The last few days I had some time and look around over the Internet. As you know, there is a lot of news about companies like Facebook.com and Google. Their success is the motor of a whole industry, they are the fuel for lots of new business ventures. In loads of business-plans you will see entrepreneurs compare their ideas against that of these companies. It is very difficult to create and come up with something unique, I grant you that, but what is it that these companies mentioned above have in common? The answer is; simplicity! Already I hear loads of people wonder if I lost it, but let me assure you, I didn’t.
During the last years I have come in contact with many VC-companies and they all are looking for companies that look like Bebo.com, Facebook, Google and MySpace. The “why” is simple too, these companies re-present high valuations today and therefore the investors who backed these companies made a great “return of investment”. These VC companies contact me if I know entrepreneurs with similar good ideas. In most cases I do send them info about young companies that look for funding. And then it starts; benchmarking! The business plans are going to be compared to the successful companies of today. After a while I have come to believe that VC-companies want something they can understand and compare, they want it too; simplicity!
What is simplicity?
So what is simplicity? Let me take a first shot at this. Google is a company that is committed to make “search” simple and because of that focus got mass audience. Of course they introduced several ways to “please” that mass with simple functions like GoogleReader, GoogleNews and Gmail. FaceBook wanted to give people a simple way of showing and sharing their online profiles, which resulted that people also started to find each other and start looking for (old) friends and (old) collegues. Facebook got mass audience and a very nice valuation because of that. To keep to mass satisfied, Facebook opened up for developers who came up with “fun stuff” that the people on Facebook started to use. Simple, right?
Where am I heading? Well, both companies do represent a quite simple business model. Not only do investors understand this very well, but also for the users (read; the mass audience). There I said it! I believe that there are lots of companies right now with amazing concepts, but sometimes way too early for the public at large. These companies need development time and it is very good that investors do “back” these companies, but at what price? Sometimes it is my believe that investors just don’t want to miss out and just invest for the sake of it. I heard someone say once; ” Out of the 10 investments, we hope 3 of them will do very well”.
Aiming for the same users
So lots of companies do get funding, because the investors do hope that it might be the next big thing. This means that the internet gets more crowded with websites that do reach out for the mass audience. All of these companies aiming for the same users in general. The more, the better…but where to find them. You know the answer by now; Facebook and Google. Did those companies expected this; sure they did, Google came up with Adwords/Adsense and Facebook created a Marketplace and opened up for developers that created complete companies with ditto websites based on developing “widgets” for companies like Facebook. Overhere a nice case-study by the way. But in the end the mass audience stays at Facebook and Google. Better; their reach is growing more and more!
The audience’s contribution
Through the years people got a bit more used to pay online, or better said “order online”. To trust a computer that is going “online” and pay with your own real earned money, that is a bit scary. It takes time and these days it seems that people are getting used to it. People that are spending money online will also drive the possibilities online. You need the audience’s contribution to become a (financial) success. For example I started to use more and more Flickr. Flickr.com is growing but my guess is that this is because of the success of Facebook and more bloggers. In the end Flickr also has to rely on other sites and developers for their own growth and financial success.
Therefore I say, keep it simple and you will attract the mass audience. They will and can figure out what you offer, start coming back on a daily base and tell others about your offering. When you get this mass audience, you will also see new companies “floating” around your company and come up with new ideas to tease and please “your” audience. That will give you and your investors a nice return of investment. And I’ll bet you that those developers will get funding too. Only thing is, is that they are relying on your company and are in the back-seat. Question is for them “how long are you being the top-driver (of traffic)?”.