Rapid experimentation, not irrational exuberance

BubbleI’ve read literally hundreds of articles and attended several panels during the past year all based around the question of whether we are in a Web 2.0 “bubble” or not. Is all the money being thrown at web businesses these days essentially a duplicate of the Web 1.0 bubble which so many us were swept up in?

My opinion has settled on “NO,” for a few reasons.

Money. There is money on the web this time. Google is making tons of it. Making money on the web is a tangible thing in 2.0, not based on theories generated by technophiles and marketers (Disclaimer: I am both). It’s not irrational to pursue a piece of that pie.

Failing Cheap. If you look at the amount of money spent on starting web businesses and the proportion of that money that is wasted in failure, it’s not out of line with what happens in the real world. The mistake people make is to think about it in terms of the number of failed businesses they see, not in terms of the money that’s failing. Web businesses have very low barriers to entry – that is, they take very little money to start capital-wise and the expertise to start them is easy to hire or even to obtain for free (ownership stake). This is in contrast to other types of physical businesses that require lots of seed money and niche expertise – manufacturing, retail, or even mom-and-pop restauranteuring. A failed web business, in most cases, probably burned through less than $300K, which compared to the Web 1.0 cost of failure (often $30 MM instead of $300K) is a true bargain.

Web 1.0 hangover. Most of the people who sit around worrying about if we are in another bubble, and talking/blogging about a potential doomsday, are people who were in the first one and have scars. While that experience no doubt has been positive in making them more rational businesspeople, it can also cause a risk aversion that can be very limiting. Startups are very risky by nature (see my second point about lots of failure), so a lot of folks who were the most traumatized find it hard to approach the situation with much optimism these days.

This period in the Internet’s history is a period of rapid, rational growth – where lots of bets will be placed and many will fail. But some will succeed too, and it’s by focusing on those success stories, and the sound business fundamentals behind them, that we can avoid the urge to panic. What do you think?

Photo Credit: dopiaza

Tell Me You Love Me is the millenial Breakfast Club

The Breakfast ClubLast night I had two very different and contrasting experiences while I sat in front of my television. In the middle of cooking up some dinner I turned on Kid Nation, yet another reality TV show, whose premise is to put a bunch of kids in a situation that is very much like the castaway-on-a-desert-island setup of that reality TV pioneer and heavyweight, Survivor. The kids are put by themselves in this Old Western town and have to build their own community. (I guess the producers chose the Old West because it’s primitive, but not too primitive – to see kids eating bugs and trying to build their own shelters might be too much)

It was interesting for a little while, but soon I found myself remembering an essay I read recently in Chuck Klosterman’s book, Sex, Drugs, and Cocoa Puffs. The essay was about the reality TV show that started it all, MTV’s The Real World. Chuck has spent a disturbing amount of time watching and thinking about the Real World, and as a result he has some interesting things to say about Reality TV in general. His comment that I remembered while watching Kid Nation unravel was concerning archetypes.

His opinion is that it is very difficult for you and I to understand the complexity of another real human being, so we think better in archetypes. He points out that as the Real World got more popular, it was because the characters on the show actually became “less real.” Through the help of increased scripting and creative editing, The Real World’s producers began to take eight complicated real people and turn them into simple one-dimensional characters, like something out of the popular 80’s movie The Breakfast Club, which features “the Nerd,” “the Jock,” “the Rebel,” and “The Priss” (80’s heavyweights Anthony Michael Hall, Emilio Estevez, Judd Nelson, and Molly Ringwald, respectively) – although in the Real World‘s case these archetypes have been updated to “the Hick,” “the Fratboy,” and “the Militant Gay Feminist.”

But the featuring of archetypes is where the similarities end. The Breakfast Club’s whole goal is to start with the archetypes and dissolve them, revealing the “real” complex people underneath and showing us that Nerds can be cool, Jocks can be sensitive, and The Priss can date The Rebel. The Real World, on the other hand, wallows in the shallow mire of stereotype for entertainment purposes.

So after Kid Nation ended, leaving me feeling like I had cotton candy for brains, I pulled up HBO On Demand and watched an episode of their new series Tell Me You Love Me. This show features four simultaneous storylines that focus on four couples at various stages in life – young and unmarried, married no kids, married with kids, and retired. And even though it features paid actors and fictional storylines, it is the “realest” show I’ve ever seen. The way it delves into these relationships is captivating because it shows every dimension – most notably the sexual (it’s definitely just for adults) – in glorious flawed detail. It routinely swings between exposing the ugliness of the relationships and celebrating their beauty, in a way that constantly has you saying “I’ve been there.” And the interesting conclusion is that professional actors can be more real than an untrained amateur when a camera is pointed at them, even when they are reading from a script.

So as Reality TV gets less real and celebrates the stereotypical simpleton, elsewhere people are developing great shows that tear down the stereotypes to find the wonderful complexity, commonality, and humanity in all of us. The Breakfast Club lives on.

Top 5 questions to ask your competition

I haven’t had much time to read feeds (or blog) lately, but for a brief moment today I was reading Austin Startup and saw a story about Inovis. Visiting their website, I spotted a tab in the main navigation that said “competition and pricing.”

Clicking through, I saw that they are featuring profiles on their competitors, including size, number of employees, and a feature-by-feature comparison chart that helps prospects understand which of Inovis’ features map to their competitors’. The profile ends with a top five questions to ask that competitor.Top 5 questions

Most people in sales agree that it’s bad form to bash the competition. It ends up doing more to damage your reputation than it does to make someone more likely to buy from you. But why not shape the features your prospects are looking at and what types of questions they are asking? Inovis shows some guts in going after their market this way. I like it.