Category: reflections

Marc Andreessen wrote a very good article that introduces a new point of view as to what is the most important factor for successful startups. He says its good market. I won’t explain why. Just go and check out his arguments. I think they are very logical and seem right.

On the other side I am reading a book named “Stumbling on happiness” by Daniel Gilbert and there is one specific topic I want to bring to your attention. He basically says that humans almost never realize what they missed when trying to imagine something. In other words, our brains can’t deal very well with lack of information. The following experiment was done:sets of trigrams (three letter words such as SDF DFU DKI OET) are given to people and at each set, one of them is pointed and said to be special for a reason. As results show, it takes roughly 34 sets of 4 trigrams before people realize the simple rule that governs which one will be special (such as a rule that the special trigram is always the one that contains T). However, when this experiment is done the same way but the rule of the special trigram is a MISSING T, no one ever manages to figure it out, no matter how many sets are presented. Fascinating. “Pigeons have no trouble figuring out that the presence of a light signals an opportunity for eating, but they cannot learn the same thing about the absence of light” says Daniel.

So then what is the connection between the two? I think there are two markets: the ones we can spot due to knowledge, experience, and studies, and the ones that we can’t. Because those invisible opportunities exist, there is plenty of potential for everybody. “And how exactly am I supposed to see what I can’t see?” Easy. Just do things. Plenty of the most famous startups did not imagine their future like it is now. They just did it. Neither Flickr, nor Paypal, nor plenty of others started with the idea they became famous for. But by just starting, they had the chance to see those new clues for new markets that were otherwise invisible.

THE TRIGGER:
I just finished reading Blog! By David Kline and Dan Burstein which I reviewed last post. A bunch of interesting points appeared but one paragraph really drew my attention. It appeared in an interview with David Teten and Scott Allen(from Virtual Hanshake):

???The major difference between blogs and social networking sites is that, while still social in nature, blogs are far more individualistic. You don??™t need to join a particular online site to participate in a discussion around, say, new technology trends. And in terms of the discussion itself, the communication is centered around the personal voice or views of the blogger rather than on the group, as it is in discussion forums on networking sites.???

What bothers me in this paragraph is the word ???individualistic??™. Just like the interviewee, we make one big assumption ??“ that blogs are individualistic. For many years we have seen the blog as something personal, private, and almost sacred. These are the characteristics of a (online) diary, which is quite natural given that blogs are descendants of the personal diaries. However, as we dig deeper in the social networking models we realize that our true nature is social and not individualistic. People write blogs because they want to be heard and recognized, because they want to communicate, get advice, and make new friends. True, blogs do have a personal and distinguishable voice, but this is exactly what they should use to socialize. Yet, they don??™t. Blogging these days is more like sitting on the top of the hill and screaming your lungs out to the crowd. Linking is more like pointing with fingers left and right, rather than shaking hands, hugging people and making new introductions. We are screaming so loud though, that we forget to identify who our listeners are.

THE IDEA:
We should stop thinking of the blog as an online journal. Blog is actually the closest thing that comes to a profile of a person. No Facebook, Myspace, or any other proprietary site can squeeze such detailed, impassioned stream of consciousness. With pictures, video and text, the blog has it all. There are plenty of apps that can be used ??“ look at Fred Wilson??™s blog. It??™s got it all- Twitter, profile picture, voki avatar, music, name it -he’s got it. What we still don??™t realize is that blog is the unit of the most organic, largest, universal social network. The best part? It??™s not a proprietary site, it??™s a network pushed by a multitude of users, open source software, and private web2.0 applications.

HOW WE DO THAT:
We are actually closer to that vision than it seems. We have all the components in place, all we have to do is rewire them ??“ RSS, blogs, enthusiastic useful information swap, critical mass, a plethora of apps.
Small changes (such as few new tags in the RSS) can define the difference between blog1.0 and blog2.0. From then on blog2.0 will develop in a totally different direction with two main characteristics:

1) Blog2.0 parts will be unified under the single profile they represent. Anything people use to identify themselves in social networking sites will also be integrated in blogs ??“ status updates, profile picture, ‘About me’, interests, albums, friends, topics for discussion – anything.
2) Blog2.0 will become a platform for applications, just like Facebook did. Gmail blended email with chat very successfully and blogging will do the same – friends lists, VoIP, chat, email, etc.

THE RESULT:
-You either install an open source package on your server or you take advantage of an already existing company like Typepad to create.
-You upload an avatar, fill in details, write your first post. You also change your status to ???John has a new blog2.0???
-After lunch you have 4 invitations to become friends with your buddies??™ blog2.0s. You accept them.
-You look at the activity on your post. Commenting resembles a Facebook wall but also has threading/voting like reddit.com
-You then check your inbox, send out a couple of messages, upload pictures. Just like people get notified by RSS for the new posts, they get notified for the uploaded pictures.
-A photographer happens to stumble upon one of your pictures of the gorgeous Costarican jungles and starts chatting with you on Blog2.0. You become friends and you add her to the friends list. Potential date.
-The followin day you decide to change your avatar. All the comments you’ve ever made in the blogworld have now your new picture.

NAYSAYERS:
“But I am happy with what I have. My blog is private, individualistic and I want it to stay like that!”
No one will force anybody to make that transition, so whoever is happy with what they have, they are welcome to keep it (say hello to ‘backward compatibility’). However as our imaginary blog2.0 picks up, it will increasingly look (for naysayers) like they are left out of the big party. They will simply be missing out, just like it happened with blogs, with social networking sites, with emails, and pretty much any technological improvement, and the blog2.0 as a profile unit in an organic social networking, may be one of those improvements.

What do you say?

…And How Much We Actually Don’t Get.

Cheesy movies like Legally Blonde is usually not my type, but I am in Costa Rica and since here you do all that you don’t do in NYC, I did see it. Around the happy end the “believe in yourself” clich?© pops up. Normally if you are not wetting your eyes at such deep wisdom you would be laughing your ass off. I don’t know why but I did try to think about what that phrase really meant and why people say it.

We’ve all been told that if we believe in ourselves, all will be good and we’ll get what we are after. Thousand of times it has zoomed by my ears. And probably eactly for that reason I never thought about it and why (if it is true) it worked. I see the following logical explanation, but there might be plenty others: if you don’t think that you are good enough, you would be more willing to quit, so at the face of a tough moment when despair lures on you, actually not believing in yourself gets you to “I can’t make it anyway, why bother the suffering” as opposed to “I can do it, but I have to get through this crap first”. Thus, solely what you think of yourself may determine whether you are going to get through the Dip or not.

I have always known that, but I have never really reflected on it, so it has never had any meaning to me. Therefore it has never affected my life in any way (Well let’s see how that works now 🙂

A bigger question spins off from this matter: Are we so ignorant that we suck information without really thinking about it, as a result of which we don’t get to live life to its fullest?
I think the answer is yes. And that immediately gets us to the point that you have to constantly analyze anything that you might think is of any worth or interest to you. Try this one “A bird in the hand is worth two in the bush”. What associations does it evoke? What experiences tell you that it is true/wrong? Is it true after all? Why? What kind of mentality does it promote? Is this the mentality you are after?

I have been reading a very strange book that tells the story of the greatest merchant in the world. There are ten two-page chapters that you are supposed to read at wakup, at lunchtime and at bedtime for a month before moving to the next one. At first this seems retarded. It is in a sense brainwashing because you are repeated the same thing over and over until you believe it. I am sure people just breeze through them like a regular book but I tried this rereading thing. I did 10 days instead of a month. I also wasn’t just reading them – I read every word carefully and asked myself at every moment, “what was the author thinking when he was writing that sentence?” I was paying attention to what he MEANT to say, not only what was said. Those two unusal behaviors resulted in a very interesting phenomenon: because of what other things I have read during the day or the things I have experienced, every time I read the same chapter, I saw it in a different light. Every time I reread it I discovered new things in it, I unravelled it more and more and combined it with my personal experience and analysis. It was incredible to understand how much we actually miss by merely reading something and not taking time to understand what it is.

This is true of every kind of information that goes through us. There are plenty of success stories (Marc Cuban), how-to explanations (Paul Graham), data and interpretations (Marc Andreessen) and all kinds of advice out there. But unless you actually pause your life and think about them, they will not be of any value (and some of those can be truly life-changing).

Well, I want to start a startup, but anything you do is equally dependent on how much thought you put in it. Do I have to say what you should do now?

Investors seem to love to ask this one question, “How are you going to market your startup?” By now, I have a ready answer that I shoot right away. The concept is a little vague and difficult to get, but I will try to make that clear. The answer to life, the universe, and everything is:

If my product is really damn good, it will market itself. If it is not, I shouldn’t bother marketing it.

It sounds a little bit like ‘Build it and they will come‘ but it is NOT. Let me tell you why.

First let’s have a look at Coca Cola’s marketing strategy. Their drink is a product significantly different than your new, innovative (hopefully) idea for startup. Coke is an old product that we all know. It’s been around for years and there is nothing so cool about it. The ads you see around have one purpose – to make you drink Coke when you don’t really care what you drink. This is the type of thing in which you constantly need to be bombarded with messages that will layer up in your subconsciousness and will finally make you drink Coke. For that purpose, ads are targeted to everybody, all the time, and everywhere (even SecondLife! blah). Marketing of Coca Cola looks probably somewhat like that:

That is perfect and in time covers millions and billions of people. However, it only works if your budget is $2.5billion+. If you are like me, you probably don’t even have billionth of that.

So what can we do? Something smaller, like Google AdWords? Nah. AdWords is pretty much the Coke strategy on a much smaller scale:

What is happening there is targeting single users according to their searches. True, more efficient than other online advertising services, but still equivalent to buying your new users. You want better than that – you want them to not only join for free but cajole friends to join for free too!

At this point you should have already realized that you are just not able to spread the idea on your own. You want USERS to do it for you. The ominous word of mouth. This is the only way it could work, and since it is the only way, that should get you thinking, “How do I get my users to do that?” The answer is: You get them to work for you by creating the most amazing, best-out-there product, so that when people recommend it to their friends they feel proud of themselves. That is, it must be just really good – easy, cool, useful etc. In that case, the scenario of marketing will look like that:

Now this is a different story. All you did was sent an email to your best friends and relatives [red line], that might be interested in it, and the rest was done by them [blue dotted line] because by recommending that amazing ‘grade A’ product will make them look knowledgeable, generous, and cool (oh that coolness factor!)

If you really really want to spend money, here is where online advertising makes sense. At this point, when you have crowd working for you, you want to give them many initiation points at random places with random groups of people, in which case your marketing power can be multiplied many times:

If you can’t make other people talk of you, you got the wrong idea. Get a new one, improve your current concept, or just give up — you are wasting your time.

Do you agree with me now?
“If my product is really damn good, it will market itself. If it is not, I shouldn’t bother marketing it.”

I recently read an article about a study that some professor did, but unfortunately I don’t remember his name. The basic idea is the following:

About 1500 people are split in 2 groups, group A (we will call it so) has very simple task – listen to a bunch of indie songs and rate them accordingly. The more curious and exciting group we will call B, which has a similarly simple task – listen to a bunch of songs and rate them, the one difference is that B has access to B’s ratings and people see the top list of best rated songs before they choose what to listen and how to rate.

The obvious result is that ratings among A of songs are not much different from each other. That means that rating of the first song is just a little bit higher than the second top rated song, which is just a little bit higher than the third rated song and etc. Group B’s rating however looked different. Song number 1 was far far better rated than song number two and song number three was significantly worse than two etc. From this we can conclude that the exponential results are due to what Alek calls “herd behavior”.

So far, so good.

Now comes the real deal. Group B was divided in 8 sections. All of them listened to the same songs, but each group had their own individual rating lists. The result was very very curious – each had a different top 15 list. In each section, different songs became the most listened. The article reasoned that small differences of luck, or unaccounted factors in the beginning can mean a lot for the success of a song. This way a song that got lucky to be played in the beginning becomes big hit for example, although there are plenty of other songs that technically are not worse in musical terms. If you try to give an analogue of real life, the star Madonna is now, could have been someone completely else due to random small occurrences of luck.

Now that sounds horrible, unfair, and nasty for the people that do believe they have qualities but didn’t make it only because of this luck part of the deal.

I think we can put a different spin on failure however. If there is about 10 songs, and you think you have the skills to make in in top 3, but you were unlucky up to know, I can tell you one thing: doing it over and over again will statistically force the bad luck to ‘run out’ and you will marry success. Same for startups.

I have never thought of it like that, but this is a big part of what people call perseverance.

UPDATE: [ Here is what Marc Andreessen wrote about luck ]

Few days ago I was discussing with my partner Noah how the website is coming. I mentioned in a previous post that he is not what you can call a hacker or a very computer savvy person. So while talking about our idea again, he surprised me with a very good question: “So what prevents other people from doing what we are doing, and why should WE be the ones to succeed?” I totally did not expect such a good question from him so it took me a few seconds to run scenarios through my head. Eventually I mumbled something very reasonable that sounded like that: “Well, to our knowledge, we are the first to be doing such a weird and useful idea, so we have the advantage of time. The other thing that plays only after we launch this product is that sometimes some site become very popular and its difficult to take them over because they have solid amount of dedicated users (or maybe not). It’s a little bit like being youtube – nothing technologically very challenging that can’t be done, and also they weren’t the first ones to come up with this either. But they had a lot of users, and even Google couldn’t compete, so they bought them”Once I said that, something very interesting formed in my mind. I saw the online business from a totally different perspective. There are two reasons for acquisitions usually: great technology that takes time to be developed and a great user base. What I never realized is that they bought have the same purpose and it is to own people, pieces of their attention. Internet is like a second world, that has no rules yet and is free for grabs. This is the beauty of it. NO RULES. So the game is the following – you hook up people on your service and you are their owner. You can now be considered landlord. What you can do is use those people (their attention) to make money or capture more free users that have no roots to anything yet. Who is really damn good at this game? Yes, the googles. They hooked up people on their search, made billions, hooked up people on the maps, will make more billions, and what do they do with this money? They buy people that they use to make more money and buy more people… I am saying this because most of the websites can be replicated by Google for a maximum of few weeks. So essentially what happens when there is an acquisition is that G doesn’t really buy a company or technology, they buy YOU, they buy ME and my mom (well, my mom got bought by Ebay when they acquired Skype). But who gets the money? It’s not the end users.

The bright side: there’s still plenty for everyone. There are plenty of freely roaming browsing users that either don’t know about G or are interested in things that G doesn’t provide yet. So do go and capture land. After all its free – all you have to do is go and claim it.

I am always into trying to come up with something entrepreneurial rather than settling down with a 9 to 5 job. An interesting side effect is that people around me feel like they have to share their own inventions and ideas. It’s all good with me. I have trained myself over time to breakdown an idea into components, analyze them and figure out if its doable. The problem is that once I do that, the results I spit back so quickly are usually bad, and people hate it. They like to think they came up with something incredible. Usually I am right for one of the following reason:

1. These are most often either my brothers, my friends from neighborhood, or college friends. What they all have in common is that they are new to entrepreneurial thinking. I mean, I am new myself, and it’s already been 4 years now solid brainstorming. They don’t know that they are walking in my first steps: they are naive and their ideas are unrealistic.

2. The second big problem is that their attention span is too short. They share, get encouragement and/or criticism and that’s where it ends. They don’t do anything about it, they just move to another, ‘better idea’…

3 . Most of them tend to think that getting a product out on the market is easy and can be done on the side of jobs, partying, traveling, and oh yeah, lots of drinking. You can’t start a business and expect to lift it off the ground if you have a full time job. You learn those things when you get to the “doing it” part… which brings us to the most import point:

4. The difference between IDEA and BUSINESS. One thing is to get idea. Everybody has them. Everybody gets brilliant ideas. However, no one does anything about them. Brainstorming is easy. It’s fun but it also tricks you into thinking that once you make a couple steps, you are close to finishing a 30-mile marathon. Big big difference. Marathon is not something you achieve with 1,2, or 3 tries. You have to run hundreds of times distances much shorter. You have to fail many times before you reach your goal. Only it so happens that sometimes you are in the middle of it and you haveГ‚ to change direction for something else…

It really is funny. People come, share their ideas and when I tell them why they will not work, they get mad at me. They often call me Mr Critical or say I am pessimist and nothing will work out for me. Its great – I love hearing that. Call me whatever you want but until someone makes even a super small business out of their idea I am always going to be right…