If the next generation of high growth startup companies
has shown us anything, it’s that “speed is king”.
Companies like Google, Skype and NetFlix have shown
us that it wasn’t about adding more employees and
office space as quickly as possible. It was about
addressing changing market conditions as quickly as
possible with products that could scale big and fast.
Look at how these companies have gone from relative
obscurity to market powerhouses in a matter of years,
shoving giant incumbents out of their way in the
process:
Google - Proved to Microsoft that being the world’s
largest software company was useless if you couldn’t
respond quickly enough to changing market conditions,
like the rise in ad-supported searches. Google is now
worth almost half the price of Microsoft.
Skype - Grew to over 50 million users of its voice over
IP service before big telecom could even begin to
respond to the opportunity (they still really haven’t).
Skype was sold to eBay for over $4 billion dollars after
just 3 years in business.
Big companies
aren’t geared toward addressing rapidly changing
market opportunities – startups are.
The next generation of startups has learned that it’s
their speed that is keeping them ahead, not their size.
Showing posts with label Everything you need to know about Business. Show all posts
Showing posts with label Everything you need to know about Business. Show all posts
18 July, 2009
Internet actually happened!!!
The promise of a billion people instantly connected to
the Internet sounded like a pipe dream in the mid-90’s,
but guess what? It actually happened.
Today over a billion people are connected to the
Internet and using it like crazy. Heck, since the Internet
took off I can’t even remember the last time I visited
my local bank or walked into a Blockbuster to rent a
movie. I don’t even know if real live travel agents still
exist anymore thanks to Expedia.com.
The Internet “actually happening” has meant that the
benefits to having a truly networked audience can make
lots of businesses highly scaleable and far more cost
effective. Here are just a few of the key reasons why
the proliferation of the Internet means so much:
The viral Internet got real. In the last five years
we’ve seen the true power of viral marketing on the
Internet. Companies like Napster, PayPal and MySpace
have grown to tens of millions of users within just a
few years simply by referral. That same rate of user
acquisition a decade ago would have cost tens of
millions of dollars and would have taken ten years.
A billion people actually use it. Think about this for a
second. Even five years ago you had people
experimenting with stuff like eBay. Today thousands
of people actually make their living on eBay. When the
Internet goes from a “nifty tool” to a “basic necessity”
the power of that Network increases exponentially.
It scales like a mother. Once startups understood that
the fastest way to grow a business is to have a truly
scaleable on-line product, companies like PayPal and
Google went through the roof. Sure, you can open up
20 restaurants a year, but nothing grows faster than an
Internet-based company simply adding more servers to
support more customers.
It’s really easy to get started. Any idiot with
computer and the most basic knowledge of the Web can
(and has) open up shop on-line. This means that the
barrier to entry for new startups has plummeted
significantly (I’m still not sure if this is good or bad
judging from some of the incredibly lame Web sites
I’ve seen, but hey – who am I to judge?)
Obviously the Internet isn’t new, but it’s important to
understand just how much it has evolved in the last five
years as a key business startup tool. That is not to say
that companies who do not have an Internet strategy are
doomed, but it’s hard to ignore an instantly addressable
market of 1 billion people as a key game-changing
trend.
the Internet sounded like a pipe dream in the mid-90’s,
but guess what? It actually happened.
Today over a billion people are connected to the
Internet and using it like crazy. Heck, since the Internet
took off I can’t even remember the last time I visited
my local bank or walked into a Blockbuster to rent a
movie. I don’t even know if real live travel agents still
exist anymore thanks to Expedia.com.
The Internet “actually happening” has meant that the
benefits to having a truly networked audience can make
lots of businesses highly scaleable and far more cost
effective. Here are just a few of the key reasons why
the proliferation of the Internet means so much:
The viral Internet got real. In the last five years
we’ve seen the true power of viral marketing on the
Internet. Companies like Napster, PayPal and MySpace
have grown to tens of millions of users within just a
few years simply by referral. That same rate of user
acquisition a decade ago would have cost tens of
millions of dollars and would have taken ten years.
A billion people actually use it. Think about this for a
second. Even five years ago you had people
experimenting with stuff like eBay. Today thousands
of people actually make their living on eBay. When the
Internet goes from a “nifty tool” to a “basic necessity”
the power of that Network increases exponentially.
It scales like a mother. Once startups understood that
the fastest way to grow a business is to have a truly
scaleable on-line product, companies like PayPal and
Google went through the roof. Sure, you can open up
20 restaurants a year, but nothing grows faster than an
Internet-based company simply adding more servers to
support more customers.
It’s really easy to get started. Any idiot with
computer and the most basic knowledge of the Web can
(and has) open up shop on-line. This means that the
barrier to entry for new startups has plummeted
significantly (I’m still not sure if this is good or bad
judging from some of the incredibly lame Web sites
I’ve seen, but hey – who am I to judge?)
Obviously the Internet isn’t new, but it’s important to
understand just how much it has evolved in the last five
years as a key business startup tool. That is not to say
that companies who do not have an Internet strategy are
doomed, but it’s hard to ignore an instantly addressable
market of 1 billion people as a key game-changing
trend.
#1: The key ingredients got cheaper
Every startup, no matter what industry they’re in, has
an income statement with roughly the same line items –
payroll, marketing, technology and such. Ten years ago
each of these line items would have cost a fortune to
fund. That meant a startup company needed tons of
capital in order to even make a dent in the marketplace.
This created a large barrier to entry for new
competitors.
However in the last few years the price of each of these
key ingredients has simply plummeted, which in turn
has significantly lowered the barriers to entry for
startup companies.
Take a look at how each of the line items that used to
break the bank for startups has changed:
Technology is a commodity. Software has gone open
source (read: free), connectivity and hosting are dirt
cheap and you can buy a fully functional PC on eBay
for $100. Even the ridiculous costs of long distance
telephone service have become a thing of the past (we
love you Skype!) You can legitimately take care of all
the technology startup costs for a company for about
$1,000. Sweet.
Marketing became performance-based. We can
thank Google and Overture for this one. With the rise
of cost-per-click and search engine marketing we saw
the rise of performance-based marketing that allowed
companies to pay for ads that worked, not just for ads
that ran. Now a startup can begin attracting customers
with a marketing budget of just $100 and grow from
there.
22 year olds don’t make $100,000 anymore. The
young, energetic talent that we all relied on to build the
infrastructure behind all of our great ideas no longer has
a rock star salary. The days of the HTML programmer
making $100k and taking his dog to work are over.
Now that work can be done for $10 per hour – or less.
Capital is less necessary. When the price of just about
everything plummeted, so did the need for lots of
capital. The problem with capital is that it takes time
and energy to raise. Now that same time and energy
can go into actually starting the company, not funding
it.
When you add all of these ingredients together you get
an interesting combination. All of a sudden startup
companies can get to market quickly without having to
raise lots of capital to do so. This breeds more startups
and it breeds them a lot faster.
an income statement with roughly the same line items –
payroll, marketing, technology and such. Ten years ago
each of these line items would have cost a fortune to
fund. That meant a startup company needed tons of
capital in order to even make a dent in the marketplace.
This created a large barrier to entry for new
competitors.
However in the last few years the price of each of these
key ingredients has simply plummeted, which in turn
has significantly lowered the barriers to entry for
startup companies.
Take a look at how each of the line items that used to
break the bank for startups has changed:
Technology is a commodity. Software has gone open
source (read: free), connectivity and hosting are dirt
cheap and you can buy a fully functional PC on eBay
for $100. Even the ridiculous costs of long distance
telephone service have become a thing of the past (we
love you Skype!) You can legitimately take care of all
the technology startup costs for a company for about
$1,000. Sweet.
Marketing became performance-based. We can
thank Google and Overture for this one. With the rise
of cost-per-click and search engine marketing we saw
the rise of performance-based marketing that allowed
companies to pay for ads that worked, not just for ads
that ran. Now a startup can begin attracting customers
with a marketing budget of just $100 and grow from
there.
22 year olds don’t make $100,000 anymore. The
young, energetic talent that we all relied on to build the
infrastructure behind all of our great ideas no longer has
a rock star salary. The days of the HTML programmer
making $100k and taking his dog to work are over.
Now that work can be done for $10 per hour – or less.
Capital is less necessary. When the price of just about
everything plummeted, so did the need for lots of
capital. The problem with capital is that it takes time
and energy to raise. Now that same time and energy
can go into actually starting the company, not funding
it.
When you add all of these ingredients together you get
an interesting combination. All of a sudden startup
companies can get to market quickly without having to
raise lots of capital to do so. This breeds more startups
and it breeds them a lot faster.
In order to understand why it’s so important to Go BIG
you first need to understand that the game of starting
companies has changed a lot in just the last few years.
In particular, three important things have happened that
made the startup game much easier and far more
competitive at the same time.
#1: The key ingredients got cheaper
#2: The Internet actually happened
#3: Speed became king
explanation of each point in the posts to follow...
you first need to understand that the game of starting
companies has changed a lot in just the last few years.
In particular, three important things have happened that
made the startup game much easier and far more
competitive at the same time.
#1: The key ingredients got cheaper
#2: The Internet actually happened
#3: Speed became king
explanation of each point in the posts to follow...
go BIG or go HOME!
These days successful startup companies need to
think bigger, grow faster and stay smaller
(physically) than ever before.
Windows of opportunity are closing faster meaning
startups must react quickly to opportunities by
leveraging speed versus size. In a short period of
time startups need to Go BIG or go HOME!
In the following posts ,I will explain some of the ways through which start ups can really GO BIG!!!
think bigger, grow faster and stay smaller
(physically) than ever before.
Windows of opportunity are closing faster meaning
startups must react quickly to opportunities by
leveraging speed versus size. In a short period of
time startups need to Go BIG or go HOME!
In the following posts ,I will explain some of the ways through which start ups can really GO BIG!!!
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