Here are over half a dozen places where I found my head nodding in both directions and would like to add my two-cents (Paul Graham's quotes in italics).
I've provided hopefully convenient summary bullet points:
1. Focus on what (mainstream) people want.
"The most important task at first is to built something people want. If you don’t do that, it won’t matter how clever your business model is..."
I'd like to add an "Yes, and" and a "Yes, but" here.
Yes, and I'd suggest to the founding team and/or startup CEO,
"you'd better have a long list of possible ways you can devise a business models that you're constantly editing, morphing, adding to, and whittling down.
You get extra points if you're actively thinking about it at least once a day while you're figuring out what people want. Double points if you're bringing the subject up in regular meetings with your core operating team."
Yes, but, most of the time mainstream people don't really know what they want.
They only figure it out after they see some rapidly evolving/morphing examples. And one can get killed trying to provide the examples. For every Yahoo!, there's been an Excite, Lycos, Altavista, etc.
2. The devil really is in the "fuzzy, wuzzy, sometimes widgety" details.
"Both (Flickr and del.icio.us) had to get a lot of subtle, social things just right. You’re more likely to do that if you can evolve organically."
Yes, but it doesn't mean you need to do this without help from your external investors and/or advisers. In fact, more often than not, that's one of the key reasons you have them on board.
What do I mean by fuzzy wuzzy, sometimes widgety details? It's the subtle, non-obvious stuff that provide additional Mojo to recent "Web 2.0" phenoms:
- The "widget" music player in MySpace that made it easy to virally share music.
- The "widget" flash video player in YouTube that made it easy to virally share video.
- The 150 + categories of classifieds on Craigslist's front-page, that add method and user-generated order to an otherwise overwhelming madness of item and service listings.
On a separate tangent, I'd argue that del.icio.us never did get the "subtle, social..." must-do of getting it's user-interface easy enough "to get", and to use, by the unwashed mainstream. And this was while it was growing like gangbusters organically. But that's another story.
3. Business model to come eventually.
"But experience so far suggests that figuring out how to make money from something popular is a lot easier than making something popular."
It didn't use to be this way, especially in the dark days of Web 1.0. But with online advertising much more in the mainstream a decade later, it's easier to figure out clever, technology driven ways to monetize stuff driven by the uber-online advertising trend. Google is the poster-child for this lesson.
On this point, I'm in violent agreement with this post from the aptly named Dead 2.0, responding to a quote by Paul Graham:
"We print it on T-Shirts: “Make something people want.” If you had to reduce the recipe for a successful startup to four words, those would probably be the four."
But maybe you can expand it to a few more words? “Make something people want that you can charge for” has a nice ring to it too."
I'd take the liberty of modifying the T-shirt slogan to:
"Make something people want that you can charge for implicitly if not explicitly."
It may fit better on a bumper sticker.
We are due for more innovation on the uber-business model front as we pass the half-decade mark on this so-called "Web 2.0" trend.
4. "Are we there at the Bubble yet?"
"There may be a lot of lame startups being started, but that’s not the definition of a bubble. A bubble is when a lot of money is being invested in lame startups, and that’s not happening yet. The reason so many new startups are getting started is that the cost has gone down, not that funding has gone up."
My head was nodding less vigorously on this one. I wanted to add, Yes, but,
while I agree the absolute level to start startups has gone down, the absolute level to scale startups to the next level, assuming it's not sold to an incumbent for an early exit, is going up.
Case in point, in the emerging space of discovering music, the two entrants Pandora and Last.fm are both ramping up in VC funding, while following most of what Paul preaches in the interview. Pandora in particular has raised over $22 million dollars and has six VCs and Angels on it's nine- member board.
And this is a space where the business model has yet to be figured out since the participants are totally focused on point 2 above.
"The dependent key variable to probability is time : At a certain point, without significant resources the probability of a huge success (ie bigger than Graham's flickr and delicious examples) a business will require more significant rocket fuel in most cases.
Basically bootstrap for as long as humanly possible, pain and all - then nitro your turbo up at the right time. Fast and Furious."
5. It's the network, Stupid.
'I especially like things that take advantage of the power of networks. As Sun used to say, the network is the computer. Except now it’s the Internet plus the phone network, not just your local LAN, and that changes everything."
This insight may have jumped the shark for now. It's time to take this to the second derivative, and focus on the harder stuff.
6. It's about value destruction as much about value creation.
"...even though I’m supposed to be an investor, the ideas that excite me most are not necessarily the ones that make the most money, but the ones that blow away evil old monopolies."
I've been focused on this since 1993-4, when I first started to get excited about TCP/IP starting to go mainstream. The downer was that it would take a long time. A decade's gone by and we're just, just, getting started on this one. At least another decade to go.
And by the way, whether you're an entrepreneur, an incumbent, an Angel, a VC, a private equity investor, or a hedge-fund focused on the public markets, you still need to figure out how to survive, and preferably thrive while waiting for the tidal waves to come.
7. Focus on number one.
"The easiest way to make something people want is to make something you want. What do you wish existed that doesn’t?"
Yes, but, I'd add, you'd better make sure you have the same tastes/judgment/filters, gut instinct, and EXECUTION CHOPS as the folks Paul cites as examples of having succeeded with this strategy:
"Most of the great startups seem to have begun with something the founders wanted: Google, Yahoo, Apple, even Microsoft."
Time to get back to work.
* P.S. The sub-title of this post "Yes, And...", along with the new category named the same, will be used in future posts where I'd like to add my two-cents to speeches/interviews/quotes by people of note in the media, both online and off. I'm also adding "Yes, But..." in a similar vein, to be used in future posts.