The thing that will keep Web 2.0 plays from being successful is the very thing that made them what they are today: geeks.
There has been a growing amount of chatter about this lately, and today there was a good conversation on the topic, started by Umair at Bubblegen.
While he correctly defines the problem (“geeks [need to] think outside their own box of geekery”), Umair uncharacteristically offers a solution that is too complex, ironically geeky, and, frankly, unnecessary:
The challenge, of course, is for geeks to understand that it’s exactly this value equation they should be disrupting, not ignoring: making marketing, branding, advertising not evil. That they’re evil doesn’t mean you should ignore them – it means you should be destroying them and then redefining them.
The solution has nothing to do with redifining, destroying, “lowering the evilness”ing, or working towards anticonsumptioning.
Those are geeky.
When the problem is geek the solution is simple: down-geek. How does a Web 2.0 venture do this? By paying attention to, and executing in, all three stages of a start-up: innovation, commercialization, and scale. Many companies, especially Web 2.0 plays, pay little-to-no attention to the second stage – commercialization. It’s this lack of focus, at a critical stage, that leads to failure. By refocusing attention and properly executing throughout this vital stage, Web 2.0 companies can avoid the problems that plague, and ultimately doom, Web 2.0s.
Let’s examine the players in Web 2.0 and how they assist a start-up through two of the stages:
- The geeks are the entrepreneurs. Part of being a geek means the complete mastery of Phase 1 Innovation: Ideas. And thanks to falling costs (computers, software, …) geeks can more easily complete Phase 2 Innovation: Idea to Product on their own.
In Web 2.0 entrepreneurs are capable of completing Stage 1: Innovation on their own with little input from anyone outside of the team (generally a thriving hive of geeks)
- VCs are still VCs. While this is changing in Web 2.0, it’s happening at very slow pace and only within a small group of firms. VCs are still playing the role of a traditional VC – eagerly waiting to invest their funds, sit on a board, and collect cash upon exit.
In Web 2.0 traditional VCs will invest in start-ups and guide companies through Stage 3: Scale.
Stage 1 easily completed by being geeky. Stage 3 easily completed with the help of traditional VCs.
What about Stage 2? Historically, for a number of reasons (not the focus of this post), commercialization was not very important, occasionaly not even necessary. This has changed. Commercialization is now as important as the other two stages of a start-up. Ignoring this stage ensures the failure of the firm. Unfortunately this statement is being proven on a regular basis by Web 2.0 companies. And, really, I don’t think they can help it.
Why? Let’s revisit the opening line of this post: The thing that will keep Web 2.0 plays from being successful is the very thing that made them what they are today: geeks. Tremendous innovation is occuring and the instantaneous adoption by geeks of these innovations has been truly remarkable. To commercialize these products the start-up would have to question, challenge, and test everything that could be considered “Web 2.0″. And that is a practically impossible task for geeks.
Refresh: Commercialization is the stage of “Providing Proof” – proving value propositions, clarifying positioning statements, figuring out correct foothold markets for penetration, etc.
Can you blame the geeks for failing?
- Instantaneous adoption of your product – would you question anything?
- Product feedback flowing from early adopters – would you ignore it all, upsetting your current customer base?
- Geeks network with other geeks, and herd thinking in a community focused on similar passions can cloud judgement. When every conversation you’re exposed to is positive, would you be clear minded enough to ask the tough questions and answer them appropriately?
- Would you be able to challenge the things which appear “most true”?
- Would you question and test everything that you’ve learned about traditional business practices and start-up strategy?
That’s what you need to do in the commercialization stage. While it’s difficult to do in any market segment it’s nearly impossible for geeks to do within the Web 2.0 realm.
Commercialization is testing everything about the product, positioning it properly, and making it “whole” (Umair, hilariously and accurately documents two of the many areas that a Web 2.0 company needs to focus on: needs & usability. I bet with the number of Web 2.0 companies, and the challenges they face in the commercializing phase, we’ll be enjoing a lot of new verbs shortly).
This is the hardest stage for a start-up to complete. Maybe because it’s not on their radar, possibly because it’s difficult, potentially because of lack of experience. Most likely because what’s required in this stage (especially in Web 2.0) is counter-intuitive and hard to swallow, let alone stomach.
How does a company navigate through this stage? You would think VCs could help. Some innovative ones can but we know that most won’t/can’t. This will gradually change, as the dynamics of venture capital changes.
I’d give you some tips, but unfortunately I can’t blog those… you can always ping me to chat.