AKF Partners

Abbott, Keeven & Fisher PartnersPartners In Hyper Growth

To Succeed Big, Think Small

I, like a lot of you, read lots of blogs and articles each week, some of my favorites include Joel on Software, Coding Horror, High Scalability, Seth Godin, and Tim Ferriss. I also read just about cover to cover the IEEE publications that I receive. I use a variety of methods to keep track of the ones that I like so that I can find them easily when I want to reference them. Two of my favorite tools to do this with are Evernote, where you can clip web pages with tags into your notebook, and ShareThis, where I can drop something in my sharebox and send it to someone at the same time.

I was having a discussion the other day about small services as business opportunities and recalled several threads that seemed to be tangentially related. I parsed through my clipped, starred, and shared items and found these pearls. Whether you are already part of a start-up or considering one here are some ideas that you might consider.

And since one of the technical editors of our book has pounded into my brain the demand to “explain how this relates to scalability”, let me explain. If you’ve read a few of our posts you know that we believe that scalability is about more than technology, in fact if done correctly it’s technology agnostic, but depends greatly on people, process, and architecture. This starts even before the business is founded. The right business plan that balances people and investment with real revenue earning products is critical to scaling. If your cost are too high to service a given number of customers you are losing money. Now you can argue that you’ll get efficiency of scale at some point but you need to survive long enough for that to occur. Without further ado, on to our amalgamation of advice:

Seth Godin says the way to make money on the Internet is by connecting people with what they need. He gives examples that include the following as well as many more:

Connect advertisers to people who want to be advertised to.
Connect job hunters with jobs.
Connect information seekers with information.
Connect teams to each other.

Kevin Kelly says the solution for inventors who are up against the giant aggregators like Amazon is to find 1,000 “true fans”.  If each one is willing to pay $100 each year for something that you invent or service that you provide you can make a great living. This might be four CDs that you produce each year. For those organizations comprised of more than just a solo artist, Kelly states that an increase in fans is necessary but is linearly proportional to the increase in the team size.  He continues that because of the network effect (Metcalfe’s Law) it is likely that the value of the your fans increases proportionally to the square of the number of fans, which means the number of true fans does not have to double to support a duet.

Paul Buchheit, the 23rd employee at Google and creator of Gmail says stick with it, overnight success takes a long time.  They started Gmail in 2001, launched it in 2004 and 7 years later is seen as a huge success with annual growth rates of 40%.

Matt from 37Signals advises to keep your day job and work on your start-up on the side. Even though he capitulates that starting a business does require plenty of time and effort, quitting puts a shot clock on your idea. When coupled with Buchheit’s notion of success is a measure of endurance not speed, this seems like sound advice when possible. For those already under the pressure of the shot clock just remember that is monetization is king and survival is a competitive advantage.

So far in our bucket of advice we have 1) connect people with what they need, 2) find 1,000 fans to support your dream, and 3) don’t jump in until you are able to stick with it for the long haul. What I can add to this is Think Small. Throw away the fifty page business plan that requires $25 million of investment to sustain a profitless company for seven years. Instead think of a single service that people or businesses need.

For Internet companies, there are dozens of services that they need as part of their product offering but only as a small part.  Therefore they either don’t have the expertise or they can’t dedicate the resources to build it well. An example of this is search. Lots of websites need search functionality but few are going to build it themselves when there is a site search tool built by experts available.

Services that come to mind and that either need to be done or need to be done better are contextual classification, yield optimization, micro-payments, recommendations, abstracted scaling, and application monitoring. Go give it a shot and think about scaling from day one of your business.