There are Web 2.0 companies popping up left and right, every self respecting Ruby on Rails and PHP programmer must have one. Following these startups as well as what the big players does has become a national geek pasttime (detailed knowledge of these thing is a must to be cool in a Web 2.0 crowd!). The vast majority of startups will fail, and the good times where millions of venture dollars are easily available and where Yahoo and Google are on an aquiring rampage are soon over. So what is needed to create a successfull web venture? Open any management book or read any startup blog and they will say “team, team, team” and after that “contacts, contacts, contacts”, so I am going to skip these obvious ones. Instead I am going to outline the 3 things I think that any web venture needs to become a success…
Almost anything you have online can be easily copied, almost any code and feature can be copied. This can be done by the big guys or by some well fincanced startup throwing money (and indian programmers) at the problem, and it can also be done by a couple of overachieving Computer Science majors at Standford (it has been done before). So a bigger moat is needed to protect what you got and to set you apart from all your competitors. These offline advantage can be patents and trademarks (if you have the money to protect them), hardware (Googles gigantic server farms and network for example), fame (Guy Kawasaki and Truemors is a perfect example) and contracts (signed contracts with partners, suppliers or customers that brings you some unique advantage). All these things are hard to copy and will get you an advantage both when it comes to protect your position and beat your competition. It is also really going to help when it comes to the valuation of your company.
Advantages of Scale
This works great for Google, MySpace and Wal-Mart, so why not for you? It is not a given for a startup to reach the point where they are big enough to take advantage of their size, but it is a must create a web venture that is successfull in the long run. Advantage of scale comes in many forms and in many diverse areas. If you set up your own server infrastructure (instead of going for Amazon EC2) you will get better deals from the hardware suppliers the more you buy. If you have a large number of users you will get more usefull behaviour data you can use to improve your services, and you will also be able to sell more advertising. The bigger and more poupular your site is the more free PR you are going to get, etc etc. Again, this is hard to copy.
Speed of Development
As stated above all code can be copied, all features can be copied and all designs can be copied (as AOL did with Yahoo’s design). But only things that already exists and are released can be copied easily. To copy your plans and your future roadmap is not as trivial. Therefore it is critical for a web startup to be able to move quickly and constanstly improve, add new feature and services. Everything you develop is just one step of the overall masterplan for world domination. That way you can leave the copycats behind and stay #1. This means that you constantly need to think 3 steps ahead and know what will be your next step. This also will save you from the worst panic when the competition releases some new hyped feature.
Why isn’t Data or a cool name a must-have?
I haven’t mentioned Data as one of the must-haves. One reason for this is that a lot of the advantages of data are part of the “Advantage of Scale”, ie the more good data you have the better. Another reason is that data in most cases can be copied (if it is in HTML format is can definitly be copied), unless it is protected by contracts (ie an Offline Advantage). Another thing I haven’t included in the must-haves is the cool name factor, something that seems so important in the Web 2.0 world. A cool name is great, a cool name is good, a cool name that you can also buy the .com domain for is even better – but it is not absolutely critical. Anyway, there are many good posts/articles/books about that subject. But a cool name alone does not equal success.
Googles famous motto is “don’t be evil”, but in reality it is more like an information Pacman and should have the motto “must eat all data”. There is no doubt that Google is the current leader on the internet and one of the companies that really enables the Web 2.0 explosion. At the same time it is also one of the most feared companies, and is more and more being viewed as an evil empire. This is just what happened to Microsoft in the 90s. So is Google acctually more evil than Wal-Mart, Microsoft and Darth Vader?
To be clear this is not another FOG (=Fear Of Google) post, there are more than enough of those out there in the blogosphere, it is more some thoughs about why Google is starting to get the Mr Evil image.
More evil than Wal-Mart?
Wal-Mart relies on huge scale advantages and is famous for killing of small mom-and-pop stores in the cities it invades. The Web 2.0 space has very few mom-and-pop stores, the corresponding would instead be the 2 geek startup that hacked something cool looking together in 2 months using Ruby on Rails and then gets a lot of buzz. These minor startups are very vulnerable to what the Mountain View gigant does. The addition of MyMaps to Google Maps picked of quite a few startups, as did Google Analytics. So I think that small startups that does not really have a full fledged application, but more just a hyped feature (as is the case for most Web 2.0 startups) do right in fearing Google. For them Google is the same as Wal-Mart.
More evil than Microsoft?
Microsoft ruled the desktop, Microsoft ruled the OS, Microsoft ruled the office. This is still true, but the grip is weakening more and more, and Google is the main enemy. When Microsoft was the big bad wolf that dominated every part of business it entered. It was (and is) a real threat to any big and small business. Guess what, the same is now true for Google. To not be aware of what Google does is foolish for anybody in the Internet or Computer industry. With it’s massive userbase and bottom less bank accounts it can enter and dominate almost any market it sets it’s mind to. So that would make Google the same as Microsoft version 1999.
More evil than Darth Vader?
I have never met the Google founders, but I very much doubt that they have a constant asthma attack like good old Mr Skywalker Senior has. Anyway Darth Vader is one of the coolest villans ever, to I do think that comparing Google with him is a bit unfair to both parties. Darth Vader has cool TIE-fighters, Google has a replica of SpaceShipOne in the reception of the Googleplex, but the similarities pretty much end there. Still, comparing Google to Darth Vader makes for a good subject for the post, please forgive me for that.
As good as ice-cream?
So far Google has just been compared to evil things, so let’s compare them to something good instead, like ice-cream! Acctually Google has some advantages over ice-cream – almost everything is free at Google, while most ice-cream shops insist on getting my money. Google is dominating the way they are because they are providing great products that people want. We all use Google Search, and personally I am a total Google Desktop junkie and also use Google Analytics, Speradsheets, Docs etc. So as long as they are not more evil than Wal-Mart and Microsoft combined, and as long as there are not a better alternative I will stay a loyal Google user.
The key thing is of course how Google are going to use all the data they collect, the risk is that they will really invade privacy. But hey, they are fighting Paypal with Google Checkout, so how evil can they really be?