COMMENTS
Great post and seems like startup school was well worth it.
"It's hard to imagine Google starting and succeeding with a 37Signals-style subscription model; especially in the time when Google launched, having to "pay" for the privilege of searching the web would likely have been a recipe for failure."
There are similarities---Google adopting the Overture CPC model was the equivalent of the "freemium" model today. While the other search engines were selling off results to advertisers at high CPMs and simply poor at finding what you wanted, Google made a better product and priced it right...five cents a click to start.
The risk of missed opportunities are never counted. How many Siebel VARs and consultants were there ten years ago? Could any of them become Salesforce.com? With VC maybe. Highly unlikely without it.
"Some ideas might well have that billion-dollar potential, and may need that VC funding to get going. A lot more ideas really can be put together in 10 hours per week (as Hansson mentioned Basecamp was built), and then run as a profitable business. The important thing is having the ability to tell one sort of idea from the other."
That is so true -- and yet -- so many times, we get carried away while envisioning the next big thing (well, according to us anyways ;)).
A healthy does of realism is what we need I think :)
Thanks for the very insightful article.
Thought provoking post on a good talk.
The VC ecosystem treats entrepreneurs as a commodity raw material: about one team in 200 is funded, so they are looking for the top 1/2 % The rest are thrown away.
Compare that with the YCombinator model, with it's associated community and things like Hacker News that provide ongoing support for teams that were not accepted as well as many that didn't apply. YC may force at least seed VCs to reconsider their model for software companies.
I can imagine a number of business that could charge you to search the web, in particular the application would be very focused on helping you find what you are looking for and not wasting your time and attention on ads.
I don't think you can tell if you have a billion dollar idea: complicating factors include the risk of self-deception, survivor bias (we only hear about the winning lottery tickets), and the need for ongoing focused experimentation and execution to make a real business. I think you can tell if you have a good idea that's worth pursuing, but that's a far cry from a billion dollar idea.
I don't understand the meaningful differences between the Basecamp family of products and the Google Docs family. Couldn't they both be billion dollar ideas? Or perhaps neither.
Take for example McDonalds, Ray Kroc took ideas reduced to practice in an existing business and understood how to convert one hamburger stand into a franchise model. Yet nominally you would think a hamburger stand wouldn't be a billion dollar idea.
Is it really "either this or that"? It looks a bit binary to me.
Let's elaborate.
Def succeed
Depending on your personality
If you are a socially fluent person, sell your idea to VCs.
If you are a socially inept person, sell your product to customers.
If you are a dog, please contact me, I have a business proposal for you.
Else quit
end
Exception Genius
return !GallileoStyle?
end
;-)
And I always thought that the purpose of a business plan is for the entrepreneurs to determine whether they need outside funding or not...
Berislav, that is ONE of several purposes of a business plan, but hopefully not the only one :)
"...in favor of simply building a business by the somewhat revolutionary idea of just charging money for your products". And to think of it, charging money to keep your business going has been around for eons :-) Its the other way round that is revolutionary.
Both camps have their points. Google could not have started without the seed money. They could not have charged for search results, because search engines before them were not charging anything. I am sure they would have considered that option if it was not so. Ebay started without any VC funding and did start charging at an early stage and no one even today thinks of providing auctions for free.
The title is misleading, but the article is decent.
@Matthew Baron... the title could be seen as misleading, but I actually based it on some things DHH said at the very beginning of his talk. He talked about how alone he felt there, and made several references to the fact that his point of view was in opposition to much of what we were hearing throughout the day.
So, it wasn't meant to be misleading... he himself made the point that his was a minority opinion in that setting.
Glad you liked the article, thanks.