Online Business Models

Andrew Chen asks why we are so bad at predicting successful startups. He writes: "...we’re all so bad at predicting what will work and what won’t. I’ve written about my embarrassing skepticism about Facebook, but hey, I’m just a random tech guy.

For the folks whose job it is to professionally pick winners, the venture capitalists, they aren’t doing very well either.

It’s been widely noted that the venture capital asset class, after fees, has lagged the public markets- you’d be better off buying some index funds."

In his view, much of the disappointing results are due to the "generic startup advice" being offered online. He writes that generic principles cannot be effectively applied to all situations. And he is right.

But more than anything Andrew stops at analyzing what are the kind of people who often provide such predictions and strategic advice:

"[There are] two categories: hedgehogs, who view the world through the lens of a single defining idea and foxes who draw on a wide variety of experiences and for whom the world cannot be boiled down to a single idea."

"...Silver clearly identifies as a fox, and contrasted his approach to the talking head pundits that dominate political talk shows on TV and radio. For the pundits, the more aggressive, contrarian, and certain they seem, the more attention-grabbing they are.

Rather similar to what we see in the blogosphere, where people are rewarded for writing headlines like “10 reasons why [hot company] will be killed by [new product].” Or “Every startup should care about [metric X]” or whatever."

"The solution to all of this isn’t easy- to be a fox means to draw from a much broader set of data, to look at the problem from multiple perspectives, and to reach a conclusion that combines all of those datapoints."

"Over my 5 years in Silicon Valley, the biggest lesson I’ve learned from trying to predict startups is calibration. They talk about it in the video above, but the short way to describe it is to be careful with what you think you know versus what you don’t."

Insightful. Right on the mark. 8/10

Full article: http://andrewchen.co/2013/04/08/why-are-we-so-bad-at-making-startup-predictions/

(Image credit: Red fox - Shutterstock)

The Startup Knowledge Base is a curated content archive focusing on startup topics. All content included has been reviewed, vetted and tagged as to provide only the cream of the crop.

This resource has been created for two groups of people:

1. those who are new and need to get up to speed quickly.
   
   
2. those who are experienced entrepreneurs and want to stay of top of their game.

The objective behind this free project is to provide an easy path to learn what needs to be known for a startup without being sucked in by the latest article or hype. Attention has therefore been given to quality content independently of its published date.

From the original site: "We've screened the web's best startup advice, summarized, categorized, and tagged it for you."

210 articles covering a time span of five years, completely summarized.

All original articles and authors are properly credited.

Free / pay with a Tweet or FB post or donate something.

More info: http://startups.kbase.co/

Try it out now: http://startups.kbase.co/start-browsing/

Thanks to Marty Zwilling on StartupProfessionals for distilling some of the key traits that have made Amazon, Apple, Facebook and Google such uniquely successful companies.

From the article intro: "According to many technology pundits, including Phil Simon, in his book “The Age of the Platform,” these four exemplify the rise of platforms with applications as a business model, rather than a single product or service. Whether you believe his conclusion or not, you can learn a lot from the lessons he offers on how to build a competitive business model today."

The article provides ten key principles utilized by this "gang of four" to reach their broad business success.

Here my favorite four:

1) Act small. “Bigness” and all of its attendant problems – bureaucracy, politics, infighting, and the like – put any business model at risk. Bureaucracy and excessive democracy kill speed. Shake organizations up often to avoid stiff and inflexible management structures.

2) Be open and collaborative. Startups as well as large companies must be open to all sorts of new ventures, partnerships, and offerings. Make application programming interfaces (APIs) open and freely available to developers, partners, and consumers.

3) Move quickly and decisively when spotting a niche. Don’t confuse patience with inertia. Waiting too long means that an opportunity may disappear permanently – or someone else may beat you to the punch. Temper expectations, but make the bet.

4) Use existing tools. It’s time consuming, expensive, and simply unnecessary for every company to create its own tools and base functions (planks) from scratch. By using outposts, businesses increase serendipity, exposure, and cross-pollination.

Valuable. To the point. 7/10

Full article: http://blog.startupprofessionals.com/2013/03/10-entrepreneurial-lessons-from-gang-of.html

Ustream officially launched Open Pay-per-view (Open PPV), a service that allows anyone to easily sell tickets to live video events with no upfront fees.

Open PPV requires no pre-screening of events and with just a few simple steps, broadcasters can schedule a pay-per-view event, set the price, and begin promotions through social media.

(Source: PR Newswire http://s.tt/1zXeH)

Open PPV events on Ustream can be purchased with all major credit cards and watched from around the world on Ustream.tv.

Broadcasters can begin streaming their first pay-per-view event and selling tickets in a few easy and risk-free steps.

For more information about Open PPV, visit:
http://www.ustream.tv/ppv
or http://www.ustream.tv/platform/ppv

If you are looking for a crowdfunding alternative to Kickstarter.com to finance your project, here are seven possible other solutions that you can take into serious consideration.

"Crowdsourcing king Kickstarter.com might not be the best bet for aspiring entrepreneurs to raise funds."

Informative. Resourceful. 7/10

Full guide: http://grasshopper.com/blog/2012/12/7-crowdfunding-platforms-compared/

If you expected the New York Times to be a failure, you'll have to think again. Not only its digital subscription is profitable but it is also become quite a relevant money-generating revenue channel.

From the original article: "More than a year and a half later, it’s clear the New York Times’ paywall is not only valuable, it’s helped turn the paper’s subscription dollars, which once might have been considered the equivalent of a generous tithing, into a significant revenue-generating business. As of this year, the company is expected to make more money from subscriptions than from advertising — the first time that’s happened."

"Despite the metrics, the larger significance of the Times’ newfound subscription wealth is that readers, not advertisers, are now more directly responsible for the Times’ business — minus a few stubborn bloggers."

Informative. 7/10

Full article: http://go.bloomberg.com/tech-blog/2012-12-20-the-new-york-times-paywall-is-working-better-than-anyone-had-guessed/

If you are wondering what the future of news may really look like, my advice is to give a very good read to this fantastic article.

In it, Nicco Mele and John Wihbey report the sad state of the news industry and illustrate the facts that indicate an alternative, high-value path that can be taken for the future. The tracks are already there, paved by some pioneering orgs and by a bunch of small individual personalities on the web. 

This article distills the very own business and development approach I have been using since 2008, when I have decided to move away from depending on Google-based advertising revenues and toward the creation of a service dedicated specifically to develop information-based micro-businesses focusing on individual personalities.

Here, from a ton of interesting content I have excerpted 10 key thoughts that stand out for me as being fully representative of the new model that is emerging for the future of the news business (curators, subject-mater experts, individual with a real expertise read closely).

1) ...terrifying signs of the decline of the news industry.

...three of America’s most esteemed papers for sale — The Boston Globe, the Chicago Tribune, and the Los Angeles Times...

2) News revenue remains overwhelmingly dependent upon advertising, but the radical connectivity of the Internet has greatly diminished both the scale of newspapers’ reach as well as the value of advertising.

3) What if journalists became like your doctor, dentist, or teacher — people who provide a valuable service to you, and whose name, voice, and personality are more intimate? ...The question then becomes how to create a social presentation layer that wraps around news — preserving the integrity of the product but updating its interface to fit with human behavior in the digital age.

4) Without an identity, much journalistic content will increasingly be swept around the Internet in an anonymous blur of sharing and finding through networks, with little regard for the source or the labors taken to produce that news.

5) ...re-design the newspaper to be a platform for talent across multiple media. ......what if news outlets decided to flip their model, so that the editorial staff was not subservient to the brand, but the “brand” became a platform for talent?

6) ...outlets, like Boing Boing, are making money largely based on the brands of several smart, interesting personalities. Many of the “blogging networks” are built around aggregating traffic across different online personalities. One could name dozens of examples where a single blogger or news personality is driving substantial traffic. ...we’re already likely to see a “new dance between top talent and media brands,”... “If brands are successful at assembling enough talent,” ... “they’ll succeed because they provide easy entry points for us consumers.”

7) The future of news organizations is a lot of [diversfied] revenue sources — maybe as many as 30 or 40 — and none of them account for a substantial stake of the organization’s income.

8) In March of 2008, Kevin Kelly famously put forth the theory of 1,000 true fans as a potential future for music. Find 1,000 dedicated enthusiasts willing to pay you $100 a year for your music, and then you don’t have to worry about selling albums.

9) Why are more journalists not doing the same — and creating more kinds of editorial products to sell — while cultivating a paying fan base?

With the decline of trust and loyalty in large institutions, it is increasingly hard to imagine people in the coming decades subscribing because of loyalty to an institutional Big Media entity. Yet it’s easy to imagine them wanting to fund several people whom they trust to bring them information they care about.

10) ...research to date shows that the average news consumer is a creature of habit, circling back to the same two to four big websites to get their news. But this will not continue in perpetuity... “Elite” news consumers — ... already organize their consumption this way, around key Twitter and RSS feeds, following lists of personalities they like or admire. The broader public will ultimately begin to shift in this direction.

Milestone. Must-read article. Insightful. Inspiring. Well-documented. 10/10

Full article: http://www.niemanlab.org/2013/04/the-end-of-big-media-when-news-orgs-move-from-brands-to-platforms-for-talent/

Curating and selecting apps, with the goal of helping users find the best solutions for their needs is a business that pays.

AppGratis an app focusing on this very need and founded by French entrepreneur Simon Dawlat as he was still a student, has discovered that not only there is a large need for finding the most appropriate app for carrying out specific tasks, but there are also a few ways to make this effort pay back itself nicely.

"Apple hails the 775,000 apps on its App Store, but a sea of choice can end up being a glut for end users who struggle to choose the mobile service they really need.

In the last few years, AppGratis (pronounced ‘gra-tese’) has stepped in to solve the problem.

The free “app discovery” service offers users one free app a day from the App Store, and now has 10 million users, of which 3 million use the app everyday. It also makes more than $1 million a month in sales by taking a cut from in-app purchases after its promotions — something of a testament to the freemium model and AppGratis’ negotiating tactics."

How it all started as recounted from the founder: "We are helping developers get distribution in the App Store and helping users discover new apps. We started as a newsletter which had daily deals and daily picks, and from there we became an app in 2010."

"We have 30 people in Paris. Half the team is people who will do the dirty job of finding the apps and picking up the gems."

How do they make money?

"We make money by partnering with a big brand. So if you think about the Nike Plus fitness program, we’re going to help bring this app and offer a two-month free subscription to the service. We will be working with guys like Disney who want to push new games to complement a new movie release. [This is AppGratis' main revenue source, charged on a cost-per-install basis.]

And for smaller developers we do revenue shares. With app developers who monetize their app directly we’re able to share the extra revenue we bring them by bringing an extra million users to their user base."

Must read for curators and entrpreneurs alike. Lots to be learned from this. 8/10

Full interview with French founder Simon Dawlat: http://www.forbes.com/sites/parmyolson/2013/02/18/5-minutes-with-the-founder-of-global-app-curation-hit-appgratis/

Can you curate Amazon products, review and rate them and then make a profit by reselling them from your site? It looks like this business model may have some potential.

Apparent proof comes from TheWireCutter.com, a site I have recently discovered and which does essentially that. Under 20 and more product categories TheWireCutter professionally selects and reviews the most valuable and interesting products while providing lots of good information, references and insight.

All links to products are tagged to identify TheWireCutter as the affiliate reseller, and therefore Amazon pays a commission for any of the products that readers of TheWireCutter will eventually buy.

Great example of how to make the affiliation model pay while curating existing commercial content / products and adding lots of extra value.

Check it out: http://thewirecutter.com/

Wikisway is a web app which allows you to search the Crunchbase database of startup, entrepreneurs, companies and investors, and to visualize relationships between people, investors and companies in a navigable visual graph.

Wikisway, places startup information in context by visualizing how people, places and things are connected in a single-page web visual application which makes it easy to gain understanding and new insights about any startup related company or person they are interested in.

Reviews:

• A Portland startup Wikisway offers visual presentation for businesses
• How Are People, Places & Things Connected? Portland Startup Wikisway Shows You
• If Google Maps and Wikipedia had a baby, it would look a lot like Wikisway.
• New Civic Accelerator Galvanizes Social Entrepreneurship & Impact Investing

More info/Request invitation: http://www.wikisway.com/

Paywalls are gradually changing, giving way to more osmosis between what is inside them and what can be accessed and shared by those who haven't paid up for it.

Erecting rigid barriers around news content may not be the best strategic move if your competitors cover the same ground and interests that you focus on.

On PandoDaily, Hamish Mckenzie reports that the New York Times and the Wall Street Journal both offer great examples of how to manage paywalls in a more effective fashion, by utilizing them more as “passes” "that give subscribers access to a publisher’s content wherever that content may be", rather than being rigid gates where no trespassing is enforced in a military way.

As a matter of fact "both the New York Times and the Wall Street Journal let anyone read their content for free, provided they find it via Facebook, Twitter, or Google. They know that it’s easy to get around the paywalls in other ways..."

"The “paywalls” we’re seeing today, however, are different and place more emphasis on the first syllable of the word. Call this Phase Two of the paywall. The newspapers want you to pay, but the walls are lower and more permeable.

...They know that it’s easy to get around the paywalls in other ways – such as deleting the extraneous code pasted onto the end of a story’s URL – but they figure the costs of “losing” the revenue opportunities on those stories are lower than the gains they make from the people who prove willing to pay a subscription."

Rightful. Insightful. 7/10

Full article: http://pandodaily.com/2012/12/24/our-understanding-of-paywall-needs-to-change/