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29

Jun

Building platform companies

RIM recently paid $8.3M to buy the once highly buzz-worthy Dash Navigation. Dash was a GPS-masquerading-as-in-car-software-platform company. And, you know, there is no better way to instantly sound bigger than to say, “we’re a platform for…”

I personally loved the Dash as a product, but just was never quite sure about the whole platform focus. There are two problems with the “platform” approach, one is that platforms are hard - you need to both create a killer product and convince others to build killer products for you. The second is that the tactic is often more about ego and makes your life harder for little benefit, no matter how instantly sexy and “big” a new platform sounds.

Dash Navigation could have built on a pre-existing platform, as Stacey over at GigaOm points out. Slacker radio (which I love) and Kindle have similar issues. Do their separate devices warrant an entirely new platform or is being on the iPhone/Android/etc close enough?

We went through this several times at Ambient Devices, where we got regular questions about whether we should just be embedded in cell phones and laptops - a tack that our major competitor Microsoft Spot took before they ultimately died. Despite the ill fate of Spot as part of another platform, which I chalk up to execution, I’m still not sure the separate device (new platform) was the right answer.

Over in social gaming land, I was talking with James Currier last week and he made an empassioned point about building inside of existing social networks. Why build a new platform from scratch when your customers are already coming back to Facebook (retention), already have their friends there (acquisition), and spend more time there (engagement).

Is your idea really worth trying to be one of the 10 URLs an average person visits in a day? Is your idea really worth being one of the three devices an average person purchases in a year? If not that doesn’t mean it is a bad idea, most $100m+ revenue companies do so without creating a platform - it just means you need to look for the best ecosystem to exist in.

25

Jun

A Startup is like a Pirate Ship

As Cap’n of this particular ship, I’d like to add that it’s great sailing the windy seas with Mr. Sivak. Also, this is an apt companion to using Dave’s Startup Metrics for Pirates to navigate your ship.
Instead of watching TV or playing Grand Theft Auto, work on your idea. Instead of going to bed at 10, go to bed at 11. We’re not talking about all-nighters or 16 hour days – we’re talking about squeezing out a few extra hours a week.

37signals advocating doing your startup on the side, to which I respectfully disagree vehemently. If you love your idea enough, make a damn commitment. Ideas are hard to grow, and if you’ve got an out you are likely to take it. Commitment breeds success, or as paul graham put it, “The startup may have more long-term potential, but you’ll always interrupt working on it to answer calls from people paying you now.” As Paul points out, committing also causes a lot of other good behavior - like getting “ramen profitable” as quicly as possible.

There are certain, very rare individuals, who seem to be able to be parallel entrepreneurs but I am not one of them. Whether the idea was mine or I’m on board with someone else’s idea, I am not smart enough to have figured out a way to be totally committed to more than one thing at a time. And I’m not willing to work on something that I’m not fully committed to.

For me the idea is very simple. Life is short, don’t work on anything if you don’t believe in the vision. And, if you believe in the vision, don’t compromise that vision by cheating on it with other ideas.

The Real Lessons From Twitter

15

Jun

How to succeed in the coming social gaming explosion

Shanti does a good overview of the Facebook/Myspace ecosystem and where it’s headed

Yes! 50 Scientifically Proven Ways to Be Persuasive

9:
A small gift makes people want to reciprocate. People who received a small no-strings-attached gift from a stranger were twice as likely to buy raffle tickets from him than those who were just pitched on raffle tickets.
12:
Attaching no strings increases response to the message. Using the same hotel as the one mentioned in Chapter 2, researchers tried out two different versions of the sign. The first one: if you reuse the towels, a donation will be made to a nonprofit environmental organization. The second version: the donation has already been made, since the hotel trusted you’d reuse the towels anyways. Recipients of the second message reused their towels 45% more than the recipients of the first one.
29:
Similarities raise the response rate. A person named Cindy Johnson received a survey request by mail from someone named Cynthia Johannson. Someone named John Smith received a survey from Gregory Jordan. The name similarity in the first case (note that it’s just phonetic similarity, none of the names are the same) brought up the response rate to 56% vs. regular 30%.

11

Jun

Navigating your startup in dark places

conventional wisdom

Everyone loves the Google startup story. You know the one… when they started, pretty much everyone thought that the search business was all wrapped up. First by Yahoo, then by Excite, then by Altavista. But it wasn’t, it was only the tip of the iceberg.

People use this example to show that innovation happens in the dark corners, not the light of day. To innovate means going where the rats are scattering from, and not succumbing to the warm comfort that comes from joining them wherever they happen to be headed next.

But Google is the easy example. At the time, the Yahoo’s of the world were still seen as positive, enlightened, poster boy companies. Search worked. All Google had to do is explain that they believe they had a better way, because clearly the way was paved with gold.

The example that I prefer instead is Flickr. Because not only was photo-sharing “done” when Flickr started, many people thought it wasn’t even worth doing. Shutterfly, Ofoto, and others created sharing photos with your family in a nice, clean, private way (after all, who would want to share photos with strangers). And they had proven the streets of photo sharing were not paved with gold. People would not buy enough photos, there were no significant exits, and I remember chatting with many investors who had simply written off the entire category as untenable.

I’ve never talked to Catarina and Stewart about raising money for Flickr, but it couldn’t have been easy. I can see investors rolling their eyes. This was a dark corner of the Internet that should best be left alone. Too much money was already poored in. The results were in.

The pressure for a startup to go towards conventional wisdom is intense. You are constantly getting advice from investors, advisors, mentors, peers - and they will likely point you towards what everyone tells them. I feel this every time we are asked whether we are a “games company” or a “music company.”

I know what our users think, I know what my team thinks, but also know what the conventional thought wants to hear.

Music is also one of those dark corners right now. I hear this over and over. Great for traffic, no way to monetize. Pandora is on the rocks. iMeem can’t get profitable. Seeqpod gets sued as soon as it’s big enough for the labels to bother. And even if you can cut a deal, no business can thrive in any market when 70% of the revenue goes out the door on the way in.

Meanwhile, games are hot hot hot. If you’re not making an iPhone game right now you must be daft, because the gravy train is rolling from every credit card, through every Apple password, into startups’ pockets. Or at least be making a casual MMO or social game. Anything that the unwashed masses can pay for by signing up for a trial subscription to Maxim or a third credit card.

And so the temptation is there. It would be simple for us to emphasize the virtual goods and gaming, try and distract from music. “Music? Oh yeah, that’s a theme we think will appeal to people, but let me tell you more about Kart Rider and Club Penguin. Did you know they sold for $700m dollars? Just think of us as music-themed Zynga.”

The truth is, as will become clear over the next six months, is we are a music company first. Our heroes are visionary companies that broadened, even redefined, our expectations of what a music company could be. The originating visions of MTV, Harmonix, Last.fm, and others.

We believe in the universal and endless passion of people for music. We believe that what people crave and will pay for, when they go to concerts, or dance, or play Rock Band, is to do more with music than listen. We believe in building a new way to experience music together through games.

Especially when talking to investors, or advisors, the temptation is intense to sell the hot story of the day. But to succumb to what people want to hear would be ignoring the vast blue ocean we see right in front of us.

At one of my early startups, internetsoccer.com, it seemed every failed investor meeting or new issue of Business 2.0 lead to the drafting of a new opening paragraph of the executive summary.  We wavered from the confidence of our own instincts about the product direction, from our rising traffic, from the passion of our users, and had to learn a hard lesson about succumbing to market spin. We got lucky and got a positive exit ($15m on $1m raised), but not without a lot of uncertainty about what we were even selling and who we were supposed to make happy next.

We forgot that a real measure of the power of a startup is the ability to re-ignite the dark places.

They are kicking ass up the street yet again. Good job guys, my only worry is the lost productivity around the Conduit offices again once this hits.
david:

The Beatles: Rock Band opening cinematic (via bauldoff and davidkaneda)

They are kicking ass up the street yet again. Good job guys, my only worry is the lost productivity around the Conduit offices again once this hits.

david:

The Beatles: Rock Band opening cinematic (via bauldoff and davidkaneda)

02

Jun

WoW: The First True Single-Player MMO

Nice overview of a common topic around the office about WoW, the impact of directed quests on multiplayer play

Squint testing your product

Can you define your entire product in a screenshot? Yesterday I got into a good discussion about the “squint test” on various products.

If I take one connotical screen shot of a product, and squint, what’s the impression of the product? Because, guess what, that’s what your users think your product is. I think this is the general thing with Tumblr, no matter how much early on it attempted to be this new “tumblelog” thing when you look at the screen and squint it screens, “ooh, pretty blogs.”

Alex over at Harmonix has talked about the same issue with Frequency and Amplitude (the games that happened before Guitar Hero & Rock Band).  Both got great reviews from the small number of people that played it, but if you look at a screenshot it reads something like, “super ridiculously busy space racing game of some sort?”

If you think about plenty of products that you love you can probably boil them to a single squinted screen shot.. The ebay listing, the Twitter feed, Portal, Zombies defending against plants. What other examples/counter examples?