Amy Shuen Blog

Purple Cows vs. Maverick Surfer

How are prosumers, DIY and online uploaders using Web 2.0 strategy transforming the Fortune 500 and Fortune 50Million business landscape? 

It turns out to be as simple as Purple Cows vs. Maverick Surfers. 

Purple Cows:  In the Startup School 2008 talks, (see Top 10 tips from Startup School) Michael Arrington of Tech Crunch summed up his advice to entrepreneurs as be a "Purple Cow". the term coined by Seth Godin to capture the essence of "standing out in the field" as a path to success. 

Maverick surfers:  This was juxtaposed against the compelling visual put up a few hours earlier by Greg showing the ideal startup entrepreneur as the lonely but courageous surfer heading down a 5-story high Mavericks-size wave.  Greg had exhorted the audience to go after huge gigantic markets with the help of VC-funding----going for "out of the ballpark" home-runs like Google's "organizing all the world's information".    Maverick surfers ask themselves Steve Jurvetson's famous question "how high is up".  The idea is that if you choose the right industry with a huge market and the right timing, that you'll be able to ride the huge wave to success. '

Web 2.0 strategy powers up prosumers, DIYers, creative online uploaders to not only be an online, social media and hypernetworked "Purple Cow" noticed worldwide by other Purple Cow enthusiasts but to generate their own Mavericks-size wave and market instantaneously using social media platforms and viral distribution like Facebook.  This is the iLike story multiplied and leveraged by the Fortune 500 and Fortune 50Million alike.

So to continue with the Surfer analogy--dear to my heart since I'm a kite-board and windsurfer--Web 2.0 strategy allows individual users and entrepreneurs to create their own Third Wave online at the same time that they creatively find their own Blue Ocean Strategy and Purple Cow market. 

Boy, talk about mixing and re-mixing metaphors...

Here's a Web 2.0 hip answer to the age-old corporate strategic question of whether individual, entrepreneurial and company competences are more important to sustainable competitive advantage or larger industry-level, structural forces and macro-economic trends.   Hundreds of strategic research articles and scholarly tomes have been written to try to separate out the impact of "distinctive", "core", "innovative" and "dynamic" capabilities from industry-level factors on strategic performance.  Purple cows and maverick surfers can co-exist and collaborate in the hypernetworked world.

Web 2.0 Strategy Research Seminar Online

The readers of my O'Reilly Web 2.0 Strategy book forum know that  I use the book forum as a web cafe or mashup between a conversation, a helpdesk and and strategy advice column--"ask Dr. Amy". 

In contrast, my blog is like an ongoing web 2.0 strategy research seminar online.  I've scheduled my blog postings around the 100 or so end-notes in my book and will be adding commentary and linking to new or updated information from the authors of the many different books, articles, cases and references that are recommended. 

In May, we will be discussing several key Chapter One topics:
Online DIY and the experience economy
Uploaders
Collective user value
Freemiums
Public sharing and Creative Commons
Semantic Web and metadata
Business model analysis
Single customer and per user economics
Financial valuation methodologies
Funding requirements of Web 1.0 vs. 2.0

Web 2.0 Strategy Book Launch at Expo Wildly Successful

Wow--for a short while I was a "rock star" book author at the Web 2.0 Expo, with rave book reviews from Tim O'Reilly and John Battelle, being video-blogged by Robert Scoble, audio-blogged for the Seattle PI, interviewed by the BBC and major US newspapers, while hundreds of my just-printed book, Web 2.0:  A Strategy Guide, flew off the shelves of the O'Reilly Media booth. I've posted links to these on my website www.amyshuen.com. 

My publisher tells me that selling out of 400-500 books in 2 days is record-breaking, And most wonderful of all, I observed browsers decide to buy the book in the morning and then come back an hour or so later for three or four more--for their team, their boss, their co-founders, colleagues and friends.

The most fun of all was meeting and chatting with the folks who were buying my book, while personally autographing their copies.  Thanks so much to all of you who shared your stories, interests and questions about Web 2.0 strategy and contact information.  In true Web 2.0 fashion, I've tried to aggregate these separate pieces of data and information into the following "collective intelligence" insights...

1. The range of readers interested in Web 2.0 strategy is  surprisingly large and diverse.
25% startups, 20% big companies (15% high tech, 5% traditional), 20% service--ad, creative agencies, design, communications, consultancies, 10% media (broadcasting, newspapers, film), 10% public and academic (libraries, universities, education), 15% international

2. Web 2.0 has gone mainstream business--balancing cool and whizzy technology, user experience and consumer-oriented social media startups with the economics of big business, industry, Enterprise 2.0-- making integrated advertising and communities online and offline increasingly important.  This reader group appreciates MBA-style analytical tools and strategic frameworks applied to Web 2.0 strategy.  So I clump the 20% big companies and the 20% service groups together under mainstream business--assuming that many of the 20% service groups are servicing large business clients with advertising, web design and online communications services. 

3. Web 2.0 strategy looks to be the future of the Fortune 50Million as well as the Fortune 500.  Although there were very few pizza parlors, pet stores, specialty sports and realty offices represented at the Web 2.0 Expo, bringing world-class but easy to use technology and online services to millions of fragmented small and medium size businesses has always been the holy grail and a challenging untapped and hard to reach market--having some of the characteristics of the individual consumer market and others of the business, professional and industrial marketplaces.  I'lll be writing more posts in the future on how Web 2.0 strategy and the economics of web services might bridge this chasm.   

    

How to make money with Web 2.0

I caught a few of Dave McClure's slides presented  during his Startup Metrics 101:  Product & Marketing Wrkshop with Hiten Shah and Vanessa Fox at the Web 2.0 Expo SF.  They'll be posted on his blog 500hats and slideshare later today.

The most compelling was "How to make money?" [with Web 2.0 startups]. 

1. Adsense--Dave and several of the other presenters I've heard agree that it's hard to make money on Adsense.  However, this is not the same as saying "forget ad-based revenue models".  Dogster, BlogHer and others show that the devil is in the details--direct advertising and sponsors and a highly motivated and passionate community--longtail or not--can be quite profitable.

2. Start Free-->Go Freemium--I was delighted to hear Dave bring up key timing and sequencing issues in Web 2.0 and "exponential" network effects strategy.  When you offer "free" and whether it is for early-mover advantage, or developing critical mass and social influence before an imitator/competitor/other platform triggers a competitive race or to swing an affiliate vote in a tippy market battle zone--matters a lot.  The 2nd and 3rd chapters of my new Web 2.0 strategy book looks a lot at these particular "make or break" decision points in a Web 2.0 world.

3. Subscription and Recurring Transactions--Dave brought up the pros and cons of one time e-commerce-style transactions vs. subscription and recurring transactions.  His discussion made me realize that there's much more going on than just a price-based unit product sale versus the monthly or time-based fee more often used for time-based services.  Recurring transactions not only build "stickiness", but a "frequent" transactions-kind of trust.

4.Qualify your customers--Dave characterized conversion as a type of prospect qualification and lead generation.  This was an interesting perspective and quite different than thinking of communities as large scale focus groups.

5. Sell something physical or virtual.  Dave mentioned that the "virtual" goods economy was getting more developed in Asia--China and Korea, for example.  I love

Web 2.0 Expo SF: Dogster Monetizes 50k+ Dogs and Cats (via Owner Community)

Web 2.0 Expo in SF opens today but the Expo Hall and plenary talks don't start till Wednesday.  I stopped by the 9-12 workshop titled Starting Up  Strategies for Financing & Growing Your Web 2.0 Startup being presented by VCs Rob Hayes and Jeff Clavier.  About 300 people attended.

By 10:30 I had an overwhelming sense of deja vue--the VC funding process slides could have come straight out of the Wayback Machine circa Web 1.0.  Then, Ted Rheingold, CEO and founder of Dogster, got up and in 15 minutes gave some really valuable Web 2.0 insight and advice, summarized as follows:
1. Dogster took a passionate online community and turned into a profitable vertical portal
2. Dogster's secret recipe was:
    * selling ad inventory directly
    * providing an integrated brand campaign to its advertisers
   * turning several sponsor-level brand advertisers into loyal revenue-generating clients at the same financing level as angel investors--1.5-3k/month means 36k/year/sponsor~roughly eq to one angel investor.  This can stave off doing angel round and valuation when you do take money higher.
   * subscription service with 50,000 dog and cat lovers as multiple revenue stream in addition to ad-related revenue
  * Using customer base for everything from QA to Market Research to advertiser lead generation
  * Adding real SEO and viral fun to keep growing and reaching passionate customer base.

Some key conclusions to be drawn from Ted Rheingold's Dogster's experience:
A. Don't have to be huge to monetize well
B. Fcus on revenue as much as you do your product
C. Someone has to be selling, always...

Top 10 Takeaways from Startup School 08

Can a b-school entrepreneurship course be crammed into  1-day of Paul Graham's well-known Y-combinator Startup School 08?   YES!!   and here's how...

In a very Web 2.0 cash and time-efficient way, Startup School 08
* collectively shared the wisdom of tech greats such as Jeff Bezos, David Hansson, Marc Andreesen, Paul Buchheit, Sam Altman, Greg McAdoo, Jack Sheridan, Paul Norvig
* virally distributed for free, the live experience for 700+ attendees in Stanford's Kresge Auditorium and the video experience online.

Here's my Top Ten Takeaways from Startup School 08--(items 8-10 were questions raised by many speakers but not answered.) 
1. It's OK to ask for money from happy users (DH)
2. Reach the Fortune 5 Million (DH)
3. Are you a Purple Cow vs. How High is Up? (MA v. GM)
4. Stop Using the internet (for 5 minutes so I can load my presentation) (PG)
5. Paul + Jeff = Good ideas/services + instant web scaleability at variable cost = Animoto success
6. Tomaguchi effect aka benevolence as business strategy (PG)
7 Gave me confidence not competence (comment of young East Coast entrepreneur attending)
8. Exponential thinking  (network effects, collective user value, combinatorial mashups)
9.  What's new with Web 2.0-- cashflow, economics, financials
10. Timing--when is free more valuable?

Answering items 8,9,10 was why I wrote the book Web 2.0:  A Strategy Guide, just published by O' Reilly and available in hardcover as well as on Safari.  Or use the promotional code "websf08opw" to get a free Web 2.0 Expo badge to attend the Moscone Center plenary events, some talks, book-signing, participate in the Web 2.0 Open unconference and Launchpad.

Web 2.0 Strategy Book in stock and shipping now

Hurrah!  You can get your copy of Web 2.0:  A Strategy Guide by Amy Shuen now at Amazon.   This "amazingly useful" hardcover book  is available at the amazingly low price of $16.49 and free shipping.

Readers tell me it's hard to put down so plan to read it in one or two sittings. Then join me on this blog starting in May for a fascinating "deep dive" into some of the topics of interest...

Here's the MAY calendar of blog-postings on Chapter 1 of the book:
Prosumers and the Third Wave
Online DIY and the experience economy
Uploaders
Collective User Value
Freemiums
Public and open sharing
The Semantic Web and metadata
Digital photo ecosystem
Flickr's founders
Contexts for interactioni
Business model analysis for the entrepreneur
Burn rate and j-curve cash flow analysis
Netflix financials
Per customer economics
S-curves and crossing the chasm
Company financial valuation methodologies
Entrepreneur, founder's net worth at exit
Cash efficiency of Web 1.0 vs. Web 2.0 startups