Need a Little Inspiration?

I'm usually not much for motivational pieces. I generally prefer nuts and bolts "how to" articles or more philosophical discussions about entrepreneurship. However, this video is really well done and may inspire a few people who were contemplating a startup to get off the fence:

You Only Get Five Tickets

Warren Buffett is renowned for his ability to wait patiently for the right investment opportunity to come along. Instead of spreading his capital across a wide range of investments, he loads up on the very few that demonstrate tremendous upside potential. That's one of the primary reasons he's been so much more successful than most professional money managers. To cultivate that mindset, he once proposed that investors imagine they only had five tickets for their entire lifetimes, and making an investment required the use of one of those tickets. Just think how much more selective you would be if your portfolio operated under those limitations!

It's Not Just About Eyeballs

Daniel Lyons reports on financial problems at Digg and offers a warning for Web 2.0 outfits:

Digg’s collapse has become a cautionary tale for so-called Web 2.0 companies in Silicon Valley, even the current crop of superstars, like Facebook and Twitter. The basic problem is that these new-media companies don’t really have customers; they have audiences. Starting a company like Digg is less like building a traditional tech company (think Apple or HP) and more like launching a TV show.

Wesabe vs. Mint: Lessons Learned

Marc Hedlund recently posted a great piece on why Wesabe lost to Mint in the battle of online personal finance apps. As many of you know, Mint was acquired by Intuit in 2009 for $170 million. Wesabe, on the other hand, closed its doors several months ago. Hedlund was the product designer (and later CEO) at Wasabe, so his point of view is especially relevant. He points out, for example, that Wesabe launched almost a year before Mint, contrary to what a lot of people assume. He also makes it clear that Wesabe's failure had nothing to do with design or brand identity.

Second, Mint focused on making the user do almost no work at all, by automatically editing and categorizing their data, reducing the number of fields in their signup form, and giving them immediate gratification as soon as they possibly could; we completely sucked at all of that. Instead, I prioritized trying to build tools that would eventually help people change their financial behavior for the better, which I believed required people to more closely work with and understand their data. My goals may have been (okay, were) noble, but in the end we didn't help the people I wanted to since the product failed. I was focused on trying to make the usability of editing data as easy and functional as it could be; Mint was focused on making it so you never had to do that at all.

Fail Fast, Fail Cheap

We all hate failure. As a nation, we loathe and fear it. General Patton famously quipped, "America loves a winner, and will not tolerate a loser." And yet, failure remains as much a part of entrepreneurship as success. If you look at the careers of serial entrepreneurs, you will usually run across one or more flameouts before they hit it big. Henry Ford, Walt Disney, and Thomas Watson (the founder of IBM) all struggled early on. Watson famously had the following to say about the relationship of failure to success:

It's quite simple, really. Double your rate of failure. You’re thinking of failure as the enemy of success. But it isn’t at all. It is better to aim at perfection and miss it than to aim at imperfection and hit it. You can be discouraged by failure or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that's where you’ll find success. On the far side.

For entrepreneurs, the important lesson is to learn how to manage failure. If you do it well, it will get you that much closer to your objective. Here's how:

1. Don't get discouraged by the inevitable setbacks and dead ends. It's part of the game. Get used to it.
2. Treat failures as teachable moments for you and your team. Don't repeat the same mistakes twice.
3. Fail quickly and cheaply to preserve the option to try again. (Know when to hold 'em and when to fold 'em.)
4. Keep your reputation intact at all times. Always play it straight with employees, partners, and investors.

If you follow these four pieces of advice, you'll get plenty of bites at the apple. Remember, it's not how many times you get knocked down. It's how many times you get back up that counts.

Design Patterns for Online Businesses

There's really nothing new under the sun. Most ways of making money, including sophisticated financial products, frequently have analogs from other industries and historical periods. Michael Rappa summarizes the most common business models found online, categorized into nine archetypal design patterns:

• Brokerage Model—bringing buyers/sellers together
• Advertising Model—promoting products/services to an audience
• Infomediary Model—gathering information about an audience and monetizing it
• Merchant Model—selling goods/service either wholesale or retail
• Manufacturer (Direct) Model—selling goods/services directly to the user without an intermediary
• Affiliate Model—providing purchase opportunities wherever people may be
• Community Model—selling ancillary products/services in a community
• Subscription Model—charging for ongoing usage of a product/service
• Utility Model—charging based on how much of a product/service is used

Reboot: Guy Kawasaki on Bootstrapping

Guy Kawasaki has done it all in his career. He's been a Mac evangelist (and later an Apple Fellow), founded or co-founded three startups (ACIUS, Fog City Software, and Alltop), and manages his own early-stage VC fund. If that weren't enough to hang his hat on, he's also a celebrated speaker and author with nine titles to his credit, including the best-selling The Art of the Start. In 2006, he posted this essay on bootstrapping on his blog, which contains some wonderful advice for anyone involved in a startup, including some interesting contrarian ideas on what it takes to be successful.