Archive for July, 2010

Settling.
July 29, 2010

It occurred to me the other day that the evolution of the English language has a few particular anomalies that make very little since. Chief among these is the word “settle.” I didn’t bother looking up the Webster’s definition, but consider this:

A few hundred years ago, a number of brave folks left the safety of their homelands to journey by boat for weeks to a new world where they had very little idea what would await them. They also had it on pretty good authority that most of them would never be able to return to the place from which they left. They showed up, got off the boat, and immediately had to deal with a slew of difficult situations. They had to find food, build shelter, figure out how to get along with (or defend themselves from) the indigenous population and figure out how to make a life. And what did we call these people?

Settlers.

Now, the concept of settling is thought of as “stopping short” in many cases. Instead of starting a business or going back to school, people “settle” with the security of a job. Instead of holding out for Mr. Perfect or Mrs. Right, people sometimes “settle” on a mate.

I find it interesting that in a historical context, “settling” something is about as difficult an activity as there imaginably is. And in a contemporary context, “settling” is sometimes thought of as a decision to NOT try and get the most out of oneself, one’s abilities, or one’s opportunities.

Just Because…
July 27, 2010

Inch By Inch

I don’t understand the stock market.
July 23, 2010

I realize that sell-offs and profit-taking are as old as the market itself, but it amazes me with which the frequency stock owners will sell on good earnings. In the last week, both APple and Microsoft have announced INSANELY good earnings. They beat market estimates in most every metric available. And both show no signs of slowing down. Apple’s earnings didn’t include the huge debut of the iPhone 4 and Microsoft is only starting to get momentum with upgrades in the enterprise space. So while I realize these big earnings present a chance for people who bought at lower levels to take some cash off the table, and for every seller there is a buyer, I’m shocked that the stocks don’t spike higher in the short-term as buy-and-hold players take a piece of the pie. (Perhaps that’s because the buy-and-hold folks already own the stock?)

Regardless, while it seems logical to sell at the peak it seems illogical to sell on the way up. I’m sure traders would say the opposite is true and that trying to predict the peak is a loser’s game. I guess that’s why I’m not a stock trader.

So maybe I was wrong…
July 21, 2010

I read a lot of startup, business, and entrepreneur blogs, magazines, and books. And almost all of them at some point or another will feature a post or a few pages stating the following:

You are not building the next Google or the next Apple, so get that out of your head.

I’ve written that post here as well and refer to the concept pretty regularly. The prevailing wisdom behind this idea is two-fold: First, the guys that started those companies didn’t know what they were building but it’s unlikely they said, “here’s an idea that will make us 10 Billion dollars!” More likely they were trying to start a business and not starve to death. Secondly, a fair amount of “luck” goes in to taking any business of any type from “small” to “wildly successful.” That luck comes in many forms such as being in the right place at the right time.

For example, I’m of the opinion that Twitter is as big as it is now because Evan Williams (one of the founders) spent a lot of time cultivating relationships in the web world. When he showed up to SXSW a few years ago with Twitter in his bag, the right people were already his friends and were happy to use the service. It’s easy to gain a zillion users if the right mavens (Michael Arrington of TechCrunch, for example) are on your side early on.

But what about Google? What was their “luck?” They launched a great product in a competitive space and in a couple short years they had taken over the sector. How? Why? I’m not aware of any incident of luck that caused the mass adoption of Google.

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So where am I going with all of this, you ask? Well, I have three pretty good ideas right now. They are as follows:

1. A tangible product with 60% margins. I am CERTAIN that if I spent 10 hours a week on this project for 3 months it would be on a path to earn $100,000 in its first year. And I am certain that every additional 10 hours a week I spent on the project would add another $100,000. I wouldn’t need any help to start the business and the necessary startup capital would be less then $1,000. But, based on my cocktail-napkin math, it would be hard to grow the business past $10MM/year.
2. A website/mobile app with absolutely no business strategy that would be very useful to lots of people if done right. But done correctly it could be a multi-million dollar business. Websites that offer similar concepts routinely raise funds at nine-figure valuations.
3. A website/mobile app that would be astoundingly difficult to build and would likely not make a dime until I had a team of really smart people on board to help develop partnerships. But done correctly, it could be a multi-billion dollar business.

Guess which idea I’m most interested in starting? The third one. After that, I’m most interested in the second. And only after talking myself out of those do I find even the slightest motivation for idea #1 which could reasonably add $100,000 to my bankroll and could conceivably generate a few million a year in 5 or 6 years.
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This brings me back around to the early part of this post. I owe everyone an apology, myself included. Why? Because somewhere, someone IS building the next Google and the next Facebook and the next Microsoft. In some garage or tiny office somewhere there is a team of dedicated folks with an idea that WILL become a zillion dollar business. And if they have made the mistake of believing blogs out there (this one included) then they are trying to talk themselves in to being satisfied with a successful small business instead of saying, “forget that. This idea/product/application/device is frigging awesome and it’s going to be HUGE.”

Any product that can be successful at X size can be Y times as successful at Y size. Markets can be created, expanded, penetrated, and developed. No, you are never going to have an IPO if you sell LA Lakers headbands on ebay. But there are huge markets out there that are ever changing. And their are huge markets out there that don’t exist yet (buggies > cars, the telegraph > the telephone, libraries > search engines, etc.) and someone, somewhere is going to create a fish so big that it barely fits in the ocean.

May as well be you.

Genealogy in the new era.
July 19, 2010

One thing that I find fascinating in this digital day and age is that genealogy is about to become much more expansive then ever before in world history.  Frankly, I think this is about the coolest bi-product of the digital age.  Let me explain…

What are the names of your grandparents?  Do you have a mental picture of them?  Maybe you remember what they look like from something you did as a child together.  Now, what did they look like when they were your age?  Would you be able to pick them out of a group picture when they are age 10, or 20, or 50?

What are the names of your great grandparents?  A lot harder, yes?  Any chance at all you know what they look like?  If you answered “yes”, that’s probably because you’ve seen them in a picture or two.  What did they do for a living?  No idea, right?  Sadly, it seems that we forget people – LOTS AND LOTS OF PEOPLE – about every 3.5 generations.  We don’t spend much energy thinking about or remembering people with whom we had very little interpersonal contact.  It’s sad, but it’s a fact.  People live, people die, and somewhere along the way – be it 30 years or 80 years – they are completely forgotten.  Only people who were well known by the public (Babe Ruth, President Truman, Marilyn Monroe, etc.) remain in the mind’s eye for more then a generation or two.  And even they start to fade over time.

Now imagine this:  in 100 years, all of your decedents will be able to recognize you because of the pictures available now.  It gets better.  In most cases, they’ll know your voice from a video of you that see on YouTube or a similar site.  And if you have a blog or an email account those kin folk of the future will get to “know” you better then you could EVER know your great grandparents.  Linked in will provide a detailed work history.  Facebook will offer deep insight in to your likes and dislikes and in to the company you keep.  And a generation or two from now, most (or all) of a person’s life will be completely recorded in digital format and nearly consolidated.  Credit Card receipts to show what you bought your wife on your first anniversary.  Facial recognition software to chronicle what plane you took and where you went on a vacation.

If our consumer culture had a longer attention span, someone would be putting together some sort of application or product to neatly organize and chronicle “you” so that your kids and grandkids and great grandkids would always have a digital version of you to look in on.   The problem with the business model is that there isn’t much of a way to see how effective it would be and how used and appreciated it would be because you’d be dead (or close to it) as your family members were using it.  Maybe they’d pay $20 for a digital archive of Grandpa Josh or Grandma Jill.  Who knows.

Or maybe it isn’t a product that needs to be made at all.  Maybe the natural order of the internet ecosystem will simply exist in a way that an interested person can look for and easily “find” the digital you.  Point is, I’m delighted to know that my kids and their kids and their kids will always have a way to know more about me then I know about my great grandparents and their parents, etc.    You should be glad to – many people work hard (at work, family, charity, church, whatever) to be “remembered” for something and it just became a lot easier.  In fact, you aren’t likely to have to do anything at all.  You’ll just be there, forever, for everyone to see.

Good thoughts from Godin
July 17, 2010

Seth godin recently posted this below and it has provoked quite a bit of thought for me.  I guess I’m technically sharing it with the readership, but truthfully I wanted to have it someplace safe so I can keep thinking on it…

Information about information
The first revolution hit when people who made stuff started to discover that information was often as valuable as the stuff itself. Knowing where something was or how it performed or how it interacted with you can be worth more than the item itself.
Frito Lay dominates the snack business because of the information infrastructure they built on top of their delivery model. 7 Eleven in Japan dominated for a decade or more because they used information to change their inventory. Zara in Europe is an information business that happens to sell clothes.
You’ve probably already guessed what’s now: information about information. That’s what Facebook and Google and Bloomberg do for a living. They create a meta-layer, a world of information about the information itself.
And why is this so valuable? Because it compounds. A tiny head start in access to this information gives you a huge advantage in the stock market. Or in marketing. Or in fundraising.
Many people and organizations are contributing to this mass of data, but few are taking advantage of the opportunity to collate it and present it to people who desperately need it. Think about how much needs to be sorted, compared, updated and presented to people who want to choose or learn or trade on it.
The race to deliver this essential scalable asset isn’t over, it’s just beginning.”-seth godin

Rotten Apples
July 16, 2010

The Apple press-conference today regarding the iPhone 4 antenna issue was ugly.  Not “Lebron James on prime time” ugly, but close.

I have great admiration for Steve Jobs and Apple and think that their elevation of the Apple brand as a premium, “Cool” maker of devices has been amazing.  That’s why I’m baffled that Jobs and Co. could do such a poor job at today’s press conference.

First, Jobs detailed how other devices from Motorola, RIM, and HTC have similar antenna problems when held a certain way.  That’s great and all, but the people who bought an iPhone 4 bought the device instead of the Motorola, RIM, and HTC devices because they believed (and were promised) that the iPhone 4 would be the best device available.  Jobs’ comparison was the first time I’ve ever seen him marginalize the APple brand.  Imagine if Ford released an Expedition and boasted that it got 20 miles per gallon.  A few months in, folks were complaining that it only got 17 mpg and would Ford care to offer an explanation.  And imagine that Ford said, “We’ve come to the conclusion that physics won’t allow us to make a vehicle this size that gets 20mph….but it’s no big deal since it’s basically the same gas mileage as a Chevy Tahoe.”  Ford would NEVER justify the attributes of its vehicle by saying they are equal to the competition, especially if they were “equally bad”.

Next, Jobs suggested that the problem with antenna reception was being blown out of proportion because fewer then .5% of iPhone 4 owners had called Apple Care to inquire about the problem.  Surely he isn’t so naive as to think that such a number represents all of the people experiencing frustration with the device.  Furthermore, the near-constant reporting on tech blogs and television has provided consumers with plenty of information that might disuade them from calling Apple Care, namely that Jobs had already issued an edict that there was nothing wrong with the phone and it should be held a different way.

Third, Jobs talked about how the iPhone 4 was dropping less then 1 call in 100 more then its predecessor, the iPhone 3GS.  So, after an announcement keynote that the iPhone 4 was going to “change everything” Jobs followed that up by admitting today that the iPhone 4 features an antenna that is NOT as good as the one it replaced.

I applaud Apple offering free cases to everyone.  I imagine that they’ll engineer a fix of some sort before September (when the “free case” deadline passes) and all will be forgotten.  But I think that things could have been handled substantially better from the outset.  Here is what i would have said:

“We realize that the antenna is not performing as well as is expected of an Apple product.  We take great pride in creating wonderful products and we take it very seriously that our customers and the market agree with us.   Even though our internal testing shows that our device’s performance falls within normal ranges of a cell phone, we do not think of the  iPhone as a “normal” device.  You expect more from us, as you should.  As a result, we will be offering a free case to anyone who has the iPhone 4, credit to anyone who has purchased a case already, and a “no questions asked” full cash return policy for anyone who would like to return their iPhone 4.  We remain confident that the iPhone 4 is the premier mobile device available and we are certain that we will permanently improve the antenna and reception quality in short order.  Thank you for choosing Apple.”

The end.  WOuldn’t have even needed Steve to fly back from Hawaii to say it.

Dream Big, Do Small
July 13, 2010

One of the many reasons people don’t venture out to start their own businesses is because they are waiting around for their “big” idea to come.  No use working on something small, they think.  Something small could distract me – and my time, energy, capital, and connections – from something big.

That’s a silly way to think.  For starters, your “big” idea is going to have to start as something small anyway.  Unless you have access to tons of talented people and plenty of cash (and if you’re reading this blog you probably don’t) then there is simply no way that you are going to start a Fortune 500 company overnight.  So all of your planning about the new social network you’re going to build or the manufacturing facility you want to open is for not since the chances of you getting such a thing up and running are zero.

That’s not to say that you shouldn’t dream big.  I do it all the time in the form of registering domain names for potential ideas and businesses, jotting down journal entries about staffing needs and sales pitches.  But the reality is that you aren’t building the next Google or next Microsoft or Amazon.

Why?  Because Brin/Page, Allen/Gates, and Bezos weren’t building those things either.  They were starting with something small.  Only after they had something small that worked did they start diving in to how to make it “bigger.”  My advise to you would be that if you have an idea for a small business you should go about starting that small business.  And if your small business ends up simply being a small business forever, so be it.  There is nothing wrong with a part time business that makes you some supplemental cash or a full time business that makes you a living.  Not every success has to be measured in “billions” or even “millions” of dollars or users or page views.