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The Test of a Good Product Posted: 19 Jun 2008 02:56 PM CDT Over the past few months I have had numerous entrepreneurs approach me to ask if I know of any good investors. Others haven’t approached me but I’ve read of their trouble finding funding. Today, a friend of mine, Nate Westheimer, announced that he will no longer be pursuing his own startup. I’m sorry to hear that but I’m glad that he is looking forward with optimism. Only recently did I speak with another entrepreneur who was making the same decision. Building a business is insanely challenging especially if it is in the internet industry. Personally, I’ve tried to develop countless startups. From a website called Frusic, which was the first social network that brought together musicians and fans to University Swap, which was a site that found the cheapest textbook on the web. I also tried things non-internet related including importing liquor from Brazil which was one of the most challenging companies I’ve started. I’ve also worked at a number of startups which each died slow deaths. Each died for their own reason but pretty much all of them died. At this point you may be thinking to yourself: well I know who not to hire when I’m trying to build my startup! Aside from the fact that the first 5 or 10 businesses I was involved in all failed, I’ve learned a ton from each of these failures. Entrepreneurs Can Become Excessively Attached One thing that I’ve also had the opportunity to observe over the past couple years is the attachment that entrepreneurs have with their businesses. This attachment can have numerous side effects. For the purpose of this article, the primary issue with this attachment is that an entrepreneur will frequently try to build something that just isn’t a good idea. When I say something isn’t a good idea, it means a lot of things including: it was the wrong timing for a product’s introduction, a poorly developed pitch or lack of access to the people that could make an idea work. Entrepreneurship involves a lot of luck and frequently it requires this magical mix of passionate and intelligent individuals combine with access to people that can spread an idea. Bad Ideas are Simply Bad Ideas Occasionally, I meet somebody that has a really horrendous idea and no matter how much marketing they put into it, it simply won’t work. Then again, nobody can tell you what really is a horrible idea but if you start hearing that your idea isn’t a great one from multiple people, you might want to question whether it’s worth following your current idea. That was like the liquor I was preparing to import. The reality was that it tasted like crap. Years later, nobody has been able to figure out an effective way to market the distilled sugar cane to consumers. No matter how much marketing you put into something, some ideas were meant to die. One thing that nobody can take away from true entrepreneurs is passion and persistence. No matter how many failures you have, you must make sure that you keep those two things. Most often, truly great ideas experience growth pretty early on. While it takes a variable amount of effort to get something off the ground, once you get something to launch, it should be able to gain traction with a little bit of effort. Good Ideas Experience Traction Early On The funny thing is that once your product or service starts gaining traction, you’ve only started. Enough of the rambling. What do I think the true test of a good product is? If you build a prototype, after a minor amount of adjusting, your product should be able to gain traction. If you find that it doesn’t gain traction after an extreme amount of effort, you might want to reconsider the future of your idea. One final thought. Just because knowing when to quit is extremely important for an entrepreneur, there are no exact rules. Sometimes one customer is all you need and that is enough “traction.” In the end, the entrepreneur is the only person who can decide. What do you think are good tests of a product or idea? Do you have rules for knowing when to quit?

App Developers Making $8,000 A Year Posted: 19 Jun 2008 12:02 PM CDT According to news posted on Techcruch, SocialMedia, the leading Facebook ad network, has paid out $8 million to developers over the past year. Divide that by the approximately 1,000 developers that are on their network and you get an average of $8,000 per developer. This isn’t a fair analysis though because revenue is clearly skewed toward those application with a higher number of active daily users. According to Jason Kincaid, “during a talk at the Web 2.0 conference last April, members of an expert panel were predicting total revenues on the Facebook platform of as little as $10M this year.” While that estimate has been underestimated, there is no sign that the number is going to be substantially higher. Then again it would be difficult to predict how much is actually being generated considering the numerous ways that applications are currently being monetized. There are virtual currencies and rewards programs that are generating revenue as well. The real questions about the revenue in this space are if this is sustainable and if it will continue to grow. Not even Facebook or MySpace have been able to generate massive revenues so it continues to be an industry wide issue. What creative solutions do you foresee for solving the monetization issue? Disclosure: SocialMedia is a sponsor of my sites.

Bebo Beefing With Facebook? Posted: 19 Jun 2008 10:37 AM CDT When Bebo lauched their platform last year, they made it insanely easy for developers to convert their Facebook applications over. That may have been a bad idea. Facebook’s upcoming update next month is going to substantially change the integration process for developers. Rather than being a breeze to transfer applications, it’s now going to become a little more challenging. According to Alley Insider, Bebo’s head of platform engineering is concerned. Steve’s worried that Facebook's upcoming redesign, the one that's going to limit the spread of new apps, will also make it more difficult to move new Facebook apps to Bebo. So the network has to decide whether it’s going to change its own platform, yet again, to match Facebook’s. If Bebo doesn’t, Cohen says, it'll lose out: “Facebook really threw a monkey wrench in the whole compatibility thing….If we're not compatible with Facebook, no one is going to develop for our platform.” Additionally, it appears that the head of platform engineering isn’t as concerned about OpenSocial. He’s convinced that the Facebook platform is still the platform that matters. Looks like Bebo is going to be facing some difficult decisions in the coming months. Also, I can’t imagine that Facebook is too concerned about this issue. Ultimately, Facebook and Bebo are technically competitors.

Developers Give Twitter the Boot Posted: 19 Jun 2008 09:55 AM CDT I gotta be honest. For the past couple weeks I’ve been using Plurk a ton. The initial reason was downtime from Twitter but it increasingly became about the much more active community. Then today I read about developers bailing on Twitter because of their unreliable API. That’s a big problem but then again not even Plurk has a functioning API. The reality is that developing a micro-blogging platform is a lot more difficult then anyone anticipated as far as I can tell. Twitter has throttled API access, making it extremely difficult for any developer to build a reliable application on top of the service. A couple months ago, I launched an internal directory for this site but the Twitter API slowed down the service significantly. While I’ve since figured out a workaround (which has yet to be implemented), having to develop a workaround due to an unreliable API just doesn’t seem like the right solution. Some seem to think that Twitter is going to die thanks to their failing API. While I’ve been using the service less frequently, many of my contacts are still using the service regularly to stay updated with what’s going on in the digital community. Many more are confused with which service to use and have instead decided to use all of them by taking advantage of the Ping.fm service which updates your status across all your networks. Whatever the solution is, something has to give in the world of status updates and micro-blogging in general. For some reason I seriously doubt that this will mean the death of Twitter. Have you started using other services as well or are you still a faithful Twitter user?

The Global Battle for Social Network Domination Posted: 19 Jun 2008 09:25 AM CDT While domestic shifts in social network usage have helped fuel the growth of a select group of social networks, it is becoming increasingly apparent that the real opportunity for expansion of reach is abroad. Last night Eric Eldon illustrated that Friendster, the long forgotten social network which helped fuel domestic social network addiction, could become the largest social network globally thanks to growth in Asia. In Europe there is another battle taking place. According to Caroline McCarthy, “Facebook’s still a long-shot second place in French social networking, according to the metrics. Skyrock, a site almost completely unknown in the U.S., pulled in 11.5 million unique visitors in April 2008 compared to Facebook’s 3.2.” It’s not all bad news for Facebook though as they grew a whopping 2,877 percent in France year-over-year. It’s clear that there is a massive race underway to snap up as many users as possible because ultimately once you have a user and all their friends, there is a substantially decreased likelihood of that user shifting to a new social network. That would also explain Facebook’s emphasis on friend recommendations. As the social networks play there own technical battles over opening up and building the most developer friendly platforms, there is still a race just to obtain users. It’s clear that there is still no official winner and there won’t be one for some time. Who has all of your friends and who do you think will end up winning?

Top Social Network Age Distributions Posted: 19 Jun 2008 08:08 AM CDT Rapleaf, a company which regularly produces studies on social networks, has released a new one about the age distribution of users on MySpace, Facebook, Flickr and LinkedIn. Here are some highlights of that study: - 120 million social network profiles (total) were found, with each person averaging 2-3 social networks - Women and the 14-24 year old demographic are more likely to use Myspace and Facebook than other demographics (the 14-24 year old demographic represents 65.5% and 66.25% of total users respectively) - Men and the 25-34 year old demographic are more likely to use LinkedIn and Flickr than other demographics (the 25-34 year old demographic represents 51.0% and 38.1% of total users respectively) It’s interesting to see that the age distributions are all heavily skewed toward a younger demographic. LinkedIn has the oldest demographic overall but the most popular age group is those members between the ages of 25 and 34.

MySpace Releases New Developer Tools Posted: 18 Jun 2008 11:30 PM CDT Over the past couple days, MySpace has been communicating with developers about a couple of issues. The first issue was the creation of a new tool that enables developers to run Flash files within applications. Rather than hosting the files on their own servers, developers must upload flash files to MySpace’s servers using the form pictured below: This new model provides developers with script access while still protecting MySpace from harmful external scripts. Check out the MySpace post for more details. The second announcement made by MySpace is the introduction of an oAuth Tool which assists developers in constructing properly formatted query strings. The new oAuth tool “allows developers to generate a Base string and a Signature along with request querystring, so that they can compare what a valid request looks like to what they’re own servers are producing for server-to-server RESTful API calls.” I’m sure that this tool will help resolve confusion for many of the developers that were facing challenges with creating proper HTTP requests. A screen shot of the new tool is displayed below. If you’d like to learn more about the updates, go check out the MySpace developer blogs.

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