Tuesday, March 28, 2006
Friday, March 17, 2006
Every aspiring entrepreneur wants to come up with the next killer application. But the question is what is a killer app actually? How do you validate that your application is a killer app? A common rule of thumb is if any of the Big Guys (Read Google, Yahoo, MSN, Amazon, Ebay etc) wants to buy you than your application can be a killer application?
Success for a startup approximately equals getting bought. You need some kind of exit strategy, because you can't get the smartest people to work for you without giving them options likely to be worth something. Which means you either have to get bought or go public, and the number of startups that go public is very small.
If success probably means getting bought, should you make that a conscious goal? The old answer was no: you were supposed to pretend that you wanted to create a giant, public company, and act surprised when someone made you an offer. Really, you want to buy us? Well, I suppose we'd consider it, for the right price.
Paul Graham In "Ideas For Start Up"
With this thought in my mind I begin to explore what the big guys of Web 2.0 would like to buy? This proves to be a Holy Grail. Especially when we have the example of EBAY buying Skype with out any possible synergy between their lines of business.
So I thought lets compile the data and do some crunching to predict who may wants to buy what. J . I begin by analyzing what ultra cool Google might be interested in buying? What's there in Google shopping list? I will analyze the buying pattern of all the three big boys in subsequent posting.
Lets start with Google
I found a complete list of acquisitions made by Google at wikipedia . Even in Pre IPO phase Google was always scouting for good start up. But post IPO its acquisitions are more widely know and good news is currently Google is on a Shopping Spree .at first glance they all look like madness and without any master plan. But on a deep analysis you can find some strange pattern.Surprisingly most of the acquisitions made by Google are in the category of "Shadow Applications " very few of them are in the front end? Only a very Few of the companies were bought in order to enter the new business (Read: Picassa, Pyra Labs, KeyHole Outride etc).
Most of them were just applications which can strengthen the existing product offering which are not in leadership position in their respective markets. Something likes a steroid for a dull application in Google Basket. Like Deja which was bought to re launch Google Groups. "Applied Semantics " which was bought to develop contextual advertising like Ad Sense and Ad Word. They paid 102 Millions for net semantics. Later on they acquired sprinx to enhance these contextual Ad services.
Zip Dash was bought to provide a revenue stream on the top of Google Maps.
Reqwireless was acquired to avail Gmail on wireless devices .
dMarc Broadcasting was acquired to extend advertising onto audio channels.
Writely was acquired to provide online web based word processor
Baidu was acquired to get a geographical reach in a niche market.
Cut a deal with AOL to get a lot of user base, which stick to Default.
There are many more. But I guess this list is enough for the purpose of discussion
So? Does that Looks like a totally random selection with out any coherent logic? It looked like this to me initially. I thought money has got in to the head of folks at Google. Predicting what Google will buy is not easy. Can I do it?
Honestly I can't but I can find some common characteristics, which are present in all these firms and try to extrapolate from the data. We can only point in the general direction of the next buy of Google.
With all these data I set down to do crunching and finding a pattern, super imposing one model after another. (Actually I had dinner with one Investment Banker last night so I am still under the hangover J).
Sadly I still can't shout Eureka! So I share my finding with you and trust "wisdom Of Crowd " to help me. So you go thru the details I have given here and come up with your own predictions.
I will post my analysis some time soon during the day or tomorrow. Now it's Time to Go Back to work J.
During bar camp i had a chat with Saad . i don't know much about him other than the fact that he is a NID Grduate and a ace Photographer . he can do wonders with camera . check out his Flickr photo stream here
if some body is intrested in my flickr photstream he can find it here
Saturday, March 11, 2006
Audience response was good (Well, They were listening ). Some folks asked questions pertaining to the default factor & its implications. But strangely most of the Questions come out from the slide where I mentioned, “Web 2.0 Requires a Revenue stream other than Advertisement “.
So here I will attempt to bring some coherence in my arguments about why I am not comfortable with the idea of having Advertisement as the [only] source of revenue.
What Are Advertisements? : A Tool to Grab Your Attention
Ever heard of the term “Attention Economy”? No? Ask any veteran of Advertisement world. This is a pillar of Advertisement (Now onward “Advr.”) world.
Attention Economy is the whole cartel of Advr. Folks trying to get your eyeball, you’re mindsapce, your attention and getting paid for it. They put up an Advr. , You look at it; if it is good you talk about it to your friends and somewhere down the line this convert/translate in to you or your friends purchasing the stuff. It’s a chain reaction for which you are the starting point .So it all depends how good was the Advr in getting your attention.
In narrow sense of word the parameter for measuring the efficiency /Quality/Effective ness of an Advr is, it’s ability of distracting us from what we are currently doing and make us pay attention to the product it is pitching.
This makes Advr. Unsuitable for some type of applications. It’s ok to look at an Advr while you are relaxed, or not doing something, which require a focus attention of yours. In short if your intended application or website offer a service which can be accessed in a “Sit–Back & Relaxed “ mode (say photo sharing, social networking, chatting and even Blogging J) than perhaps having a few Advr link on the side bar is not a bad idea.
But the moment you want to do something that require you to “Sit-Up & Stay Focused “ than most of the folks don’t like the idea of having an intrusion of Advr. That partly explains the reason why out of so many companies in Web2.0 space ,only 37signals.com is not having a Adv supported business model .Because the nature of application require them to do so. and 37signals is having a substantial user base that actually pay for the service.
There is one more and very interesting aspect of this story,
During the debate at BarCamp someone from the audience said
What that gentleman was trying to say was that he would put up with the annoyance of having Ad Sense link, as long as application is free. He will simply ignore them. He will not click on them .its fine with him
Yes Sir! It is absolutely fine with you. And you are not alone, World is full of people like you. But if I am a small time service provider, it is not fine with me. If you come to my site and don’t contribute to revenue even after a long time of steady usage of my service than I will be in trouble.
If you look at the ratio of “Page View “ and “Advr Click” for Big Portals, you will see the truth. God save you if you are a small time operator for a niche segments.
Problem is compounded with the rise of “contextual, Text based, Advr service” like Google’s Ad -Sense, which pay you only for clicks. Now than you can’t even get the benefits of “Eye Ball Time” of those “Banner-Ads” On Which a user might never click but which can generate /convert in to a sale in offline world.
Say an Advr of Pepsi or “All Clear Clinic” .
So if you want to make a “Sit Up “ type of application what are we left with?
a) Simply make some thing people will pay for. J
b) Keep a basic version for free but not “Advr Free” so that user can try it
c) Give a lot of feature in Paid & “Advr Free” Version.
d) Let both Free & Paid Community interact with each other.
e) Keep your subscription fee very low.
f) You can even think of starting a sort of referral scheme which award you a certain point on every joining and after amassing a certain numbers of point you are automatically upgraded to a Free “Paid Version”.
You can keep giving every thing for free and hope that one Fine Day Google, Yahoo, EBAY & MSN will try to out bid each other to acquire you. Good Luck.
Problem With Portals:
You can argue that Companies (Read : Portals ) are making Money this way. Isn’t it? Doesn’t it validate the model?
Yes it does. But only partially, only for some players, some very big player .Big players are hard to replicate. There can only be so many Yahoo and MSN. While making plans for your businessbig portal are not good data points.
“Investors looked at Yahoo's earnings and said to themselves, here is proof that Internet companies can make money. So they invested in new startups that promised to be the next Yahoo. And as soon as these startups got the money, what did they do with it? Buy Millions of dollars worth of Advertisings on Yahoo to promote their brand. Result: a capital investment in a startup this quarter shows up as Yahoo earnings next quarter-- stimulating another round of investments in startups.”
Now be honest to your self and calculate how much chance does your company have to be next yahoo before you burn all your cash? If you think it has a fair amount of chance to do so, than you might as well take yahoo as a data point.
Problem with portal model is that aiming to be a horizontal portal like Yahoo, MSN is like competing with Boeing & Airbus in bidding for a 100 Year Lease of all aircraft of Lufthansa. There is very little room.
There is a time for every type of technology & every type of venture. If you are there at that time you can click. Not after it, Nor before it. Portal was the model of Web 1.0 world now have a good number of portal.
Similarly Blogging might be the hottest Application today, but it is not a brainchild of Payra Labs alone. Long before Web 2.0 and all this hype, a company called PointCast came up with the idea. It was way ahead of its time.
So think about it what type of application you have? Can you replicate the Portal phenomena? & Can you make Portals of World Buy you? And can you do all of these before you run out of cash. And deiced.
I have not suggested any solution to the revenue problem here. I have tried to provide a framework for discussion. I am looking for an answer myself because as an aspiring entrepreneur this is the first question VCs will ask me.
This makes me wonder why this Advr mindset is still prevailing and why people still see it as the only source of revenue on net. After all 1999 is not that far in memory lane?
I think part of the reason lies in the history of Advr & Internet it self.
From the inception of the concept of Advr. It has been very hard to measure “Return On Investment “(ROI) from the capital expense on Advr. (I.e.: Can you tell how many people drink Pepsi because they saw an Advr of Pepsi in Playboy or Times or WSJ?) .
Internet is the only medium where this problem is solved to a certain extent. This is what Advr World has learned from Internet.
What has Internet learned from Advr World?
Well if you can get enough folks to Advertise on your publication you can sell your newspaper on a cost that is absurdly lower than the expense & still you can make a lot of money.
But ironically while most of the newspaper charge you some thing? Geeks have taken this to next level and they are giving their newspaper for free.
Looking forward to you comments!!
Friday, March 10, 2006
What are our desires? What on earth does they stand for? Why some of them snowball in to passion or obsession and other dies very next day? Is there logic behind this seemingly random process?
Sometime back I wrote a Blog post about loosing the desires of child hood as we grow up? In that post I provided a cursory view of the problem. Why we hold back our self from doing what we want to do .Be it Starting a Venture or Going to North Pole or Asking the girl out for coffee? Why some time we can do it and sometime we can't?
Ever since that posting I was thinking about it .I used to think that the solution lies inside us. It's a fight within me. It's all about overcoming my fears, insecurities and uncertainties and there is no external dependency. Starting a Venture require a mental require to cross a mental gap which is up to me to do. Outside factors can't help much, at least not in any Positive manner. I need to be a lone warrior in this quest.
I was wrong. I realize it while I was sitting at BarCamp Delhi.
There are external factor. Three of them. Survival and snowballing of any desire depend on these three factors. Can we control them? Yes. I think so. You have done it in past albeit unknowingly.
These three triangulating forces are
a) The Itch b) The Denial c) The MuseThe Itch:
Itch is the desire /wish/ dream it self. Every desire start as an itch. Small but not ignorable. It holds our attention and occupies our mind. We have to do something about it. It offers us an opportunity to do something, something original, something new. It is more like mythical siren's lure.
We go through this daily .we find many temptations inviting us to explore & trying to start that itch. We notice a new café on our way to work and feel like checking out the stuff there. We see "Rang De Basanti " and time feel like fighting out the whole god damn system (although its momentarily) .We read that in Dec 2005 alone 40 Million mobile phones were sold in India and we think can I make some thing that these user will pay for? .We stop at HP Gas Filling station and wonder whether sania is looking at me? J
Some of our Itches are just long standing needs vying for attention. A sort of incremental desire. In tune with the current rhythm of life. You always wanted to check that café but can't squeeze enough time for it. But some time our itch constitute of something, which doesn't fit in out rational scheme of things. We are afraid to explore them. A sort of disruptive desire out of harmony with your current life. This type of itch is hard to kill and we feed them.
How to know which type of desire you are having right now? Well that's very simple just think what is stopping you to explore that option? Is it constraint of time, money, geography or energy level?
Or you are afraid of the idea, does this idea contradict your past, your surroundings, if implemented successfully will you be looked upon as most unlikely person to pull it? You don't doubt the potential of idea but doubt your own capability to do justice to it. Are you afraid of being laughed at if you fail in the pursuit? Can you sleep now?
If it is any of this case than there is a fair chances that this is an idea, which is a disruptive idea. Legend is when Sabeer Bhatia and jack smith came up with the idea of Hotmail. Than both of them were not able to sleep that night. They were afraid. In retrospect it looks funny. Why would they be afraid?
Because the moment you come across something big ,you are pulled in to two opposite directions by the forces of Denial and Muse. It's like a black magic and for sometime nothing makes sense. Still you can't escape because these forces are playing inside you.
"In a way, it's harder to see problems than their solutions.Most people prefer to remain in denial about problems.It's obvious why: problems are irritating. They're problems!Imagine if people in 1700 saw their lives the way we'd see them.It would have been unbearable. This denial is such a powerful force that,Even when presented with possible solutions, people often prefer to believe they wouldn't work."
Paul Graham In "Ideas For Startup"
" If anything can go wrong, it will definitely go wrong " :Murphy's Law
The moment you come up with a world changing, paradigm shifting, curve jumping, and rain making idea. The force of denial begins to show you every reason why this will not work. It seeds you with worry, apprehensions and doubts. You worry about loosing peer acceptance, you worry about home loan EMI, you worry about kids & if you are an American you worry about Health insurance also
We are conditioned that way. I admit you need to do some amount of forward thinking but too much of it kills any zeal you have for moving ahead. What denial actually do is, it make us incapable of trusting our guts. You look ahead when what you need to do is to squint in future. You can't see or predict future by looking ahead. Horizon is the limit. You need to squint and denial makes you incapable to do that. It hibernate your brain with cold logic.
Itch is about warm imagination. Denial is about cold logic.
I can call for souls from the heaven & ghost from hell, So can you.
That is not important, what is important is, Will they come?
William Shakespeare In Hamlet
Everybody has their own private Mount Everest they were put on this earth to climb. You may never reach the summit; for that you will be forgiven. But if you don't make at least one serious attempt to get above the snow line, years later you will find yourself lying on your deathbed, and all you will feel is emptiness.
Hugh Mac load in "How To Be More Creative"
Third factor that do the trick is the force of Muse. The out of the world inspiration. Some sort of goal, some conquest beyond the stated purpose of the endeavor. It could be anything proving your self, making money, revenge, world domination, nirvana, moksha, to be one with the universe or any such thing.
Painter draw portraits of long lost girlfriends, composer create symphony for lost love. Emperor erects Taj Mahal. They were not just painting, composing or building a monument. They were serving a higher purpose.
Near to home NRN created infy not for just creating software and make profit . perhaps his muse was to show that you can create a world class ,profit making commercial enterprise in India by ethos of wealth sharing and respect for individual . he has given a human touch to capitalism "
E Sreedharan did Metro to prove that A Govt Project can be done with highest quality and execution standards . it is not just a mean of transport . it stand for the hidden potential of all those great potential of great minds locked in the govt. machinery . its a muse for them .
I have seen that for much of the time people take seemingly irrational maneuvers because there is muse factor. They are inspired. The whole cartel of seminar and networking meeting industry is catering to those folks who seek company of like-minded, enterprising folks.
It is a type of positive self-feedback. Remember we used to put up all those posters and banner in our rooms during college. We were looking for muse. Strange we don't do it now.
So if you want to wrestle and overthrow the forces of denial then feed the forces of muse. A muse inspires every great idea. None of the great idea, invention, and accomplishment was approved by the peer group. Create your own muse.
Read, meet, discuss, analyze, deduct, conclude and make a jump .
May the force be with you.
Saturday, March 04, 2006
i had a Great Day @ BarCampDelhi . I attended some great presentation and brainstorming session on everything which is web 2.0 . there was talks about " Ruby On Rails" ,Ajax ,Structured Blogging, Adword , Bootstrapping a Software start up , Testing web application ,Mobile Web Application , Knowledge Management . i did a session on "Web 2.0 & Power Of Default " looking at the Queries i received i can safely say that the presentation went ok .
Events like BarCamp allows a Peer Meeting of Entrepreneurs . look forward to next BarCamp
Friday, March 03, 2006