smell of good business

What? Is that a dot-com smell in the air? It’s all about eyeballs again….

The interesting change with Web 2.0 has created a sense that the internet is all new again. There are some truly amazing success stories – witness www.utube.com as the largest, most recent couple of guys and an idea turned into millions. And may similar success fall to www.wordpress.com – this is truly a great offering.

But there is something in the air that smells funny…. and it seems we have a new generation of people coming through who have:

  • Never witnessed a recession
  • Never seen businesses lose a f…ing frightening amount of money
  • Never been paid so much for so little experience
  • Starting discussing “eyeballs” as inherently adding value

Am I cynical (or jaded as it didn’t work out last time – I was supposed to be driving a Ferrari to my own private golf course right now!) or does something smell funny?

Today, as it did at the time of the crash, it stills comes down to “show me the money”. At least now, advertising models are well established and easily quantified.

What piqued me to write this was a pic of Malcolm Gladwell on the front of the Australian Financial Review with him saying that business needs to get over itself and recognise the power of snap judgements.

I have read the Tipping Point, and did find it an interesting read. Gladwell may well be onto something – and I share a view that making snap decisions in the heat of business is often very sensible. You are closest to the action, best in the position to make the decision – so you should be able to make it without having to engage in endless email / other approvals – and analysing it may make you change your mind against something that makes sense.

However I also remember vividly hearing similar tones around the time of the dot com crash along the lines of, “if you are looking for a standard business model, you just don’t get it…”. You should be very concerned if anyone wont be specific on:

  1. Who wants it?
  2. How much for?
  3. Who says so?

At the end of the day business is about the exchange of value. Part of value creation is really thinking about things.

For more about thinking, please see my posts Talk to me in numbers and 3 Reasons why smart people in organisations do stupid things

So, what do you think? I look forward to any feedback….

4 thoughts on “What? Is that a dot-com smell in the air? It’s all about eyeballs again….

  1. Hi Justin! Your three criteria for “do you have a business model” seem pretty sound. I think the thing that I’m always curious about with a great idea is if it’s so great, why didn’t you already build it and why don’t you already have customers?

    Are we in a bubble? Lots of people seem to be saying yes. There are some differences between this go-around and the last one, however. For one thing, the IPO market is not nearly as open. Also, the costs have dropped dramatically. Many tech entrepreneurs today are self-funding, because hosting costs are low enough and the tools are affective enough for one or two talented individuals can create a viable company with almost no investment.

    At the end of the day, if you’re scratching your head trying to figure out how you’re ever going to make money with your business, you probably do need to go back to the questions you asked. Is there value here? What is so special about my service or product that people will love it, and they can’t get anywhere else?

  2. Todd, thanks for the comment, and I think you are right on the money in relation to the differences. The cost of go to market is so vastly reduced, technology is much more stable, so a couple of key investment risks are significantly lowered.

    It makes for an exciting time….

  3. Hi Justin,

    We just caught up by accident the other day, and the first time I come to check out your blog the latest article discusses exactly the issues I am currently dealing with.

    I am currently trying to be one of those self-funding tech entrepreneurs. The new Web 2.0 movement has created opportunities that should have been realized during the last net bubble. You might be surprised that techniques and technology used to deliver modern Web 2.0 applications existed in late 90’s. The difference between the last bubble and this one is that tech people like myself can concentrate on developing great products without worrying about business. Because the cost is so low I can develop something new, make it available to people and if it does not work I can take it down. All I would loose in the process is $50 and some time. Testing of new applications is not a problem because there are thousands of geeks online who consider it a badge of honour to be a beta tester on some new startup website.

    Another reason why the latest Web 2.0 bubble is much more stable then the last is because new development is outside the standard “Development Life Cycle”. Basically companies like Microsoft and Sun can tell us all how to write applications and most companies listen because this is their bottom line. But self-funding tech entrepreneurs like myself can look at their offering and say “Not today” and try something completely different. Great example of this is 37 Signals. They developed Ruby on Rails and many web based applications using it. Now Ruby on Rails is voted the number 1 tech to look for in 2007 by Computer World.
    Because of this, people like me have no real competition in the corporate world. No established services company can ever deliver what I can because I use tools I want to use, not what the ‘industry’ standard is.

    As long as I can make enough money to pay my mortgage and still have some time free to develop and work on my own software my venture will not go bust. It might not make much money but it will move along. To date my expanses include $5000 for computer hardware, $120 per year on hosting and my time. No business model, no long meetings, just pure creativity and fun. This could not have happen during last bubble.

    You are right, there are some very exciting and interesting times ahead.

  4. Edin, thanks for the post, great synopsis and great to catch up. I’ll be really interested in what you come up with – and perhaps I can add some value to.

    Take care

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