Google announced its Chrome OS last week, and it’s focused on the cloud. You basically get a browser and web-based applications to replace all the stuff you love. In fact, the OS is so cloud-focused it even resets itself on errors by downloading itself.
Let’s discount the availability of Internet everywhere. Look beyond the fact Google Gears is still flaky and doesn’t work seamlessly with Google’s own products, GMail and Google Calendar. These things can and will get better.
Google’s strategy is to sync everything to the cloud and assume its accessibility everywhere: your laptop at home, your desktop at work, your Android phone, and now, your netbook (or other coming device). The cloud is actually Google’s servers, though, which works out nicely for them.
Compare this to Apple’s 2001 vision of the home Macintosh being a hub for your digital lifestyle. You go home, you use your computer. You plug in your iPod. You plug in your iPhone. You plug in your iTablet. Your home machine has everything, and the peripheral devices work to parcel out the information in the context you need them.
Microsoft is on this side as well, but they’re following a weird disjointed path that focuses on the cool new thing every year: Microsoft Home Server to sync your multiple PCs at home, Windows 7 to catch Mac OS X, Windows Mobile 7 to catch iPhone OS. In an attempt to keep their fingers in every pie, Microsoft acts as if everything needs to work together instead of a subset.
You don’t need everything synced to a cloud: music, email, and calendar are good enough for most people.
Apple has figured this out – that’s why they called it a digital media hub.
Microsoft is close – instead of competing with Apple on a product-by-product basis they should do three things:
- allow XBox360 to store your music and videos locally
- allow synching for Windows Mobile 7 and Zune HD to an XBox360
- bring calendar and email to XBox Dashboard through Windows Live
Google and its Chrome OS, meanwhile, are a different path. I can see why technophiles geek out to this (”I can get my spreadsheet anywhere!”), but I can do that using Dropbox anyway, and I get a nicer UI.
Software doesn’t always win the day, especially when you’re dealing with normal humans who don’t know (or care) what a cloud is.
Paul Graham wrote an article on how Apple alienates its iPhone developers. He has a good discussion about developers iterating and needing to get a new product in the hands of their users. In fact, he mentions a developer who says the approved app feels crappy next to the daily builds and betas he hands out.
It’s time for these folks to try my G1. Not because it’s better but because Android will annoy the crap out of you. Every day, I get a notification telling me “N number of apps updated.” And every day, I roll my eyes and clear the notification. Users don’t want to go through this process; it’s annoying when it happens on a desktop every few weeks, so it’s even worse on a daily basis on a phone trying to download over a
3G EDGE connection.
Deciding what constitutes a critical bug is difficult – if you’re a lone developer you think everything is important. Should Apple trust you to self-regulate and update only on critical fixes or major new releases?
Apple has an iron fist when it comes to the iPhone and its ecosystem because its advantage is a tightly knit experience. Getting a daily notification while you sync asking you to update or an in-app pop-up with details lessens the polish.
Ultimately, I think this App Store stuff is a way of throttling developers to ensure the experience is not too painful. More updates make users think, and you want to minimize that.
While at National Instruments a few years ago, I got to see a large company clean up and simplify its product lines. The company wanted to move from a huge catalog of products (NI-DMA-PCI-6024E-16) to a standard set of lines (M Series, N Series). One mantra I repeatedly heard during this process was breaking things into good/better/best – that is, having three different options to appeal to the main segments of any buying population:
- good – those who always, always take the least costly option
- better – those who don’t want to look cheap, so they go one step up
- best – those who always, always take the most expensive option
If you’re selling a product or service, then you are leaving money on the table if you don’t consider a cheaper version of your product or a more expensive service plan. In fact, this is at the core of the whole freemium meme – slightly interested users will never ever pay for your product, so give them a solution good enough to use and talk about. The more interested and serious user will actually pay for it.
Now, the cool thing is that the same good/better/best breakdown applies in markets. So, fellow startup person, are you:
- providing a cheap solution in a market dominated by expensive solutions?
- providing a best-of-breed platform in a market fragmented by other companies?
- in the middle hoping to fight both ends of the market?
If you answered 1 or 2, best of luck! If you answered 3, then you should really think about how you’ll stand out and get your marketing message across. It’s hard describing that you bought the middle MacBook – the aluminum one without the illuminated keyboard. How will you describe your company if it’s not the cheapest solution or the highest quality one?
We went through a lot of iterations and tweaks while working on our pitch for Dropcam. One thing that friends, family, and investors liked is the initial market. At one point, though, we were trying to address concerns from an investor by discussing [our crazy new technology] and he stopped us immediately with:
Wait a sec. Now you’re breaking the two-crime rule. Do you know what that is?
No, we didn’t. What’s that?
Cops will often pull someone over for some minor offense like speeding or a headlight being out. That’s no big deal and you can usually work your way out of it… unless you’ve got some drugs in the car or are driving drunk. The second crime is the one that gets you locked up.
Look – there’s enough uncertainty about your success in [market]. Now you want to add the complexity of [crazy new technology]? I know you guys are smart and can do a lot of stuff, but you just added to your degree of difficulty.
Obviously, this person didn’t invest… but it was some good feedback. Investors can deal with uncertainty surrounding your market or technology, but rarely both.
Andrew Chen pointed out an awesome iPhone presentation by Pinch Media, which covers some really useful insights you should use if considering whether to make your app free or paid, as well as whether your app is doing well when compared to other apps. Here are some of the key points.
Whether you have a free or paid iPhone application, the users returning falls off exponentially. If you retain more than 5% of users after 60 days, you’re doing really well. Long term retention is about 1%; this is true for both paid and free applications.
You shouldn’t necessarily give away your application for free and make your money on advertising. Because current CPMs are around $2.00 and applications are usually run 12 times at most, you may be better off just charging $0.99 for an application. Charge first, and adjust as you see a trend (high usage per user, target demographic, or lots of users) indicating advertising makes you more money.
One of the big questions we faced while going through a fundraising round is determining how much to raise.
During the 6 weeks we were looking for investors and advisers, we actually moved between a seed round in the hundreds of thousands to a series A for a couple of million to a “series A lite” around a million.
This movement between types is a siren call – as you get some interest you feel you should raise a little more. After all, more money is more runway. It’s more for hiring good people. It’s more for a nicer office. It’s more for marketing and business development opportunities. Right?
Elliott Dahan has a nice breakdown in a recent presentation of the difference between types of funding. Two things differentiating between a seed and funding stage?
- team vs. traction – if you have a product with users, a series A is much easier to attempt
- quick (< 1 week) vs slow turnaround – seed investors can move really fast if they are interested, while institutions will have lots of due diligence
My experience corroborated this. Angels would respond much more quickly than institutional investors. Usually the difference was one week vs about 3-4 weeks to go through the multiple presentations and interviews.
The current economic crisis, though, has made most investors more cautious. In fact, traction is now something even prominent angels want to see. One thing we heard: past small series A investments are now seed, while past seed investments are now going un-funded.
If you’re an entrepreneur looking for investment, realize that the road to financing is getting longer and more uncertain. It’s not necessarily that your idea needs work, it may also be that the investors you’re speaking to are scared.
A quarter of iPhone users say it’s displacing a notebook computer. 28% of iPhone users surveyed said strongly that they often carry their iPhone instead of a notebook computer.
One critical question is what laptop uses are now replaced on the iPhone? Are we talking about IM? Email? Or is a small group actually doing real web research and work on the phone?
Speirs goes on to describe the three main contexts for usage he sees:
|Type 1||physically moving while using – 0-1 hands||small feature set, simple, easy, quick, focused|
|Type 2||“interstitial” – standing, waiting – 0-1 hands||more features, still relatively simple, adding peripheral data|
|Type 3||away from home – sitting, replacing laptop – 2 hands||complex, requiring user to think and respond|
Do type 3 apps really need to exist on the iPhone? If they do, will a screen keyboard be the preferred method of input? The market for Windows Mobile apps has existed for a while (ditto Symbian), yet neither took off. Is that because it was too niche, or because type 3 apps just don’t translate to such small devices?
I read Growing a Business last week, a book by Paul Hawken of Smith & Hawken. The book is pretty old, from 1988, so there is no mention of the Internet, little about software, and nothing at all about startups. In fact, I was struck when the author mentioned the computer for the company. Not a, but the.
Even so, the book is a must-read for anyone who actually wants to build a business that makes money, contributes to society, and does something useful. Hawken doesn’t go into a ton of specifics about finding an idea or market, but he says a few things I’ll keep in mind going forward:
Address problems that money alone cannot solve.
If you’re chasing after an idea that could be solved by an estabished company throwing some dollars and people at it, that’s likely a bad sign. (Whether they do it, can focus on it, etc., is a different consideration.) If you hear about people paying consultants or contractors to do something and it still sucks, there just may be an opportunity there.
Money goes where it causes the least embarrassment.
This one relates to the whole “no one ever got fired for picking IBM” thought process. It’s true, both when it comes to internal spending and when it involves VC funding. Why does it seem like funding cycles come in waves? Why did a bunch of social networks get funded all at the same time, but then it took a few years and a risk for the new wave (led by Facebook) to get additional funding)? Why do some entrepreneurs repeatedly get funding when they have no past success while new guys find it impossible to even get in the door?
Focus on a niche instead of developing a new market.
Hawken discusses how hard it is to create a whole new market, one that people don’t realize is needed or one where the benefits are not apparent until you try it. Instead, he suggests focusing on a niche. If it buys in, you can explore and grow from there.
Also discussed are building a good culture, focusing on customers, funding, and lots of other great insights. The lack of technology talk produces a list of business lessons and people skills necessary for those who want to create a business instead of just raising funding or boosting egos.
While thinking about how to organize projects on my home machines, I decided to look into Git, a version control system like CVS and Subversion (SVN). Unlike those two, however, Git is distributed, which means you can have multiple repositories for the same project, and/or only a local one to handle your stuff.
You can use Git a lot like Subversion with one major benefit: you can do local check-ins without having to branch, synchronize, and create remote copies of your own sandbox.
Of course, this means you have to learn yet another set of syntax. A really good primer is a crash course on Git for SVN users, but here are the key things I learned and found to get rolling fast.
So let’s just assume you’re creating a project in directory local_dir. You already have a bunch of files and you want to sync up. You also have a remote server my_server. Here’s what you do.
First, go into the local_dir directory and:
- git init – sets up the git files for tracking locally
- create and edit a text file called .gitignore – on each line place files you want to ignore, like DS_Store and *.tmp files, etc.
- git add . – tells git you want all files (recursively) as part of the next commit
- git commit -m “initial checkin blah blah” – tells git to commit with the given message
At this point you’re locally ready to go. If you don’t want to work on multiple machines or synchronize to the cloud, have fun!
Otherwise, you should now go to your server and set up a place for your files to live in remote_dir:
- mkdir remote_dir
- cd remote_dir
- git –bare init – sets up git in this directory with no initial working copy
Now you go back to your local machine and tell it about your remote server:
- git remote add origin firstname.lastname@example.org:remote_dir – tells git how to ssh to your remote repository
- git push origin master – tells git to send your local copy to the server – magic!
You may want to edit .git/config so that you can quickly push and pull files by adding the following lines to this file:
remote = origin
merge = refs/heads/master
This will mean you can use the following commands to synchronize to and from the remote server:
- git push – send local copy to the server
- git pull – get server updates into local copy
Finally, if you want to work on other machines (or have someone else join you in your work), all they have to do is:
- git clone email@example.com:remote_dir – copies the remote repository to your local machine
Voila – you’re ready to go!
I finished Guy Kawasaki’s book Rules for Revolutionaries yesterday, and there is one chapter in the book I wanted to highlight because it summarizes some common mistakes when building a business.
Kawasaki calls these mistakes death magnets, the “traditional habits and patterns of thinking that seduce companies”. Here are his top ten:
- picking low-hanging fruit – make sure your initial market focus fits not those most rabid for your product (the early adopters who will nitpick), but those who are strategically viable.
- just sucking less – don’t be happy with just sucking less than your competitors, because you will remain open to a new market entrant.
- overemphasizing budget – remember to take opportunities when they come even if it costs more than you wish.
- overemphasizing consistency – don’t fall into cycles and patterns just because that’s they way it has been before.
- attacking too many markets at once – this one is so awesome it gets a quote: “You have to pay your dues by knocking down barriers and dominating niche markets one at a time.”
- diluting your brand – don’t waste any brand recognition by going in an odd direction.
- outsourcing – don’t outsource core competencies.
- mimicking the big guys – don’t copy processes and activities just because a big competitor does it.
- lowering prices – gaining market share, killing competitors, increasing profits on volume… none of these are a guarantee.
- assuming that “best product wins” – one of the greatest business lessons ever
The book was written in 1999, so it’s great to see how applicable these points are today. I wonder what Guy Kawasaki would say now about #9. The freemium model emphasizes the 0 price point as a way to gain market share (and mind share).