonstrate that any given business enterprise must first prove its financial viability before building the product. That is a good goal. And perhaps for VCs this is a solid requirement, but obviously it hasn’t been. But more to the point, if we were to apply your argument across the board then Ron Paul’s investors would be throwing their money to the wind, Steve Jobs would have closed down Apple a decade ago and the blogging software you use here would not even exist.

I ask you this: When your daughter has a lemon stand outside the house what was the end-goal? Was is profitable? Certainly not. It was entirely subsidized by mom. But a lesson was learned and skills were gained perhaps for another day and another enterprise. That is valuable. That is a good end goal. But even more, it was enjoyable to the child. It holds intrinsically its own end goal that has nothing to do with marketing. Many of these businesses you are chiding live in a similar world. Thank God for them.

Thank God some people believe in having audacious goals that move forward with a zeal that do not necessarily make financial or other rational sense. Thank God there are people willing to challenge the status quo and start a revolution in audio, video, publishing or politics when number crunching nay sayers argue it isn’t viable or possible. Thank God there are some politicians like Ron Paul, no matter how much I may despise some of his policies nor want him elected, that challenge the notion that we should do something “with a clear value proposition” as an end goal.

Your final argument that we should look at “history of business and technology” as a role model is an excellent one. Unfortunately, I am afraid you haven’t. Most of the radical innovations that we rely upon each day came about from those bold, radical, free thinking, passionately absurd people who chose to do what their hearts desire led them to regardless of a clear value proposition.

A Great great response to a sometimes complicated and complex issue. Kudos to the otherwise unknown Rod.  David shouldn’t you reply?

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What did we do to piss off China? or The art of Non-Branding by..

Let’s see, our children keep getting their lead based toys taken away from them, our tires keep going flat, we have the worst case of Montezumas revenge from the seafood, my dog has been sick for weeks and won’t fetch, my teeth are falling out and the family art project with the aquadots has caused everyone to pass out and now this…

If you have purchased a Maxtor Basics Personal Storage 3200 product since August 2007 the product may be infected with a virus.  Kaspersky Labs, a maker of anti-virus software, has alerted Seagate to the existence of a virus found on at least one Maxtor Basics Personal Storage 3200 product. Seagate has traced this issue to a small number of units produced by a Maxtor sub-contract manufacturer located in China. 

Seagate quickly put a stop ship to units leaving the facility as soon as the company learned of the probable infection. All units now leaving the facility in question have been cleared of the virus and units in inventory are being reworked before being released for sale.  However, some affected units may have been sold to the public before the problem was detected.

Seagate has posted a warning on its website about its Maxtor Basics Personal Storage 3200 hard drives. According to the posting, Seagate traced the issue to a “small number” of units produced by a Maxtor Chinese sub-contractor.

The effects of this virus are minimal.  According to Kaspersky the virus is the Virus.Win32.AutoRun.ah, a molar virus that searches for passwords to online games and sends them to a server located in China. It also deletes other molar viruses and can disable virus detection software. All of the known games affected are Chinese with the exception of World of Warcraft.  The following games are affected.WSGame
91.com
QQ
Woool
rxjh.17game.com
TianLongBaBu
AskTao
Perfect World (Wanmei Shijie)
World of Warcraft
A word to the wise, Baidu is one of the hottest internet properties in the world and China has a population of 1.3 billion, about 130 million of whom are Internet users, an online market second in size only to the American market. Having said that, Could the next big headline be, “Baidu users infected with worlds worst virus…”?

SearchBoth; Pitting good versus evil.

In an effort to confuse and confound internet searching even moreso, SearchBoth has decided to add more functionality. Forget the fact that most people really don’t know how to use search properly in the first place, SearchBoth had taken a novel approach in that it would combine the results from rival search engines. And you thought that Yahoo and Google had combined forces?  Hah! But there is one problem with this idea. Rather than re-doing an already busy page, SearchBoth has decided to just clutter the page with a additional tools.

SearchBoth.com places websites side by side on one split screen in order to make comparing the results of any two websites simple and easy. The site started out with just Google and Yahoo but now offers Ask.com, MSN, DogPile, MetaCrawler, Alta Vista, LookSmart and WebSearch as well. Users can select any two search engines and view them side by side on one split screen. Cool concept but…

SearchBoth.com has also included the ability to search travel sites side by side as well with the top 12 travel sites. Users can search Hotels.com, Expedia, Travelocity, HotWire, CheapTickets, SideStep, Kayak, CheapFlights, Travelation, TravelZoo, PriceLine, Orbitz, and CheapOAir side by side as well. Cool idea but…

Although these features may be useful, the UI harkens back to a pre-millenium design where designers and engineers would vomit information onto a page thinking that “less was less” and more was not enough.

If I’m wrong, correct me and show me the way. I can be swayed.


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Marc Meyer is a Digital and Social Media Strategist at DRMG. This is my personal blog where I share observations, thoughts and opinions that are all my own.

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