March - 2007 - issue > Cover Feature
7 things to remember while chasing the Web 2.0 dream
Rajesh Setty
Wednesday, February 28, 2007
For me, Web 2.0 is all about harnessing the full power of the web. It means getting web applications to look like desktop applications (think: Google Maps) and engaging the members of the community at an entirely different level (think: Digg, Reddit) Last month, an aspiring entrepreneur told me that he was working on a Web 2.0 startup, an area that he considered was going to be ‘hot’. I was happy for him, and asked him what problem he was solving or what opportunity he was creating with this startup.

He seemed puzzled by the question. I won’t go into the details of his answer, but it reminded me of those booming dotcom days when having a website was considered the same as a business, and actual business value was almost irrelevant.

I’m not saying that Web 2.0 is the next dotcom bubble, but the similarity is interesting. Ask ten people to define Web 2.0, and you will get ten different answers. That seems to be the sign of a buzzword, not a real business concept. So as you consider entrepreneurial opportunities in 2.0, it’s wise to consider some of these lessons from the dotbomb field.

1. Don’t chase exceptions – make them
YouTube got sold for more than a billion dollars without making any money. Fark and Plenty Of Fish, two other high-profile startups, have only one employee. So should you model your new company on one of these? Probably not. These examples are exceptions, not the norm, and trying to replicate an exception is rarely a good idea. Once the media and investors are all over it, it’s not an original idea anymore.
So rather than chasing an exception, create your own!

2. You can’t forget the team and the business model

Team comes first. Web 2.0 projects are no different. Even the most “viral” ideas need people to succeed.

With open source going mainstream, the technology costs involved in starting a new web-based business have dipped. So this time around, self-funded entrepreneurs may be burning their own money, instead of other people’s, trying to build a flawed business model. Check your business model. Please.

3. Do what works, not what’s cool (Ajax)
Yes, Ajax is cool, and everybody seems to be using it. But customers are not going to choose your service or product only because it is Ajax-enabled. While you can pretty much ajaxify (sic) everything, think first about whether it’s necessary for what you do.

4. Lay the right foundation
Design the first version of your product or service with high standards – but be aware of the challenge you set for yourself. You can’t compromise on the standards after the first version is out, because you have made an implicit promise to your customers and prospects on what is yet to come. But maintaining those same high standards for future releases can be extremely costly if you aren’t prepared, so lay a solid foundation for fulfilling expectations.

5. Emphasize agility
You can’t ride for long on the “first-to-market” train – if you’re onto a good thing, competition is certain to be sneaking up on you. Being agile is your insurance policy. So when you get surprises, you can change course quickly and maintain your lead.

6. Choose the right metrics
Page views and visitors may not always be the right metrics. Forget Web 2.0 for a moment and think - what metrics will you need to track to be successful? If everyone in the the Web 2.0 world is doing a particular thing – it may be a good reason to do something different.

7. Involve your customers right from the start
With the fast cycle times in the Web 2.0 world, it’s easy to get carried away with your idea. The best way to delight your customers with your product or service is to work with them from the outset and get their feedback. Knowing their expectations and beating them is a great way to create a “wow” experience – for them, and for you.

Rajesh Setty is a serial entrepreneur and investor based in the Bay Area, where he is involved in several web 2.0 businesses – Suggestica and iPolipo among them. Rajesh is also the author of “Beyond Code” (foreword by Tom Peters), published in the US and India.

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