Winning The Web 2.0 Lottery: Picking The Right Numbers

August 7, 2006

If you are a regular reader of this blog, you probably know that I'm somewhat of a skeptic when it comes to the viability of many of the "Web 2.0" businesses out there (note:  I use double quotes around "Web 2.0" as I'm still unsure exactly what it means).

In this article, I'd like to approach this issue from a slightly different perspective.  Let's say you are determined to play this lottery.  What should you do to increase your chances of winning?  What are the best numbers to pick?

Important Note:  I consider myself to be relatively objective and have a basic understanding of statistics (I was thinking about being a professional blackjack player at one point in my life).  As such, I do understand that lotteries are random events and that there is really no way to have tips for picking winning numbers.  Web 2.0 on the other hand, has a non-random component to it -- which is what makes it interesting.  So, I'm taking a bit of poetic license here.  Work with me.  It’s Monday morning and I haven’t had my coffee yet.

Picking Winning Numbers For The Web 2.0 Lottery

These are the numbers you should be striving for (Note:  Many of these are contrived and arbitrary, but I'm just trying to make a point).

This is the ideal number of other players that have already launched a product that is near identical to yours. 

The number of other startups that you should assume are working on an identical product to yours, but they haven't launched yet.

The minimum number of co-consipirators (co-founders) you need to get stuff done.  You'll need at least one more passionate and immensely competent person to spread the work around.  Going it alone is a recipe for failure as you have as much a marketing problem to solve as you have an engineering one.  I don’t care how smart and motivated you are, you are still limited by the laws of space and time.

The maximum number of VC meetings you should have before you get back to work on your product.  With two meetings, you learn most of what you need to know (after that it’s repetitive).  This number can increase once the product has launched and you have some real numbers to show.  I would have cited the probability of your raising VC before actually launching a prototype or product, but I didn’t want to resort to scientific notation, so will let it go.

The number of days a week each of the founders should be working pre-launch to get a product out the door as quickly as possible.

The approximately number of times you’ll actually “launch” your product.  The first time, you’ll be caught by surprise (because TechCrunch will write you up, even though you’re not quite ready).  Your servers will crash and you’ll lose sleep.  The second time, you’ll be ready, but the market will be caught by surprise because they have no idea what you actually do.  The third time will be when things almost work and it is almost clear to people what it is you do.

The average number of actual, real, “customers” you should expect to get as a result of being TechCrunched.  (Note:  This is a constant and is not influenced at all by the actual traffic generated).

As in learning from 37signals.  One of the few Web 2.0 companies out there that is actually a practical business.  They have much of the upside of a cool company (like a cult-like following and almost limitless PR successes) and little of the downside.  Somehow, they've figured out how to be cool, viral and still charge (gasp!) real money.

What have I missed?  What are your favorite numbers in the Web 2.0 lottery?

Topics: startups web20

Written by Dharmesh Shah


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