Details of the session
A panel of Internet entrepreneurs discussed future models of online business success and the importance of planning for what’s to come while still acknowledging past developments during Day 2 of the FutureWeb conference at WWW2010 in Raleigh.
Panelists touched on several areas of Internet importance, including privacy concerns and the mid-1990s software boom, but they often tied the topics of discussion back to successful entrepreneurial practices.
“As an entrepreneur, your job as to create value,” said David Gardner, the founder and CEO of VenueGen. “It’s creating that value, that’s what entrepreneurship is all about. The role of the entrepreneur—and it may make it more difficult to get funding—but for most part, with my ventures, I kind of ignore what’s going on (in the market). I focus on creating value. If you create value, everything will work out for you later on.”
Moderator Tom Miller, the leader of the Entrepreneurship Initiative and vice provost for DELTA at North Carolina State University, said the golden age of software development began in the 1975-76 time frame with the founding of Microsoft and Apple Computer, and continued to the mid-90s but began busting by later in the decade.
Panelists agreed that online product development was fertile ground 20 years ago and two reasons the “dot com” bust was so severe was because the market didn’t know how to define new Internet ventures and because developers weren’t able to construct sound business models.
“The reason that software was such an attractive field as an entrepreneur is that you could have an idea of a product in your line and with a couple of people and couple of thousand dollars, you can build it and you could make it,” philanthropist Chris Evans said. “Once it’s in your head, a lot of the work is done. It was a wide open space to be able to come into.”
“What was happening,” William C. Weiss said, “was more sexy than it was productive. It wasn’t until years later that the market understood there was something meaningful to what they were doing.”
And at first, Aaron Houghton said, businesses succeeded because they did follow a tried and true standard business model: build it, sell it, ship it. But soon, they began retooling and losing business.
“In the early years, this is really a representation of what markets thought of the companies,” Houghton said. “The companies that failed didn’t use the model of we built, we ship it. They’re using model of ‘come take a look around,’ and they advertised online only.”
While Internet companies have had better success becoming profitable, panelists said the next step for potential entrepreneurs is to recognize how users interact with technology. They said it’s important to plan for the future, but they warned against neglecting older products.
Weiss said human habits and tendencies reoccur through time, so it benefits entrepreneurs to study the slower technologies that still impact users.
“None of us are smart enough to entirely understand the future what might future look like,” Weiss said. “With what you know about how people act, what might the future look like? The lessons we’ve learned in the past are (development has) got to be done with precise sensitivity to the user. They have to be part of the equation.”
Gardner said five years ago he predicted video rental stores would be completely non-existent by this point. He said he thought OnDemand services would have taken over. It’s true that stores like Blockbuster are becoming less relevant with each passing day, he said, but it’s up to entrepreneurs to “start looking for new applications for that technology, as technology starts maturing.”
And there enlies an opportunity to make money. Take iTunes, for example. Houghton said decoupling services can create the potential for greater profitability. He said allowing individuals to buy single songs means people wind up spending more for one song at a time than they would if they were forced to buy entire albums.
“People don’t want to buy the whole A-to-Z packages anymore,” he said.
Knowing what consumers want and how they act online is doubly important these days, panelists said. Content producers and developers need to give people what they want where they want it. They also need to find ways to interact with users to generate good will and interest.
Weiss said the Web doesn’t create new outcomes in terms of cultures and human habits. But it does allow users to assemble into smaller, more comfortable communities—communities that Evans said entrepreneurs can tap into.
“One of things different about entrepreneurship now is that you run into problems with scaling,” Evans said. “Let the community crowd source it. Let the community be creative for you. The ways we tap into that are allowing us to scale businesses in ways that have never been able to be done before. It’s a little bit counterintuitive … that something that was so chaotic would work so much better than something that was centrally planned.”
The overarching lesson for entrepreneurs is to take chances and do the work.
“The challenges now are capital and legal,” Evans said. “In looking at software now, you’re wondering in the back of your mind if someone has a patent for it. But sometimes you have to say, ‘We’re going to do it and see what happens, when it happens.’”
-By Colin Donohue, Imagining the Internet