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Consultants Don’t Pivot, Founders Do. Consultants can help startups leverage their limited resources. But startups can shoot themselves in the foot when founders use consultants at the wrong time or in the wrong way. Here’s why. Your Process Doesn’t WorkA friend of mine asked me to chat with a startup he’d invested in. “They’re deep into Customer Development,” he said. So I met the entrepreneur and asked him how his search for a business model was going. “We’re in Customer Validation but we can’t seem to close a deal.” The rest of his story was mostly a blur. You Can’t Outsource Personal ExperienceHere’s what I told him: A startup exists to search for a scalable and repeatable business model. Customer Development is the process of how you get out of the building and search for the model. It can’t be delegated. Let me say it again: Getting customer feedback can not be delegated. Why? Pivots need to happen quickly, rapidly and often. Coming out of my daze, I asked: “Why weren’t you the one talking to customers?”

Lessons Learned. While Google fights on the edges, Amazon is attacking their core. Google is fighting battles on almost every front: social networking, mobile operating systems, web browsers, office apps, and so on. Much of this makes sense, inasmuch as it is strategic for them to dominate or commoditize each layer that stands between human beings and online ads. But while they are doing this, they are leaving their core business vulnerable, particularly to Amazon. When legendary VC John Doerr quit Amazon’s board a few months ago, savvy industry observers like TechCrunch speculated that Google might begin directly competing with Amazon: [Google] competes with Amazon in a number of areas, particularly web services and big data.

And down the road, Google may compete directly in other ways as well. In fact, Google and Amazon’s are already direct competitors in their core businesses. Moreover, Google’s algorithmic results for product searches are generally poor. ** Most Amazon Prime customers probably already do skip Google and go directly to Amazon. Steve Jobs single-handedly restructured the mobile industry cdix. With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly upended the power structure of a major industry. In the US, before the iPhone, the carriers (Verizon, AT&T, Sprint, T-Mobile) had an ironclad grip on the rest of the value chain – particularly, handset makers and app makers. Ask anyone who ran or invested in a mobile app startup pre-iPhone (I invested in one myself). Since the carriers had all the power, getting any distribution (which usually meant getting on the handset “deck”) meant doing a business development deal with the carriers.

Business development in this case meant finding the right people at those companies, sending them iPods, taking them to baseball games, and basically figuring out ways to convince them to work with you instead of the 5,000 other people sending them iPods and baseball tickets. The basis of competition was salesmanship and capital, not innovation or quality. Six strategies for overcoming “chicken and egg” problems cdixon.

Products with so-called networks effects get more valuable when more people use them. Famous examples are telephones and social networks. “Complementary network effects” refer to situations where a product gets more valuable as more people use the product’s complement(s). Two products are complementary when they are more (or only) useful together – for example, a video game and video game console, or an OS and an application for that OS. Microsoft Windows gets more valuable the more apps are made for it, which in turn makes Windows more popular, which in turn leads to more apps, and so on. Microsoft Windows is not more valuable simply because there are more copies of Microsoft Windows in the world, but because there are more complements to Windows in the world.

Network effects can be your friend or your enemy depending on whether your product has reached critical mass. Here is a high level summary of the 6 strategies we describe with a few updated examples. 1. 2. 3. 4. 5. 6. Startup strategy. Burnham's Beat: The Google Dependency Index: A List of Public In. « Don't Take Angel Investments From VCs | Main | The Algorithm Myth And Why Google Will Be Hated » Wall Street has lots of stock indexes. Everyone knows the NASDAQ and Dow Jones Industrials, but there are hundreds of other indexes for almost every sector and capitalization.

With that in mind, I offer the Google Dependency Index, which is composed of a list of public companies that essentially find themselves completely at the mercy of Google. I put this list together mostly as an exercise to quantify just how important Google was to the direct financial performance of other public Internet companies and I have to say that after going through the exercise it has convinced me that Google A) is actually even more powerful than people perceive it to be B) there will inevitably be a backlash against this power.

Sub-Sector: Direct Dependents (Companies that actually get cash from Google) America Online (AOL): Ever wonder how much Google pays AOL to be its default search engine? Legal Disclaimer. Does Rest Of World Matter More Than The US? I spent some time on Comscore this morning looking at US vs Rest Of World traffic for some of the largest web properties. Here are the stats for Feb 2010: Google: 890mm worldwide visitors, 745mm non US – 84% non US Facebook: 471mm worldwide visitors, 370mm non US – 78% non US Twitter: 74mm worldwide users, 53mm non US – 72% non US I suspect Facebook and Twitter will both end up north of 80% once their internationalization efforts are fully realized. Facebook is a lot farther along that path than Twitter but it seems like Twitter is growing like a weed outside the US right now. This is a Comscore chart of Twitter's non-US traffic through February 2010.

The conventional wisdom is that international usage cannot be monetized as well as US traffic and that is certainly true. Even if international traffic could only be monetized 25% as well as US traffic, when your international traffic is 80% of your total traffic, you would make as much money internationally as domestically. One million true fans. A few years ago Kevin Kelly wrote a post called 1,000 true fans, in which he argued an artist "needs to acquire only 1,000 True Fans to make a living," and using the power of the Internet it is possible to do so independently. In the last few years since that post we've seen an explosion in the use Web services and apps by everyday people -- with arguably Facebook leading the way. Chris Dixon just called where we are today an internet of people. We're at a point now where I see the 1,000 true fan concept regularly applying to startups, albeit a few orders of magnitude higher (depending on whether it is consumer or business).

Now it is relatively common for a startup to get 1,000,000 true fans and be both nicely profitable and relatively low profile. We would have that conversation over and over again about, alright, no one is going to buy shoes without trying them on. I've had a similar conversation a half-dozen times in the past year. Internet Devalues. Web 2 winners start as free apps and become platforms | The Equi. I’m at the Le Web conference in Paris for the next couple of days and this morning I caught a panel chaired by Mike Arrington with the platform people from Facebook, Twitter, Myspace, LinkedIn, Ning and Six Apart. The first observation is that these companies have been very successful in getting people to use their ‘platforms’. There are now 50,000 apps built on Twitter, 60 million people use Facebook Connect every month, and the Ning numbers are also very impressive. The second observation is that with the exception of Ning these companies all started as applications and have backed into a platform model over time.

Traditionally in IT the move has more been in the other direction – e.g. Microsoft started with the Windows platform and then moved downstream into applications afterwards. I think the difference this time round is that the web 2.0 success stories built wildly popular free apps which generated the enablers for their platforms as a by product. Convergence at work – Apple and Google square up | The Equity Ki. What’s the vision? High concept pitches are great for getting your foot in the door (“It’s Friendster… for dogs!”). But once you’re in the building, pitch a bigger vision.

I’ve been talking to a lot of startups that apply to AngelList and most of them don’t have a vision that would separate investors from their money. Here are some great visions: Facebook isn’t a social network. Facebook “gives people the power to share, making the world more open and connected.”Plancast isn’t a place to share plans. Vision principles Vision isn’t a replacement for traction and milestones. Don’t make your vision too abstract. Vision is aspirational.

Make sure your vision is crisp, short, and articulate. Don’t belabor the vision. Vision is free. Notes on business sustainability – Joel Andren on Zynga | The Eq. Joel Andren posted a couple of weeks ago on Why Zynga couldn’t go public soon enough – in which he notes that everything is great at Zynga right now (revenues on a tear, Farmville is hot, Cafe World is getting there) but postulates that ‘their current efforts have probably reached their apogee without making significant changes to their ecosystem’.

Hence they should get out while the going is good and IPO. I’ve got no inside track on Zynga buy Joel’s analysis is interesting and can (and probably should) be applied to most internet businesses. He has a ‘customer ecosystem’ model into which he has plugged Zynga: And by way of explanation: If a company is strong, it will have three of four squares rated green. I like this model a lot. To comment on Zynga’s red squares: We have seen the danger of Facebook dependence before when iLike was only able to sell itself for $20m.

Web services should be both federated and extensible cdixon.org – chris dixon's blog. One of the most important developments of the web 2.0 era is the proliferation of full featured, bidirectional APIs. APIs provide a way to “federate” web services from a single website to a distributed network of 3rd party sites. Another important web 2.0 development is the proliferation of web Apps (e.g. Facebook Apps). Apps provide a way to make websites “extensible.” The next step in this evolution is to create web services that are both federated (APIs) and extensible (Apps). In my ideal world, the social graph would not be controlled by a private company. Consider the following scenario. With today’s APIs, if, say, Gowalla wanted to integrate Facebook plus SimpleGeo into their app*, they would basically have 3 choices: 1) Embed Facebook widgets in Gowalla. 2) Pre-import SimpleGeo data. 3) Host an instance of SimpleGeo’s servers internally.

In a world of extensible APIs (or “API Apps”), Gowalla could instead send Facebook data back to SimpleGeo. This Post Won’t Go Viral | Messy Matters. Sometime during the late 19th or early 20th century, a simian immunodeficiency virus that infects wild chimpanzees made the jump to humans who hunted the animals. The mutated human strains spread from one individual to the next through intimate contact — usually unprotected sex or needle sharing — often leaving carriers absent of symptoms for extended periods while they continued to transmit the virus.

By the early 1980s, large numbers of injection-drug users and gay men exhibited signs of compromised immune systems. These first clinically recognized cases of AIDS, later traced back to HIV, were the start of a global pandemic that has claimed the lives of more than 25 million people to date. For every book or album purchased because of a personal recommendation, how many were bought after simply browsing the stacks, reading a review, or seeing an advertisement? The vast majority of adoptions occur either without peer-to-peer influence or within one step of an independent adopter. Yahoo! What To Do When A Tech Giant Decides To Eat Your Lunch. Editor’s Note: This is a guest post by Mark Suster (@msuster), a 2x entrepreneur, now VC at GRP Partners. Read more about Suster at his Startup Blog, BothSidesoftheTable. WWDC. The annual Apple event where no real hints about what products they plan to release are floated in the public domain in advance.

No private head nods are given to small startup companies to help them prepare. We’re in a market where 800-pound gorillas throw their weight around and the rest of the market races to react and survive. Any company who develops products reliant on iOS spends weeks crapping their pants before WWDC. No vacation schedules allowed for weeks before or weeks after. It’s madness. This happens with Google, too. Or Twitter launches its own photo-sharing app integrated into their product. What is a startup to do? For starters, fear not. Puh-lease. Right. And on and on. eBay / StubHub. Focus wins. The golden rules to live by are: Platforms are channels not businesses. Here are some examples. Good luck.

A mobile first strategy still needs distribution. The mobile first strategy is where the mobile version of your product takes precedence over all other platforms, e.g. Web, desktop, etc. You code for it first and it takes your primary focus and design efforts. It's like when people used to code to Windows before porting to Mac or for IE before porting to Firefox. I see a lot of angel pitches from companies pursuing this mobile first strategy. Leaving aside the bigger question of whether the future of software will be dominated by mobile applications, I have a particular problem with most of these pitches: distribution. Namely, coherent distribution strategies are often missing. Without distribution, how is anyone going to find your app? Of course there are plenty of possible mobile distribution strategies: OccupyAppStore.

It was the Nth time I've had this conversation in a board meeting, "We can't figure out how to get on the leaderboards. The app stores aren't working for us as a distribution channel. " To which I replied "All the app stores use a leaderboard model which makes the rich richer and everyone else poorer. We are in the 99%, wishing we were in the 1%. It makes me want to find a park inside the iTunes store and camp out there in protest.

" All joking aside (and #OWS is not a joke), this is a serious issue for the mobile application market. There have been multiple attempts to build alternative app marketplaces but none of them have developed much traction. Just because an app was the most popular six months ago, doesn't mean it should be the most popular now. There are app discovery services like Appolicious, Appsfire, and several others of note. Centralized control of an ecosytem never offers as much opportunity and diversity as a decentralized system. After The Hype. Fast, good, cheap, and something else | The Equity Kicker. Getting the competitor analysis right when pitching | The Equity. APIs In The Late Afternoon. The War For the Web. Users First, Brands Second. The Logged Out User (continued) When has a consumer startup hit product/market fit. Fred Wilson to devs: Expect platform owners to work against you. Why Google can’t build Instagram. Pincus: In Five Years, Connections Will Be To Each Other, Not The Web; We’ll Be Dial Tones.

Graphs cdixon.org – chris dixon's blog. How New Ideas Almost Killed Our Startup. Key Elements of a Massively Scalable Startup. Milestones to Startup Success. The Startup Pyramid. What’s strategic for Google? cdixon.org – chris dixon's blog. The hierarchy of success. Could FriendFeed have crossed the chasm? « I’m Not Actually a Ge. Most Startups Should be Deer Hunters. On the link economy « BuzzMachine. Creating sustainable competitive advantage. Inc Magazine on Minimum Viable Product (and a r. Progress towards the mobile web and away from apps | The Equity.