Category: Startups

Ideas vs Execution vs the Founder

Category: Startups

You know why some startups that are working on some of the great ideas/products fail? You would think that they have a great idea, have a great team, and have a backing of the leading VC firms in the industry, but often times they end up in the dead pool after a few years.

There are of course many reasons for their failure, but to drive the idea of this post, ceteris paribus – mostly it’s because of the person, the leader, the entrepreneur behind the idea. Yes, I think, one of the most important requirements for a startup to succeed is to have a founder who is absolutely obsessed with his/her idea (provided that product/market fit has been achieved), very passionate about it and driven by it on daily basis. And most importantly, he/she is involved in all the important decisions about the product; from marketing to design to product features to User Interfaces… etc, basically end-to-end involvement. This is necessary. It’s a pre-requisite. Especially in the early years of a startup.

It’s when founder decides to heavily delegate (or even outsource) the product development to someone else, that the problem arises. Unfortunately, this is what happens in some startups; the founder would be too focused on the business development part of the startup and have little involvement in the product development part. Or some entrepreneurs who have money would setup a company and hire someone else to run their startup for him/her. Or some entrepreneurs would decide to outsource the most important part of the startup (i.e product development part) to third party companies.

It’s also why big corporations have struggled to churn out great ideas into successful products and services. Because, in big companies, new ideas would come from top management as a directive and passed to relevant divisions and subsequently to Product Managers or “Product Owners” for execution. This kind of delegation, especially for the new and innovative ideas can be disastrous. On top of that, big corporations would have layers and layers of red tape and processes that hinder the efficient execution of an idea. Inter-department collaboration on launching new ideas can be a real pain too.

So, it’s no surprise why Amazon allowed hugely successful Zappos to run independently after its acquisition in 2009. Or why Walt Disney kept Pixar as a separate entity after its acquisition in 2006. It’s precisely for the reason to keep the company culture alive and untainted, to keep the acquired company lean and efficient. And most importantly, to let the passionate people behind these companies to run them.

Steve Jobs have said on this topic spot on in his 1995 interview called “The Lost Interview“;

You know, one of the things that really hurt Apple was after I left John Sculley got a very serious disease. It’s the disease of thinking that a really great idea is 90% of the work. And if you just tell all these other people “here’s this great idea,” then of course they can go off and make it happen.

And the problem with that is that there’s just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that great idea, it changes and grows. It never comes out like it starts because you learn a lot more as you get into the subtleties of it. And you also find there are tremendous trade-offs that you have to make. There are just certain things you can’t make electrons do. There are certain things you can’t make plastic do. Or glass do. Or factories do. Or robots do.

Designing a product is keeping five thousand things in your brain and fitting them all together in new and different ways to get what you want. And every day you discover something new that is a new problem or a new opportunity to fit these things together a little differently.

And it’s that process that is the magic.

And because of this, you can’t outsource your idea to someone else to make it successful for you!

Wikipedia’s Initial Idea and How it Evolved

Category: Business Insights & Advices, Startups

Wikipedia as we know it today, with more than 3.7 million articles for english version alone, had a different idea and business model altogether in the beginning that many people may not know it now.

As the story goes.. In 1999, Jimmy Wales had an idea, he wanted to create a free encyclopedia to be written by experts and PhD holders, it was called Nupedia. He reasoned, only scholars, academics and experts in a particular field would be able to write such articles. It made sense, as scholarly articles needed a lot of referential data and research, not everyone would be able to write such articles. However, in its first year, his team of “experts” were able to write only a dozen articles. They were simply too slow. This was due to many reasons, most of the academics were too busy, it was difficult to convince them to write for Nupedia, research normally took few years..etc.

So, Jimmy Wales saw that it was not working, something had to be done. He came out with a new idea. He suggested to his team, why not make it in a way that anybody can create an article, others can edit it, etc… basically early years of crowdsourcing. But the editors of Nupedia and Advisory Board were not very supportive of the idea. For them it was the opposite of what they were doing at the moment. Non-academics, and uncontrolled editing and creation of articles, they thought, would jeopardize the credibility of the articles and company as a whole. They reasoned, there would be too much error in the articles, which would render the articles useless for any scholarly reference or research.

This new idea ended up separated into different project and was called “Wikipedia” (wiki – hawaiian for quick). Within a year, there were more than 20,000 articles in it. Clearly it was a success and it was working. As for the margin of error, it was 3.86% per article, compared to 2.92% for Encyclopedia Britannica according to 2005 research by journal Nature, which is acceptable. And usually these errors get corrected over time.

Eventually, Nupedia was shutdown in 2003, and it had only 23 articles at the time of closing. And as they say, the rest is a history…

Lesson to Startups and Entrepreneurs..

Sometimes the initial idea for your startup may not work out, and you might end up doing something totally different for your startup and its direction. And this phenomenon is actually very common in startups. As Jawed Karim of YouTube said in SVC2M event in Kuala Lumpur, their initial idea for youtube was “a dating site with videos“.

So, if your first version of your product (MVP) didn’t take off, don’t despair. Find out why it didn’t take off, get feedback from your potential customers/users on what they want, after that iterate and try again!

Note: If you want to read more about wikipedia story, check this Business Week article here

Please feel free to comment about your own experiences or of any companies that you know which changed their business model, direction, idea drastically from the original one.

Next Big Idea: Internet TV

Category: Startups

If you are an entrepreneur or company that missed making big money from the dot com era, overall internet business after that, and missing the boat from mobile applications at the moment… then perhaps you should start getting prepared for the next big wave – Internet+TV.

Google is already into it as we all know it, they are trying to figure it out at the moment. But there are so many great products and services can be built for bringing internet to the TV. Just a food for thought!

google-tv.png

Jack Ma’s Philosophy on Shareholders

Category: Startups

MBA books teaches you that – shareholders are the most important stakeholders of the company and that company’s main objective is to increase shareholder value.

However the founder of Alibaba.com, biggest online company in China, says that for him “the most important groups are customers and then employees. He says that customers are the ones who pay him and employees are the ones who stick with him but shareholders come and go. And for this reason, shareholders come last for him.”

That’s a very interesting point that he makes. Read his other two company philosophies on TechCrunch here. Watch the full interview here.

Forrester: Company blogs are the least trusted source of info

Category: Blogging, Startups

Forrester has an interesting report on “sources of information” and how much people trust them. You can see the results in the diagram below. As you can see, the least trusted source of information is the corporate blogs. With all the “corporate blogging” taking off… at least among Fortune 500 companies, this is a huge information to swallow for the corporate bloggers.

However, on the positive side, now that the companies know people do not trust their blog posts, they can start working on various solutions to make their corporate blogging work.

trust_source.png

How can they make it work?

  • Well, perhaps they could use the blog not only to communicate but also to get feedback from their customers and to start building strong community.
  • To genuinely listen to the comments, and provide quick solutions to the problems.
  • Instead of just re-posting press releases on the blogs (i.e too formal), maybe they could choose an informal approach and be closer to their blog readers.
  • Top management should be actively involved in blogging as well. This has many advantages; one – it would make the posts more authoritative. two- people would be more willing to listen to and believe CEO than any other executive. and three – it would have a multiplier effect on the company, because if CEO replies a commenter and says “we will do it”, this would actually turn into an action. So, by just replying to comments CEO would actually be improving company’s products.
  • …etc.

Companies should definitely try to get this report and study it if they can.