Entrepreneurship In The Age Of The Internet

1. Entrepreneurship In The Age Of The Internet • Why did Terence Matthews say: “I’m glad I started most of the businesses I have been involved with (e.g., Mitel/Newbridge) before the age of the Internet had begun?” • Because it was easier back then? • Because ‘I am glad I didn’t know what I didn’t know’?

2. Entrepreneurship In The Age Of The Internet • The answer is b). • Didn’t know that there were already a bunch of competitors out there. • Ideas are in infinite supply. • Just try counting from zero to infinity! • Zero is a complex concept first used in India and Mayan civilization and brought to Europe through Arabia– numbers definitely represent ideas (Q.E.D.)

3. Entrepreneurship In The Age Of The Internet What is the value of something in infinite supply? • Economic theory of Supply and Demand suggests value approaches zero! • 30 million clever, hard-working Americans and millions more around the world are thinking up clever new ideas every day!

4. Entrepreneurship In The Age Of The Internet • Mathew Lafrance, Allan Ghosn, Christian Ste. Marie and Mat Bouchard • 5 ideas for business startup • Each one worse than the one before, ending in SILENT ALARM CLOCK! • Except for one

5. Entrepreneurship In The Age Of The Internet • GradeAStudent.com (Now GradeATechs.com) • Only one problem they said– NerdsOnSite.com already up and going • Is this a problem?

6. Entrepreneurship In The Age Of The Internet • No! • Strong value proposition • Huge and growing market • If it is a good idea, there will be competition • If it is a bad idea, there won’t be but so what? • It’s a BAD idea!

7. Entrepreneurship In The Age Of The Internet Out execute the competition: • Provide superlative Customer Service • GASnet: reverses out the work to clients and suppliers • Match making service– between techies and clients • For first time ever, a service business is scalable due to the Internet

8. Entrepreneurship In The Age Of The Internet • Web 2.0 works because: • Custom outputs from standard inputs; • Scalable; • Network effects; • Reverse out the work; • Match making systems; • User generated content ; • And more!

9. Entrepreneurship In The Age Of The Internet • Open source; • Peer to peer; • SEO; • And more!

10. Entrepreneurship In The Age Of The Internet • Home Builder Industry. • One of the most conservative on the planet– highly resistant to change. • Preaching (unsuccessfully!) since 2000. • Sell a home– the work is just beginning. • 30+ hours in the sale centre picking out tiles, carpets, counters, cabinets, fixtures, colours, etc. • Customers on site– driving foreman C.R.A.Z.Y.

11. Entrepreneurship In The Age Of The Internet • What’s the alternative? • Physics engine on a website– allow customers to select lots, home design and all options and see the costs! • An e-cash register! Even run it in reverse– de-select granite counter tops and replace with Formica • Spend 50 hours, 70 hours, whatever on website!

12. Entrepreneurship In The Age Of The Internet • Put CPM Schedule on website. • Customers can see exactly what stage construction is at. • Suppliers can see when drywall is required. Suppliers update CPM when JOB completed. • Lawyers for Buyer and Seller can schedule e-closings.

13. Entrepreneurship In The Age Of The Internet • Reverse out the work to: customers, suppliers, lawyers, bankers, mortgage brokers and others. • Home builder becomes website operator. • Productivity improves. • Customer service improves. • Profitability goes up and up. • Out compete the competition.

14. Entrepreneurship In The Age Of The Internet • But wait, there’s more. • Suppliers (electrical fixtures, plumbing fixtures, kitchen cabinetry, carpeting, tiling and 1001 others) will want to advertise on the website. • The more home owners (customers) on the website, the more suppliers will want to be there. • The more suppliers on the site, the more customers will want to use the website.

15. Entrepreneurship In The Age Of The Internet • Virtuous circle. • Network effects– similar to first fax machines. • What is the value of having the only fax machine in town? • Negative value!

16. Entrepreneurship In The Age Of The Internet • Why don’t home builders do this? • Inertia– “We do it this way because we have always done it this way and we have always done it this way because this is the way it is done.” • Our competition will see our designs and our costs too! • Ever hear of secret shoppers– news bulletin to industry: they already have all your designs and costs!

17. Entrepreneurship In The Age Of The Internet • GradeATechs.com, VHB and LavaLife.com: a) match making (e.g., suppliers (techs) and people with computer problems/women and men); b) reverse out the work (e.g., selecting home options, scheduling); c) network effects; d) scalable service enterprises!

18. Entrepreneurship In The Age Of The Internet • Custom Out puts from Standard Inputs too!

19. Entrepreneurship In The Age Of The Internet • Henry Ford: “You can have any colour of (Model T) car you want as long as it is black.” • VHB– can produce a near infinite variety of homes from standard inputs without bankrupting the company. • Users (home buyers) generate options– marginal cost to the company: close to zero.

20. Entrepreneurship In The Age Of The Internet • Kevin Rose, Founder, Digg.com • Kevin Rose made $60 million in 18 months • How did he do that?

21. Entrepreneurship In The Age Of The Internet • Web 2.0. • A new model for a newspaper uniquely adapted to the Internet. • Readers are contributors. • Readers dig up interesting stories from all over the web and post brief synopses to the site and links to them whereupon other readers vote on them—the most popular ascend the page.

22. Entrepreneurship In The Age Of The Internet • The site harnesses the competitive instincts of the readers/contributors to compete to see whose story will lead. • The site works because of its homogeneous demographic—contributors only post stories that will be of interest to the group. • The site is dynamic—leading stories change by the minute or hour.

23. Entrepreneurship In The Age Of The Internet • Digg.com’s cost for headline writers = ZERO. • Digg.com’s cost for journalists = ZERO. • Digg.com’s cost for editors = ZERO. • Digg.com’s cost for distribution = ZERO (at least, the marginal cost is practically zero).

24. Entrepreneurship In The Age Of The Internet • Digg’s sustainable competitive advantage is its business model and its readership. • You might be able to knock off its business model but it is extremely difficult to knock off its millions of dedicated (mostly males 15 to 55) readers. • The key is that the readership is relatively homogeneous and has similar interests.

25. Entrepreneurship In The Age Of The Internet • How to first populate Digg.com? • Each co-Founder can personally call 1,500 people in a month. • That’s 50 calls a day for 30 consecutive days. • Then let scalability and network effects take over. • The more readers, the more contributors, the more contributors, the more readers. • Clients (readers) are also suppliers!

26. Entrepreneurship In The Age Of The Internet • Is there anything else that Web 2.0 does? • Yes! • Something new! • Something unexpected!

27. Entrepreneurship In The Age Of The Internet • The Mechanical Turk; • The anti Dr. Strangelove • The opposite of Fail Safe

28. Entrepreneurship In The Age Of The Internet • Putting the human back in the loop! • Who selects to stories that go up on Digg.com’s site? • People do that • Who votes them up (or down)? • People do that (better than any algorithm)

29. Entrepreneurship In The Age Of The Internet • Naver.com out competed Google in Korea! • How did they do that? • By replacing the Google algorithm with a natural language search tool that allows users to ask questions • Which are then answered by other users! • The Mechanical Turk is inside the system!

30. Entrepreneurship In The Age Of The Internet • Who else does that? • Wikipedia for one • Put the human being back in the loop and develop a better business model will give you a sustainable competitive advantage and probably a better experience for users

31. Entrepreneurship In The Age Of The Internet • IF YOU HAD TO CHOOSE FOUR THINGS TO START YOUR BUSINESS WITH, I WOULD RECOMMEND: • A good business model; • Launch clients and customers; • Self capitalization; • Sound execution.

32. Entrepreneurship In The Age Of The Internet • I WOULD PLACE MUCH LESS EMPHASIS ON: • Bank financing; • A great, never-before-tried idea; • A partner; • Access to government grants; • Access to VC financing.

33. Entrepreneurship In The Age Of The Internet • Gadgets and Gizmos do not make a business. • Bell Control– circa 1985 taught me that.

34. Entrepreneurship In The Age Of The Internet • You are not the market. • No one else wanted to turn off their phones! • You need top notch execution and a sustainable competitive advantage to successfully implement a viable business model.

35. Entrepreneurship In The Age Of The Internet • Google was not first search engine. • But they had a better algorithm, neutral, TRUSTWORTHY results and much better execution. • More than 10 interviews now required to get hired on by Google. • Sergei Brin and Larry Page recognize that it is NOT your assets or your IP that produce profits, it’s your people.

36. Entrepreneurship In The Age Of The Internet • People like to buy from people they like and trust. • Suppliers trust you to pay them. • You trust them to deliver on time. • Clients trust you to deliver and you trust them to pay you.

37. Entrepreneurship In The Age Of The Internet • Trust is the foundation of a successful career. • Once you establish trust, you become part of the (business) ecosystem that will sustain you, your business and your family for a long time.

38. Entrepreneurship In The Age Of The Internet • Success requires: • Focus and Discipline; • Confidence and Imagination; • Ability to Execute; • Courage and Sacrifice. Qualities the generation from 1914 to 1994 had in abundance!

39. Execution Counts, Ideas are Not Enough • Bring Back the Senators Campaign: 1987 to 1990. • “What does Toronto have that Ottawa doesn’t?” Bruce Firestone to himself, 1987 • A zoo, a theme park, a NHL Team!

40. Execution Counts, Ideas are Not Enough Out execute the competition: • Purchase 600 acres for Palladium (now SBP). • Pre-sell 15,000 PRNs for season tickets (at $25 each). • Sign up 500 corporate sponsors (at $500 each) and 32 original corporate sponsors (at $15,000 each). • Lobby the 21 members of the NHL’s BOG and its President.

41. Execution Counts, Ideas are Not Enough • Don’t take ‘No’ for an answer, late Professor of Economics O. J. Firestone, U Ottawa to his son Sept.1990. • “You will never, ever get a NHL Team in Ottawa,” anon. BOG member the night before the NHL awards the Senators to Ottawa, Dec. 6, 1990.

42. Execution Counts, Ideas are Not Enough • “Make sure that the last face the BOG sees before they make their decision is yours,” Norm Seagram, former member of TOOC to Bruce Firestone. • Last two faces the BOG see: Phil Esposito (Tampa) and Bruce Firestone. • “The NHL is pleased and proud to announce… franchises have been awarded to Tampa and Ottawa,” five hours later.

43. Execution Counts, Ideas are Not Enough • After winning the franchise, you: • Party all night? • Do a few media interviews, leave for Miami, fly to Montreal, drive to Ottawa, prepare to sell $22 million in cash worth of season tickets in ten days in late December 1990 for a team that won’t play (and win) its first game until October 8, 1992?

44. Execution Counts, Ideas are Not Enough • “John, what was the vote?” • “It was unanimous.” • Surprise phone call three weeks later.

45. Entrepreneurship In The Age Of The Internet • What’s missing today? • The next generation of entrepreneurs. • How come China and India are doing so well? • Entrepreneurs unleashed by National Governments. • Emphasis on education, technology and entrepreneurship. • Reduction in bureaucracy. • CONFIDENCE!

46. Entrepreneurship In The Age Of The Internet • What do many western Governments believe? • Everything today is a cost not an investment. • Everything must be regulated. • It’s all about rights not responsibility.

47. Entrepreneurship In The Age Of The Internet • What will happen to Western Nations? • They will act and react. • They will reform their institutions. • Entrepreneurs and entrepreneurship will prevail not only in business but also in other organizations– from NGOs and not-for-profits to charities and educational institutions.

48. Entrepreneurship In The Age Of The Internet • Who gets the promotion? • Intrapreneur or employee? • Brian: “I have an idea for a great, new service for the company– it will take two years and $10 million to launch it.” • Cathy: “I have an idea for a great, new service for the company– it will take two years and $10 million to launch it but I have three pre-launch clients each willing to kick in $2.5 million and take the first six months of production.” • No one has time to baby-sit you today.

49. Entrepreneurship In The Age Of The Internet • Today if you have real customers, real clients and real cashflow, you will get financing/not the other way round. • Customers will help design the product/service– when your product/service meets the real world it will change (usually for the better) anyway.

50. Entrepreneurship In The Age Of The Internet • Rob Hall at Momentous.com– started all his businesses (Internic.ca, Pool.com and Zip.ca) with self capitalization. • Once VCs own part of your business, you are now a rent-a-CEO.