The internet is a bubble


Links. Photo by me.

No, I’m not talking about a valuation bubble as in the .com-days. I am talking about how we are using the internet, today in January 2012, roughly 17 years after its breakthrough.

The evolution of the internet can be split up in to three phases, each building on the previous. Each phase is defined by a verb, which is the default behavior of a user of the internet in that phase.

The first phase is the SURFING phase, when we went from place to place looking for text and images. Yahoo! even started out as a company that manually tried to enter all the web sites of the world in to a categorized index. How crazy doesn’t that sound today?

This was the era of the bookmark and the URL. Your homepage (if you had one) back then was often just a dump of your bookmarks from your Netscape web browser.

The second phase is the SEARCH phase and started around the beginning of the century when Google became the dominant search engine. For many people, Google became the internet. I personally use the search engine more times than I can count during a single day. It has become almost an extension to my mind, an extra mind that we all share. It’s almost as if we’re becoming the same individual on some level. Quite fascinating.

Keywords and links became the hard currency in this era since links signal trust and is used by the Google algorithm to give each page a weight, the Pagerank. Search Engine Optimization tricks were (are) used to optimise your place in the search result but it really just boils down to creating stuff that people like to link to.

The third phase is SOCIAL and the verb is RECOMMEND, as in retweet, like, +1, share etc. This is where the bubble comes in because in this phase the internet is no longer interconnected web pages but streams of data from our friends. In the phase we live in sort of a Matrix reality shaped by the recommendations and retweets or the people (or companies) we trust.

An endless stream of status updates, this is the bubble we live in.

This is the era of hashtags instead of links or keywords, because the hashtag is how you pick out the signal from the noise in that endless stream. This is a significant shift from the first phase, which was essentially a broadcast phase where content owners had full control over the web sites they wanted you to visit. A hashtag, on the other hand, is just part of the stream and you have as little control over it as you have over the water in a river.

We’re only at the beginning of the social phase of the web so it’s not a bubble in that sense of the word.

Surfing, searching and recommending. The first three phases of the web. What do you think the next one will be?


Passive founder deadlock

Startup Founders are like toes
Startup Founders are connected like toes on a foot. Photo by me.

A “deadlock” is a state in a computer program where parts of the program is waiting for other parts to finish who in turn are waiting for the other parts. The result is a freeze where nothing happens. This has probably happened to your computer some time.

A similar situation can occur in early stage startups. Before a startup gets funding or revenue the only thing that drives it is the passion of the founders. But, the passion in every individual founder is deeply connected to the passion of the other founders. You need to have a passion balance equilibrium otherwise the startup will freeze just like the computer program!

As an example, you’re three founders, you get started, energy is high and you’re all excited to do this thing. Then after a while one of the founders starts drifting. Maybe her daytime job takes too much time. Maybe her spouse doesn’t like that she spends all her free time working on your startup. Maybe she just lost interest, the reason doesn’t matter but the fact is that you are now extremely close to a passive founder deadlock situation.

Her drain in energy will drain the other two founders as well. It’s Sunday evening and you have the choice between playing with your kids or working on your startup. Why should you sacrifice your spare time when the other founder don’t? You go play with your kids (a wise choice anyway). The startup dies.

The same situation can occur in later stages, when funds are limited. As long as your startup doesn’t have its wings in the air passive founder deadlock is probably your number one risk.

So, how do you prevent it? At the end of the day, you can’t. This is simply one of the facts of life for a startup. But you can limit the risk somewhat.

  • Of course you should make sure you have written agreements between the founders. This sets the baseline of what you expect from each other. It should also describe how a breakup should be done.
  • Too much administration can kill the passion too but some simple way of tracking who does what will help you see early on if someone is dragging behind. A Kanban board is an excellent tool.
  • One rather extreme way is to define an equity value for each task that needs to be performed and then split the equity after the task has been done based on who contributed the most to finishing the task. With this approach all the founders together make a list of what needs to be done and decide on an equity value for each task. When the task has been done the founders meet to “split the boot” with the founder who contributed the most getting the most equity. The downside with this approach is that you will spend a lot of time arguing over who did what and how much they contributed but if it works out it’s probably the fairest way to do it.
  • Do the startup alone is one way but the chance of success is even smaller with this option so this is not recommended.
  • If you’re OK with not an equal split of equity you can appoint one of the founders as “CEO”, give her more equity and the authority to be the driver of the startup. It’s then her task to “hire” co-founders and pay them with equity for the work they do. This approach also has downsides.
  • Of course the best way to solve this is to just simply get your wings in the air as soon as possible. You really should hate being in the startup phase.

What do you think is the best approach to prevent passive founder deadlock?

Hacker News discussion.


You should hate being a startup

We tend to glorify the startups too much. As Steve Blank says “a startup is a temporary organization designed to find a scalable business model”. What this actually means is that each day you spend in “startup mode” is a failed day. You still haven’t found the scalable business model!

You should celebrate the day when you’re no longer a startup. That means you’ve succeeded.

(Thanks to Gullfot for inspiration.)

Update: got some feedback on this elsewhere and I would like to point out that I personally love the startup phase. The problem is that the startup itself must leave this phase as soon as possible. This creates an interesting tension between the entrepreneur and the startup which is one of the reasons you as a startup entrepreneur should build a system, not a product.


Jobs of the future: services, super-brands and startups

Machine and man
The machine and the man. Photo by me.

Automation is killing the job market, not China. That’s the message in this post recently posted on Hacker News.

I’m not sure I agree.

I can see two very clear trends when it comes to where new jobs are created.

One is the shift from industry jobs to service jobs.

Did you know that globally, farming has been the most common profession since basically the dawn of civilization up until about a decade ago? Now it’s service jobs.

Humans helping other humans, this is a type of jobs that will never go away because humans have qualities (“the golden scarcities“) that machines can never possess regardless of if they pass Turing tests or not.

Forget the factory worker, I want to see more hairdressers, singers, gardeners, interior decorators, designers, artists, coaches and ocularists.

The second is the bleeding edge of innovation and super-brands that have shorter and shorter lifespans. The share of the economy belonging to the mega-corps is decreasing. Smaller and faster is the way of the future. This is the era of the startup economy. The only thing that will remain big are the brands – mindshare.

So there you have it: services, super-brands and startups.

That’s what the economy will look like the next 50 years. Heck, it’s what it looks like today!

At least the part that’s working.


Photos from SSWC 2011

Sweden Social Web Camp is an unconference held on an island in the Blekinge archipelago in souther Sweden. I’ve written about it before so this time I will just post a few photos I took. Perhaps I will get back with a longer post for this years edition, there was a lot to digest.

You can find my Flickr-set here and the group with photos from everyone here. There are currently 1346 photos in the group…

These are the ones I took and that I’m pleased with.

IMG_8526.jpg
Anna on the rocks.

Jocke i trädet
Jocke in the tree.

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Jumping from a cliff.

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Winning.

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Flying.

The Brit
The Brit (there can be only one).

Ström!!!
I’ve got the power!

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Tents and geeks.

Magic evening
We’ve got a jumper!

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Good times.

All the photos (except two that didn’t upload for some reason) are also on Google+.


Zero, One, Infinity – The Only Three Numbers Your Startup Should Care About

Zero. Getting started. Launching. Finishing the first version. Deciding on a name. Registering the company. Signing the co-founder agreements. Everything that gets you from a non-startup to a startup. We call that “getting to zero”.

One. Your first paying customer. Before you have a paying customer you don’t have a company, you only have a dream. A paying customer means someone thought your solution to a problem they had was worth paying for. A paying customer means you have a purpose and a reason to exist. A paying customer means most likely there are other paying customers.

Infinity. Scaling the company. A first company is a good milestone but to reach infinity you have to have a system that runs by itself. A wealth generating machine. An engine of growth. Something that is built to sell.

Zero. One. Infinity. Three milestones for your startup. The three most important numbers in your business.

If you read this far you should follow me on Twitter.


5 principles that will help you succeed with your startup

This post is an attempt to explain this tweet and flesh out the five principles I mentioned in the tweet: Make stuff people want. Do the work. Build a system. Don’t be evil. Don’t give up.

Make stuff people want.
This one is from Paul Graham, the founder of the startup accelerator YCombinator. The original post is here. This is also the core of the lean startup movement.
It sounds easy enough: of course you should make something people want! What a silly principle. Yet, all too often people fall in the trap of instead building something they think people want – big difference!
For example, if you’re writing a business plan and have no finished product, haven’t talked to an actual customer and haven’t verified in some way that your idea actually works on a real market – then you’re building something you think people want – not something they actually want. The only way to make sure is to build something as early as possible and try to sell it.

Do the work.
This one comes from the book with the same name. It focuses on the challenge every day to get up and just do the work. There are so many things fighting for your attention. You will have to struggle extra hard with your startup as long is it doesn’t make money enough to support you (the wings are not in the air). Just like going to the gym it’s a question of self discipline to see results.
Every day is a fight for survival for your startup. Every day you must do the work.

Build a system.
A company is a value producing system that should run without its founders. The sooner you realize this the better. What does this mean? It is far too common for entrepreneurs to build their company around themselves. Without the founders everything fall to pieces.
Instead, you should identify the processes that makes your company tick and detach yourself from the every day work as much as possible, either through automation or through employing people to do the work for you. Your goal as a CEO is to make the company sellable. The way to it: build a system.

Don’t be evil.
Everyone in the web industry knows that this is the corporate mantra for Google. The source of the statement is Gmail-creator Paul Buchheit (who now also works for YCombinator). Keeping your conscience clean makes things so much easier, especially in the capitalism 2.0 world of social media and transparency. If you’re in it for the long run, be nice. Do you want to explain things like this to every potential customer, investor or employee? No, you don’t.

Don’t give up.
In the must-read book Founders at Work: Stories of Startups’ Early Days Jessica Livingstone (co-founder of YCombinator – for some reason every wisdom about startups comes from this company) interviews a number of startup entrepreneurs. The one thing they all say is the most important in order to succeed is: persistence. Not giving up.

That’s it: Make stuff people want. Do the work. Build a system. Don’t be evil. Don’t give up. Follow these principles from the leading startup minds and your chances of success are greatly improved. Most important of all, though, is to actually get started and do it. What are you waiting for?

If you read this far you should follow me on Twitter.


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