Allan Isfan is a co-founder of FaveQuest, a young start-up. This blog covers start-up topics.

Monday, October 16, 2006

Google

crush crush crush!


Do you remember that "Kids in the Hall" skit in which Mr. Tyzik would crush people with his fingers? It still makes me laugh!

I've been dealing with people asking me "why won't Motorola, apple or any other Goliath crush you"? A very valid question which I have asked myself many more times than others have.

This brings up many important questions for a start-up, but two key ones keep me up at night ... not with worry but to figure out the answer. The questions are:
1) have all good ideas been thought of already? If someone has thought of your idea, are you screwed?
2) if your idea is more of a concept rather than a technology, how do you defend it?

Let's tackle the first one. You come up with what you think is an awesome idea. With the giddy excitement of a child on Christmas morning, you type in your key words with shaky fingers into google .... and 100 links come up in 0.01 seconds!!! SON OF A BEEYATCH!. All good ideas have already been thought of, with some associated patents in and many websites describing your great idea. Radio TIVO? Done. MP3 player with WiFi. Done. With all the smart, motivated people out there, this is bound to happen.

Of course this is not true. However, it is wise to assume this is the case so that you can build a truly defensible product or service. If you assume you're the only one that thought of a particular way of doing something and that is your only foundation, the false sense of security makes you extremely vulnerable. New concepts fail or don't get implemented for many reasons (two of many are highlighted below).

Execution is key. The last $100M/yr product I was a major contributor on was not that novel. In fact, a major telecom equipment vendor had teamed up with a leader in DSL at that time and came up with what turned out to be a complete catastrophe. Our solution was so much better, it's not even funny. We were in a life and death situation where the whole company depended on the success of the product. We set very high goals, hired people with balls, executed with unbelievable focus. Failure was not an option and it showed. Our second product didn't fare so well.

Incumbents don't care. Big companies need big revenues and need universal appeal to hit their numbers. Even big companies have limited resources. Can you imagine if Apple came out with the next iPOD and it only sold 100k units per month. Heads would be rolling. BTW, they sold 14M iPODs in the last quarter. If we could sell 100k units/month, we'd be snorkeling in a pool of champagne (I wonder how much that would cost?)

Lots more to be said but best move on. Ok, so what if your idea is more of a concept, such as a service, rather than a magical technology, how do you defend it?

Everyone is looking for the secret sauce or that one ingredient that makes the sauce secret. I remember going to restaurants, trying to guess how they made the sauce so I could make it at home. I came close a few times but mostly didn't quite nail it. The trick is to mix ingredients such that they build on each other. Each one brings out the elements of the other. You see where I'm going with this. Amazon doesn't just have access to huge inventory and low storage costs. Their recommendations, often contributed by users, help people find other stuff. I often buy books two or three at a time to minimize shipping charges. Amazon often doesn't store items in their own warehouse. They just serve as a storefront and products get shipped directly from someone else's warehouse to you ... $0 cost to Amazon. Freaking genius. Nothing secret here.

Few people believed in search when Google was pitching. A site for crazy, user generated content called YouTube? Well ... we now have GooTube which controls an absolutely ridiculous number of eye balls and the equally ridiculous ad revenues.

Ye must have faith ... and balls.

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