Simple Idea. Add Execution.

In today’s economy, there’s no financial room for error. Get your cash flow straighted up, or get out.

That doesn’t mean that IDEA error, or trial-and-error, is not alive and well. The zero-cost startup is absolutely a reality, birthed both Six Apart and Google during the post-dotcom downturn. (Please don’t argue the exact timing - Google was born during the bubble, but benefited from a zero/low-cost basis to build something great. Scaling search is a different story.)

There’s never been a better time to start with a simple idea (but it should be big - huge distinction), but do it well. I thought it’d be fun on Friday to comb over a handful of startups I’ve looked at on my blog to see how they are doing.

Startups I’ve commented that have marginally (or more than marginally) improved an existing business model or technology:

Jellyfish: Perfectly elastic cash rebates. Acquired by Microsoft, now powers its Live Search Cashback system.

Farecast: Predictive airfares - buy or wait predictions. I’ve mentioned them on several occasion; I’ve linked to a previous post about the web needing applications that solve real problems. Acquired by Microsoft.

RetailMeNot: Social coupons and deals. Mentioned in an inquiry about gwallet (still yet to launch), but re-reading a TechCrunch post a while back mentioning RetailMeNot as a 3 person operation reminds me how far great execution on a simple idea can go. They just launched BeatMyPrice. Seems mostly like a price comparison wrapper on RetailMeNot. May not be acquired soon, but no doubt they’re making a boatload of cash from the deal/price/coupon model.

Startups that haven’t rocketed upward:

Genietown: Local services marketplace. I liked the concept, but rightly saw a few things mis-executed. If they have cleaned them up, it might not have been enough as they haven’t yet helped Genietown make its growth spurt in a tough, tough market.

Stagr: Apparel startup by Nick Swirnmum (founder of Zappos). Stagr looks like it’s given up on its broad, ambitious model and looks like it’s only selling Stagr branded apparel on their web site. When both the idea and execution go away, we know what happens.

Moral: Building a company is hard. So start simple, and execute every single day.

Facebook App Racket Does Not Strike Me As Wise

A pretty spot on analysis by Mike Arrington at TechCrunch about the new verified application process as a… Protection Racket.

I also don’t have a problem with this. In fact, I would generally applaud a company for finding a fair way to generate a significant revenue stream.

Except this doesn’t strike me as wise. Name one open platform that has charged a fee for inclusion, and seen this somehow improve the platform. Can’t? OK, maybe Facebook can be the first one to make it work for them.

The only company I can remember charging for inclusion, in a previously open and free product, is Yahoo Directory. Eventually, the Directory became a stale product that was somewhat costly to maintain. It made a whole lot of sense to charge $299/year for inclusion, both for Yahoo and the price was right for the vast majority of sustainable businesses. So far with Yahoo, we know what going down that road does for you.

The step basically admits that your model is becoming stale. You’ve run out of monetization options. Maybe it’s a wise admission (profit extraction), but I would have liked to have seen Facebook exhaust further monetization options first: complete its promised payment system (as Mr. Arrington mentions) or some virtual currency system.

Marc Andreessen said for Ning that a long tail of inactive accounts is valuable. The same applies here. I indeed believe strongly that revenue must be king, especially now. And, yes, quality of applications wil go up - $375 is not a huge amount of money. However, for a company with grand ambitions and broader promise than most any other, I just don’t think this is the right move at the right time.

Only time will tell, I suppose, but we may look back at this moment as an interesting inflection point.

Live Poker for iPhone: Time Wasters Are Rising!

Zynga’s Live Poker for the iPhone (via TechCrunch and Mashable). Texas Hold ‘Em for Facebook is my original Facebook application time waster; the application for iPhone seems even better. Of note is that it’s also the first iPhone app to use Facebook Connect.

Jason Calacanis also mentioned a category of startups that provide free, lasting entertainment that will do very well in this prolonged recession. Live Poker and Zynga will certainly fall into that category.

Jason also mentions that the days of $3,000 bottle service in New York and Los Angeles are gone, not only for financial reasons but because you look like a jackass doing it. As such, the entirety of high-end nightlife predicated largely on real estate windfalls and a strong(er) economy is a particularly hard trodden space.

There’s a very special category of entertainment that will also do especially well today, and that’s social entertainment with lasting entertainment value. These I think will do well even if there’s a high price attached to them. Guitar Hero, Rock Band and Wii Sports are three easy examples. They’d do well anyway because they’re fun as hell - they’ll do better as people look to stay home but still want the fun company of others.

The days of excess are gone, boys and girls.

Back soon! iLetYou Launches, Rental Fundings

Haven’t had too much time to blog here again. With iLetYou launched, I’m laser/super/high/all focused on some pressing priorities. On that note, I blogged about two big fundings by Chegg and HomeAway in just the past 2 days. It’s evident a change is happening.

Back soon!

Product Service Systems: A Sustainable Choice

At the iLetYou blog, I wrote a blog post about Product Service Systems.  Check it out.

Product Service Systems put the emphasis on results, rather than consumption of a product and the inefficiencies and waste caused by pure consumption.  You’ll surely hear more about Product Service Systems, both from myself and elsewhere.

BTW–Software as a Service is a huge example of a Product Service System.  The analogy between SaaS for computing and PSS in general is very strong.  How they both change the world may be equally profound.

Nuclear Winter, How Startups Should Deal With It

Through these tremendously tumultuous (to say the very least) weeks in the US market, I haven’t been posting instead focusing on what’s important right now.

A lot has been said about Jason Calacanis’ e-mail, then blog post, about (The) Startup Depression.  At the risk of seeming too diplomatic, I happen to generally agree with Jason’s assertions but see how certain viewpoints have a tendency to invoke the ire of certain folks (which I think is OK in the interest of discussion).  And the usage of the cliche that it’s always darkest before the dawn is absolutely true.  If that seems too terse for you, then you likely don’t relate to too much startup depression talk anyway.

Jason revolves around two internal factors (to focus on) and an external factor (psychologically very important for startup founders):

1. How are you executing.  And basically how can you improve it.  Read “good”, “hard working”, and “determined”.
2. How good is your idea.  How quickly can you adjust to figure out and adjust your hypotheses.  Read “smart” and “flexible”.
3. Outside Factors.  Once you’ve optimized for the first two, theoretically the only factor between you and success is being able to ride out the “nuclear winter” and how you deal with this.  Read “tough”.

There are some very obvious lessons:

• Harder to Get Credit.  Translates to harder time to raise money, but still possible when solid value proposition and model is presented
• Spend Less Anywhere You Can
• Find Revenue
• Execute Better
• Focus on Creating Value

From Rafe Needleman’s tips for startups:

• Advertising is a trailing indicator
• US is not the only market

Valleywag today naturally leads the charge in value creation and innovation against more opportunistic business and value destruction.

I’ve personally experienced the creation of maximum value created during down times.  The reasons are numerous, but the most obvious is a less crowded field as less determined, less effective competitors drop out of running.  Survival of the fittest becomes amplified when there are less artificial tools at everyone’s disposal.

Every startup founder needs to make the decision of when to close its doors.  If you have a good idea and you are executing, a down market generally benefits you.

It’s a different yet similar time than post-2000.  Today’s online economic model means you can survive by running your company lean and focusing on revenue.  The fittest can and will survive, and come out strong at the end.    As Jason says, it’s always darkest before the dawn and it’s an evolution not a revolution.  How you get there is a different (your) story.

As usual, I’d love to hear any thoughts on the matter.

In Search of Elegant Solutions

I’ve been posting with less frequency lately. All the while VERY busy trying to find elegant solutions to complex problems. It’s something every engineer or programmer is used to. Engineers aren’t lazy, they’re just looking for simple, elegant solutions to complex problems. (OK, maybe a little lazy. Your quality, typical engineer hates wasting time on an inefficient solution.)

Yet elegant solutions aren’t always easy to find, unless you’re doing the hard work on the ground floor where ideas and creativity can pop out of anyone and anywhere. Which to some extent is why I think the book called The Elegant Solution by Matt May exists: because Toyota recognizes and leverages this to create the biggest and best car company on the planet.

The definition of an Elegant Solution as posed in The Elegant Solution’s ChangeThis Manifesto:

An elegant solution is one in which the optimal outcome is achieved with the minimal expenditure of effort and expense.

It’s also whittling down a problem to the essence of the problem. It’s also finding and solving the root cause of a problem, and really sort of ignoring everything else. And sometimes it’s a process and time consuming (a topic for later) to find that elegant, lazy solution to a problem of any size. But it’s honestly that process that is always the most fun and most rewarding.

gWallet: Anyone know what’s up here?

Anyone heard of anything surrounding gWallet?

gWallet’s tagline is “reinventing the way you shop”, interestingly close to the first iteration of iLetYou as “reinventing renting”.

Gurbaksh Chahal, founder of BlueLithium which sold to Yahoo, is the poster boy for his third startup.

I’m generally super-critical of any startup that attacks a stronghold market with a product that’s marginally better.  gWallet is obviously being touted as revolutionary, but from I haven’t seen as much from what I’ve seen about gWallet so far.

In this particular example, it’s very clear that comparison shopping search and merchant aggregation community (especially surrounding coupons and deals) are very lucrative and profitable spaces.

Become.com and RetailMeNot are recent and even more recent, respectively, examples that seemingly entered when there were already many established players.  Revisiting these two examples right now, Become.com seems a little Web 1.0 while RetailMeNot’s secret seems to be clean user experience incorporating social elements of voting and user-generated coupons/content (but probably a lot of competency in core areas such as SEO and PR is the real reason).

On the other hand, there is just so much value to be extracted from this whole coupon/deal/savings space.  Lots of companies do it well, but is it really a cornered market?  So I am definitely wondering if Gurbaksh Chahal understands this much: that by competently applying a marginally better experience to an inherently lucrative and not completely efficient space can translate to a huge win.  Because I’m not personally seeing the ace in the hole quite yet.

Thoughts or anything else to add?

iPhone 2.0 3G: Initial Productivity Assessment

I’ve been able to play around with the iPhone 2.0 3G for the past few days.

It’s definitely a great phone. Apple fanboys will really play this up, another reason why Apple stomps MS. Skeptics will play up the inevitable cons. And I probably fall more on the line of a fanboy with each incremental Apple device I pick up, thinking how amazing it is that an electronic device can give you a comforting, warm fuzzy feeling.

For the cool factor, most agree it’s a no-brainer though.

However, the main argument against the iPhone comes from BlackBerry users citing superior e-mail push and functionality largely due to the lack of tactile keyboard (see comments on this Web Worker Daily thread). Most, including myself, have cited the iPhone as “just a toy” not suitable for real business usage.

So how does the iPhone stack up from a productivity standpoint?

What’s good?

• Keyboard Works Better Than Expected. Before getting the iPhone 2.0 and based on limited testing, I was one of those who shunned the iPhone based on its touchscreen keying. The biggest downside I’ve found so far is that walking and texting/e-mailing is seemingly impossible: you actually have to concentrate when there’s no tactile feel for typing. That being said, I’m remarkably fast when I am concentrating on said keyboard - it seems faster than my old Treo.
• E-mail Setup Fast and Accurate. In syncing with my MacMail settings, e-mail worked immediately on my iPhone. I’ve struggled with numerous problems in the past with Windows Mobile; Blackberry tends to work pretty well.
• App Store. Developers and Web 2.0-types are most interested in the new App Store this time around. It has to be the coolest new platform to come through for a while, enabling application ideas that not too long ago were only pipe dreams. When cross-platform interoperability can increase networks to the HUGE user base of mobile users, it will become the greatest network ever. Loopt for location-based social networking. Music matching and collection based on a live audio matching. Pandora for incredible music recommendations and streaming radio on the go!
• All in one. The convergence of a phone, visual voicemail, GPS device, sync’ed life recorder (largely delivered via Apps such as Evernote, more), Internet browser, games machine and more in one really makes this device a killer.

What’s limited?

• Easy, Almost Too Easy. In typical Apple fashion, simplicity and ease of use means there’s a limit to functionality within the device. Moving mail around folders is really easy but there’s no multiple select for marking items as read, for example. Lack of copy & paste is another.
• Push E-mail. The push on e-mail is not as seamless as Blackberry. There may be tricks to improve this, but my iPhone really does seem to be pushing e-mail to me.
• Flash! To me, this is huge. A large number of sites use Flash for simple graphs and navigation, such as Google Analytics. This is pretty important to me, and productivity suffers because even highly business-related sites become more limited without the use of flash.
• Apple Lockdown. Since I did write about tethering my Treo with Bluetooth to my MacBook Pro, it stands to reason that I grew attached to that backup solution if I was unable to catch a WiFi signal. By locking down the iPhone, you have to jailbreak the iPhone in order to tether your iPhone to use the 3G connection as a modem for your laptop. As of this date, we’re still waiting for free WiFi from AT&T for all wireless customers at all Starbucks. As great as Apple can be, this is where their control for great purposes goes too far and goes wrong.

So there are pro’s and con’s. But what does this means from a productivity standpoint?

One pivotal piece to mention is that I instinctively did not think of applications I wanted to install from a productivity standpoint as much. Yes, my Facebook activity may be a little faster. Yes, productivity tools like Evernote can be great life sync tools moving forward. But will there be a Microsoft Office killer app? I don’t think so.

Yes, I think that net the iPhone makes me more productive for many of the above reasons. It falls short because of Apple’s choices, largely constraints made due to limited screen real estate. But it’s also a lot of fun.

Finally, I would question anyone that says you are really that productive on a phone. The iPhone does a fine job with many productivity tasks, despite some limitations. You still need the full screen experience to get real work and production done. Short, pithy e-mails plus piecemeal clean up so that you don’t have a pile of things waiting for you at the office after a long day away, are great to be able to do, but to me that’s not where the real work is done.

Entertainment can be done better on the go. A PSP or a Gameboy holds its own when you want to waste some time on the go.

As far as the evolution of the phone goes, I see a “good” productivity device and a “great” entertainment device to be as good as it gets. And the iPhone is getting close. Please improve some of the limitations and I’ll rave even more :-).

Yahoo BOSSes Its Way Into Long Tail of Search

I could have almost missed this: Yahoo has announced Yahoo! Search BOSS (Build your own search service) as also reported by GigaOM and TechCrunch. You can access Yahoo! search results via API or framework, mashing up Yahoo’s index, and ranking and relevance, with your own algorithmic take on search. Not much concrete is being commented, possibly because there’s not much to be said. Om Malik has has reservations, but is interested in seeing what comes of it.

Broadly, it is one of the neater applications of open strategy and web service. For Yahoo, it’s smart indeed just like SearchMonkey was the neat and smart first part of its open strategy.

It is hard, or maybe impossible, to tell what will come of the strategy. It still hinges on someone to create a better secret sauce of smart algorithms, data mining, machine learning, artificial intelligence and all the cornerstones of CS intelligence. And it must be done: it’s a hedge to give Yahoo a better shot at possibly acquiring or partnering with the big bang company that somehow does search better than Google. But all the infrastructure savings doesn’t presume that a better algorithm will emerge.

So I do applaud Yahoo for going down the long tail of search with BOSS. Yet Farecast, Kayak and Sidestep, Oodle, Vast, SimplyHired, NexTag, Shopping.com and many more “vertical search” aggregators ofttimes rich in metadata dominate the fat middle (fat belly?)– and I bet they will continue to do so.