Startup Diaries

The Open Business Concept

Fred Wilson wrote this week about the need for an open social network, one where the users have complete control on their information.
Sean Ammirati wrote about the possible creation of an open ad network. An ad network where publishers get the all cake of the advertising budget (instead of the Google and rest of the ad networks way where they take a big cut of the advertising money).

It all brings me back to an old vision I had when I started my company NuConomy.
Back in the early days of 2006 when I just started to roll the idea in my head I thought about what was back then an absurd idea - do rev share with the end users. I thought about businesses like YouTube where millions of people are producing and uploading every day (basically doing all the work) and in the end Google (back then it was still YouTube) takes all the money.
It sounded very unfair in my head. I had a vision of a web where the people who produce the content gets not just the glory but also the money. I decided to develop a system that can measure the end user contribution to the business in order to decide how big his cut of the cake should be (I got to admit that today running incentives programs is just a feature in our system. The platform itself changed its focus to next gen analytics).

In my head I even envisioned totally new structure of business. Something I called "The Open Business" (taken from the concept of open source).
Imagine a business that his owned by its employees and ran completely by its employees. Everyone share of the business is decided by their direct contribution to the business.

Lets take for example the idea for an open social network.
You take an open source platform and start a new social network with a business model around advertising. Each user who joins the network gets a status of a virtual employee of the network and a shareholder of the company. How many shares does he gets? Depends on his exact contribution to the business.
Users that has more friends, upload and write more high rated content, invite more friends and drive more page views or clicks on ads gets bigger cut of the revenues every month.
It's that simple. In the open business the users are the shareholders. They are the employees. They not just own their information, they own the business itself.

I also gave a lot of thoughts about how this concept of open business can help drive the open source community.
Think of an ad based open source project, where all the developers that contributed to it gets a cut of its revenues. How you decide how much each developer will get? By their exact contribution the project. You can measure stuff like number of created/solved bugs, number of developed features, rating of features, spent hours, etc.
I know that most people who participate in open source are doing this for the community and not for profit, but can the open business be an open enough model that the community can actually embrace?

Technorati Tags: open business, open source, rev share, business, ad network

Connected Innovators

I'm sitting right now in the connected innovators showcase of the supernova conference. The showcase features 20 companies chosen by Techcrunch to demo and talk about their new products.

While listening to some great products, I just have to wonder why there are just two hours dedicated for this kind of showcase from a full 3 day conference.
I mean, lets face it, most of the sessions in most of the conferences are quite boring. You keep hearing the same things that you already know again and again.
In the last hour I learned (and enjoyed) much more than I had in the all supernova and Web 2 Expo conference all together.
I would like to see a conference where the people on stage will actually be the young and unknown faces that work on the still unknown startups. Than, maybe we will finally hear and learn something new.

Technorati Tags: supernova2007, startups, innovation

Transparency

In his blog Jason Calanis pointed to the CEO and co-founder of Wesabe, Jason Knight, who declared in the company web site, that all users can call him directly between 12 to 4 PM.

Loved it. This is exactly the approach a modern CEO should take. Complete transparency. Understanding that your customer is the center of the business is something we should all embrace.

From day one, when we launched our company web site, I put my direct mobile phone there. Yes, talking with customers can be time consuming, but it's also one of the best uses of my time.

As someone who need to direct this company, I want to be as close as possible to our customers. I want to hear what are the pain points for them. I want to learn what we could do better and what they expect from us in the future. I want to simply give them the opportunity to teach me about our business, because in the end of the day - they are our business!

A Start Up Dream

Wow. 1.6 billion dollars. Again - 1.6 billion dollars. That was how much Google paid to acquire YouTube.
The amazing fact is that it took Chad Hurley and Steve Chen, the founders of YouTube, just 19 months to get to this point!
That's the wet dream of every guy and girl who ever dreamed about opening its own business.

The really cool thing about this is the fact that when you look at YouTube today you got to ask yourself, how the hell no one has done it before...
I guess that was the thing that always fascinated me about the Internet, even (and maybe more) in the early days. The fact that a person with a good idea and notepad has the potential to change the world. What other industry can give you this chance??

In a personal note, I got to admit that I'm sorry it was Google and not Yahoo that acquired YouTube.
I think that Yahoo is one of the only "big guys" that actually understand the new community concept. Their new products like Yahoo Travel and Yahoo music are just awesome, and they really know hot to get the social networking concept to work for them.
Meanwhile, as much as I appreciate Google as a search engine, I'm disappointed from all the other applications the company has developed.
It seems that Google is trying so much to shoot to all directions, that no one of their products is really getting as good as it should have been. Too many times they lunch something new and exciting and then "forget" to update it for months.
Even Gmail, which I use quite a lot, stayed almost the same for such a long time. I hope that the fact that YouTube should stay independent will keep them from going on the same lane.

The Future of Web Economics

Marshall Kerkpatrick has a good post about the emerging trend of rewarding users in top social media sites. But what I really recommend is reading the comments section. You will find there a really high quality discussion about the future of the web economics. Should we give users incentives for interacting with our site? Should those incentives be based on money? Is it a good or bad thing?

On a side note, this actually show why talkbacks are such important thing today. Sometimes you can find more insights in the comments/talckbacks section that in the actual article itself. In this example, you can almost feel you are reading a live article - an article that updates itself over time by the power of the community.

Not many people know this, but my current start up I founded is working to answer exactly those questions. In the next week we will unveil ourselves to the world, and than of course I will have much to say about the all subject. In the mean time, here is an excerpt of one of my comments to the discussion (comment number 64):

Let me start by quoting Jason: “Quality. That single factor is what determines the winners in our business”.
That single phrase is the honest truth about user generated content and community bases sites.
People are going to Digg and Netscape.com because they can find there the most relevant information for them.
People are choosing a dating site by the number of quality guys and girls there.
You are reading those lines because of the number quality insights and professional users who comment in this site.

So the real question is simply how you attract the most contributing, quality users to your site.
If you are YouTube it could be that your brand name is simply enough. But if you are one of its competitors, you probably need to give users more incentives to come to you.
If the incentives should be based on money, reward points or mare recognition simply doesn’t matter. It will change from business to business. Most of the time it will probably be a combination of a few.
The real question is how you know to recognize these top tier users and how can you reward them in a way that will give them incentives to not just glorify their own names, but to try and help making your site better.
By paying users Jason done much more than just getting top users, he made them feel part of Netscape. In order to get the most of your users, you should treat them not as users but as partners. Their success is your success. Your success is their success.
A smart man once said that if we want to learn about the future we should look into the past. What we see today in the Internet is not different from what happened with other “old” media platforms. In the early days of the radio and TV everyone was armatures, mostly doing things for the publicity. But as the years passed we started to see talent emerge, and than even stars and today also super stars.
I believe this is exactly what we will see also in the Internet. We will see some of the users going from mare users to media super stars. Those users will be the ones that can make the difference between a business success and failure. Those users will be worth enough for us to pay to in order to keep them.

How much is a year in Web 2.0 time?

They say one year of a man worth seven years in a dog life. I wonder how many years it worth in a Web 2.0 start up life? ten? twenty?
I left my job and went on my start up adventure almost 7 months ago, but for me it looks like a all life time already. All I can say is that I'm happy I had enough friends who already took this journey, so I was actually fully packed and ready for the road.

Jason Calacanis blogged about how people forget that the all social news/search field is quite new, and it will take a few more years until the masses will understand it and adopt it.
The point is actually very relevant to a lot of other Web 2.0 technologies out there.
We that live inside this bubble, the ones who read Techcrunch, Mashable and Engadget every day, tend to forget that most of the people living with us on the planet don't adapt to changes so fast.
Think about the Internet 10 months ago and the Internet today. It's amazing to see how many things has changed in this time. Suddenly video is everywhere, wireless and 3G are again the hot stuff, Kazza is out and free legal TV on the web is on. The old media companies are still "dead" but now also the "old" traditional news sites are yesterday story. If you don't have a MySpace account you probably came from Mars and the best way to correspond with your grandmother is via IM and Flickr.

This is how we, the bubble guys, see the world. And we sometimes forget that most people don't wear the same "reality glasses" we use.
We already decide which are the companies that will survive and which are the ones that will go down, even when the company is just six months old and the market itself is here for less than a year. When the true mass of the population will adapt the new technologies and services, it will be a completely new ball game.
There will be much more room for more competition.
There will be much more room for variation.

Think for example on the all concept of social networking and communities. Today, hot is more. More users. More features. More gadgets. People want to be part of the largest communities. But in order to learn on the future, we must all look into the past. Look at how life and communities evolved in the real world.
Does big is always the best option? Well... sometimes. But other times people are actually looking for just the opposite. They are on the look for a warm, close, small community. Where they can learn to know everyone, where they can feel "at home". People are leaving the big cities with all the commotion and go to the suburbs. To the more quite life.
Are we going to see the same trend also on the web?
Think of it also in economical terms. What do you think is easier to monetize. A huge group of changing, different people or a smaller, more focused group? Where will you get the best CPM?

No. I'm not saying MySpace and Xanga will go down. I'm just saying that we will probably see much more space for more niche sites. As in the real world. We will always have Wall Mart, but we will also have our small grocery store.

Finally, we must all remember that as our world has changed so much in the last year, it can also change again in the next one. We all still got a chance to find our spot in the Web 2.0 world.

Predicting the future and shopping for less

Techcrunch reported today that Farecast is taking their service nation wide (US) today.
If you don't know Farecast, I really recommend having a look. Their idea is one of the most interesting I have seen in a awhile.

In their own words:

We use data-mining algorithms to search for patterns, in the accumulated airfare data, which are associated with significant price changes. These patterns are represented and stored in models, and the models are then rigorously trained. Once created and trained, we use these models to predict the future

Simply said, Farecast can tell you if you should buy the ticket in the current price or wait for it to go down.

I would love to have this kind of service in Europe. Buying an Easy Jet ticket in Europe is like playing the lottery. You never know if you should have bought it a week before or a week after. There are huge differences in price for tickets to the same flight.

But what I'm really interested in is finding out if you could take Farecast prediction engine and tweak it to work in other markets. Think about a tool that tells you how much you should pay in an online auction (eBay or any other vendor). Or trying to predict stock market changes... Now - this is one hell of a start up.

The Video Market Boom is still to come

Bill Tancer from Hitwise noted yesterday that the spike in Google Video visitors (cause by the addition of Google Video link to the Google home page) did not hurt YouTube. On the contrary both services are keeping to grow in tremendous numbers.

I think this just shows how much more potential the video market has. The big fight today is not just between the different services, but also on educating the masses that video on the Internet is easy and fast.
There are many people who went broadband just recently (or still using dial up), and they are still not aware of the fact that video on the net can be a comfortable experience.

The video market still has much more places to go. There are a few technologies still to come that has the potential to take this market to new heights:

• Video searching - Searching videos based on content and not meta data is a technology we all still waiting for.
• Advance Tagging - Most video sharing sites like YouTube lets you tag videos you upload. The next generation of services will let you tag specific moments in videos. How many times we find ourselves watching a 10 min video when all we wanted is to watch a specific minute inside. There are already a few start ups that goes in this direction. Read for example Techcrunch post on latest joiner Viddler.
• Video compression - As someone who lived in a few countries in Europe I can tell you that video experience in most of the world is still far from TV. Most of the time you need to wait around 30 - 60 seconds of buffering before the video will start and too many times the video will simply stop in the middle for more buffering. In this conditions, the TV "zapping" experience is just impossible.

Now take all this and add the fact that we will see the Internet and our living room TV set getting along much better in some way, and you can start and understand how big this market is going to be.
Suddenly all the millions that gets poured into Silicon Valley start ups don't look that much...

TurnHere - A new way to explore the cities of the world

TurnHere is a very cool new site on the block.

TurnHere hires independent directors to create short films on different cities and places around the world (Although right now most films are on US major cities).

You can browse the films by locations and get some new fresh look on the places you want to travel to.

I really like the original thought behind the site, not we just need to see if they can make a business out of it.

You can read more details in SiliconBeat review of the site.