Having an idea for a killer website doesn’t necessarily mean you can build it yourself. When it comes to building a website, there are a lot of factors to take into consideration. You have a great idea, however do you have the right configuration to execute and make this dream a reality? Developing a web business is a hard job, therefore you need additional talents or talented people to achieve success.

Talent marketplace Vitamin Talent prepared this handy flowchart to help you decide whether it’s time to build a great website or not.

Paul Graham is a well-known character in the startup world for his past successes and most recently, the launch of Y Combinator. In 1995, Graham and Robert Morris founded Viaweb, the first application service provider. Viaweb’s software, originally written mostly in Common Lisp, allowed users to make their own Internet stores. In 1998, Viaweb was sold to Yahoo! for 455,000 shares of Yahoo! stock, valued at $49.6 million. Later Viaweb became Yahoo! Store. BusinessWeek included Paul Graham in 2008 edition of its annual feature, The 25 Most Influential People on the Web.

Graham’s Y Combinator, founded in 2005, is an early-stage investment firm and boot camp for entrepreneurs. It seeks to find the country’s most promising startups. Twice a year, Graham and his five partners invite several dozen entrepreneurs to move to Silicon Valley for three months.

Y Combinator has a reasonably good reputation for producing “interesting” companies. As such, for those startups that need funding beyond what YC puts in, the fact that they’ve been one of the chosen few likely gives them an edge over a random startup looking for angel/VC money. Paul’s network is also pretty strong and he can “draw in” outside investors. Famous investors Yuri Milner and Ron Conway have started to offer every single seed-stage start-up firm Y Combinator  a $150,000 investment with very favorable terms: a loan in the form of a convertible note with no cap and no discount, the kind of fine print that would make most venture capitalists wince.

Let’s look at the numbers: As Paul Graham shared on his website; in 6 years, YCombinator has invested in 316 startups including this summer. YCombinator has only invested about $5 million, around $15,000 each. They’ve now had 25 companies acquired, 5 of them for over $10 million. As to valuation, the combined value of the top 21 companies that YC has funded is $4.7 billion! The data used for calculation is derived from the most recent funding rounds.

As Paul Graham says, “the numbers look encouraging so far”. I think It’s proved that Paul Graham’s YCombinator has become an absolute success. Congratulations.

Many people who want to start their own businesses and many people who want to invest in others’ ideas search answer of this question: “Which is more important the idea or the entrepreneur?” .

In academic journals, this is referred to as the horse (idea) and jockey (entrepreneur) debate. The horse and jockey analogy reflects two different financing philosophies: Either you believe the idea is the key and bet on the horse, or you believe management is the key and bet on the jockey. “Another way to phrase it is to say that you either bet on an A-team with a B-idea or on a B-team with an A-idea.

People have different thoughts on this topic. Generally, thoughts on this topic may be  grouped into 3.

1. The Idea: Some think that a good-idea will turn into a successful business in any manner whatsoever. They think business world has an evolutionary side which only good ideas can survive in time. Their motto is “Having the right idea is what counts.” .
2. The Entrepreneur: Many venture capitalists operate on the assumption that even if an idea isn’t perfect, it could be made so by the right management. So they think entrepreneur is more important than the idea.
3. Both The Idea&Entrepreneur: Some people believe that a successful business starts with a good idea. But firstly, an idea must be generated  and turned into a successful business by an entrepreneur. A good idea is a requirement but it’s not sufficient to succeed, it needs a good entrepreneur too.

I also think both the idea and the entrepreneur are important at the same time. A good idea is a start point. But don’t forget, most startups fail. A startup can begin with a revolutionary idea but execute dismally. Another startup can begin with a mediocre idea but execute spectacularly. The startup which executes dismally will fail and the one which executes spectacularly may succeed. But a startup which begins with a revolutionary idea and execute spectacularly will succeed. You may have the best idea but if you cannot reach your customers or you cannot pay your bills, you will fail. On the other hand, you may have the best management team but without a unique idea, growing your business and attracting investors will be very though job.

When you have a great idea, the questions to ask yourself is

1. Now that I have this great idea, do I have the right configuration to execute and make this dream a reality?”

2. Can I convince the marketplace that I can make this happen?

Consequently, I think the entrepreneur is 55% and the idea is %45 important to achieve success in business. What do you think about it? Would you bet on the Jockey or the Horse? Please comment…

As an entrepreneur and an editor, I really like to hear founder stories. I think every entreprenur like me want to hear about what happened at famous technology companies in the very earliest days. Where did founders get the ideas that made them rich? How did they convince investors to back them? What went wrong, and how did they recover?

Matthew Wise also wondered what it would have been like to hear stories from founders like Steve Jobs and Bill Gates during their startups’ early years. Wise felt a need for a way to get interviews of notable entrepreneurs and their success stories. Matthew Wise and Andy Saebjorensen invested co-built an open platform to enable other founders around the world to participate in FounderLY.  Any founder may film a fellow founder, so long as you follow the FounderLY roadmap, and submit the video to FounderLY. FounderLY will then package it with an intro, bumper, and a closing, and publish it to its website FounderLY.

Thanks for Wise and Saebjorensen for their visionary project. Below you can see an example video from FounderLY featuring serial entrepreneur Steve Blank.

Steve Blank Part 1 of 5 from FounderLY on Vimeo.

You can’t go a day without mention of the “credit crunch” in the media.  Everyday, new companies goes bust and the unemployment numbers are bleak. The unemployment rate hit 8.5 in US in March (8.1 in US in February).

Being an entrepreneur has always been a hard thing but in these tough times, it gets harder. Starting a new business or trying to expand a current business needs very much courage, when you look at around and see all those bust companies and unemployed people . We wondered and searched the net to learn how the entrepreneurs are handling the downturn.

Courage
A recent survey shows, 45% of entrepreneurs says “Yes”, 35% says “No” and 21% says “Not Sure” to the  “Is now the time to launch a new business?” question. Also in the US,69% of entrepreneurs stated that they will continue with their business growth plans despite the prevailing economic climate. Even in downturn, brave entrepreneurs are going on their ways and launching new businesses.

Resistance

Fear is a fatal feeling in the downturn; but feeling of hope is very important to take risks. Some desperate entrepreneurs won’t be able to resist the downturn but 78% of entrepreneurs expect their business to survive this downturn.

Responsibility

Companies are squeezed by the recession and the surplus of some companies reduced and become insufficient to pay salaries and bills. Some entrepreneurs cut own pay to stay alive and not to cut jobs. This is unusual even for a recession but a very responsible attitude. What a business owner tells is, “All those small-business books say, ‘Pay yourself first.’ [But] not paying myself enabled me to keep a couple of other people around,” he says. “It’s not [the employees'] fault that I bet on growth.”

You can read these, if you want to read more about this topic:

How entrepreneurs are feeling@ CNNMoney

Entrepreneurs Cut Own Pay to Stay Alive@ Wall Street Journey

Web 2.0 started as a revolution that uses the web to link people together. Web 2.0 means communicating, sharing, discussing and trading online in very useful ways never possible before. Web 2.0 simplifies collaboration and information exchange. We get used to Web 2.0 services as a part of our daily lives and these services are being more popular day by day.

Web 2.0 makes headlines, but how is it possible to make money by starting a Web 2.0 business? We are sure that there are very successful Web 2.0 companies. Google makes money based on  “free” search,  Facebook and other social networks  grow so quickly and their content is created by their users.

This concise list is prepared to explain what’s different about Web 2.0 and  to help you about how to create a successful Web 2.0 business.

1. A Simple Business Idea: Every succesful business requires a business idea.  The main problem abot business ideas is that people think a complex idea means more success. Most succesful Web businesses focus on simple problems and solve them perfectly. There were search giants before Google but Google improved search results, localized its services with a very-simple interface and for free. Don’t forget, complexity is the enemy of Web 2.0 . Think simple!

2. Create and Release as Early as Possible: The development velocity is important when you start a Web 2.0 business. Investors want to see working prototypes before they invest in your projects and don’t forget the competitors; some of them are experts about getting others valuable ideas and transform into businesses.

3. Use The Network Effect: Web 2.0 World is people-centric and there are countless free ways of collaboration with people who may become your users, investors or team-mates. Social networks and social bookmarking sites likes Digg are the best places to find volunteers for testing your products or advertising your business for free. Listen to your customers and let their feedback shape your product.Try to develop a community around your web business and hire a community manager as soon as possible. Motivated fans will be the best and the cheapest marketing staff of your company. The network effect is the main reason why leading Internet companies got so big, so  fast.

4. Use Web 2.0 Tools To Cut Costs & Save Time:The simple rule to calculate how much money you need for a startup is; ”If you plan to develop in a year, it’s going to take two; if you think it’s going to take $100K, it’s going to take $200K”. So you must find a way to cut your costs and finish your project in due time. Web 2.0 tools help you to complete your tasks in a fast and mostly for free (or at a small charge) way. For example FreshBooks offers a simple invoicing and time tracking services that help you manage your business and lets you . Google Voice gives you anumber for all your phones, voicemail and sms. Especially in the startup phase, online services save you time and money, be available 24/7 and make you look professional.

When developing your products; don’t re-create what you can source from elsewhere. Another website’s API or Google App Engine may reduce your development time. Try to source it from elsewhere before you build something up. If you’re lucky it can be for free but sometimes it’s worth buying a ready solution; your time is priceless.

5. Monetize Every Chance: Advertising can often seem overly commercial especially in the startup stage but a sponsorship or small advertising sections are good for your business to make some money. Every pageview of your web business has potential as an earning point. You can also find innovative ways.

6. Track Your Users & Rankings: Success of your web 2.0 business depends on your business’ statistics. More users mean more money. You must track how man users visit your site, how much time they spend on your site, the most popular and the least popular parts of your site, how much registered users you have and etc… There are plenty of web 2.0 services to track your user analytics and  I think Google Analytics or a similar service is adequate for this purpose. You must also track and evaluate the demographics of your users to understand their needs and level of interests. User registration and polls are good options.
Tracking you site’s ratings is another important thing. Google’s PageRank, Alexa’s Traffic Rank and other rankings show how popular your site is and enables benchmarking of your site’s performance to your competitors’. You must know who’s talking about your company and in what way,too.

7. Don’t Forget Marketing: If developing a good web service is 50% of your business; the other 50% is marketing. Most of the creative & innovative solutions become trash because they can’t become brands. New users mean new markets; having a well-planned market strategy can save your business’ life. Instead of diving into a crowded market like a red ocean full of sharks, look for emerging areas on the web and try to find niche markets.  You should read something about Blue Ocean Strategy to learn niche marketing better. Marketing and brand positioning are two important points that you can need a professional’s help.

8. Read About Successful & Unsuccessful Internet Companies: Experience means money and time. A web entrepreneur must read the success stories of Amazon, Google, Youtube, Yahoo, Digg, Facebook, Myspace, LinkedIn,  PlentyofFish and the others, once. But an internet entrepreneur must read the stories of unsuccessful Internet companies that entered the deadpool, twice.

9. Have a Revenue Model: You can have 10 million pageviews, your users can spend several hours in a day on your site but it’s possible that you earn nothing. Every business needs a revenue model. You can sell physical goods, just run ads or sell your online services. It’s your business and  you will make a decision.  Don’t forget without a revenue model, starting a web business is a business suicide.

10. Continually Improve Your Business and Develop Improvement Metrics: Continuous improvement is the key factor to stay alive in Web 2.0 World; without continuous improvement, Web 2.0 itself can’t stay alive.  Experience is important and failure breeds success. You must learn from your mistakes and not repeat them.
You should define your targets and the KPIs (Key Performance Indicators) to reach your targets. For example, ROI rate is very important if you have investors. Define your metrics and check them often and improve your strategies to improve your business.

This post is a brief of personal experience and inspired by Dion Hinchcliffe’s “50 Essential Strategies For Creating A Successful Web 2.0 Product” article.

]]> http://siteboat.com/creating-a-successful-web-20-business/feed/ 2 http://siteboat.com/what-is-a-business-idea-business-development-series-1/ http://siteboat.com/what-is-a-business-idea-business-development-series-1/#comments Mon, 22 Sep 2008 20:09:47 +0000 Erdem OZKAN http://siteboat.com/?p=144

As I’m working as a Strategy and Business Development Consultant, i want to share the basics of business development to help you develop your own businesses, with you. I’ll post some ”Business Development Series” topics which are about innovation and entrepreneurship. The first topic is ‘What’a a business …