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How to Build a Web 2.0 Company?

August 5, 2008

vcmike

I was meeting with an entrepreneur today, who said to me that the way to build a web 2.0 company is first to build a feature, then figure out how to turn it into a product, then to try to build that into a company.

Not sure I fully agree, but if nothing else an interesting way of thinking about it.

What do you think?

6 Comments

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  1. August 5, 2008

    I distrust sweeping generalizations and think that his particular case is probably important, but it might end up making a lot of sense.

    I don’t know if I like the idea of explicitly trying to build a “feature” first (seems like a lot of web apps these days are just features anyway), but I do think it’s important to just start building. Stop talking for a minute and make something. Your first version/output is guaranteed to suck, but that’s OK. That’s why you iterate, iterate, iterate; release early and release often. Talk to people, especially your future customers. Figure out what hurts, what they need, then make it. Your junk gets better. Rinse and repeat.

    It’s funny how much you learn when you start prototyping – not just about yourself and any specific potential customers, but also about your industry in general. In my (limited) experience, an early version that you end up discarding can do more for your grasp of product & product strategy than a whole lot of planning. It seems that some of the main reasons for this are that (a) you start to figure out how things work, and (b) you begin REALLY paying attention (having skin in the game will do that to you). I made business plans in college; I got A’s on them; I didn’t know sh*t.

    You’re the investor: what do you think? A feature seems like a cool exploratory way of getting to know something; play is a great tool for learning. Assuming you won’t fund a feature, how do you feel about a product that evolved, bottom-up, out of experience and user testing?

  2. August 5, 2008

    Not sure I agree either.

    I feel that part of the point of the statement is to risk as little time and money executing a simple idea. If the idea sticks within it’s early stages and gains traction, then you start looking at building it into a business. However if it doesn’t stick, you haven’t risked much and move on to your next single feature idea.

    Maybe I’m old fashioned, but I think it takes time to nurture and execute a business well. There’s high growth in our industry and although Paul Graham likes to make the “sprinter” story, I do counter that saying that marathon runners tend to have a longer career as marathon runners than sprinters do.

    If distance is money, would you rather get to 100 meters in 9.7 seconds and stop after that or 26 miles in 2 hours 4 minutes?

    I don’t think it’s impossible to win at the feature as a product model, but I do think it’s going to be a different sort of commitment and goal.

  3. August 6, 2008

    i think we’ll see a lot of companies like that, although i think the key is how the finance part of things — i.e. how they are funded and how they liquidate. this is an area where i think the funds created by platforms — i.e. google’s fund, facebook fund, etc — can really shine and show where they deliver value.

  4. August 6, 2008

    I think that’s the cheap, lowest risk way to build a Web 2.0 company, but not the only way, and certainly not the only, or even most, successful way. It’s just an extension of the public beta mentality.

  5. August 6, 2008

    @Luke G: As an investor, I assume that most early staged web 2.0 projects will end up a feature, whatever the intentions at the outset. So I need a pretty compelling argument at the outset as to why there is a reasonable likelihood of maturing into either a platform (which is very unusual, but doable as in the case of WordPress) or at least a product with very substantial commercial value. With the caveat that, along the way, even the most compelling argument will only bear out after lots of deviations along the way based on real market/user feedback.

  6. August 12, 2008

    @mike Heh I just got called a “feature”, and it brought your post to mind.

    http://www.altgate.com/blog/2008/08/awesome-experie.html

    We’ve got some new stuff coming out in the next few days that will hopefully help communicate the scope of what we’re working on, but I don’t have a problem with this right now.

    Hope to see you at demo day.

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