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Archive for the ‘Entrepreneurship’ Category

SMB Open Source Usage

Here are a few of the findings derived from Bluehost data (an EIG company) and follow-on research:

  • 60% of web hosting usage is by SMBs, 71% if you include non-profits. Only 22% of hosted sites are for personal use.
  • WordPress is a far more important open source product than most people give it credit for. In the SMB hosting market, it is as widely used as MySQL and PHP, far ahead of Joomla and Drupal, the other leading content management systems.
  • Languages commonly used by high-tech startups, such as Ruby and Python, have little usage in the SMB hosting market, which is dominated by PHP for server-side scripting and JavaScript for client-side scripting.
  • Open source hosting alternatives have at least a 2:1 cost advantage relative to proprietary solutions.

The Lean Startup Principles

PRINCIPLES

  1. ENTREPRENEURS ARE EVERWHERE

    You don’t have to work in a garage to be in a startup. Read More

  2. ENTREPRENEURSHIP IS MANAGEMENT

    A startup is an institution, not just a product, so it requires management, a new kind of management specifically geared to its context. Read More

  3. VALIDATED LEARNING

    Startups exist not to make stuff, make money, or serve customers. They exist to learn how to build a sustainable business. This learning can be validated scientifically, by running experiments that allow us to test each element of our vision. Read More

  4. INNOVATION ACCOUNTING

    To improve entrepreneurial outcomes, and to hold entrepreneurs accountable, we need to focus on the boring stuff: how to measure progress, how to setup milestones, how to prioritize work. This requires a new kind of accounting, specific to startups. Read More

  5. BUILD-MEASURE-LEARN

    The fundamental activity of a startup is to turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere. All successful startup processes should be geared to accelerate that feedback loop. Read More

Why Solo Entrepreneurship?

I will let The Technium do the explaining and it is in part due to the Long Tail:

 The long tail is famously good news for two classes of people; a few lucky aggregators, such as Amazon and Netflix, and 6 billion consumers. Of those two, I think consumers earn the greater reward from the wealth hidden in infinite niches.

But the long tail is a decidedly mixed blessing for creators. Individual artists, producers, inventors and makers are overlooked in the equation. The long tail does not raise the sales of creators much, but it does add massive competition and endless downward pressure on prices. Unless artists become a large aggregator of other artist’s works, the long tail offers no path out of the quiet doldrums of minuscule sales.

Other than aim for a blockbuster hit, what can an artist do to escape the long tail?

One solution is to find 1,000 True Fans. While some artists have discovered this path without calling it that, I think it is worth trying to formalize. The gist of 1,000 True Fans can be stated simply:

A creator, such as an artist, musician, photographer, craftsperson, performer, animator, designer, videomaker, or author – in other words, anyone producing works of art – needs to acquire only 1,000 True Fans to make a living.

A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.

To raise your sales out of the flatline of the long tail you need to connect with your True Fans directly.  Another way to state this is, you need to convert a thousand Lesser Fans into a thousand True Fans…..

A few caveats. This formula – one thousand direct True Fans —  is crafted for one person, the solo artist. What happens in a duet, or quartet, or movie crew? Obviously, you’ll need more fans. But the additional fans you’ll need are in direct geometric proportion to the increase of your creative group. In other words, if you increase your group size by 33%, you need add only 33% more fans. This linear growth is in contrast to the exponential growth by which many things in the digital domain inflate. I would not be surprised to find that the value of your True Fans network follows the standard network effects rule, and increases as the square of the number of Fans. As your True Fans connect with each other, they will more readily increase their average spending on your works. So while increasing the numbers of artists involved in creation increases the number of True Fans needed, the increase does not explode, but rises gently and in proportion.

A more important caution: Not every artist is cut out, or willing, to be a nurturer of fans. Many musicians just want to play music, or photographers just want to shoot, or painters paint, and they temperamentally don’t want to deal with fans, especially True Fans. For these creatives, they need a mediator, a manager, a handler, an agent, a galleryist — someone to manage their fans.  Nonetheless, they can still aim for the same middle destination of 1,000 True Fans. They are just working in a duet.

Third distinction. Direct fans are best. The number of True Fans needed to make a living indirectly inflates fast, but not infinitely. Take blogging as an example. Because fan support for a blogger routes through advertising clicks (except in the occasional tip-jar), more fans are needed for a blogger to make a living. But while this moves the destination towards the left on the long tail curve, it is still far short of blockbuster territory. Same is true in book publishing. When you have corporations involved in taking the majority of the revenue for your work, then it takes many times more True Fans to support you. To the degree an author cultivates direct contact with his/her fans, the smaller the number needed.

A Tale of Two Entrepreneurs

There are only two kinds of entrepreneurs from behavioral economics point of view:

  • market entrepreneurs – sell products and services without a social mission
  • social entrepreneurs –  sell products and services with a social mission – Hapinoy, etc

Related links on social entrepreneurship: