I had the privilege of participating on a panel about ubiquitous computing at the 2009 Kellogg Private Equity and Venture Capital Conference yesterday. Other panelists were Tim Chang from Norwest Venture Partners, and Enrique Godreau from Voyager Capital. Participating on a panel with such august speakers is thrilling, but they set a rather high bar! Enrique’s background in ubicom dates back to Xerox PARC when Mark Weiser first articulated the term (around 1988). Tim Chang also has a long experience with ubicom.

Enrique spoke first, giving a flawlessly articulated explanation of the roots of ubicom and how it impacts our daily lives. Tim (in his usual thoughtful manner), put ubicom into perspective, threading it into his investment theses. Tough acts to follow!

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Recently I had the CEO of a local startup ask me about a branding strategy for his technology startup. He wanted to brand the company itself, and also create sub-brands for specific company products.

In some ways, that makes sense. Different products may appeal to different users. The more specific your goal with a brand, the more likely you can make it resonate with certain customers.

But there are reasons why most tech startups should create a single company brand, and avoid creating product sub-brands.

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As an entrepreneur, I’m into building value. That goes without saying, right?

When I started my first company in 1994, my only business plan was to make the $600 minimum monthly payment on my credit card for startup expenses. A brilliant and reasoned plan, I know.

When, in the first month, I brought in $25,000 I thought I hit the lottery (aside from the splitting headache from lack of sleep). Things only improved from there (except for the lack of sleep part). Very quickly I had 20 employees. Still, I had never stopped to figure out what I was doing, or more importantly what I wanted out of it.

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Effortless scalability. I want it. I’ll pay for it.

Planning a smooth scale-out growth of a web application can be a nightmare. You are never certain how popular the application will be. You can’t tell when the users will actually use the service. When your site hits the first page on Digg, you feel elation and terror at the same time. Even worse, it can be very difficult to estimate how your users will use the site, how many videos they will watch, and how many database updates they will trigger.

It is easy to set up a single-server web application, or even to separate the major tiers onto separate servers. But when it comes to scaling out to more servers, particularly more database servers, life gets difficult. You face data concurrency issues, latency challenges, failover needs, and backup requirements. Solving each of these is complex, time-consuming, and often expensive.

None of this is conducive to building the next big Internet startup. Solving the scaling issue is a necessary evil… for now. In my opinion, whoever fixes it will make a heap of money. It’s a commodity problem. Someone ought to fix it.

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The blogosphere is replete with references to an interesting post by Michael Mace, “Mobile Applications, RIP“. Michael believes that the age of custom mobile application stacks is dead. Instead, he posits, the mobile web is surging in importance, despite its being inelegant and inferior technologically. He points out that

“A platform that is technically flawed but has a good business model will always beat a platform that is elegant but has a poor business model.”

In principle, I agree with him, but his choice of language and approach to the issue suggest that technology comes first. As he says “A platform (subject) … has a … business model (object).” I don’t mean to sound like a third-grade English teacher, but this is an important distinction. Platforms don’t have business models (or at least they shouldn’t). Business models have platforms.

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Note: This article derives from a paper I co-authored in 2007, “Understanding Key Success Factors for Social Web Ventures”. It won first place in the Insightory.com competition. You can view the entire paper here. This blog entry is part of a series of entries covering social web ventures.

Metcalfe’s Law says the value of a network equals the square of the number of its users. Larger networks create network externalities, leading to competitive advantage. Users post on YouTube because there are more visitors. And visitors come to YouTube because there are more videos to watch.

Therefore, network size is key to a successful social web venture. More users and content than your competitors means more consumer value, which in turn creates a snowball growth effect.

But when should you start monetizing your traffic? Critics suggest that many startups wait too long to start monetizing. However, until we find revenue models that do not reduce consumer value, the wisest strategy is to hold off monetizing your traffic at least until you reach an inflection point (e.g., second derivative hits zero).

Most revenue models, such as advertising, reduce consumer value. Metacafe, which has long had relatively intrusive ads, launched nearly two years before YouTube, but continues to trail far behind the market leaders.

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I’m on the executive board for a very promising Chicago-based startup. The CEO and CTO consult me weekly (sometimes daily) for my thoughts and advice about various aspects of their business. We often shoot emails back and forth about industry news and events, and the activities of potential acquirers, competitors, etc.

There is one competitor in particular that has been creating a lot of buzz. Each time their competitor makes a big PR splash, I can see / hear the stress on the faces of the entrepreneurs. It’s a natural thing, and to a certain extent it can be helpful. But many entrepreneurs overreact to the activities of the competition.

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Note: This article derives from a paper I co-authored in 2007, “Understanding Key Success Factors for Social Web Ventures”. It won first place in the Insightory.com competition. You can view the entire paper here. This blog entry is part of a series of entries covering social web ventures.

Social Web Ventures

Despite the financial and market challenges of the dot-com crash, some companies not only survived, but flourished. Many new internet sites also emerged. Google hurtled past incumbent search engines like Yahoo and AltaVista. EBay grew steadily. Friendster and then MySpace appeared without warning. In 2005, YouTube began its meteoric rise.

These sites all share one thing in common: they are to one extent or another social web ventures. These ventures harness the social interests of their customers to create value, enabled by an Internet platform. This category includes obvious players such as MySpace, YouTube, Flickr, Wikipedia, and Digg. A less obvious example is eBay, a sort of social commerce site where reputation determined by other users plays one of the key roles in the platform’s success.

But what are the factors that differentiate a successful social web venture from a bust? Our user participation hierarchy provides the beginning of a framework for this sort of analysis.

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This is my first blog post. Ever. I should have done this years ago. Apparently, the first bloggers started at it in 1994, around the same time I began my first technology startup, a web consultancy. Although I was knee deep in the web, I had never heard of blogging, and was sleeping about four hours a night. No blogging for me at that time.

By 1999 when blogging became more popular, DDS (the unfortunately unappealing acronym for my first startup) had grown so much that I had to split it into two companies with a total of perhaps 60 employees. I was also an executive board member and CTO of a venture backed online mortgage company. In retrospect, I probably would have both enjoyed and benefited from starting a blog at that time. But I was too busy, or at least that is what I told myself.

Which leads us to the question, “How far ahead of the chasm am I?” I am speaking of Geoffrey Moore’s chasm, of course. Am I an enthusiast or a visionary? Or (shudder) am I part of the early majority (the first post-chasm group).

My wife would like to peg me as the earliest of enthusiast adopters, always trying out the newest and uncertain technologies. As evidence, she would present the very nature of Blir, one of my more successful (prior) companies.

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